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U.S. Securities And Exchange Commission
 Washington, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 OR
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File No. 0-31547
 AMERICAN OIL & GAS, INC.
  Nevada
    
    88-0451554(State or jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)1050 17th Street, Suite 1850, Denver, CO
    
    80265(Address of principal executive offices)
    
    (Zip Code)
 (303) 991-0173
 þ o
    o þ
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AMERICAN OIL & GAS, INC.
FORM 10-QSB
INDEX
 PART I.FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Balance Sheets  June 30, 2005 (Unaudited) and December 31, 2004
    
    
    3Statements of Operations  Three and Six Months Ended June
30, 2005 and June 30, 2004 (Unaudited)
    
    
    4Statements of Cash Flows  Six Months Ended June 30, 2005
and June 30, 2004 (Unaudited)
    
    
    5Notes to Financial Statements
    
    
    6Summary of Significant Accounting Policies
    
    
    6Item 2. Managements Plan of Operation and Discussion and Analysis
of Financial Condition and Results of Operations
    
    
    12Item 3.Controls and Procedures
    
    
    15PART II. OTHER INFORMATIONItem 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    15Item 6. Exhibits
    
    
    16Signatures
    
    
    16302 Certification of Chief Executive Officer302 Certification of Chief Financial Officer906 Certification of Chief Executive Officer906 Certification of Chief Financial Officer
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PART I
 
 ITEM 1. FINANCIAL STATEMENTS
 AMERICAN OIL & GAS, INC.
 
 BALANCE SHEETS
 6/30/05
    
    
    12/31/04ASSETS
    
    (UNAUDITED)CURRENT ASSETSCash and cash equivalents
    
    $
    2,799,273
    
    
    $
    5,251,889Receivables
    
    
    1,116,546
    
    
    
    258,848Advances and prepaids
    
    
    32,129
    
    
    
    54,535Total Current Assets
    
    
    3,947,948
    
    
    
    5,565,272PROPERTY AND EQUIPMENT, AT COSTOil and gas properties, full cost method (including unevaluated costs
of $4,039,407 at 6/30/05 and $2,022,367 at 12/31/04)
    
    
    8,004,076
    
    
    
    3,700,892Other property and equipment
    
    
    13,481
    
    
    
    7,221Total property and equipment
    
    
    8,017,557
    
    
    
    3,708,113Less  accumulated depreciation, depletion and amortization
    
    
    (740,806
    )
    
    
    (221,793
    )Net property and equipment
    
    
    7,276,751
    
    
    
    3,486,320$
    11,224,699
    
    
    $
    9,051,592LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable and accrued liabilities
    
    $
    960,170
    
    
    $
    108,611Preferred dividends payable
    
    
    
    
    
    
    18,020Total current liabilities
    
    
    960,170
    
    
    
    126,631LONG TERM LIABILITIESAsset retirement obligations
    
    
    44,425
    
    
    
    40,702COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITYSeries A preferred stock, $.001 par value, authorized 500,000
sharesIssued and outstanding  no shares at 6/30/05 and
67,000 shares at 12/31/04
    
    
    
    
    
    
    67Common stock, $.001 par value, authorized 100,000,000 shares
    
    
    35,789
    
    
    
    29,154Issued and outstanding  35,788,702 shares at 6/30/05
and 29,153,702 shares at 12/31/04
    
    
    35,789
    
    
    
    29,154Additional paid-in capital
    
    
    11,367,582
    
    
    
    10,400,629Deferred compensation
    
    
    
    
    
    
    (141,250
    )Accumulated (deficit)
    
    
    (1,183,267
    )
    
    
    (1,404,341
    )10,220,104
    
    
    
    8,884,259$
    11,224,699
    
    
    $
    9,051,592
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AMERICAN OIL & GAS, INC.
 
 STATEMENTS OF OPERATIONS
 (UNAUDITED)
 Three
    
    
    Three
    
    
    Six
    
    
    SixMonths
    
    
    Months
    
    
    Months
    
    
    MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    Ended6/30/05
    
    
    6/30/04
    
    
    6/30/05
    
    
    6/30/04REVENUESOil and gas sales
    
    $
    1,239,042
    
    
    $
    79,763
    
    
    $
    1,925,769
    
    
    $
    147,677OPERATING EXPENSESLease operating
    
    
    57,400
    
    
    
    14,710
    
    
    
    94,503
    
    
    
    34,922General and administrative
    
    
    665,303
    
    
    
    233,625
    
    
    
    1,132,010
    
    
    
    422,813Depletion, depreciation and amortization
    
    
    374,569
    
    
    
    21,051
    
    
    
    519,058
    
    
    
    41,5641,097,272
    
    
    
    269,386
    
    
    
    1,745,571
    
    
    
    499,299OTHER INCOMEInvestment income
    
    
    17,642
    
    
    
    918
    
    
    
    40,876
    
    
    
    918NET INCOME (LOSS) BEFORE INCOME TAXES
    
    
    159,412
    
    
    
    (188,705
    )
    
    
    221,074
    
    
    
    (350,704
    )Provision for income tax
    
    
    60,130
    
    
    
    
    
    
    
    82,822
    
    
    
    Tax benefit of net operating loss carryforward
    
    
    (60,130
    )
    
    
    
    
    
    
    (82,822
    )
    
    
    NET INCOME (LOSS)
    
    
    159,412
    
    
    
    (188,705
    )
    
    
    221,074
    
    
    
    (350,704
    )Less dividends on preferred stock
    
    
    
    
    
    
    15,326
    
    
    
    
    
    
    
    30,652NET INCOME (LOSS) TO COMMON
STOCKHOLDERS
    
    $
    159,412
    
    
    $
    (204,031
    )
    
    $
    221,074
    
    
    $
    (381,356
    )NET INCOME (LOSS) PER COMMON
SHAREBASIC
    
    $
    
    
    
    $
    (0.01
    )
    
    $
    0.01
    
    
    $
    (0.02
    )NET INCOME (LOSS) PER COMMON
SHAREDILUTED
    
    $
    
    
    
    $
    (0.01
    )
    
    $
    0.01
    
    
    $
    (0.02
    )BASIC WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING
    
    
    34,437,740
    
    
    
    25,926,202
    
    
    
    32,171,810
    
    
    
    25,283,139DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING
    
    
    34,942,411
    
    
    
    25,926,202
    
    
    
    32,613,195
    
    
    
    25,283,139
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AMERICAN OIL & GAS, INC.
 
 STATEMENTS OF CASH FLOWS
 UNAUDITED
 6/30/05
    
    
    6/30/04CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    221,074
    
    
    $
    (350,704
    )Adjustments
to reconcile net income (loss) to
net cash provided (used) by operating activitiesStock issued for services
    
    
    105,251
    
    
    
    26,251Options issued for services
    
    
    38,632
    
    
    
    Deferred compensation
    
    
    141,250
    
    
    
    141,250Accretion of asset retirement obligation
    
    
    1,025
    
    
    
    632Depletion, depreciation and amortization
    
    
    516,971
    
    
    
    40,932Changes in assets and liabilities(Increase) in receivables
    
    
    (866,554
    )
    
    
    (14,252
    )Decrease in advances and prepaids
    
    
    22,406
    
    
    
    38,810Increase (decrease) in A/P and accrued liabilities
    
    
    838,877
    
    
    
    (387,954
    )Net cash provided (used) by operating activities
    
    
    1,018,932
    
    
    
    (505,035
    )CASH FLOWS FROM INVESTING ACTIVITIESCash paid
for office equipment
    
    
    (1,371
    )
    
    
    Proceeds from the sale of oil and gas properties
    
    
    
    
    
    
    326,247Cash paid for oil and gas properties
    
    
    (3,605,708
    )
    
    
    (567,659
    )Net cash (used) provided by investing activities
    
    
    (3,607,079
    )
    
    
    (241,412
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from sale of common stock
    
    
    
    
    
    
    1,525,000Proceeds from exercise of common stock warrants
    
    
    152,600
    
    
    
    Cash
received from acquired company
    
    
    1,795
    
    
    
    Preferred dividends paid
    
    
    (18,864
    )
    
    
    Cash paid for offering costs
    
    
    
    
    
    
    (7,430
    )Net cash provided by financing activities
    
    
    135,531
    
    
    
    1,517,570NET
(DECREASE) INCREASE IN CASH
    
    
    (2,452,616
    )
    
    
    771,123CASH, BEGINNING OF PERIODS
    
    
    5,251,889
    
    
    
    1,066,458CASH, END OF PERIODS
    
    $
    2,799,273
    
    
    $
    1,837,581SUPPLEMENTAL SCHEDULE OF CASH FLOW
INFORMATIONCash paid for interest
    
    $
    
    
    
    $
    SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING AND FINANCING ACTIVITIESStock issued for services
    
    $
    105,251
    
    
    $
    26,251Stock based deferred compensation
    
    $
    141,250
    
    
    $
    141,250Stock issued for acquired company
    
    $
    656,833
    
    
    $
    Warrants issued for oil and gas consulting services
    
    $
    21,072
    
    
    $
    10,537Options issued for services
    
    $
    38,632
    
    
    $
    
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AMERICAN OIL & GAS, INC.
 
 Notes to Financial Statements
 (UNAUDITED)
 June 30, 2005
   Nature of Business
   
 Note 1  Significant Accounting Policies
 USE
OF ESTIMATES
 CASH
EQUIVALENTS
 OIL AND GAS PROPERTIES
 DEPLETION, DEPRECIATION AND AMORTIZATION
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CEILING
TEST
 REVENUE
RECOGNITION
 IMPAIRMENT 
 SHARE BASED COMPENSATION 
 6-30-05
    
    
    6-30-04Net income/(loss)  as reported
    
    $
    221,074
    
    
    $
    (350,704
    )Add stock based compensation
included in reported net
income/(loss)
    
    
    153,691
    
    
    
    Deduct stock based compensation
expense determined under the
fair value method
    
    
    (392,174
    )
    
    
    Pro forma net income/loss)
    
    $
    (17,409
    )
    
    $
    (350,704
    )Net income/(loss) per share:As reported
    
    $
    .01
    
    
    $
    (0.02
    )Pro forma
    
    $
    .01
    
    
    $
    (0.02
    )
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6-30-05
    
    6-30-04Expected option life
    
    5 years
    
    Risk-free interest rate
    
    3.09% to 3.36%
    
    Dividend yield
    
    0%
    
    Volatility
    
    57.78% to 70.70%
    
    
  INCOME
TAXES
 ASSET
RETIREMENT OBLIGATION
  Asset retirement obligation beginning of year
    
    $
    40,702Liabilities incurred
    
    
    1,636Accretion
    
    
    2,087Asset retirement obligation at June 30, 2005
    
    $
    44,425
 NET
EARNINGS (LOSS) PER SHARE
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PerNet
    
    
    
    
    
    
    ShareQuarter ended June 30, 2005
    
    Income
    
    
    Shares
    
    
    AmountBasic earnings per share:Net income and share amounts
    
    $
    159,412
    
    
    
    34,437,740
    
    
    $
    Dilutive SecuritiesStock options
    
    
    
    
    
    
    354,221Warrants
    
    
    
    
    
    
    150,450Diluted earnings per share:Net income and assumed
share conversion
    
    $
    159,412
    
    
    
    34,942,411
    
    
    $
    
 PerNet
    
    
    
    
    
    
    ShareSix Months ended June 30, 2005
    
    Income
    
    
    Shares
    
    
    AmountBasic earnings per share:Net income and share amounts
    
    $
    221,074
    
    
    
    32,171,810
    
    
    $
    .01Dilutive SecuritiesStock options
    
    
    
    
    
    
    304,111Warrants
    
    
    
    
    
    
    137,274Diluted earnings per share:Net income and assumed share
conversion
    
    $
    221,074
    
    
    
    32,613,195
    
    
    $
    .01
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Note 2  Property and Equipment
  Oil and gas properties, full cost methodUnevaluated costs, not subject to amortization or
ceiling test
    
    $
    4,039,407Evaluated costs
    
    
    3,929,641Asset retirement costs
    
    
    35,0288,004,076Furniture and equipment
    
    
    13,4818,017,557Less accumulated depreciation, depletion and amortization
    
    
    (740,806
    )Property and equipment
    
    $
    7,276,751
 Note 3  Common Stock
   Note 4  Related Party Transactions
 rd
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rd
  Note 5  Subsequent Events
      11




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ITEM 2.
    
    MANAGEMENTS PLAN OF OPERATION AND DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
    Overview
    12




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Results of Operations
  The quarter ended June 30, 2005 compared with the quarter ended June 30, 2004.
  13




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The six months ended June 30, 2005 compared with the six months ended June 30, 2004.
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Liquidity and Capital Resources
   
 ITEM 3. CONTROLS AND PROCEDURES
   
 PART II.
OTHER INFORMATION
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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Item 6. Exhibits.
 Exhibit No.
    
    Description3(i)
    
    Articles of Incorporation of the Company.(1)3(ii)
    
    Bylaws of the Company (as revised on December 12, 2002).(2)31.1
    
    302 Certification of Chief Executive Officer31.2
    
    302 Certification of Chief Financial Officer32.1
    
    906 Certification of Chief Executive Officer32.2
    
    906 Certification of Chief Financial Officer
 
 (1)
    
    Incorporated by reference from the Companys Form 10-SB, file number 000-31547, filed on
September 18, 2000.(2)
    
    Incorporated by reference from the Companys Form 10-KSB/A, filed on November 18, 2003. 
 SIGNATURES
  Signatures
    
    Title
    
    Date/s/ Patrick D.  OBrien

Patrick D. OBrien
    
    Chief Executive Officer and Chairman of The
Board of Directors
    
    August 15, 2005/s/ Andrew P. Calerich

Andrew P. Calerich
    
    President, Chief Financial Officer and Director
    
    August 15, 2005
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EXHIBIT INDEX
 Exhibit No.
    
    Description3(i)
    
    Articles of Incorporation of the Company.(1)3(ii)
    
    Bylaws of the Company (as revised on December 12, 2002).(2)31.1
    
    302 Certification of Chief Executive Officer31.2
    
    302 Certification of Chief Financial Officer32.1
    
    906 Certification of Chief Executive Officer32.2
    
    906 Certification of Chief Financial Officer
 
 (1)
    
    Incorporated by reference from the Companys Form 10-SB, file number 000-31547, filed on
September 18, 2000.(2)
    
    Incorporated by reference from the Companys Form 10-KSB/A, filed on November 18, 2003. 17