10-Q 1 pofs10q93013.htm PREMIER OIL FIELD SERVICES, INC.

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

(Mark One)

 

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2013

 

OR

 

[    ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

 

From the transition period from ___________ to ____________.

 

Commission File Number 333-138111

 

PREMIER OIL FIELD SERVICES, INC.

(Exact name of small business issuer as specified in its charter)

 

Nevada   27-2262066
(State or other jurisdiction of incorporation or organization)   (IRS Employer Identification No.)

 

534 Savanna Hill Lane, Rockwall, Texas 75032

(Address of principal executive offices)

 

(972) 772-9493

(Issuer's telephone number)

 

N/A

(1713 Moorish Lane, Heath, Texas 75032)

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [     ].

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

  

   Large Accelerated Filer [  ] Accelerated Filer [  ]
     
   Non-Accelerated Filer [  ] Smaller Reporting Company [X] 

  

Indicate by a check mark whether the company is a shell company (as defined by Rule 12b-2 of the Exchange Act: Yes[  ] No [X].

 

Indicate by check mark whether the registrant has submitted electronically and posted on its website, if any, every Interactive File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (SS325.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files), Yes [ ] No [X ]

 

As of November 15, 2013, there were 7,346,336 shares of Common Stock of the issuer outstanding.

  

1
 

 

 

 

 

 

TABLE OF CONTENTS

 

 

  PART I FINANCIAL STATEMENTS  
     
Item 1 Consolidated Financial Statements 3
     
Item 2 Management’s Discussion and Analysis or Plan of Operation                                            12
     
     
Item 4 Controls and Procedures 14
     
   PART II OTHER INFORMATION  
     
Item 6 Exhibits 15
     
  Signatures 15
     

 

 

 

 

 

 

2
 

  

 

PREMIER OIL FIELD SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2013 AND DECEMBER 31, 2012
 
ASSETS   September 30, 2013    December 31, 2012 
Current Assets   

 (Unaudited)

 

      
    Cash and Cash Equivalents  $26,879   $57,741 
    Accounts Receivable (net of allowance for doubtful accounts of $0 and $0)   1,164    226,814 
    Other Assets   7,046    1,950 
        Total Current Assets   35,089    286,505 
           
    Fixed Assets (net of accumulated depreciation of $357,207 and $345,121)   63,168    172,460 
           
TOTAL ASSETS  $98,257   $458,965 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current Liabilities          
    Accounts Payable  $34,051   $49,616 
    Accrued Expenses   342    —   
    Accrued Tax Expense   —      —   
    Current Portion of Settlement Payable (Note 6)   —      35,672 
    Current Portion of Notes Payable   10,714    29,128 
        Total Current Liabilities   45,107    114,416 
           
Long Term Liabilities:          
    Loan From Shareholder   7,707    39,608 
    Long Term Accounts Payable   —      200 
    Notes Payable   42,426    142,704 
    Less: Current Portion of Notes Payable   (10,714)   (29,128)
        Total Long Term Liabilities   39,419    153,384 
           
TOTAL LIABILITIES   84,526    267,800 
           
Stockholders’ Equity          
    Preferred stock, $0.001 par value, 20,000,000 authorized,          
            -0-  issued and outstanding at September 30, 2013 and December 31, 2012   0    0 
    Common stock, $0.001 par value, 50,000,000 authorized,          
            7,346,336 and 7,346,336 issued and outstanding at September 30, 2013 and
December 31, 2012		   7,346    7,346 
    Additional Paid in capital   277,862    277,862 
   Retained Earnings/(Accumulated Deficit)   (271,477)   (94,043)
    Total Stockholders’ Equity   13,731    191,165 
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $98,257   $458,965 
           
See accompanying summary of accounting policies and notes to consolidated financial statements.

 

 

 

 

 

3
 

 

 

PREMIER OIL FIELD SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012

(Unaudited)

 

   Three Months Ended  Nine months Ended
   September 30,
2013		  September 30,
2012		  September 30,
2013		  September 30,
2012
             
             
  REVENUES                    
  Third Party Revenues  $—     $41,450   $652,450   $253,799 
  Related Party Revenues   —      —      —      —   
    TOTAL REVENUES   —      41,450    652,450    253,799 
                     
COST of SALES (inclusive of depreciation of $7,570 and  $28,113 for three months and  $44,088 and $78,029 for nine months)   16,084    34,124    453,544    112,179 
  Gross Profit   (16,084)   7,326    198,906    141,620 
                     
Operating Expenses:                    
   Depreciation and Amortization   —      251    341    754 
   Other General and Administrative   21,166    14,334    385,104    228,410 
    Total Operating Expenses   21,166    14,585    385,445    229,164 
                     
Operating Income (Loss)   (37,250)   (7,259)   (186,539)   (87,544)
                     
Other Income (Expense)                    
    Interest Income   2    15    14    49 
    Gain (Loss) on Disposal of Assets   —      11,613    12,974    11,613 
    Interest Expense   (315)   2,493    (3,883)   (8,942)
    Total Other Income (Expense)   (313)   14,121    9,105    2,720 
                     
Net Income before Income Tax Expense   (37,563)   6,862    (177,434)   (84,824)
                     
Provision for Income Tax (Expense)   —      —      —      —   
                     
Net Income (Loss) after Income Tax Expense  $(37,563)  $6,862   $(177,434)  $(84,824)
                     
                     
Basic and Diluted Loss per share  $(0.01)  $0.00   $(0.02)  $(0.01)
                     
Weighted Average Shares Outstanding:                    
Basic and Diluted   7,346,336    7,346,336    7,346,336    7,346,336 

 

 

See accompanying summary of accounting policies and notes to consolidated financial statements.

 

 

4
 

 

 

PREMIER OIL FIELD SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Year Ended December 31, 2012 and
The Nine months Ended September 30, 2013
 
                
                
   Common
Shares		 

Common

Amount

 

Additional

Paid In

Capital

 

Retained

Earnings/

(Accumulated

Deficit)

  Total
                
                
Balance at  January 1, 2012   7,346,336   $7,346   $277,862   $(196,249)  $88,959 
                          
Net Income   0    0    0    102,206    102,206 
                          
Balance at December 31, 2012   7,346,336    7,346    277,862    (94,043)   191,165 
                          
                          
Net Income (Loss)   0    0    0    (177,434)   (177,434)
                          
Balance at  September 30, 2013 (unaudited)   7,346,336   $7,346   $277,862   $(271,477)  $13,731 
                          
                          
                          
                          
See accompanying summary of accounting policies and notes to consolidated financial statements.
                          
                          

 

 

 

 

 

5
 

  

 

PREMIER OIL FIELD SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED September 30, 2013 and 2012
(Unaudited)
 
       
    September 30, 2013    September 30, 2012 
CASH FLOWS FROM OPERATING ACTIVITIES          
    Net Income (Loss)  $(177,434)  $(84,824)
    Adjustments to reconcile net income to net cash          
            used by operating activities:          
                Depreciation Expense   44,429    78,783 
Bad Debt Expense
Loss on Sale of Asset		   

1,164

(12,974)

    —   
        Changes in assets and liabilities:          
                Decrease in Accounts Receivable   224,486    17,408 
                (Increase) in Other Current Assets   (5,096)   (170)
                (Decrease) Accounts Payable   (51,436)   (50,542)
                Increase (Decrease) Accrued Expenses   342    (24,058)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   23,481    (63,403)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
                Proceeds from Sale of Assets   77,836    119,239 
                Purchase of Fixed Assets   —      (235,618)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES   77,836    (116,379)
           
CASH FLOWS FROM FINANCING ACTIVITES          
                 Sale of Stock for Cash   —      —   
                 Payments on Shareholder Loan   (31,901)   48,921 
                 Payments on Note Payable   (100,278)   (138,842)
                 Proceeds from Notes Payable   —      215,655 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES   (132,179)   125,734 
           
NET CHANGE IN CASH AND CASH EQUIVALENTS   (30,862)   (54,048)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   57,741    112,895 
CASH AND CASH EQUIVALENTS AT END OF PERIOD  $26,879   $58,847 
           
SUPPLEMENTAL DISCLOSURES          
   Cash Paid During the Period for Interest Expense  $3,883   $8,942 
   (Gain) Loss on Sale of Assets  $(12,974)  $—   
   Cash Paid During the Period for Income Taxes  $—     $—   
           
           
See accompanying summary of accounting policies and notes to consolidated financial statements.

 

  

6
 

 

 PREMIER OIL FIELD SERVICES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

 

NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

 

Nature of Activities, History and Organization:

 

Premier Oil Field Services, Inc. (The “Company” or "Premier") serves the oil and gas industry with down-hole drilling motors. These motors are used in the oil and gas well drilling process to drill out frac plugs and other debris in the well bore.  The Company is located in Rockwall, Texas and was incorporated on June 29, 2009 under the laws of the State of Nevada.

 

Premier Oil Field Services, Inc., is the parent company of Coil Tubing Motors Corporation, (“CTM”), a company incorporated under the laws of the State of Texas. CTM was established in June 2006.

 

Premier is a private holding company established under the laws of Nevada on June 29, 2009, was formed in order to acquire 100% of the outstanding membership interests of CTM.  On September 30, 2009, Premier issued 7,000,000 shares of common stock in exchange for a 100% equity interest in CTM.  As a result of the share exchange, CTM became the wholly owned subsidiary of Premier.  As a result, the members of CTM owned a majority of the voting stock of Premier.  The transaction was accounted for as a reverse merger whereby CTM was considered to be the accounting acquirer as its members retained control of Premier after the exchange, although Premier is the legal parent company.  The share exchange was treated as a recapitalization of Premier.  As such, CTM, (and its historical financial statements) is the continuing entity for financial reporting purposes. The financial statements have been prepared as if Premier had always been the reporting company and then on the share exchange date, had changed its name and reorganized its capital stock.  The share exchange transaction was effected to change the state of incorporation to allow the opportunity for a reduction of franchise taxes under the new Texas franchise tax calculations and to facilitate the initial public offering.  At the time of the exchange transaction, Premier had no assets or liabilities and CTM had assets of approximately $409,000 with equity of approximately $81,800.

 

The capital structure of Premier is presented as a consolidated entity as if the transaction had been effected in 2006 to consistently reflect the number of shares outstanding. However, the capital structure as presented is different that the capital structure that appears in the historical statements of CTM, in earlier periods due to the recapitalization accounting.

 

The Company operates on a calendar year-end.    Due to the nature of their operations, the Company operates in only one business segment.

 

Basis of Accounting and Consolidation:

 

The Company prepares its financial statements on the accrual basis of accounting.  It has one wholly owned subsidiary, Coil Tubing Motors, Corporation, which is consolidated. All intercompany balances and transactions are eliminated.  

 

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable Securities and Exchange Commission (“SEC”) regulations.

 

Unaudited Interim Financial Statements:

 

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable Securities and Exchange Commission (“SEC”) regulations for interim financial information. These financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring accruals) necessary to present fairly the balance sheets, statements of operations and statements of cash flows for the periods presented in accordance with accounting principles generally accepted in the United States. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to SEC rules and regulations. It is presumed that users of this interim financial information have read or have access to the audited financial statements and footnote disclosure for the preceding year contained in the Company’s Annual Report on Form 10-K. filed on April 16, 2013 and amended on April 19, 2013. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

 

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Significant Accounting Policies:

 

The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application.  The application of accounting principles requires the estimating, matching and timing of revenue and expense.

 

The financial statements and notes are representations of the Company’s management which is responsible for their integrity and objectivity. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud.  The Company's system of internal  accounting control is designed to assure, among other items, that  1) recorded  transactions  are valid;  2) valid  transactions  are recorded;  and  3) transactions  are  recorded in the proper  period in a timely  manner to produce financial  statements which present fairly the financial  condition,  results of operations  and cash  flows of the  Company  for the  respective  periods  being presented.

 

Cash and Cash Equivalents:

 

All highly liquid investments with original maturities of six months or less are included in cash and cash equivalents.  All deposits are maintained in FDIC insured depository accounts in local financial institutions and balances are insured up to $250,000.

 

Fair Value of Financial Instruments:

 

In accordance with the reporting requirements of ASC 820,  the Company  calculates the fair value of its assets and  liabilities which qualify as financial  instruments  under this statement and includes this additional information in the notes to the financial statements  when the fair value is different  than the  carrying  value of those financial instruments.  

 

The carrying amounts of cash, cash equivalents, accounts receivable, accounts payable and notes payable approximate  their fair values due to the short-term maturities of these instruments.  The carrying amount of the Company’s marketable securities and capital leases approximate fair value due to the stated interest rates approximating market rates.

 

Accounts Receivable:

 

Accounts receivable are carried at their face amount, less an allowance for doubtful accounts.  On a periodic basis, the Company evaluates accounts receivable and establishes the allowance for doubtful accounts based on a combination of specific customer circumstances and credit conditions, based on a history of write offs and collections.  The Company’s policy is generally not to charge interest on trade receivables after the invoice becomes past due.  A receivable is considered past due if payments have not been received within agreed upon invoice terms.   The Company provides an allowance for all receivables that are greater than 90 days old. Allowances for Doubtful Accounts totaled $0 and $0 at September 30, 2013 and December 31, 2012, respectively.  Write offs are recorded at a time when a customer receivable is deemed uncollectible.

 

Revenue Recognition:

 

The Company recognizes revenue in accordance with ASC 605-10.  Revenue will be recognized only when all of the following criteria have been met:

 

•Persuasive evidence of an arrangement exists;
•Ownership and all risks of loss have been transferred to buyer, which is generally upon shipment or at the time the service is provided;
•The price is fixed and determinable; and
•Collectability is reasonably assured.

 

All services are billed when rendered and payment is due upon receipt of invoice. Revenue is recorded net of any sales taxes charged.

 

Advertising:

 

The Company did not incur any advertising expenses in the three and nine months ended September 30, 2013 and 2012.

 

Cost of Sales:

 

Cost of sales consists primarily of shop supplies, contract labor, field related expenses, and deprecation on equipment used in providing services.

 

 

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Income Taxes:

 

The Company has adopted ASC 740-10 which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable.

 

Earnings per Share:

 

Earnings per share (basic) is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding for the period covered.  As the Company has no potentially dilutive securities, fully diluted earnings per share is equal to earnings per share (basic).

 

 Use of Estimates:

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.

 

Recently Issued Accounting Pronouncements:

 

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.

 

Employee Benefit Plans:

 

The Company has no employee benefit plans.

  

Emerging Growth Company Critical Accounting Policy Disclosure

The Company qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.   As an emerging grown company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.  The Company may elect to take advantage of the benefits of this extended transition period in the future.

 

NOTE 2 – FIXED ASSETS

 

Fixed assets at September 30, 2013 and December 31, 2012 are as follows:

 

   September 30,
2013		  December 31,
2012
Office  Equipment  $9,748   $9,748 
Trucks & Trailers   28,286    125,492 
Machinery &  Equipment   382,341    382,341 
Less: Accumulated Depreciation   (357,207)   (345,121)
Total Fixed Assets  $63,168   $172,460 

 

Depreciation expense for the three months ended September 30, 2013 and 2012 was $7,570 and $28,365, respectively. Depreciation expense for the nine months ended September 30, 2013 and 2012 was $44,429 and $78,783, respectively.

  

In January 2013 the Company sold a vehicle for $29,586 and realized a loss of $3,109 on the transaction. In June the Company disposed of a vehicle generating a gain of $16,083.

 

In February 2012 the Company purchased a trailer for $128,907 and due to misrepresentation by the seller the trailer was returned in August 2012 and the bank released the Company of its obligation which was $114,599 at the time. Other income of $11,613 was recorded on the settlement. In September 2012 the Company purchased a new trailer for $63,118.

  

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NOTE 3 – EQUITY

 

The Company is authorized to issue 20,000,000 preferred shares at a par value of $0.001 per share. These shares have full voting rights.  At September 30, 2013 and December 31, 2012, there were zero shares issued and outstanding.

 

The Company is authorized to issue 50,000,000 common shares at a par value of $0.001 per share. These shares have full voting rights.  At September 30, 2013 and December 31, 2012, there were 7,346,336 and 7,346,336 shares issued and outstanding, respectively.

 

 

NOTE 4 – COMMITMENTS AND CONTINGENCIES

 

The Company operates out of a mobile trailer as it is on-site at gas fields. The Company uses the President’s home address as its mailing address.

 

At September 30, 2013, the Company had the following outstanding notes payable:

 

  • Vehicle loan from Alliance Bank, dated September 17, 2012, originally for $52,119, at an annual interest rate of 4.75% due August 17, 2017.  Amount due at September 30, 2013 was $42,426.  The current principal amount due in one year is $10,714.

 

NOTE 5 – INCOME TAXES

 

The Company has adopted ASC 740-10, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset).   Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

 

The cumulative tax effect at the expected tax rate of 25% of significant items comprising the Company’s net deferred tax amounts as of September 30, 2013 and December 31, 2012 are as follows:

 

Deferred tax asset related to:

 

   September 30,  December 31,
   2013  2012
Prior Year  $33,748   $59,300 
Utilization of NOL   —      (25,552)
Tax Benefit for Current Period   44,359    —   
Net Operating Loss Carryforward  $78,107   $33,748 
Less: Valuation Allowance   (78,107)   (33,748)
     Net Deferred Tax Asset  $0   $0 

 

The Company now has a cumulative net operating loss at September 30, 2013 of $271,477 and a cumulative net operating loss carry-forward of $94,043 at December 31, 2012,

  

 

NOTE 6 – LEGAL PROCEEDINGS

 

The Company is involved in one legal proceeding. On June 15, 2010, the Company was served with a lawsuit from National Oilwell Varco LP (“VARCO”), a vendor of the Company, for $114,065, related to unpaid invoices from October 25, 2007 to September 30, 2008  During April, 2011 the Company agreed to a settlement that would require the Company to pay $122,304 over the next 24 months in equal installments of $5,096 month. The parties to the settlement also signed a judgment for $140,000 that will only be filed in the event of a default by the Company. As of August 9, 2012 the Company failed to make payments in May, June and July and technically is in default, therefore the Company accrued an additional $29,141 ($25,935 of principal and $3,206 of interest) to true-up the balance to the $140,000 original judgment, as agreed. In August 2012 the Company and VARCO agreed that the Company will resume payments by August 20, 2012 and will continue to make such payments by the 15th of each month thereafter as set forth in the original agreement. The final payment will now be due by September 15, 2013. In consideration for this agreement the Company agreed to pay VARCO an additional $1,500. VARCO retains the right to execute the original agreement should the Company breach this amendment. The balance owed at September 30, 2013 and December 31, 2012 was $0 and $35,672, respectively.

 

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NOTE 7 – FINANCIAL CONDITION AND GOING CONCERN

 

The Company has a retained deficit through September 30, 2013 totaling $271,477 and negative working capital of $10,018.   Although the Company has retained earnings it has a history of an accumulated deficit and it is uncertain whether additional working capital will be required to develop its business operations.

 

The Company has experienced no loan defaults, labor stoppages, legal proceedings or any other operating interruption in 2013.  Therefore, these items will not factor into whether the business continues as a going concern, and accordingly, management has not made any plans to dispose of assets or factor receivables to assist in generating working capital.

 

The Company intends to raise additional working capital either through private placements, and/or bank financing, or additional loans from Management if there is need for liquidity. Management may also consider reducing administrative costs. There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, and/or bank financing necessary to support the Company’s working capital requirements.  To the extent that funds generated from private placements, and/or bank financing are insufficient, the Company will have to raise additional working capital.   No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company.  If adequate working capital is not generated from operations, financing is not available, or the Management cannot loan sufficient funds, the Company may not be able to continue its operations.

 

Management believes that the efforts it has made to promote its operation will continue for the foreseeable future.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 

NOTE 8 – REVENUE CONCENTRATION

 

The Company provides drilling services to the oil and gas industry and has one significant customer from which 100% of revenues were derived during the nine months ended September 30, 2013.

 

 

Customers 2013 Revenue % 2012 Revenue %
A – Related Party $0 0.0% $0 0.0%
B 652,450 100.0 224,039 88.3
C 0 0.0 14,100 5.6
Others 0 0.0 15,660 6.1
TOTAL $652,450 100.0% $253,779 100.0%

 

None of the Company’s revenue for the nine months ended September 30, 2013 was generated from services performed for an entity controlled by the Company’s chief executive officer.

 

 

NOTE 9 – SUBSEQUENT EVENTS

 

No reportable subsequent events were noted as of the date of the report

 

 

  

 

 

11
 

 

Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS

 

Executive Overview

 

The first fiscal quarter of 2013 was very positive for the Company. UInfortunately during the second fiscal quarter the revenues declined as the Company was unable to renew contracts. This has carried over to the fiscal third and fourth quarters as new contacts have not been signed.

 

Employees

 

We currently employ one employee, the President. The Company contracted three contract employees, one field technician, one field consultant and one administrative consultant. Currently the Company only contracts the administrative consultant on a temporary basis.

 

 

RESULTS FOR THE NINE MONTHS ENDED September 30, 2013 and 2012

 

Our quarter ended on September 30, 2013.  Any reference to the end of the fiscal quarter refers to the end of the first quarter for the period discussed herein.

 

REVENUE.  Revenue for the three months ended September 30, 2013 was $0 compared to $41,450 for the three month period ended September 30, 2012.   The decrease in sales of $41,450 is due to the non-renewal of contracts in the fiscal second and third quarters of 2013.

 

Revenue for the nine months ended September 30, 2013 was $652,450 compared to $253,799 for the nine month period ended September 30, 2012.   The increase in sales of $398,651 is due to a number of large jobs with our largest customer and additional revenues related to chemical use and reprocessing of the chemicals in the hydraulic fracking process that were started in the fiscal first quarter and completed in the fiscal second quarter. The sales were $210,300 for comparative fracking services versus 2012 ($253,799) and $442,150 for the chemical use and reprocessing versus $0 in 2012.

 

GROSS PROFIT.  Gross profit for the three months ended September 30, 2013 was a loss of $16,084 or -100%, compared to $7,326 or 17.7%, for the three months ended September 30, 2012.   Backing out depreciation expense of $7,570 and $28,113 for 2013 and 2012, respectively, gross margin would be -100% compared to 85.5%, respectively. The change is attributable to the non-renewal of contracts.

 

Gross profit for the nine months ended September 30, 2013 was $198,906 or 30.5%, compared to $141,620 or 55.8%, for the nine months ended September 30, 2012.   Backing out depreciation expense of $44,088 and $78,029 for 2013 and 2012, respectively, gross margin would be 37.2% compared to 86.5%, respectively, a decrease of 49.3% points (about $320,000). The change is attributable costs related to using and reprocessing of chemicals: equipment rental and supplies $260,000 and contract services $99,000.

 

OPERATING EXPENSES. Total operating expenses for the three months ended September 30, 2013 were $21,1661 compared to $14,585 for the three months ended September 30, 2012. Depreciation expense included in the operating expense was $0 and $251, respectively, for the three months ended September 30, 2013 and 2012. The net increase of $6,832 is related to travel and contract services.

 

Total operating expenses for the nine months ended September 30, 2013 were $385,445 compared to $229,164 for the nine months ended September 30, 2012. Depreciation expense included in the operating expense was $341 and $754, respectively, for the nine months ended September 30, 2013 and 2012. The net increase of $156,694 is related to a net increase in salaries/contract services of $180,000 as the Company incurred $265,000 of compensation to the President. This was partially off-set by a decrease in rent and other related facility costs (no longer renting building space).

 

NET INCOME. Net income/loss for the periods ended September 30, 2013 and 2012 was a loss of $37,563 and income of $6,862 respectively for the three months ended September 30 and losses of $177,434 and $84,824 respectively for the nine months ended September 30.   Reasons for the changes are discussed above.

 

LIQUIDITY AND CAPITAL RESOURCES.

 

Trends, events or uncertainties impact on liquidity:

 

The Company knows of no trends, additional events or uncertainties that would impact liquidity other than the volatility of the oil and gas market.

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In addition to the preceding, the Company plans for liquidity needs on a short term and long term basis as follows:

 

Short Term Liquidity

 

The Company has a retained deficit of $271,477 as of September 30, 2013.   The Company has relied on external sources of financing to assist short-term working capital needs; through bank loans and shareholder advances.  The Company has negative working capital of $10,018 and cash flows from operations for the nine months ended September 30, 2013 were $23,481.

 

Long Term Liquidity

 

The long term liquidity needs of the Company are projected to be met primarily through the cash flow provided by operations. Cash flow from Operating Activities is expected to remain positive through 2013.

 

Capital Resources

 

As of September 30, 2013, the Company had capital commitments of $42,426 for vehicles purchased.  As of the date of this filing the Company had no additional commitments other than what is disclosed in the footnotes to the financial statements.  

 

Trends, events or uncertainties

 

The Company, since its inception in 2006, has not experienced noticeable revenue trends.   Revenue follows the oil market and when prices increase business usually remains strong.  Historically, when oil prices fall, revenue for the Company decreases.

 

Material Changes in Financial Condition

 

WORKING CAPITAL: Working Capital as of September 30, 2013 decreased by about $182,000 to negative $10,018, versus $172,100 as of December 31, 2012.  

 

STOCKHOLDER’S EQUITY: Stockholder’s Equity as of September 30, 2013 decreased by $177,434 due to the net loss.

 

GOING CONCERN: The Company has negative working capital of $10,018 and a retained deficit of $271,477 as of  September 30, 2013, and it has a history of losses and a retained deficit. Because of this history of an accumulated deficit and prior loses, the Company may require additional working capital to survive. The Company may need to raise additional working capital either through private placements or bank loans or loans from management if there is need for liquidity to alleviate the substantial doubt to continuing as a going concern. There are no assurances that the Company will be able to do any of these. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company.  If adequate working capital cannot be generated, the Company may not be able to continue its operations.

 

Management Advisors

 

Yorkdale Capital, LLC advises and assists the President with many aspects related to the regulatory filings including assistance with the consolidation of financial statements for audit. Yorkdale Capital, LLC or its principals are shareholders and invoices the Company reasonable fees for professional services monthly. The accounts payable balance at September 30, 2013 was $14,700 and at December 31, 2012 was $4,250.

  

Item 3:  Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

Item 4.  Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2013.  This evaluation was accomplished under the supervision and with the participation of our chief executive officer / principal executive officer, and chief financial officer / principal financial officer who concluded that our disclosure controls and procedures are not effective.

  

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Based upon an evaluation conducted for the period ended September 30, 2013, our Chief Executive and Chief Financial Officer as of September 30, 2013 and as of the date of this Report, has concluded that as of the end of the periods covered by this report, we have identified the following material weakness of our internal controls:

 

•   Reliance upon third party financial reporting consultants for review of critical accounting areas and disclosures and material non-standard transaction.

 

•   Lack of sufficient accounting staff which results in a lack of segregation of duties necessary for a good system of internal control.

 

In order to remedy our existing internal control deficiencies, as our finances allow, we will hire additional accounting staff.

 

Changes in Internal Controls over Financial Reporting

 

There were no changes in our internal controls over financial reporting that occurred during the period covered by this report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

 

 

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PART II

 

Items No. 1, 2, 3, 4, 5 - Not Applicable.

 

 

Item No. 6 - Exhibits and Reports on Form 8-K

 

(a)  None

 

(b)   Exhibits

 

 

 Exhibit Number      Name of Exhibit
   
31.1  Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.
   
 31.2  Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.
   
 32.1  Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

SIGNATURES

 

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

PREMIER OIL FIELD SERVICES, Inc.

 

By /s/ Lewis Andrews

Lewis Andrews, Chief Executive Officer

and Chief Financial Officer

 

Date: November 18, 2013

 

 

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