UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

 

FORM10-QSB

 

[X]QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OFTHE SECURITIES EXCHANGE ACT OF 1934

 

[] TRANSITION REPORT PURSUANT TO SECTION 13 OR

15(d)OF THE SECURITIES EXCHANGE ACT OF 1934

 

Forthe quarterly period ended: June 30, 2004

 

Commissionfile number 000-30009

 

PETROLOIL AND GAS, INC.

(Exactname of small business issuer as specified in its charter)

 

| **Nevada **  
** 90-0066187**
(State      or other jurisdiction of   
 (I.R.S.      Employer
incorporation      or organization)   
 Identification      Number)
 

**3161      E. Warm Springs Road**
**Suite      300**
**Las      Vegas, Nevada **  
** 89120**
(Address      of Principal Executive Offices)   
 (Zip      Code)
 
**(702)454-7318**
(Issuer'stelephone number, including area code)

 

Checkmark whether the issuer (1) filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the last 12 months (orfor 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.

 

YesX     No ____

 

Thenumber of shares of Common Stock, $0.001 par value, outstanding on June 30,2004, was 18,112,466 shares.

 

TransitionalSmall Business Disclosure Format (check one):

 

Yes          No X

 

 

 

 
**PARTI -- FINANCIAL INFORMATION

Item 1.Financial Statements.**
 

**PetrolOil and Gas, Inc.**

**(ADevelopment Stage Company)**

**CondensedBalance Sheet**

 

June      30,

2004

(Unaudited)
December      31,

2003

(Audited)
Assets
Current      assets:
          Cash
$                   237,042
$              1,059,838
          Prepaid asset
33,333
-
          Investment
14,882
200,000
               Total current assets
285,257
1,259,838
Equipment
4,894
2,134
Vehicles
28,009
28,009
Accumulated      depreciation
(5,280)
(2,107)
27,623
28,036
Other      Assets:
          Notes and interest receivable from stockholders
336,267
-
          Oil and gas properties using full cost accounting:
               Properties not subject to amortization
2,258,174
1,289,573
               Total other assets
2,594,441
1,289,573
$                2,907,321
$              2,577,447
Liabilities      and stockholders' equity
Current      liabilities:
          Current portion of long term debt
$                       4,000
$                     4,000
          Notes payable
250,000
-
          Accounts payable
143,522
268,071
          Deposit
99,965
-
          Accrued liabilities
7,110
31,316
          Due to officer
-
47,500
               Total current liabilities
504,597
350,887
Long-term      debt
20,189
22,923
Contingencies      and commitments
Stockholders'      equity:
          Preferred stock, $.001 par, authorized 10,000,000 shares; no shares issued
-
-
          Common stock, $.001 par, authorized 100,000,000 shares; 18,112,466 and      17,247,466 issued and outstanding at June 30, 2004 and December 31, 2003
18,112
17,247
          Stock bought for services not issued 474,680 and 160,000 shares at June      30, 2004 and December 31, 2003
475
160
          Unamortized cost of stock issued for services
(50)
(1,000)
          Additional paid in capital
6,844,396
4,630,713
          Deficit accumulated under the development stage
(4,480,398)
(2,443,483)
               Total stockholders' equity
2,382,535
2,203,637
$                 2,907,321
$               2,577,447
 

Seenotes to condensed financial statements.

 

 

 

 

**PetrolOil and Gas, Inc.**

**(ADevelopment Stage Company)**

**CondensedStatement of Operations**

**Unaudited**

 
       
Six Months Ended June 30,       
Three Months Ended June 30,March 3, 2000      (inception) to  June 30,20042003200420032004
Revenue:
$                              -
$                          -
$                          -
$                           -
$                             -
Professional      and consulting fees
 

867,737
 

168,213
 

315,426
 

82,718
 

2,881,999
Office
110,720
27,087
94,360
10,698
178,479
Wages
176,000
67,500
88,000
33,750
382,155
Travel      & Entertainment
54,227
27,157
26,554
19,183
124,380
Rent
25,950
1,800
9,780
900
29,750
Loan      Fee
132,500
-
132,500
-
132,500
Acquisition      of Assets: CBM Energy Inc.
 

654,000
 

-
 

-
 

-
 

654,000
Miscellaneous      expense
36,733
6,094
14,949
4,117
102,999
Loss      from operations
(2,057,867)
(297,851)
(681,569)
(151,366)
(4,486,262)
Other      income (expense):
          Interest income
7,581
-
6,376
-
8,648
          Earnings on investment
15,087
-
(3,634)
-
15,087
          Interest expense
(1,715)
-
(762)
-
(17,871)
Other      income (expense)
20,953
-
1,980
-
5,864
Loss      before income tax
(2,036,914)
(297,851)
(679,589)
(151,366)
(4,480,398)
Provision      for income tax
-
-
-
-
-
Net      loss
$            (2,036,914)
$           (297,851)
$           (679,589)
$             (151,366)
$            (4,480,398)
Basic      and diluted earnings per share
 

$                      (0.12)
 

$                  (0.02)
 

$                  (0.04)
 

$                   (0.01)
 

$                     (0.46)
Weighted      shares outstanding
16,448,261
12,018,857
16,448,261
12,018,857
9,766,535** **
**Seenotes to condensed financial statements.**

 

 

 

 

**PetrolOil and Gas, Inc.**

**(ADevelopment Stage Company)**

**CondensedStatement of Cash Flows**

**(Unaudited)**

 

 

Six Months Ended June 30,March 3, 2000      (inception) to June 30,
2004
20032004
Operating      activities:
          Net loss
$        (2,036,914)
$       (297,851)
$        (4,480,398)
Adjustments      to reconcile net loss to cash used in operating activities-
          Depreciation
3,173
80
5,280
          Stock and options issued for services
913,313
90,000
2,404,183
          Stock issued in asset purchase: CBM
765,000
-
765,000
          Gain on investment net of fees
(14,882)
-
(14,882)
               Change in assets and liabilities-
               Prepaid asset
(33,333)
-
(33,333)
               Accounts payable
(124,549)
(6,559)
54,141
               Deposit
99,965
-
99,965
               Accrued liabilities
(24,206)
-
7,110
               Due to officer
(47,500)
25,000
-
                    Cash used in operating activities
(499,933)
(191,830)
(1,192,934)
Investing      activities:
          Equipment purchased
(2,760)
(1,600)
(32,903)
          Investment, net
200,000
-
-
          Additions to oil & gas properties not subject to amortization
(968,601)
(526,418)
(2,118,212)
               Cash used in investing activities
(771,361)
(528,018)
(2,151,115)
Financing      activities:
          Stock issued for debt paid by stockholder of Company
-
-
6,476
          Exercise of options
187,500
-
187,500
          Note receivable payments, net
13,732
-
13,732
          Payments made on long-term debt
(2,734)
-
(3,820)
          Notes payable
250,000
240,000
278,009
          Stock sold
-
337,500
3,099,194
               Cash provided from financing activities
448,498
577,500
3,581,091
Increase      (decrease) in cash
(822,796)
(142,348)
237,042
Beginning      cash
1,059,838
161,836
-
Ending      cash
$              237,042
$            19,488
$              237,042
Supplemental      cash flow information:
          Interest paid
$                  1,715
$                    --
$                17,871
          Income taxes paid
-
-
-
Non      cash financing activities:
          Stock issued for assets acquired
$                          -
$                      -
$                50,580
          Addition to oil & gas properties not subject to amortization and      accounts payable assumed in asset purchase
 

-
 

-
 

89,381
          Stock contributed to paid in capital
-
-
5,826
          Unamortized cost of stock issued for services
(950)
1,000
50
          Stock for services not issued
475
30,000
475
          Stock, warrants and options issued for services
913,313
60,000
2,404,183
          Stock issued on exercise of options for a note receivable
350,000
-
350,000
 

**Seenotes to condensed financial statements.**

 

 

 

 
**PetrolOil and Gas, Inc.

NotesTo Condensed Financial Statements**
 
**Note1 - Basis of Presentation**
 

Theunaudited condensed financial statements have been prepared in accordance withUnited States generally accepted accounting principles for interim financialinformation and with the instructions to Form 10-QSB and reflect all adjustmentswhich, in the opinion of management, are necessary for a fair presentation. Allsuch adjustments are of a normal recurring nature. The results of operations forthe interim period are not necessarily indicative of the results to be expectedfor a full year. Certain amounts in the prior year statements have beenreclassified to conform to the current year presentations. These statementsshould be read in conjunction with the financial statements and footnotesthereto included in the Form 10-KSB for the year ended December 31, 2003.

 
**Note2 - Going Concern**
 

Theaccompanying condensed financial statements have been prepared using thegenerally accepted accounting principles applicable to a going concern, whichcontemplates the realization of assets and liquidation of liabilities in thenormal course of business. For us to continue as a going concern we must seekadditional sources of capital, and we must attain future profitable operations.We are currently initiating our business plan and are in the process of raisingadditional capital. The accompanying financial statements do not include anyadjustments that might be necessary should we be unable to continue as a goingconcern.

 
**Note3 -Stock Transactions, Consulting and other Agreements**
 

OnApril 13, 2004, a consultant exercised 250,000 warrants for cash considerationof $187,500. As of June 30, 2004 the shares were not issued and the par value ofthe shares ($250) is recorded as stock bought for services not issued.

 

OnMay 3, 2004, we issued 100,000 shares of our common stock to CPA DirectedInvestments (CDI) pursuant to a $250,000 secured promissory note agreement datedMay 5, 2004. CDI will return 50,000 shares for cancellation at such time theloan and interest are paid in full. The remaining 50,000 shares will be retainedby CDI as a loan fee. The loan fee expense was determined based on the marketvalue of our stock on the date of the agreement and totaled $132,500.

 

OnMay 19, 2004 we entered into a consulting agreement with Tom Bibiyan of FlorenceEquity, LLC. The agreement was for 90 days and we paid a fee of $50,000. Theremaining unamortized portion of the fee ($33,333) is recorded as a prepaidasset. The remaining balance will be amortized in the third quarter.

 

OnJune 17, 2004, we issued 120,000 shares of our restricted common stock to XXRConsulting Inc. pursuant to a consulting agreement we executed on June 4, 2004.The value of the stock as determined by the market price of our stock on the dayof the agreement was $276,000 and this was recorded as professional andconsulting fee expense in June 2004.

 

 

 

 

OnJune 15, 2004, we agreed to issue shares of our common stock at a value of$6,000 and a fee of $4,000 to ECON Investor Relations, Inc pursuant to aconsulting agreement. The fees are monthly and the agreement is for one yearwith either party able to terminate the agreement based on 30 days writtennotice. The shares were not issued at June 30, 2004 and the par value of thestock $3 was recorded as stock bought for services not issued.

 

Asupplier has agreed to be paid in stock for 10% of any invoice. Stock owed butnot issued to the supplier at June 30, 2004 was under 100 shares.

 

OnJuly 26, 2004 we acquired oil properties leases consisting of 640 acres with 25well heads located in Franklin County, Kansas from RWJ Oil LC. In addition weacquired related equipment.

 

Asof June 30, 2004, we had recorded a deposit (liability) on our financialstatements of $99,965, which represents funds we received from outside investorsto be used towards the formation of a new limited liability company("LLC"), whereby we will contribute certain assets to the LLC inexchange for 20% membership interest in the LLC and the outside investors willreceive 80% membership interest in the LLC for cash of $350,000.

 
**Note4 - Note Payable**
 

Weacquired a truck on September 10, 2003 and financed the purchase with afive-year loan from Mayse Automotive Group. Interest is 8.74% and the firstpayment was October 10, 2003.

 
**Note5 - Related Party Transactions**
 

Wepaid a loan fee of $132,500 in the quarter-ended June 30, 2004 to CPA DirectedInvestments, a stockholder of ours.

 
**Note6-Subsequent Events**
 

Weentered into a consulting agreement with Investsource, Inc. on July 9, 2004. Theinitial fee was $7,500.

 

Weentered into a financial advisory agreement with Energy Capital Solutions onJuly 13, 2004. The initial fee paid was $15,000 with additional fees owedpending the receipt of equity capital.

 

OnJuly 26, 2004 we acquired oil properties leases consisting of 640 acres with 25well heads located in Franklin County, Kansas from RWJ Oil LC. In addition weacquired related equipment.

 

OnJuly 23, 2004, we formed Petrol Oil, II LLC and contributed certain assetsacquired in the RWJ acquisition, including producing oil wells and other assetsassociated with the wells, in exchange for a 20% membership interest in the LLC.Outside investors provided $350,000 in cash for the remaining 80% membershipinterest.

 

 

 
** **
FORWARD-LOOKINGSTATEMENTS

 

       This document contains "forward-looking statements" within the meaningof the Private Securities Litigation Reform Act of 1995. All statements otherthan statements of historical fact are "forward-looking statements"for purposes of federal and state securities laws, including, but not limitedto, any projections of earnings, revenue or other financial items; anystatements of the plans, strategies and objections of management for futureoperations; any statements concerning proposed new services or developments; anystatements regarding future economic conditions or performance; any statementsor belief; and any statements of assumptions underlying any of the foregoing.

 

       Forward-looking statements may include the words "may,""could," "will," "estimate," "intend,""continue," "believe," "expect" or"anticipate" or other similar words. These forward-looking statementspresent our estimates and assumptions only as of the date of this report. Exceptfor our ongoing securities laws, we do not intend, and undertake no obligation,to update any forward-looking statement.

 

       Although we believe that the expectations reflected in any of ourforward-looking statements are reasonable, actual results could differmaterially from those projected or assumed in any or our forward-lookingstatements. Our future financial condition and results of operations, as well asany forward-looking statements, are subject to change and inherent risks anduncertainties. The factors impacting these risks and uncertainties include, butare not limited to:
-  increased    competitive pressures from existing competitors and new entrants;increases    in interest rates or our cost of borrowing or a default under any material    debt agreements;deterioration    in general or regional economic conditions;adverse    state or federal legislation or regulation that increases the costs of    compliance, or adverse findings by a regulator with respect to existing    operations;loss    of customers or sales weakness;inability    to achieve future sales levels or other operating results;the    unavailability of funds for capital expenditures; operational    inefficiencies in distribution or other systems; andvolatility    in the oil and gas markets.
       For a detailed description of these and other factors that could cause actualresults to differ materially from those expressed in any forward-lookingstatement, please see "Factors That May Affect Our Plan of Operation"in this document and "Material Risks" in our Annual Report on Form10-KSB for the year ended December 31, 2003.
** 

Item2. Plan of Operation.**
 
**Overview**
 

       Petrol Oil and Gas, Inc., formerly named Euro Technology Outfitters, wasincorporated in Nevada on March 3, 2000. We are an oil and gas exploration anddevelopment company. Our primary business objective is to produce economicquantities of natural gas from buried coal seams, denoted as CBM and other gasbearing formations, as well as the production of oil. Our 

 

 

 

 

longterm corporate strategy has been to consolidate a strong lease position in CBMthat contains quality gas reserves, position our leases near interstate pipelinesystems that would provide a ready sales market for our gas and ultimatelyproduce and develop these valuable resources.

 

       We have just begun to generate revenues post quarter end from one of ourexploratory wells in Woodson County Kansas. This well was drilled to assess theCBM potential in this southern most area of our Coal Creek project. Pleased withthe CBM test results, we subsequently converted the well to an oil producer.Nevertheless there is a substantial going concern issue as to whether we willever be able to commercialize our oil and natural gas production and generatesufficient, if any, revenues to satisfy our working capital requirements. Sinceinception, we have been dependent on the sale of our equity securities and loansfrom affiliates and other outside parties to satisfy our working capitalrequirements. We continue to have a working capital deficiency that raisessubstantial concern regarding our ability to continue as a going concern.

 
**Planof Operation**
 

       During the next twelve months we plan to continue to focus our efforts onbeginning the sustained development and production of our CBM reserves on ourexisting properties, raising additional capital to facilitate that developmentand furthering our business plan. With the signing of a gas sales contract witha local gas gathering system, Big Creek Field Services LLC, we are now able tobegin the continuous dewatering of some of our exploratory wells in the CoalCreek project and begin selling the produced gas.

 

       We intend to fund portions of our field operations and development programthrough capital raising and from revenues obtained from sales of our CBM gas andoil production, if any. To accelerate the development program we plan to take onJoint Venture (JV) or Working Interest (WI) partners that will contribute to thecapital costs of drilling and completion and then share in revenues derived fromproduction. This economic strategy may allow us to utilize our own financialassets toward the growth of our leased acreage holdings, pursue the acquisitionof strategic oil and gas producing properties or companies and generally expandour existing operations.

 

       Because of our limited operating history we have yet to generate any significantrevenues from the sale of oil or natural gas. Our activities have been limitedto the negotiation of WI agreements, mineral lease acquisition and preliminaryanalysis of reserves and production capabilities from our exploratory testwells. Consequently, we have incurred the expenses of start-up.

 

       Our future financial results will depend primarily on: (i) the ability tocontinue to source and screen potential projects; (ii) the ability to discovercommercial quantities of natural gas and oil; (iii) the market price for oil andgas; and (iv) the ability to fully implement our exploration and developmentprogram, which is dependent on the availability of capital resources. There canbe no assurance that we will be successful in any of these respects, that theprices of oil and gas prevailing at the time of production will be at a levelallowing for profitable production, or that we will be able to obtain additionalfunding to increase our currently limited capital resources.

 

 

 

 

       On July 26, 2004 we acquired oil properties leases consisting of 640 acres with25 well heads located in Franklin County, Kansas from RWJ Oil LC. In addition weacquired related equipment.

 
***Satisfactionof our cash obligation for the next 12 months.***
 

       A critical component of our operating plan impacting our continued existence isthe ability to obtain additional capital through additional equity and/or debtfinancing and JV or WI partnerships. We do not anticipate enough positiveinternal operating cash flow until such time as we can generate substantialrevenues, which may take the next few years to fully realize. In the event wecannot obtain the necessary capital to pursue our strategic plan, we may have tocease or significantly curtail our operations. This would materially impact ourability to continue operations.

 

       Through our registered offering (declared effective by the SEC on July 29, 2003)we successfully raised approximately $2,350,473. As of June 30, 2004, all of thenet proceeds were used.

 

       Since inception, we have financed cash flow requirements through debt financingand issuance of common stock for cash and services. As we expand operationalactivities, we may continue to experience net negative cash flows fromoperations, pending receipt of sales or development fees, and will be requiredto obtain additional financing to fund operations through common stock offeringsand debt borrowings to the extent necessary to provide working capital.

 

       Over the next twelve months we believe that existing capital and anticipatedfunds from operations will not be sufficient to sustain operations and plannedexpansion. Consequently, we will be required to seek additional capital in thefuture to fund growth and expansion through additional equity or debt financingor credit facilities. On July 13, 2004, we entered into a letter agreement withEnergy Capital Solutions, LLC, wherein they agreed to assist us with respect toa private placement of our equity securities. No assurance can be made that suchfinancing would be available, and if available it may take either the form ofdebt or equity. In either case, the financing could have a negative impact onour financial condition and our Stockholders.

 

       On May 5, 2004, we entered into a Secured Promissory Note with CPA DirectedInvestments ("CPA"), pursuant to a loan of $250,000, which CPAprovided to us. We promised to pay CPA the $250,000 with interest at the rate of10% per annum. The term of the loan shall be 120 days from the date the fullloan amount is transferred to us. We pledged 100,000 shares of our common stockas collateral for the loan. CPA will keep 50,000 shares as a loan fee and returnthe additional 50,000 shares to us when we repay the obligation.

 

       We anticipate incurring operating losses over the next twelve months. Our lackof operating history makes predictions of future operating results difficult toascertain. Our prospects must be considered in light of the risks, expenses anddifficulties frequently encountered by companies in their early stage ofdevelopment, particularly companies in the oil and gas exploration industry.Such risks include, but are not limited to, an evolving and unpredictablebusiness model and the management of growth. To address these risks we must,among other things, implement and successfully execute our business andmarketing strategy, continue to develop and upgrade technology and products,respond to competitive developments, and attract, retain and motivate qualifiedpersonnel. There can be no assurance that we will be successful in addressingsuch risks, and the failure to do so can have a material adverse effect on ourbusiness prospects, financial condition and results of operations.

 

 

 

 

       Under our current plan of operation, we are required to make certain leasepayments to maintain our rights to develop and drill for oil and gas. Theselease payments are material obligations to us and our lease holdings are ourbiggest asset.

 

       As of June 30, 2004, we had assets of $2,907,321, and $524,786 in liabilities(total current liabilities of $504,597). Resulting in a stockholder's equity of$2,382,536.

 
**GoingConcern

 **
       The financial statements included in this filing have been prepared inconformity with generally accepted accounting principles that contemplate thecontinuance of the Company as a going concern. The Company's cash position maybe inadequate to pay all of the costs associated with testing, production andexploration activities. Management intends to use borrowings and security salesto mitigate the effects of its cash position, however no assurance can be giventhat debt or equity financing, if and when required will be available. Thefinancial statements do not include any adjustments relating to therecoverability and classification of recorded assets and classification ofliabilities that might be necessary should the Company be unable to continueexistence.

 
***Summaryof product and research and development that we will perform for the term of ourplan.***
 
**FieldDevelopment*** *
       Our original plan of operation for field development started with identifyingthe most promising and cost-effective drill sites on our current leased acres,drilling and testing wells to prove reserves, completing the more promising testwells, extracting the oil, gas and other hydrocarbons that we find, anddelivering them to market. Although we believe that we have leased enough landto move forward with our field development, we will have to obtain additionalfinancing before we can fully implement this next phase of our operations whichis large field scale development.

 

       During our two year exploration and development phase of our plan of operation,we have drilled and tested a total of 18 CBM wells on selected leases in ourKansas and Missouri projects. These drilling and testing efforts provide ourgeologists and engineers with data that support the quantitative determinationas to whether there are commercially producible hydrocarbons present, such asoil, CBM or other types of natural gas. Twelve of these exploratory/test wellsare contained within our Coal Creek project in Coffey county, Kansas. Most arein proximity to an existing interstate gas pipeline and one is already includedin our recent gas sales contract with Big Creek Field Services, LLC. The totaldrilling depth for our Kansas project wells is approximately 1700 ft. Oneadditional exploratory well, located in Woodson county Kansas, was converted toan oil producer following the acquisition of our CBM test data and subsequent toquarter end began producing modest revenues to the company.

 

 

 

 

       The remaining five exploratory/test wells were drilled on our Missouri Projectin Cass County Missouri. Again most were located in close proximity to aninterstate gas pipeline system. Since the Cherokee basin dips to the west theCBM formations in Missouri are considerably shallower than in Kansas, with totaldepths being about 700 ft.

 

       Field exploration and development operations began in August 2002, with thedrilling and logging of three exploratory/test wells. Each exploratory/test wellis located on a separate mineral lease in the southwest portion of CoffeyCounty. These drill sites were selected based on a variety of factors, includinginformation gathered from historic records and drill logs (depth, and thicknessof coal seams and the results of electric gamma ray readings), proximity toexisting interstate distribution pipelines, ease of access for drillingequipment, the presence of oil and natural gas in the immediate vicinity, andconsultations with our geologist and driller. Since these are considered to beexploratory or test wells they have only been partially completed in order toallow us to investigate the production capacity of selected coal intervals, andto obtain important technical information related to stimulation activities thatare almost always required to make CBM wells commercially productive. Thus we donot presently have any estimates of oil and gas reserves on these properties.Consequently we have not reported our reserve estimates to any state or federalauthority.

 

       In the field development stages of our plan each new well will be drilled andtested individually. If commercially producible amounts of gas are present, thewell will be fully completed and a local distribution pipeline installed.Completed wells that are producing and connected to distribution pipelines willbegin generating revenues as soon as they begin pumping although these revenuesmay be realized on a quarterly basis.

 

       Once we have identified a proposed drilling site, we as a licensed operator inthe State of Kansas and Missouri, will be engaged in all aspects of well siteoperations. As the operator we will be responsible for permitting the well,which will include obtaining permission from the Kansas Oil and Gas commissionor Missouri relative to spacing requirements and any other state and federalenvironmental clearances required at the time that the permitting processcommences. Additionally, we will formulate and deliver to all interest owners anoperating agreement establishing each participant's rights and obligations inthat particular well based on the location of the well and the ownership. Inaddition to the permitting process, we as the operator will be responsible forhiring the driller, geologist and land men to make final decisions relative tothe zones to be targeted, confirming that we have good title to each leasedparcel covered by the spacing permit and to actually drill the well to thetarget zones. Should the well be successful, we will be responsible forcompleting the well and connecting it to the most appropriate transmissionfacility for the hydrocarbons produced.

 

       As the operator we will be the caretaker of the well once production hascommenced. We have no formal experience in well operations and will have to hireor retain professionals to assist us in our efforts. As the operator, we will beresponsible for paying bills related to the well, billing working interestowners for their proportionate expenses in drilling and completing the well, andselling the production from the well. Again, we have no experience in operatingan oil or gas production company, therefore, we will be forced to hireexperienced operation staff, when needed. Once the production has been sold, weanticipate that the purchaser thereof will carry out its own research withrespect to ownership of that production and will send out a division order toconfirm the nature and amount of each interest owned by each interest owner.Once a division order has been established and confirmed by the interest owners,the production purchaser will issue the checks to each interest owner inaccordance with its appropriate interest. From that point forward, we asoperator will be responsible for maintaining the well and the wellhead siteduring the entire term of the production or until such time as we have beenreplaced or the site appropriately abandoned. We anticipate hiring professionalsto assist us in our operations until such time as our management has sufficientknowledge and operations ability.

 

 

 

 

       We had a one-year consulting agreement with Mr. William Stoeckinger, a CertifiedPetroleum Geologist, from Bartlesville, Oklahoma. Mr. Stoeckinger providedgeological services both in the assessment process and in the developmentprogram. On January 31, 2004, the term of the agreement expired, however Mr.Stoeckinger continues to provide geologic consulting services on an as neededbasis. To date, Mr. Stoeckinger has reported good gas shows in a number of thecoal seams contained in the Cherokee Group, the primary source of CBM productionin the area.

 

       On January 15, 2004, we completed the acquisition of certain oil and gas mineralleases from CBM Energy Inc. in and around Franklin, Coffey, Woodson, Lyon andGreenwood Counties, Kansas, amounting to approximately 36,000 acres in exchangefor 765,000 shares of our unregistered restricted common stock.

 

       On January 15, 2004, we executed an agreement with John Haas, Mark Haas and W.B.Mitchell, wherein they agreed to grant us access to 10,000 acres of leasedmineral rights. Pursuant to the agreement we received access to the acreage forthe purpose of evaluating and exploring for CBM gas production.

 

       Kansas Geologic Society (KGS) has joined us in our scientific effort designed toassess the gas reserves from our CBM exploratory/test wells in eastern Kansas.KGS took samples from coal beds from our wells in Coffey County, Kansas. Theirpreliminary laboratory test results yielded similar gas content values to thoseobtained by our geologist, Mr. William Stoeckinger, that were derived fromsampling of our other exploratory/test wells. We view these independent gascontent values quite favorably since they indicate quantitative similarities tothe CBM producing coal beds found in Woodson and other counties to the south.Woodson county being adjacent to Coffey county.

 

       Based on our first series of exploratory/test wells we anticipate that each wellin our targeted area will cost approximately $30,000 to locate, drill and test,an additional $80,000 to complete, plus an additional $350 per month per well topay for electricity, pulling and repairs, pumping and other miscellaneouscharges. In support of these operations we have working agreements with localthird parties to monitor and maintain our wells and perform drilling andwork-over activities.

 

       If any of our wells prove to hold commercially producible gas, we will continueto add wells to our gas sales agreement with Big Creek Field Services or installour own distribution infrastructure to transport our gas from the wellhead toone of the major distribution pipelines. We have identified several majorinterstate distribution pipelines that operate within and pass through thecounties in which we have lease holdings. These include pipelines owned andoperated by Southern Star, CMS Energy, Enbridge and Kinder Morgan. We haveinitiated contact with two of these companies to ascertain the specificlocations of their pipelines, their requirements to purchase gas from us(including volume of gas and quality of gas), and the costs to connect to theirpipelines. Traditionally, the major distribution of gas in the United Stateshave purchased production from anyone who can get sufficient quantities ofquality gas to their distribution pipeline. Because some of these companies havepurchased coal-bed methane from producing wells in the southern part of Kansas,we believe that if the gas produced from wells drilled in our targeted areameets their criteria in both quantity and quality, they will purchase our gas atmarket prices. To date, we have not entered into any purchase agreements norhave we received assurances from anyone that they will enter into suchagreements with us in the future.

 

 

 

 

Presently,we cannot accurately predict the costs of transporting our gas products to theseexisting interstate pipelines. The cost of installing a distributioninfrastructure or local gathering system will vary depending upon the distancethe gas must travel from its wellhead to the compressor station and highpressure pipeline tap, and whether the gas must be treated to meet thepurchasing company's quality standards. However, based on the close proximity ofseveral major distribution pipelines to our leased properties, plus our intentto drill as close to these pipelines as practicable, we anticipate that thetotal cost of installing a distribution infrastructure for a group of about 50producing wells will be approximately $6,500 each plus a one-time expense of$5,000 per well to tap into the high pressure interstate pipeline and support acompressor and monitoring system.

 

       The prices obtained for oil and gas are dependent on numerous factors beyond ourcontrol, including domestic and foreign production rates of oil and gas, marketdemand and the effect of governmental regulations and incentives. We do not haveany delivery commitments with respect to any oil or gas produced from anyproperties that we acquire. However, due to the U.S. government's recent pushtoward increased domestic production of energy sources, and the high demand fornatural gas, we do not anticipate any difficulties in selling any oil and gas weproduce, once it has been delivered to a distribution facility.

 

       The success of this phase of our plan of operation is dependent upon our abilityto obtain additional capital to drill exploratory and test wells and also uponour successfully finding commercially producible amounts of coal-bed methane gasor other hydrocarbons in the wells that we drill. We cannot assure you that wewill obtain the necessary capital or that we will find commercially producibleamounts of gas if our drilling operations commence.

 

       The timing of most of our capital expenditures is discretionary. Currently thereare no material long-term commitments associated with our capital expenditureplans. Consequently, we have a significant degree of flexibility to adjust thelevel of such expenditures as circumstances warrant. The level of our capitalexpenditures will vary in future periods depending on energy market conditionsand other related economic factors.

 
***Expectedpurchase or sale of plant and significant equipment.***
 

       We do not anticipate the purchase or sale of any plant or significant equipment,as such items are not required by us at this time or anticipated to be needed inthe next twelve months.

 
***Significantchanges in the number of employees.***
 

       We currently have two full time employees and two part time employees. Asdrilling production activities commence, we intend to hire additional technical,operational and administrative personnel as appropriate. We do not expect asignificant change in the number of full time employees over the next 12 months.We intend to use the services of independent consultants and contractors toperform various professional services, particularly in the area of landservices, drilling, water hauling, pipeline construction, well design, well-sitemonitoring and surveillance, permitting and environmental assessment. We believethat this use of third-party service providers may enhance our ability tocontain general and administrative expenses.

 

 

 

 
**Off-BalanceSheet Arrangements**
 

       We do not have any off-balance sheet arrangements that have or are reasonablylikely to have a current or future effect on our financial condition, changes infinancial condition, revenues or expenses, results or operations, liquidity,capital expenditures or capital resources that is material to investors.

 
**FACTORSTHAT MAY AFFECT OUR PLAN OR OPERATION**
 
***Weare a development stage company, with a minimal operating history, which raisessubstantial doubt as to our ability to successfully develop profitable businessoperations.

 ***
       We have a limited operating history. Our prospects must be considered in lightof the risks, expenses and difficulties frequently encountered in establishing abusiness in the oil and natural gas industries. As a result of our recentacquisition of mineral leases we have yet to generate revenues from operationsand have been focused on organizational, start-up, market analysis, exploratorydrilling and fund raising activities. There is nothing at this time on which tobase an assumption that our business operations will prove to be successful orthat we will ever be able to operate profitably. Our future operating resultswill depend on many factors, including:
-  our    ability to raise adequate working capital;success    of our development and exploration;demand    for natural gas and oil;the    level of our competition;our    ability to attract and maintain key management and employees; andour    ability to efficiently explore, develop and produce sufficient quantities of    marketable natural gas or oil in a highly competitive and speculative    environment while maintaining quality and controlling costs.
       To achieve profitable operations, we must, alone or with others, successfullyexecute on the factors stated above, along with continually developing ways toenhance our production efforts, when commenced. Despite our best efforts, we maynot be successful in our development efforts or obtain required regulatoryapprovals. There is a possibility that some, or all, of our wells may neverproduce natural gas or oil. Since inception, we have incurred a net loss of$(4,480,398) and at June 30, 2004 our assets exceeded our liabilities by$2,382,536.

 
***Atthis stage of our business operations, even with our good faith efforts,potential investors have a high probability of losing their investment.***
 

       Because the nature of our business is expected to change as a result of shiftsin the market price of oil and natural gas, competition, and the development ofnew and improved technology, management forecasts are not necessarily indicativeof future operations and should not be relied upon as an indication of futureperformance.

 

       While Management believes its estimates of projected occurrences and events arewithin the timetable of its business plan, our actual results may differsubstantially from those that are currently anticipated.

 

 

 

 
***Wewill need additional capital in the future to finance our planned growth, whichwe may not be able to raise or it may only be available on terms unfavorable tous or our stockholders, which may result in our inability to fund our workingcapital requirements and harm our operational results.***
 

       We have and expect to continue to have substantial capital expenditure andworking capital needs. We believe that current cash on hand and the othersources of liquidity are only sufficient enough to fund our operations throughDecember 2004. After that time we will need to raise additional funds to fundour operations, to fund our anticipated reserve replacement needs and implementour growth strategy, or to respond to competitive pressures and/or perceivedopportunities, such as investment, acquisition, exploration and developmentactivities.

 

       If low natural gas and oil prices, operating difficulties or other factors, manyof which are beyond our control, cause our revenues or cash flows fromoperations, if any, to decrease, we may be limited in our ability to spend thecapital necessary to complete our development, exploitation and explorationprograms. If our resources or cash flows do not rapidly commence, we willrequire additional financing, in addition to anticipated cash generated from ouroperations, to fund our planned growth. Additional financing might not beavailable on terms favorable to us, or at all. If adequate funds were notavailable or were not available on acceptable terms, our ability to fund ouroperations, take advantage of unanticipated opportunities, develop or enhanceour business or otherwise respond to competitive pressures would besignificantly limited. In such a capital restricted situation, we may curtailour acquisition, drilling, development, and exploration activities or be forcedto sell some of our assets on an untimely or unfavorable basis.

 

       If we raise additional funds through the issuance of equity or convertible debtsecurities, the percentage ownership of our stockholders would be reduced, andthese newly issued securities might have rights, preferences or privilegessenior to those of existing stockholders.

 
***Becauseour common stock is deemed a low-priced "Penny" stock, an investmentin our common stock should be considered high risk and subject to marketabilityrestrictions.

 ***
       Since our common stock is a penny stock, as defined in Rule 3a51-1 under theSecurities Exchange Act, it will be more difficult for investors to liquidatetheir investment even if and when a market develops for the common stock. Untilthe trading price of the common stock rises above $5.00 per share, if ever,trading in the common stock is subject to the penny stock rules of theSecurities Exchange Act specified in rules 15g-1 through 15g-10. Those rulesrequire broker-dealers, before effecting transactions in any penny stock, to:
-  Deliver    to the customer, and obtain a written receipt for, a disclosure document;Disclose    certain price information about the stock;Disclose    the amount of compensation received by the broker-dealer or any associated    person of the broker-dealer;Send    monthly statements to customers with market and price information about the    penny stock; andIn    some circumstances, approve the purchaser's account under certain standards    and deliver written statements to the customer with information specified in    the rules.
       Consequently, the penny stock rules may restrict the ability or willingness ofbroker-dealers to sell the common stock and may affect the ability of holders tosell their common stock in the secondary market and the price at which suchholders can sell any such securities. These additional procedures could alsolimit our ability to raise additional capital in the future.

 

 

 
* 
**Wemay incur substantial write-downs of the carrying value of our gas and oilproperties, which would adversely impact our earnings.***
 

       We intend to periodically review the carrying value of our gas and oilproperties under the full cost accounting rules of the Securities and ExchangeCommission. Under these rules, capitalized costs of proved gas and oilproperties may not exceed the present value of estimated future net revenuesfrom proved reserves, discounted at an annual rate of 10%. Application of this"ceiling" test requires pricing future revenue at the un-escalatedprices in effect as of the end of each fiscal quarter and requires a write-downfor accounting purposes if the ceiling is exceeded, even if prices weredepressed for only a short period of time. We may be required to write down thecarrying value of our gas and oil properties when natural gas and oil prices aredepressed or unusually volatile, which would result in a charge against ourearnings. Once incurred, a write-down of the carrying value of our natural gasand oil properties is not reversible at a later date.

 
***Competitionin our industry is intense. We are very small and have an extremely limitedoperating history as compared to the vast majority of our competitors, and wemay not be able to compete effectively.***
 

       We intend to compete with major and independent natural gas and oil companiesfor property acquisitions. We will also compete for the equipment and laborrequired to operate and to develop natural gas and oil properties. The majorityof our anticipated competitors have substantially greater financial and otherresources than we do. In addition, larger competitors may be able to absorb theburden of any changes in federal, state and local laws and regulations moreeasily than we can, which would adversely affect our competitive position. Thesecompetitors may be able to pay more for natural gas and oil properties and maybe able to define, evaluate, bid for and acquire a greater number of propertiesthan we can. Our ability to acquire additional properties and develop new andexisting properties in the future will depend on our ability to conductoperations, to evaluate and select suitable properties and to consummatetransactions in this highly competitive environment. In addition, some of ourcompetitors have been operating in our core areas for a much longer time than wehave and have demonstrated the ability to operate through industry cycles.

 
***Weare highly dependent on Paul Branagan, our CEO, president and chairman. The lossof Mr. Branagan, whose knowledge, leadership and technical expertise upon whichwe rely, would harm our ability to execute our business plan.

 

       Our success depends heavily upon the continued contributions of Paul Branagan,whose knowledge, leadership and technical expertise would be difficult toreplace, and on our ability to retain and attract experienced engineers,geoscientists and other technical and professional staff. We have entered intoan employment agreement with Mr. Branagan; however, maintain no key personinsurance on Mr. Branagan. In addition, Mr. Branagan is an officer and directorof other public companies, which may impact the amount of his time spent on ourbusiness matters. If we were to lose his services, our ability to execute ourbusiness plan would be harmed and we may be forced to cease operations untilsuch time as we could hire suitable replacement for Mr. Branagan.

 

 

 

 
***Ourmanagement, officers and directors have no previous oil and gas experience,therefore investors should not rely on our management, officers or directors asbeing experts in the area of oil and gas exploration and production, which isour business focus.***
 

       Our management, officers and directors have no previous oil and gas experience.All business decisions made by them regarding oil and gas exploration andproduction will be in reliance on the advice of others due to this lack ofexperience. If reliable advice is not available, it is unlikely our businesswill succeed.
*** 

Gasand Oil prices are volatile. This volatility may occur in the future, causingmaterial adverse effects to our business.***
 

       Our future revenues, profitability, future growth and the carrying value of ourproperties is anticipated to depend substantially on the prices we may realizefor our natural gas and oil production. Our realized prices may also affect theamount of cash flow available for capital expenditures and our ability to borrowand raise additional capital.

 

       Natural gas and oil prices are subject to wide fluctuations in response torelatively minor changes in or perceptions regarding supply and demand.Historically, the markets for natural gas and oil have been volatile, and theyare likely to continue to be volatile in the future. For example, natural gasand oil prices declined significantly in late 1998 and 1999 and, for an extendedperiod of time, remained substantially below prices obtained in previous years.Among the factors that can cause this volatility are:
-  worldwide    or regional demand for energy, which is affected by economic conditions;the    domestic and foreign supply of natural gas and oil;weather    conditions;domestic    and foreign governmental regulations;political    conditions in natural gas and oil producing regions;the    ability of members of the Organization of Petroleum Exporting Countries to    agree upon and maintain oil prices and production levels; andthe    price and availability of other fuels.
       It is impossible to predict natural gas and oil price movements with certainty.Lower natural gas and oil prices may not only decrease our future revenues on aper unit basis but also may reduce the amount of natural gas and oil that we canproduce economically. A substantial or extended decline in natural gas and oilprices may materially and adversely affect our future business enough to forceus to cease our business operations. In addition, our financial condition,results of operations, liquidity and ability to finance planned capitalexpenditures will also suffer in such a price decline. Further, natural gas andoil prices do not necessarily move together.

 
***Drillingwells is speculative, often involving significant costs that may be more thanour estimates, and may not result in any addition to our production or reserves.Any material inaccuracies in drilling costs, estimates or underlying assumptionswill materially affect our business.***
 

 

 

 

       Developing and exploring for natural gas and oil involves a high degree ofoperational and financial risk, which precludes definitive statements as to thetime required and costs involved in reaching certain objectives. The budgetedcosts of drilling, completing and operating wells are often exceeded and canincrease significantly when drilling costs rise due to a tightening in thesupply of various types of oilfield equipment and related services. Drilling maybe unsuccessful for many reasons, including title problems, weather, costoverruns, equipment shortages and mechanical difficulties. Moreover, thesuccessful drilling of a natural gas or oil well does not ensure a profit oninvestment. Exploratory wells bear a much greater risk of loss than developmentwells. A variety of factors, both geological and market-related, can cause awell to become uneconomical or only marginally economic. Our initial drillingand development sites, and any potential additional sites that may be developed,require significant additional exploration and development, regulatory approvaland commitments of resources prior to commercial development. Any success thatwe may have with these wells or any future drilling operations will most likelynot be indicative of our current or future drilling success rate, particularly,because we intend to emphasize on exploratory drilling. If our actual drillingand development costs are significantly more than our estimated costs, we maynot be able to continue our business operations as proposed and would be forcedto modify our plan of operation.

 

       Development of our reserves, when and if established, may not occur as scheduledand the actual results may not be as anticipated. Drilling activity may resultin downward adjustments in reserves or higher than anticipated costs. Ourestimates will be based on various assumptions, including assumptions requiredby the Securities and Exchange Commission relating to natural gas and oilprices, drilling and operating expenses, capital expenditures, taxes andavailability of funds. The process of estimating our natural gas and oilreserves is anticipated to be extremely complex, and will require significantdecisions and assumptions in the evaluation of available geological,geophysical, engineering and economic data for each reservoir. Due to ourinexperience in the oil and gas industry and development stage operations, ourestimates may not be reliable enough to allow us to be successful in ourintended business operations. Our actual production, revenues, taxes,development expenditures and operating expenses will likely vary from thoseanticipated. These variances may be material.
*** 

Thenatural gas and oil business involves numerous uncertainties and operating risksthat can prevent us from realizing profits and can cause substantial losses.***
 

       Our development, exploitation and exploration activities may be unsuccessful formany reasons, including weather, cost overruns, equipment shortages andmechanical difficulties. Moreover, the successful drilling of a natural gas andoil well does not ensure a profit on investment. A variety of factors, bothgeological and market-related, can cause a well to become uneconomical or onlymarginally economic. In addition to their cost, unsuccessful wells can hurt ourefforts to replace reserves.

 

       The natural gas and oil business involves a variety of operating risks,including:
-  fires;explosions;blow-outs    and surface cratering;uncontrollable    flows of oil, natural gas, and formation water;natural    disasters, such as hurricanes and other adverse weather conditions;pipe,    cement, or pipeline failures;casing    collapses;embedded    oil field drilling and service tools;abnormally    pressured formations; andenvironmental    hazards, such as natural gas leaks, oil spills, pipeline ruptures and    discharges of toxic gases.
 

 

      

       If we experience any of these problems, it could affect well bores, gatheringsystems and processing facilities, which could adversely affect our ability toconduct operations. We could also incur substantial losses as a result of:
-  injury    or loss of life;severe    damage to and destruction of property, natural resources and equipment;pollution    and other environmental damage;clean-up    responsibilities;regulatory    investigation and penalties;suspension    of our operations; andrepairs    to resume operations.
       Because we intend to use third-party drilling contractors to drill our wells, wemay not realize the full benefit of worker compensation laws in dealing withtheir employees. Our insurance does not protect us against all operationalrisks. We do not carry business interruption insurance at levels that wouldprovide enough funds for us to continue operating without access to other funds.For some risks, we may not obtain insurance if we believe the cost of availableinsurance is excessive relative to the risks presented. In addition, pollutionand environmental risks generally are not fully insurable. If a significantaccident or other event occurs and is not fully covered by insurance, it couldimpact our operations enough to force us to cease our operations.

 
***Theunavailability or high cost of drilling rigs, equipment, supplies, personnel andother services could adversely affect our ability to execute on a timely basisour development, exploitation and exploration plans within our budget.***
 

       Shortages or an increase in cost of drilling rigs, equipment, supplies orpersonnel could delay or interrupt our operations, which could impact ourfinancial condition and results of operations. Drilling activity in thegeographic areas in which we conduct drilling activities may increase, whichwould lead to increases in associated costs, including those related to drillingrigs, equipment, supplies and personnel and the services and products of othervendors to the industry. Increased drilling activity in these areas may alsodecrease the availability of rigs. We do not have any contracts with providersof drilling rigs and we cannot assure you that drilling rigs will be readilyavailable when we need them. Drilling and other costs may increase further andnecessary equipment and services may not be available to us at economicalprices.

 
***Weare subject to complex laws and regulations, including environmentalregulations, which can adversely affect the cost, manner or feasibility of doingbusiness.***
 

       Development, production and sale of natural gas and oil in the United States aresubject to extensive laws and regulations, including environmental laws andregulations. We may be required to make large expenditures to comply withenvironmental and other governmental regulations. Matters subject to regulationinclude:

 

 

 
-  location    and density of wells;the    handling of drilling fluids and obtaining discharge permits for drilling    operations;accounting    for and payment of royalties on production from state, federal and Indian    lands;bonds    for ownership, development and production of natural gas and oil properties;transportation    of natural gas and oil by pipelines;operation    of wells and reports concerning operations; andtaxation.
       Under these laws and regulations, we could be liable for personal injuries,property damage, oil spills, discharge of hazardous materials, remediation andclean-up costs and other environmental damages. Failure to comply with theselaws and regulations also may result in the suspension or termination of ouroperations and subject us to administrative, civil and criminal penalties.Moreover, these laws and regulations could change in ways that substantiallyincrease our costs. Accordingly, any of these liabilities, penalties,suspensions, terminations or regulatory changes could materially adverselyaffect our financial condition and results of operations enough to possiblyforce us to cease our business operations.
** 
*Ouroil and gas operations may expose us to environmental liabilities.***
 

       Any leakage of crude oil and/or gas from the subsurface portions of our wells,our gathering system or our storage facilities could cause degradation of freshgroundwater resources, as well as surface damage, potentially resulting insuspension of operation of the wells, fines and penalties from governmentalagencies, expenditures for remediation of the affected resource, and liabilitiesto third parties for property damages and personal injuries. In addition, anysale of residual crude oil collected as part of the drilling and recoveryprocess could impose liability on us if the entity to which the oil wastransferred fails to manage the material in accordance with applicableenvironmental health and safety laws.
** 
*Ourlease ownership may be diluted due to financing strategies we may employ in thefuture due to our lack of capital.*
 **
       To accelerate our development efforts we plan to take on working interestpartners that will contribute to the costs of drilling and completion and thenshare in revenues derived from production. In addition, we may in the future,due to a lack of capital or other strategic reasons, establish joint venturepartnerships or farm out all or part of our development efforts. These economicstrategies may have a dilutive effect on our lease ownership and will more thanlikely reduce our operating revenues.
** 

Item3. Controls and Procedures.

 **
       We are a development stage company with no revenues and during the periodcovered by this quarterly report, our board of directors had responsibility forour internal controls and procedures over our financial reporting.

 

 

 

 

       We have implemented and maintain disclosure controls and procedures whichconsist of: the control environment, risk assessment, control activities,information and communication and monitoring. Our scope of internal controltherefore extends to policies, plans procedures, processes, systems, activities,initiatives, and endeavors required of a company with our limited transactions,expenses, and operations. These controls and procedures are designed to ensurethat the information required to be disclosed in our Exchange Act reports isrecorded, processed, summarized and reported within the time periods specifiedin the SEC's rules.

 

       There have been no significant changes (including corrective actions with regardto significant deficiencies or material weaknesses) in our internal controls orin other factors that could significantly affect the controls subsequent to thedate of the evaluation referenced below.

 

       Within 90 days prior to the date of this report, we carried out an evaluation,under the supervision of Paul Branagan, our President, of the effectiveness ofthe design and operation of the Company's disclosure controls and procedures.Based on the foregoing, Mr. Branagan concluded that, given the Company's limitedoperations, our disclosure controls and procedures were effective.

 
**PARTII--OTHER INFORMATION

Item 1.Legal Proceedings.**
 

       None.

 
**Item 2.Changes in Securities.**
 

       In April 2004, we filed a post-effective amendment to our SB-2 RegistrationStatement to deregister the 2,649,527 shares which remained unsold at thetermination of the offering.

 
**Useof Proceeds from Registered Securities**
 

       Our Registration Statement on Form SB-2 (File No. 333-102643), related to ourinitial public offering, was declared effective by the SEC on July 29, 2003. Atotal of 5,000,000 shares maximum and 500,000 shares minimum of Common Stockwere registered with the SEC with an aggregate offering price of $5,000,000maximum and $500,000 minimum. All of these shares were registered on our behalf.The offering commenced in August and terminated in December 2003. We sold2,350,473 shares of common stock, which resulted in $2,350,473 of proceeds tothe Company with no commissions paid on funds raised.

 

       We incurred offering expenses of approximately $64,375 in connection with theoffering. Thus the net offering proceeds to us (after deducting offeringexpenses) were approximately $2,286,098. No offering expenses were paid directlyor indirectly to any of our directors or officers (or their associates), personsowning ten percent (10%) or more of any class of our equity securities or to anyother affiliates.

 

       As of December 31, 2003, approximately $1,227,000 of the net proceeds had beenused, leaving approximately $1,059,000 of the proceeds for future use. As ofJune 30, 2004, the remaining net proceeds had been used. During the six monthperiod ended June 30, 2004, approximately $1,412 was used to repay short-termdebt, approximately $157,978 was used as general working capital andapproximately $1,067,610 was used for our drilling and development program.

 

 

 

 

       Except for prior payments to David Polay, our previous CFO, and salaries paid toofficers as part of our working capital, no offering proceeds were paid directlyor indirectly to any of our directors or officers (or their associates), personsowning ten percent (10%) or more of any class of our equity securities or to anyother affiliates.

 

StockIssuances

 

       On March 19, 2004, Larry Kehoe exercised 325,000 options at a price of $.50 pershare, Cody Felton exercised 325,000 options at a price of $.50 per share andRussell Frierson exercised 50,000 options at a price of $.50 per share. Theoptions were exercised with a note due to the Company for the strike price. 50%of the stock will be issued and 50% of the stock will issued and held ascollateral for the notes. Subsequent to the quarter end Kehoe paid his note tothe Company in full and his collateral shares were released to him. The Companyforgave the interest due on the note. Subsequent to the quarter end Felton paid$65,000 off the principal of his note to the Company and 50,000 shares werereleased to him. The Company holds 112,500 shares as collateral until thebalance of the note is paid in full. All of the shares were issued as of June30, 2004 without restriction as set forth in the S-8 Registration Statementfiled with the SEC on April 1, 2004..

 

       On April 13, 2004, Goran Blagojevic exercised 250,000 warrants at a price of$0.75 per share. As of June 30, 2004 the shares have not been issued. We willissue the 250,000 shares without restriction as setforth in the S-8 registrationstatement filed with the SEC on April 1, 2004. The shares were not issued as ofJune 30, 2004.

 

       On May 3, 2004, we issued 100,000 shares of our common stock to CPA DirectedInvestments pursuant to a Secured Promissory Note Agreement dated May 5, 2004.CPA will return 50,000 shares for cancellation at such time as the loan andinterest are paid in full. We believe that the issuance of the shares was exemptfrom the registration and prospectus delivery requirements of the Securities Actof 1933 by virtue of Section 4(2).

 

       On June 17, 2004, we issued 120,000 shares of our common stock to XXR ConsultingInc. pursuant to a consulting agreement we executed on June 4, 2004. We believethat the issuance of the shares was exempt from the registration and prospectusdelivery requirements of the Securities Act of 1933 by virtue of Section 4(2).

 
**Item3. Defaults Upon Senior Securities.**
 

       None

 
**Item 4.Submission of Matters to a Vote of Security Holders.**
 

       None

 
**Item 5.Other Information.**
 

NewCorporate Office

 

       On April 2, 2004, we executed a thirty-nine (39) month lease for new corporateoffice space located at 3161 East Warm Springs Road, Suite 300, Las Vegas,Nevada 89120. The space consists of approximately 1,864 square feet, whichhouses administrative and corporate offices. The monthly rental for the space isnot to exceed $3,450 per month commencing April 15, 2004 and ending June 30,2007 with the first three months free.

 

 

 

 

Addendum#2 to Employment Agreement of Paul Branagan

 

       On April 20, 2004, we amended Paul Branagan's Employment Agreement to amend theroyalty provision as follows:

 

1.Mr. Branagan shall receive a 1/100 Over Riding Royalty on production from anywells completed on Employer leased acreage.

2.The term of the payment of the Over Riding Royalty shall be in perpetuity.

 

       A copy of the Addendum to the Employment Agreement was attached as an exhibit toForm 10-QSB filed on May 17, 2004.

 

SecuredPromissory Note

 

       On May 5, 2004, we entered into a Secured Promissory Note with CPA DirectedInvestments ("CPA"), pursuant to a loan of $250,000, which CPAprovided to us. We promise to pay CPA the $250,000 with interest at the rate of10% per annum. The term of the loan shall be 120 days from the date the fullloan amount is transferred to us. To secure payment of the note we agreed toissue two certificates each in the amount of 50,000 shares (100,000 sharestotal) of our common stock to CPA. CPA will hold one of the certificates untilsuch time as the loan and interest are paid in full, at which time CPA willsurrender the certificate for cancellation. The other certificate will beprovided to CPA for making the loan.

 

Amendment1 to Business Partnership Term Sheet of John Haas, Mark Haas, and W.B. Mitchell

 

       On May 18, 2004, we amended John Haas, Mark Haas, and W.B. Mitchell's BusinessPartnership Term Sheet wherein we have access to 10,000 acres of leased mineralrights in Coffey and Woodson Counties, Kansas, to extend the term of theagreement to August 1, 2005.

 

LetterAgreement with Tom Bibiyan of Florence Equity, LLC

 

       On May 21, 2004, we executed a letter agreement with Tom Bibiyan of FlorenceEquity, LLC ("Florence"), wherein Florence agreed to provide variousinvestor relations and/or public relations services to the Company. The term ofthe agreement was for three months beginning on the first of June 2004. Weagreed to compensate Florence $50,000, with $25,000 due on June 1, 2004 and theother $25,000 due on July 1, 2004.

 

Resignationand Appointment of Officer

 

       Effective June 1, 2004, David Polay resigned as Chief Financial Officer of theCompany. Subsequently, on July 18, 2004 we executed an employment agreement withJohn C. Garrison, wherein he agrees to be the Company's Chief Financial Officer.We agreed to compensate Mr. Garrison an hourly rate of $150.00 with theexpectation that the Company will require about 40 hours of Mr. Garrison'sservices a month.

 

***       John C. Garrison***, is Chief Financial Officer of the Company. Mr.Garrison graduated from Kansas State University of Manhattan, Kansas with a B.S.in Business Administration and Accounting. Mr. Garrison is a certified publicaccountant with over twenty-five years of progressive experience in accounting,auditing and financial management. From 1990 to the present Mr. Garrison servesas the Certified Public Accountant for many companies, providing financialmanagement and accounting. From 1998 to present Mr. Garrison serves as aDirector and consultant for Quest Resource Corporation, a publicly held company.From 1994 through 1999 Mr. Garrison served as Chief Accounting Officer andDirector for Infinity, Inc., a publicly held company. From 1986 through 1990 Mr.Garrison served as Chief Financial Officer for Burnox, Inc., a multi-locationindustrial distribution company. From 1976 through 1985, Mr. Garrison served asa Certified Public Accountant, providing tax and audit staff of national andlocal accounting firms.

 

 

 

 

ConsultingAgreements

 

*       XXR Consulting, Inc.:* On June 4, 2004, we executed a Consulting Agreementwith XXR Consulting, Inc., a New York based agency that provides a variety ofcustom services for public companies seeking results-oriented investor relationsprograms. XXR will assist and advise us in identifying investor relations and/orpublic relations and/or market relations organizations to be utilized by us. Theterm of the agreement is for 6 months and commenced on the effective date of May21, 2004. We agreed to compensate XXR a total of 120,000 shares of ourrestricted common stock (issued on June 17, 2004).

 

*       ECON Investor Relations Inc.:* On June 15, 2004, we entered into a ConsultingAgreement with ECON Investor Relations Inc. ECON agreed to provide us with thefollowing services: Investor Relations, Public Relations, Corporate Strategies,Industry Research, and Customized Corporate Programs. The term of the agreementcommenced on June 15, 2004 and will continue for one year with an option torenew. We agreed to pay the consultant (based on current cash flow), a fee of$4,000 per month for the services rendered. In addition to the fees set above wewill issue (if applicable) shares of our common stock equivalent to $6,000 permonth to the consultant. The shares will be issued quarterly. As of the date ofthis filing the shares have not been issued

 
**SubsequentEvents**
 

GasPurchase and Sale Agreement

 

       On July 7, 2004, we entered into a Gas Purchase and Sale Agreement with BigCreek Field Services, LLC, a Kansas limited liability company, wherein we agreedto sell and Big Creek agreed to purchase our available supply of gas. The termof the agreement is for 10 years and shall continue year-to-year thereafter,unless terminated by either party

 

ConsultingAgreement with Investsource, Inc.

 
*       Investsource, Inc.: On July 9, 2004, we entered into a Consulting ServicesAgreement with Investsource, Inc., wherein Investsource agreed to be engaged ona non-exclusive basis to be our financial consultant and render advice,consultation, information, and services to our Directors and/or Officersregarding general financial and business matters. The term of the agreementcommenced on July 9, 2004 and continued for thirty (30) days. The agreement maybe extended upon agreement by both parties. We agreed to compensate theconsultant $7,500 for it's services (paid on July12, 2004).

 

 

 

 

LetterAgreement with Energy Capital Solutions, LLC ("ECS")

 

       On July 13, 2004, we entered into a letter agreement with ECS, wherein ECSagreed to act as our financial advisor and assist us with respect to a proposedprivate placement of our equity securities with institutional investors. Theterm of the agreement is for twelve (12) months from the date of the letter andmay be extended by mutual consent of the parties. In consideration for theservices provided by ECS, we agreed to compensate ECS a retainer fee of $15,000(paid on July 8, 2004), 7.0% of the gross proceeds raised from the PrivatePlacement, and concurrently upon completion of the offering, we will sell to ECScommon stock purchase warrants covering shares of common stock equal to 10% ofthe total equity of securities actually sold in the placement.

 

PetrolOil, II LLC

 

       On or about July 23, 2004, we received a 20% membership interest in Petrol Oil,II LLC, a limited liability company, in exchange for contributing certainproducing wells, and other assets received in the RWJ Oil acquisition to theLLC. Outside investors received the remaining 80% in exchange for a contributionof $350,000. Pursuant to the terms of the LLC operating agreement, we willmanage the production of the wells and the net revenues well be directed toPetrol Oil, II LLC for distribution.

 

PressReleases

 

       On July 20, 2004, we issued a press release to announce that we have signed amulti-year contract for the sale of Coal Bed Methane and other natural gas fromwells on our Coal Creek project in southeastern Kansas. We expect to beginselling gas to Big Creek Gas Field Services, LLC under the terms of our contractwithin 30 days of the press release.

 

       On August 2, 2004, we issued a press release to announce the appointment of JohnC. Garrison, CPA, as our new chief financial officer.

 

       Copies of the press releases are attached hereto as exhibits.

 
**Item 6.Exhibits and Reports of Form 8-K.**
 

(a)Exhibits
 

31.1*
Certification      of Paul Branagan pursuant to Section 302 of the Sarbanes-Oxley Act
31.2*
Certification      of John C. Garrison pursuant to Section 302 of the Sarbanes-Oxley Act
32.1*
Certification      of Paul Branagan pursuant to Section 906 of the Sarbanes-Oxley Act
32.2*
Certification      of John C. Garrison pursuant to Section 906 of the Sarbanes-Oxley Act
99.1*
Press      Release dated July 20, 2004 - Petrol Oil and Gas Announces Signing a      Long-Term Sales Contract for CBM and Other Natural Gas
99.2*
Press      Release dated August 2, 2004 - Appointment of Seasonal Oil and Gas CPA to      CFO Post
*Filed herewith

 

(b)Form 8-K
 

8-KReport filed on April 2, 2004, Notification of trading on the OTC:BB.

8-KReport filed on April 28, 2004, Press Release, New Corporate Office andRegulation FD Disclosure.

8-KReport filed on July 9, 2004, Press Release dated 7/07/04.

8-KReport filed on July 14, 2004, Press Release dated 7/12/04.
** 

 

 

 

SIGNATURES**
 

       Pursuant to the requirements of the Securities Exchange Act of 1934, theRegistrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 

PETROLOIL AND GAS, INC.

(Registrant)

 

By: /S/JohnC. Garrison
John C.Garrison, Chief Financial Officer

(Onbehalf of the registrant and as

principalaccounting officer)

 

Date:August 23, 2004**** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|