Form 10-Q for GULF COAST OIL & GAS INC.
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19-May-2008
Quarterly Report
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
LIQUIDITY AND FINANCIAL CONDITION
At March 31, 2008, cash and cash equivalents were $137,284, a decrease of $97,099 over December 31, 2007. Total liabilities at March 31, 2008 were $1,212,015, of which $455,887 were current liabilities. The remainder of the liabilities relate to the February and April, 2006 issuance of $2,000,000 of convertible debentures (the "Convertible Debentures") to three investors and recognition of a derivative liability arising from the warrants issued in that transaction.
The Company's sole source of revenues has been from its interest in three wells located in Corpus Christi. Those wells had to be reworked in late 2007 and the operator has not recovered the costs and has not therefore commenced paying distributions as of the date of this Report. The Company does not anticipate the receipt of revenues in the second quarter of 2008 but believes that production will be sufficient so that distributions will be received in the third quarter of 2008.
As of March 31, 2008 we had a working deficit of $163,437, as compared to a working capital deficit of $43,680 at December 31, 2007. The decrease in working capital is largely attributable to an increase in accrued interest on the Convertible Debentures and a decrease in cash. The decrease in cash is largely attributable to administrative overhead expenses not offset by any revenues in the first quarter.
The Corpus Christi wells continue to produce oil and gas. However, revenues have been used to pay the costs of the rework and the Company anticipates that it will receive distributiions again commencing in the third quarter of 2008. The Company will use such revenues to pay its administrative overhead. The Company is currently negotiating with several prospective partners with respect to the Saratoga Prospect, but revenues, if any, from such project will not be realized in the near term. The Company also intends to seek additional financing for future projects.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2008
COMPARED TO THREE MONTHS ENDED MARCH 31, 2007
REVENUES
The Company generated $94,197 in sales for the three months ended March 31, 2007 which reflect distributions from the Company's interest in three producing oil and gas wells in Corpus Christi, Texas. In the first quarter of 2008, the Company did not have any revenues as revenues from the Corpus Christi wells were used to pay rework expenses.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses during the three months ended March 31, 2008 declined slightly to $164,000 from $174,000 in the same period in 2007. This decrease was the result of slightly lower fees paid to outside professionals.
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NET GAIN/LOSS TO COMMON SHAREHOLDERS
Net operating loss to common shareholders was ($162,957) or ($0.00) per share for the three months ended March 31, 2008 as compared to a net operating loss of ($96,155) or ($0.00) for the three months ended March 31, 2007. The increase in net loss results from the Company's failure to generate any revenues in the first quarter of 2008 for the reason set forth above.
ACCUMULATED DEFICIT
Since inception, we have incurred substantial operating losses and may incur substantial additional operating losses over the next several years. As of March 31, 2008, our accumulated deficit was ($7,751,083).
