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 June 30, 2011

 

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.)

 

270 Southern Drive, Royce City, Texas 75189-5704

 (Address of principal executive offices)

 

(972) 772-9493

(Issuer's telephone number)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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 ].

 

As of August 12, 2011, there were 7,343,736 shares of Common Stock of the issuer outstanding.

 

 

 

 

 

 

 

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
	PART II OTHER INFORMATION
Item 1	Legal Proceedings	15
Item 2	Changes in Securities	15
Item 3	Default upon Senior Securities	15
Item 4	Submission of Matters to a Vote of Security Holders	15
Item 5	Other Information	15
Item 6	Exhibits and Reports on Form 8-K	15

 

 

 

 

 

 

 

 

PREMIER OIL FIELD SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2011 AND DECEMBER 31, 2010

 

ASSETS		June 30, 2011 (Unaudited)				December 31, 2010 (Audited)
Current Assets
Cash and Cash Equivalents		$	199,569			$	0
Accounts Receivable (net of allowance for doubtful accounts of $0 and $0)			0				12,815
Subscription Receivable			1,950				0
Employee Receivables			2,000				0
Total Current Assets			203,519				12,815
Fixed Assets (net of accumulated depreciation of $210,997 and $178,344)			188,872				208,870
Other Assets			5,188				4,041
TOTAL ASSETS		$	397,579			$	225,726
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts Payable		$	66,953			$	77,373
Accrued Expenses			21,068				47,922
Bank Overdraft			0				750
Loss Contingency (Note 6)			138,300				148,492
Current Portion of Notes Payable			15,425				7,615
Total Current Liabilities			241,746				282,152
Long Term Liabilities:
Shareholder Adavance			35,557				0
Long Term Accounts Payable			26,145				40,694
Notes Payable			81,435				59,815
Less: Current Portion of Notes Payable			(15,425	)			(7,615	)
Total Long Term Liabilities			127,712				92,894
TOTAL LIABILITIES			369,458				375,046
Stockholders’ Equity (Deficit)
Preferred stock, $0.001 par value, 20,000,000 authorized,
-0-  issued and outstanding at June 30, 2011 and December 31, 2010			0				0
Common stock, $0.001 par value, 50,000,000 authorized,
7,343,736 and 7,000,000 issued and outstanding at June 30, 2011 and December 31, 2010			7,344				7,000
Additional paid-in-capital			277,864				18,456
Accumulated Deficit			(257,087	)			(174,776	)
Total Stockholders’ Equity (Deficit)			28,121				(149,320	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)		$	397,579			$	225,726

 

 

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

 

 

 

 

 

 

PREMIER OIL FIELD SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010 (Unaudited)

 

		Three Months Ended								Six Months Ended
		June 30, 2011				June 30, 2010				June 30, 2011				June 30, 2010
REVENUES
Third Party Revenues		$	57,835			$	26,044			$	173,113			$	48,754
Related Party Revenues			0				18,725				11,700				40,575
TOTAL REVENUES			57,835				44,769				184,813				89,329
COST of SALES (inclusive of depreciation of $19,237 and $9,751 for 3 months and $39,448 and $33,983 for 6 months)			25,232				45,466				53,705				88,720
Gross Profit			32,603				(697	)			131,108				609
Operating Expenses:
Depreciation and Amortization			487				488				974				975
Other General and Administrative			97,961				78,635				197,485				231,745
Total Operating Expenses			98,448				79,123				198,459				232,720
Operating Loss			(65,845	)			(79,820	)			(67,351	)			(232,111	)
Other Income (Expense)
Interest Income			7				0				10				0
Loss on Sale of Assets			(9,448	)			300				(9,448	)			(17,629	)
Interest Expense			(3,588	)			(811	)			(5,522	)			(1,757	)
Total Other Income (Expense)			(13,029	)			(511	)			(14,960	)			(19,386	)
Net Loss		$	(78,874	)		$	(80,331	)		$	(82,311	)		$	(251,497	)
Basic and Diluted Loss per share		$	(0.01	)		$	(0.01	)		$	(0.01	)		$	(0.04	)
Weighted Average Shares Outstanding:
Basic and Diluted			7,335,348				7,000,000				7,214,460				7,000,000

 

 

 

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

 

 

 

 

  

PREMIER OIL FIELD SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Year Ended December 31, 2010 and the Six Months Ended June 30, 2011
		Common Shares				Common Amount				Additional Paid In Capital				Accumulated Deficit				Total
Balance at  January 1, 2010			7,000,000			$	7,000			$	18,456			$	40,938			$	66,394
Net Loss			0				0				0				(215,714	)			(215,714	)
Balance at December 31, 2010			7,000,000				7,000				18,456				(174,776	)			(149,320	)
Sale of Stock for cash (unaudited)			343,736				344				259,408				0				259,752
Net Loss (unaudited)			0				0				0				(82,311	)			(82,311	)
Balance at  June 30, 2011 (unaudited)			7,343,736			$	7,344			$	277,864			$	(257,087	)		$	28,121

 

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

 

 

 

 

 

PREMIER OIL FIELD SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2011 and 2010
(Unaudited)

  

		June 30, 2011				June 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss		$	(82,311	)		$	(251,497	)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation Expense			39,488				33,983
Bad Debt Expense			0				0
Loss on Sale of Assets			9,448				17,629
Changes in assets and liabilities:
Accounts Receivable			12,815				16,700
Other Current Assets			(3,147	)			(2,600	)
Accounts Payable			(35,162	)			148,669
Accrued Expenses			(27,603	)			3,599
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			(86,472	)			(33,517	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sale of Assets			42,000				82,906
Purchase of Fixed Assets			(70,938	)			(47,648	)
NET CASH (USED IN) INVESTING ACTIVITIES			(28,938	)			35,258
CASH FLOWS FROM FINANCING ACTIVITES
Sale of Stock for Cash			259,752				0
Advances on Shareholder Loan			35,557				9,849
Subscription Receivable			(1,950	)			0
Payments on Note Payable			(62,369	)			(58,869	)
Proceeds from Note Payable			83,989				47,648
NET CASH PROVIDED BY  (USED IN) FINANCING ACTIVITIES			314,979				(1,372	)
NET CHANGE IN CASH AND CASH EQUIVALENTS			199,569				369
CASH AND CASH EQUIALENTS AT BEGINNING OF PERIOD			0				0
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	199,569			$	369
SUPPLEMENTAL DISCLOSURES
Cash Paid During the Period for Interest Expense		$	5,522			$	810
Loss on Sale of Assets		$	9,448			$	17,629

 

 

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

 

 

 

 

 

PREMIER OIL FIELD SERVICES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(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 Royce City, 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 June 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. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

 

 

 

 

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 three 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 June 30, 2011 and December 31, 2010, 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 or six months ended June 30, 2011 and 2010.

 

Cost of Sales:

 

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

 

 

 

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.

 

 

NOTE 2 – FIXED ASSETS

 

Fixed assets at June 30, 2011 and December 31, 2010 are as follows:

 

		June 30, 2011				December 31, 2010
Office   Equipment		$	9,748			$	9,748
Trucks   Trailers			70,898				58,243
Machinery   Equipment			319,223				319,223
Less: Accumulated Depreciation			(210,997	)			(178,344	)
Total Fixed Assets		$	188,872			$	208,870

 

Depreciation expense for the three months ended June 30, 2011 and 2010 was $19,724 and $18,866, respectively. Depreciation expense for the six months ended June 30, 2011 and 2010 was $19,724 and $43,586, respectively.

 

During the three months ended March 31, 2011, the Company acquired a vehicle at a cost of $17,285. During the three months ended June 30, 2011, the Company acquired a vehicle at a cost of $53,613 and disposed of a vehicle with a cost of $58,243 resulting a loss on sale of asset of $9,448.

 

 

 NOTE 3 – EQUITY

 

On June 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 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 June 30, 2011 and December 31, 2010, 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 June 30, 2011 and December 31, 2010, there were 7,343,736 and 7,000,000 shares issued and outstanding, respectively.

 

 

 

On July 14, 2010 the Company filed a Form S-1; general form for registration of securities under the Securities Act of 1933, and filed an amended Form S-1 on December 3, 2010, and it became effective on January 7, 2011.  The Company, under this registration statement, is authorized to raise up to $600,000 by selling 800,000 shares of common stock at $.75 per share.  The offering will close by June 15, 2011. On February 11, 2011 the Company broke escrow as we had raised $61,750. As of June 30, 2011 we have sold a total of 343,736 shares for $259,752 and closed the offering.

 

There is currently no market for our shares. We intend to work with a market maker who would then apply to have our securities quoted on the over-the-counter bulletin Board or on an exchange as soon as practicable after our offering.

 

 

NOTE 4 – COMMITMENTS AND CONTINGENCIES

 

The Company leases office and warehouse space in Royce City, Texas. The facility is approximately 10,000 square feet and is $1,250 per month on a month-to-month basis.

 

At June 30, 2011, the Company had the following outstanding notes payable:

 

• Vehicle loan from Ford Motor Credit, dated December 8, 2010, originally for $60,413, at an annual interest rate of 6.75% due November 8, 2016.  In June of 2011 this loan paid off for $56,987 when the vehicle was traded in for new vehicle. Amount due at June 30, 2011 was $57,988.  The current principal amount due by December 31, 2011 is $5,788, and interest payable due by December 31, 2011 is $4,533.
• Vehicle loan from Alliance Bank, dated January 27, 2011, originally for $17,286, at an annual interest rate of 11.334% due December 27, 2016.  Amount due at June 30, 2011 was $14,733.  The current principal amount due by December 31, 2011 is $3,227, and interest payable due by December 31, 2011 is $760.
• Vehicle loan from Ford Motor Credit, dated June 15, 2011, originally for $66,703, at an annual interest rate of 8.90% due June 15, 2017.  Amount due at June 30, 2011 was $66,703. The current principal amount due by December 31, 2011 is $4,294, and interest payable due by December 31, 2011 is $2,918.

 

 

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 June 30, 2011 and December 31, 2010 are as follows:

 

Deferred tax asset related to:

 

		June 30,				December 31,
		2011				2010
Prior Year		$	53,930				0
Tax Benefit for Current Period			20,570				53,930
Net Operating Loss Carryforward		$	74,500			$	53,930
Less: Valuation Allowance			(74,500	)			(53,930	)
Net Deferred Tax Asset		$	0			$	0

 

 

The cumulative net operating loss carry-forward is approximately $257,100 at June 30, 2011 and $174,776 at December 31, 2010, and will expire in the years 2025 through 2030.    The realization of deferred tax benefits is contingent upon future earnings, therefore, the net deferred tax asset has been fully reserved.

 

 

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.  The Company disputes the amount owed VARCO, and had accrued $48,492 as of December 31, 2010 The disputed amount, $65,573, is based on both services performed by VARCO that were not requested and services requested that were not fully performed.  As of March 31, 2010 the Company accrued an additional $108,560 to cover the related unpaid invoices and legal costs. The suit was filed in the 125th Judicial District Court of Harris County, Texas.  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.

 

 

 

NOTE 7 – FINANCIAL CONDITION AND GOING CONCERN

 

The Company has a retained deficit through June 30, 2011 totaling $157,087 and had negative working capital of approximately $38,200.   Because of the retained deficit, the Company will require additional working capital to develop its business operations.

 

The Company has experienced no loan defaults, labor stoppages, legal proceedings or any other operating interruption in 2011.  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 three significant customers from which 82.6% of revenues were derived during the six months ended June 30, 2011.

  

Customers	2011 Revenue	%	2010 Revenue	%
A – Related Party	$11,700	6.3%	$40,575	45.4%
B	110,527	59.8	40,500	45.3
C	30,500	16.5	0	0.0
Others	32,086	17.4	8,254	9.3
TOTAL	$184,813	100.0%	$89,329	100.0%

 

Approximately 0.0% of the Company’s revenue for the three months ended June 30, 2011 was generated from services performed for an entity controlled by the Company’s chief executive officer.

 

Approximately 6.3% of the Company’s revenue for the six months ended June 30, 2011 was generated from services performed for an entity controlled by the Company’s chief executive officer.

 

 

NOTE 9 – SUBSEQUENT EVENTS

 

As of August 18, 2011, the date of this report, there are no significant subsequent events requiring disclosure.

 

  

 

 

 

 

Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS

 

General

 

In 2011, we are now implementing our growth plan that we initially laid out in our S-1 filings and therefore will see increased advertising and marketing costs.

 

 

Employees

 

We currently employ two employees, the President, and a field operator.

 

 

RESULTS FOR THE PERIODS ENDED JUNE 30, 2011 and 2010

 

Our quarter ended on June 30, 2011.  Any reference to the end of the fiscal quarter refers to the end of the second quarter for the period discussed herein.

 

GENERAL. Due to the increase in the price of crude oil and natural gas in the first six months of 2011 we saw increased sales activity which translated into increased revenues. Revenues are up 107% to $184,813 for the six months ended June 30, 200 and third party revenues were up 255% to $173,113. With the demand and the price of crude oil and natural gas remaining high we anticipate continued growth during the rest of 2011.

 

REVENUE.  Revenue for the three months ended June 30, 2011 was $57,835 compared to $44,769 for the three month period ended June 30, 2010.  Third party revenues, were up $31,791 or 122%. This is due to increased volume ($24,500) at our laragest customer.

 

Revenue for the six months ended June 30, 2011 was $184,813 compared to $89,329 for the six month period ended June 30, 2010.  Third party revenues, as referenced above, were up $124,359 or 255%. This is due to bringing on a new customer ($30,500) and increased volume ($93,800) at existing customers.

 

GROSS PROFIT.  Gross profit for the three months ended June 30, 2011 was $32,603 or 56.4%, compared to a loss of $697, or 2.9%, for the three months ended June 30, 2010.   Backing out depreciation expense of $19,237 and $18,866 for 2011 and 2010, respectively, gross profit would be approximately $51,800 (89.6%) compared to $18,200 (40.7%), respectively. The change of $33,600 or 48.9 percentage points is due to volume of about $10,400 (standard margin of 80% on sales increases of approximately $13,000) and improved efficiencies of $23,000.

 

Gross profit for the six months ended June 30, 2011 was $131,108 or 70.9%, compared to $609, or 0.7%, for the six months ended June 30, 2010.   Backing out depreciation expense of $38,474 and $34,350 for 2011 and 2010, respectively, gross profit would be approximately $169,500 (91.7%) compared to $34,900 (39.1%), respectively. The change of $134,600 or 52.6 percentage points is due to volume of about $125,000 and improved efficiencies of $15,000.

 

OPERATING EXPENSES. Total operating expenses for the three months ended June 30, 2011 were $98,448 compared to $79,123 for the three months ended June 30, 2010. Depreciation expense included in the operating expense was $487 and $488 for the three months ended June 30, 2011 and 2010, respectively. This increase was a result of an increase in contract services of $20,000 (due to the increased volume).

 

Total operating expenses for the six months ended June 30, 2011 were $198,459 compared to $232,720 for the six months ended June 30, 2010. Depreciation expense included in the operating expense was $974 and $975 for the six months ended June 30, 2011 and 2010, respectively. The 2010 expense includes $108,560 of expense provision for the lawsuit discussed in Note 6. This reduction was off-set by an increase in contract services of $66,000 (due to the increased volume) and increased auto services of $12,000.

 

NET LOSS. Net loss for the three months June 30, 2011 was $78,874 compared to a loss of $80,331 for the three months ended June 30, 2010.   Net loss for the six months June 30, 2011 was $82,311 compared to a loss of $251,497 for the six months ended June 30, 2010. The increased sales volume and improved efficiencies and expense variations, as discussed above, were the cause for the reduced loss.

 

 

 

LIQUIDITY AND CAPITAL RESOURCES. On July 14, 2010 the Company filed a Form S-1; general form for registration of securities under the Securities Act of 1933, and filed an amended Form S-1 on December 3, 2010, and it became effective on January 7, 2011.  The Company, under this registration statement, is authorized to raise up to $600,000 by selling 800,000 shares of common stock at $.75 per share.  The offering closed on June 15, 2011 and has sold a total of of 343,736 shares for $259,752.

 

 

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 market and the previously disclosed lawsuit from National Oilwell Varco, LP.

 

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 an accumulated deficit of $257,087 as of June 30, 2011.   The Company has relied on external sources of financing to assist short-term working capital needs; through bank loans and shareholder advances.  The monies being raised under the Form S-1/A registration will meet the Company’s liquidity needs for the next twelve months.  Of the short-term liabilities (approximately $242,000), $138,000 relates to the VARCO lawsuit, leaving approximately $104,000 of short-term liabilities that require funding and have specific due dates over the next 12 months.  We plan to accomplish this through cash flows from additional revenues, as we plan to invest at least $36,000 of the offering in revenue generation activities, and when needed, from shareholder advances.

 

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 improve as revenue increases in 2011.

 

Capital Resources

 

As of June 30, 2011, the Company had capital commitments of $81,435 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 for the six months ended June 30, 2011 increased by about $231,000 to negative $38,227, versus the year ended December 31, 2010.  This increase is primarily due the sale of stock as mentioned above.

 

STOCKHOLDER’S EQUITY: Stockholder’s Equity for the six months ended June 30, 2011 increased by about $177,000 to $28,121 due to the monies raised as mentioned above. Please see LIQUIDITY AND CAPITAL RESOURCES above for further detail.

 

GOING CONCERN: The Company has negative working capital of $38,227 and an accumulated deficit of $257,087 as of  June 30, 2011. Because of this accumulated deficit and limited operations, the Company may require additional working capital to survive. The Company intends 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.

 

  

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 June 30, 2011.  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.

 

Based upon an evaluation conducted for the period ended June 30, 2011, our Chief Executive and Chief Financial Officer as of June 30, 2011 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.

 

 

 

 

 

PART II

 

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

 

 

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

 

(a)  One 8-K was filed on February 17, 2011, announcing that our registration statement on Form S-1 became effective on January 7, 2011.

 

(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: August 19, 2011