UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
Form 10 QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-31945
For the quarter ended June 30, 2004
POWDER RIVER BASIN GAS CORP.
(Exact name of small business issuer as specified in its charter)
Colorado
(State of Incorporation)
84-1521645
(IRS Employer Identification #)
104, 3208 8th Ave NE
Calgary, AB T2A 7V8
(403) 263-5010
(Address and telephone number of principal executive office)
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
As of June 30, 2004, 86, 108, 261 shares of common stock, $0.001 par value,
were outstanding.
Transitional Small Business Disclosure Format (check one): [X] Yes [ ] No
Powder River Basin Gas Corp.
Consolidated Balance Sheet
June 30, 2004
Unaudited
ASSETS
CURRENT ASSETS
Cash $ 29,137
Accounts receivable 49,766
Prepaid expenses 12,100
------------
Total current assets 91,003
OIL AND GAS PROPERTIES USING FULL COST ACCOUNTING (NOTE 1)
Properties not subject to amortization 1,449,278
Properties subject to amortization 961,660
Accumulated amortization (6,993)
------------
Net oil and gas properties 2,403,945
------------
Total assets $ 2,494,948
============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 17,311
Accrued expenses 58,003
Notes payable 671,400
------------
Total current liabilities 746,714
------------
Total liabilities 746,714
------------
STOCKHOLDERS' EQUITY
Common stock, par value $.001 per share; 50,000,000 shares
authorized; 87,828,689 shares issued and outstanding 87,828
Capital in excess of par value 5,393,083
Retained earnings (3,732,677)
------------
Total stockholders' equity 1,748,234
------------
Total liabilities and shareholders' equity $ 2,494,948
============
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Powder River Basin Gas Corp.
Consolidated Statement of Operations
(Unaudited)
For the three For the six
months ended months ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
----------- ------------ ------------ ------------
REVENUE
Oil and gas sales $ 49,766 $ - $ 88,829 $ -
----------- ------------ ------------ ------------
Total revenue 49,766 - 88,829 -
EXPENSES
Depletion (11,157) - 6,993 -
General and
administrative 5,886 354,256 9,458 356,462
Lease operating
costs 10,933 - 17,153 -
Legal and
professional 10,846 21,371 20,466 23,371
Travel - - 3,610 -
----------- ------------ ------------ ------------
Total expenses 16,508 375,627 57,680 379,833
----------- ------------ ------------ ------------
NET OPERATING LOSS 33,258 (375,627) 31,149 (379,833)
OTHER INCOME (EXPENSE)
Interest expense (12,000) (9,476) (24,810) (9,476)
----------- ------------ ------------ ------------
NET INCOME / (LOSS) $ 21,258 $ (385,103) $ 6,339 $ (389,309)
=========== ============ ============ ============
BASIC INCOME / (LOSS)
PER COMMON SHARE $ 0.00 $ (0.01) $ 0.00 $ (0.02)
=========== ============ ============ ============
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 86,108,261 46,387,833 86,968,475 25,237,833
=========== ============ ============ ============
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Powder River Basin Gas Corp.
Consolidated Statement of Cash Flows
(Unaudited)
For the Six Months
Ended June 30,
--------------------------
2004 2003
------------ ------------
Cash flows from operating activities
Net income $ 6,339 $ (389,309)
Adjustments to net income provided by
operating activities:
Common stock issued for retirement of
payables - (662,199)
Depletion 6,993 -
Changes in assets and liabilities:
Increase in prepaid expenses (12,100) -
Decrease (increase) in accounts receivable (49,766) -
(Decrease) increase in accounts payable
& accrued expenses 18,343 19,452
------------ ------------
Net cash used in operating activities (30,191) (1,032,056)
------------ ------------
Cash flows from investing activities
Relinquishment of leases - 569,217
Expenditures for oil and gas property
development (80,672) -
------------ ------------
Net cash used in investing activities (80,672) 569,217
------------ ------------
Cash flows from financing activities
Proceeds from notes payable and long-term
liabilities 140,000 (1,282)
Contributed Capital - 317,700
Proceeds from issuance of common stock - 130,000
------------ ------------
Net cash provided by financing activities 140,000 446,418
------------ ------------
Net increase/(decrease) in cash and cash
equivalents 29,137 (16,421)
Cash at beginning of year - 18,938
------------ ------------
Cash at end of year $ 29,137 $ 2,517
============ ============
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Powder River Basin Gas Corp.
Notes to Consolidated Financial Statements
For the Six Months Ended June 30, 2004
Note 1 PREPARATION OF FINANCIAL STATEMENTS
The unaudited financial statements of Powder River Basin Gas Corp. for the
six months ended June 30, 2004, included herein have been prepared in
accordance with generally accepted accounting principles and the rules and
regulations of the Securities and Exchange Commission ("SEC") and should
read in conjunction with the audited financial statements and notes thereto
contained in the Company's latest Annual Report filed with the SEC on Form
10-KSB. In the opinion of management, all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim period
presented have been reflected herein. The results of operations for the
interim period are not necessarily indicative of the results to be expected
for the full year. Notes to the financial statements which would
substantially duplicate the disclosures contained in the audited financial
statements for the most recent year, 2003, as reported in the Form 10-KSB,
have been omitted.
NOTE 2 ORGANIZATION
The Company was incorporated under the laws of Colorado on August 27, 1999
as Celebrity Sports Network, Inc. The principal activities since inception
have been organizational matters and obtaining financing. The Company was
formed in an effort to broaden the scope of public appearances available to
current and former professional athletes. The Company, however, changed
their operations in 2001 through a reverse acquisition with Powder River
Basin Gas Corp., an oil and gas company.
Powder River Basin Gas Corp. (PRGB) was incorporated in Colorado on June
13, 2001. The Company is engaged in the business of assembling and
managing a portfolio of undeveloped acreage in the Powder River basin coal
bed methane (CBM) play in Sheridan County, Wyoming. This acreage is
located in a proven geological setting and near operators such as Western
Gas Resources, Barrett Resources, Phillips Petroleum, J.M. Huber and
others. The Company has leasehold interests in 8,096 net acres. Two wells
have been drilled on one lease and eleven additional wells have been
spudded. The Company also purchased a 960 acre oil and gas lease in
Louisiana which has nine wells. Two of the wells are in production and the
other seven require re-work and clean-out to be activated.
Pursuant to a reverse acquisition and reorganization agreement, PRGB was
acquired by Celebrity Sports on September 5, 2001. At the time of the
acquisition, the Company changed its name to Powder River Basin Gas Corp.
and issued 9 million shares of common stock for all the issued and
outstanding stock of PRBG; thus, making PRGB a wholly-owned subsidiary of
the Company. Because PRGB is the accounting acquirer in the reverse
acquisition, all financial history in these financial statements are that
of PRGB.
The Company issued 9 million shares of common stock for 9 million shares of
PRGB, therefore, and adjustment to the shares outstanding was necessary to
reflect the other shareholders of the Company at the time of acquisition.
No goodwill was recorded in the acquisition and the purchase method of
accounting was used to record the transaction.
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NOTE 3 OIL AND GAS PROPERTIES
The full cost method is used in accounting for oil and gas properties.
Accordingly, all costs associated with acquisition, exploration, and
development of oil and gas reserves, including directly related overhead
costs, are capitalized. In addition, depreciation on property and
equipment used in oil and gas exploration and interest costs incurred with
respect to financing oil and gas acquisition, exploration and development
activities are capitalized in accordance with full cost accounting.
Capitalized interest for the quarter ended June 30, 2004 was $0. All
capitalized costs of proved oil and gas properties subject to amortization
are being amortized on the unit-of-production method using estimates of
proved reserves. Investments in unproved properties and major development
projects not subject to amortization are not amortized until proved
resources associated with the projects can be determined or until
impairment occurs. If the results of an assessment indicate that the
properties are impaired, the amount of the impairment is added to the
capitalized costs to be amortized. Therefore amortization was taken at
$6,993 for the six months ended June 30, 2004. As of June 30, 2004, proved
oil and gas reserves had been activated on one of the Company's oil and gas
properties. All other wells are incomplete as of June 30, 2004.
NOTE 4 COMMON STOCK
In February 2004 the Company issued 3, 640, 856 shares of Common Stock in
satisfaction of a convertible debenture entered into in previous years.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
The Company is including the following cautionary statement to make
applicable and take advantage of the safe harbor provision of the Private
Securities Litigation Reform Act of 1995 for any forward-looking statements
made by, or on behalf of, the Company. This quarterly report on form 10QSB
contains forward-looking statements. Forward-looking statements include
statements concerning plans, objectives, goals, strategies, expectations,
future events or performance and underlying assumptions and other
statements which are other than statements of historical facts. Certain
statements contained herein are forward-looking statements and,
accordingly, involve risks and uncertainties which could cause actual
results or outcomes to differ materially from third parties, but there can
be no assurance that management's expectations, beliefs or projections will
result of be achieved or accomplished. In addition to other factors and
matters discussed elsewhere herein, the following are important factors
that, in the view of the Company, could cause actual results to differ
materially from those discussed in the forward-looking statements: the
ability of the Company to respond to changes in the information system
environment, competition, the availability of financing, and, if available,
on terms and conditions acceptable to the Company, and the availability of
personnel in the future.
PLAN OF OPERATION
The Company's business strategy for the next twelve months includes focused
acquisitions and drilling operations which may be curtailed, delayed or
cancelled as a result of a variety of factors, including unexpected
drilling conditions, pressure or irregularities in formations, equipment
failures or accidents, weather conditions and shortages or delays in
equipment delivery. The Company has drilled two gas wells that will
produce commercially viable gas resources once the appropriate
infrastructure (i.e., pipeline) is in place. The Company plans on
implementing its drilling plan and being recognizing revenues during the
fiscal year 2004. The Company also plans to continue to increase
production on the Louisiana project in the second quarter and is in the
process of completing a project in Oklahoma.
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LIQUIDITY AND CAPITAL RESOURCES
The Company increased its revenue from oil and gas sales during the second
quarter to $49,766 as compared to $39,063 for the first quarter makeing a
six month total of $88,829. There was no income in previous years. The
Company is currently working to raise development capital to increase
production and anticipates it will be successful in raising the funds
necessary to complete work in progress.
CURRENT LIABILITIES
On June 30, 2004 the Company had approximately $77,313 in current
liabilities and $671,400 in long term liabilities. Of this amount
approximately $531,400 is related to the purchase of leasehold interests
and related expenses incurred by the Company. The current accounts payable
include payments to auditors, accounting and legal as well as start up
costs. The accrued expenses include accumulated interest on the outstanding
notes owed by the Company.
NEED FOR ADDITIONAL FINANCING FOR GROWTH
The growth of the Company's business will require substantial capital on a
continuing basis, and there is no assurance that any such required
additional capital will be available on satisfactory terms and conditions,
if at all. The Company may pursue, from time to time, opportunities to
acquire oil and natural gas properties and businesses that may utilize the
capital currently expected to be available for its present operations. The
amount and timing of the Company's future capital requirements, if any, may
depend upon a number of factors, including drilling, transportation, and
equipment costs, marketing expenses, staffing levels, competitive
conditions, and purchases or dispositions of assets, many of which are not
in the Company's control. Failure to obtain any required additional
financing could materially adversely affect the growth, cash flow and
earnings of the Company. In addition, the Company's pursuit of additional
capital could result in the incurrence of additional debt or potentially
dilutive issuances of equity securities.
The Company's ability to meet any future debt service will be dependant
upon the Company's future performance, which will be subject to oil and
natural gas prices, the Company's level of production, general economic
conditions and financial, business and other factors affecting the
operations of the Company, many of which are beyond its control. There can
be no assurance that the Company's future performance will not be adversely
affected by such changes in oil and natural gas prices and / or production
nor by such economic conditions and / or financial, business and other
factors. In addition, there can be no assurance that the Company's
business will generate sufficient cash flow from operations or that future
bank credit will be available in an amount to enable the Company to service
its indebtedness or make necessary expenditures. In such event, the
Company would be required to obtain such financing from the sale of equity
securities or other debt financing. There can be no assurance that any
such financing will be available on terms acceptable to the Company.
Should sufficient capital not be available, the Company may not be able to
continue to implement its business strategy.
PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
The Company had an outstanding judgment which was settled prior to June
30, 2004.
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ITEM 2: CHANGES IN SECURITIES
The Company effected the following transactions in reliance upon exemptions
from registration under the Securities Act of 1933 as amended (the "Act")
as provided in Section 4(2) thereof. Each certificate issued for
unregistered securities contained a legend stating that the securities have
not yet been registered under the Act and setting forth the restrictions on
the transferability and the sale of the securities. No underwriter
participated in, nor were any commissions or fees paid to any underwriter
in connection with any of these transactions. None of the transactions
involved a public offering. The Company believes that each person had
knowledge and experience in financial and business matters which allowed
them to evaluate the merits and risks of its securities; and that each
person was knowledgeable about its operations and financial condition.
In February 2004 the Company issued 3, 640, 856 shares of its common stock
to satisfy a previously negotiated convertible debenture.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5: OTHER INFORMATION
NONE
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
NONE
(b) Reports
Report on Form 8-K, as amended, Celebrity Sports Network, Inc., filed
January 24, 2003; Change in Registrants Certifying Accountant
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Signatures
Pursuant to the requirements of Section 13 or 15(d) the Securities and
Exchange Act of 1934 the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Powder River Basin Gas Corporation
Registrant
By: /S/ Brian Fox, President
Brian Fox, President and
Chief Financial Officer
Date: August 12, 2004
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