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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q/A-1

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:

October 31, 2016

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-52392

AMAZING ENERGY OIL AND GAS, CO.

(Exact name of registrant as specified in its charter)

701 S Taylor Street

Suite 470, LB 113

Amarillo, Texas 79101

(Address of principal executive office)

Registrant's telephone number, including area code: (806) 322-1922

Indicate by check mark whether the Registrant (i) has 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 (ii) has been subject to such filing requirements for the past 90 days.   YES [X]   NO [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (SS 232.405 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 [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," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [  ]   NO [X]

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 64,941,754 as of January 6, 2017.

 

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REASON FOR AMENDMENT

The purpose of this Amendment is to include Items 1 and 2 of Part I, which were omitted from our Form 10-Q, for the quarter ended October 31, 2016, which was filed with the SEC on December 20, 2016.

AMAZING ENERGY OIL AND GAS, CO.

TABLE OF CONTENTS

PART I

ITEM 1.

FINANCIAL STATEMENTS.

AMAZING ENERGY OIL AND GAS, CO. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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The accompanying notes are an integral part of these financial statements.

See Note 1 for information regarding recast amounts and basis of financial statement presentation.

AMAZING ENERGY OIL AND GAS, CO. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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The accompanying notes are an integral part of these financial statements

See Note 1 for information regarding recast amounts and basis of financial statement presentation.

AMAZING ENERGY OIL AND GAS, CO. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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The accompanying notes are an integral part of these financial statements

See Note 1 for information regarding recast amounts and basis of financial statement presentation.

AMAZING ENERGY OIL AND GAS, CO. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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Note 1. Description of Business and Basis of Presentation

On October 14, 2014, Gold Crest Mines, Inc. ("Gold Crest", "the Company", "the Parent", "us" or "we") incorporated a wholly owned Nevada subsidiary corporation named Amazing Energy Oil and Gas, Co. On October 15, 2014, Gold Crest merged the foregoing wholly owned subsidiary corporation into Gold Crest Mines, Inc. and, pursuant to Nevada law, changed its name to Amazing Energy Oil and Gas, Co. The Company entered into a change in control agreement as the first step in a reverse acquisition process with certain shareholders of Amazing Energy, Inc. on October 7, 2014. Through its primary subsidiary, Amazing Energy, Inc. (also a Nevada corporation) the main business of the Company is the exploration, development, and production of oil and gas in the Permian Basin of west Texas.

Amazing Energy, Inc. was formed in 2010 as a Texas corporation and then changed its domicile to Nevada in 2011. The Company owns interests in oil and gas properties located in Texas. The Company is primarily engaged in the acquisition, exploration and development of oil and gas properties and the production and sale of oil and natural gas. Amazing Energy, LLC was formed in December 2008 as a Texas Limited Liability Company. In December of 2010, Amazing Energy, Inc. and Amazing Energy, LLC were combined as commonly controlled entities.

On July 31, 2016, the Company acquired Gulf South Securities, Inc. ("GSSI") (See Note 6). GSSI was organized to be active in various aspects of the securities industry and is registered as a broker-dealer with the Financial Industry Regulatory Authority ("FINRA") and the Securities and Exchange Commission ("SEC"). FINRA regulatory approval for the change in control is pending.

GSSI is a FINRA limited broker dealer for the purpose of acting as a managing broker dealer to sell and distribute oil and gas drilling limited partnership offerings.

On April 15, 2016, we entered into an agreement with Jed Miesner, our Chairman, to acquire all of his interest (100% of the total outstanding shares of common stock) of Jilpetco, Inc., a Texas corporation ("Jilpetco") in consideration of $500,000. Jilpetco is engaged in the business of operating and providing oilfield services to oil and gas properties. As a result, Jilpetco will become our wholly owned subsidiary corporation. On August 25, 2016, we announced that the foregoing agreement was amended to extend the closing date to August 31, 2016 and exclude certain property therefrom. The parties agreed to allow Jed Miesner to assign certain accounts receivable and to exclude certain personal property from the transaction. In addition, the $500,000 consideration for the acquisition is in the form of a note payable at 6% interest. (See Note 5).

Effective August 31, 2016, the Company completed the acquisition of Jilpetco. As the Company and Jilpetco were under common control at the time of the acquisition, it is required under U.S. GAAP to account for this common control acquisition in a manner similar to the pooling of interest method of accounting. Under this method of accounting, the Company's Consolidated Financial Statements as of October 31, 2016 and 2015, and July 31, 2016 have been recast to reflect Jilpetco's historical cost basis in its assets and liabilities instead of reflecting the fair market value of the assets and liabilities. The historical balances reflected herein have been adjusted and recast as if the entities had been combined as of August 1, 2015. The difference between the purchase price and historical cost of the net assets acquired has been recorded as an equity contribution of $407,682 from Jilpetco as of August 1, 2016. Intercompany balances and transactions between the entities are eliminated in consolidation of the financial statements.

Basis of presentation

These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("US GAAP"). These consolidated financial statements do not contain all of the information required for annual financial statements.

The unaudited consolidated financial statements have been prepared using the significant accounting policies as set out in the audited consolidated financial statements of Amazing Energy Oil and Gas, Co. for the year ended July 31, 2016 and Jilpetco accounting policies as outlined below. The unaudited consolidated financial statements should be read in conjunction with the historical financial statements and notes thereto of Amazing Energy Oil and Gas, Co. as filed with the SEC on Form 10-K filed November 14, 2016.

AMAZING ENERGY OIL AND GAS, CO. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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It is management's opinion that these consolidated financial statements include all adjustments necessary for fair presentation, in all material respects, in accordance with US GAAP applied on a basis consistent with Amazing Energy Oil and Gas, Co. accounting policies. Results as of October 31, 2016 are not necessarily indicative of the results for the year ending July 31, 2017.

Business Combinations

When we acquire a business from an entity under common control, whereby the companies are ultimately controlled by the same party or parties both before and after the transaction, it is treated similar to the pooling of interests method of accounting. The assets and liabilities are recorded at the transferring entity's historical cost instead of reflecting the fair value of assets and liabilities.

Revenue and Cost Recognition

The Company uses the sales method of accounting for oil and gas revenues. Under this method, revenues are recognized based on the actual volumes of gas and oil sold to purchasers. The volume sold may differ from the volumes the Company may be entitled to, based on the Company's individual interest in the property. Periodically, imbalances between production and nomination volumes can occur for various reasons. In cases where imbalances have occurred, a production imbalance receivable or liability will be recorded when determined. Costs associated with production are expensed in the period in which they are incurred.

Accounts Receivable

Trade accounts receivable are carried at original invoice amount less an estimate for doubtful accounts. There was no allowance for doubtful accounts at October 31, 2016 and 2015. Management determines the allowance by regularly evaluating individual customer receivables and considering a customer's financial condition, credit history and current economic conditions. Trade receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as income when received.

Note 2. Going Concern

These consolidated financial statements have been prepared in accordance with generally U.S. GAAP to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year.

As of the release date of these financial statements, the Company has not yet achieved profitable operations, has had accumulated losses since its inception and expects to incur further losses in the development of its business. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent on its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management's plan to address the Company's ability to continue as a going concern includes: (1) obtaining debt or equity funding from private placements or institutional sources; (2) obtaining loans from financial institutions, where possible, or (3) participating in joint venture transactions with third parties. Although management believes that it will be able to obtain the necessary funding to allow the Company to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note 3. Earnings Per Share

Basic earnings per share include no dilution and are computed by dividing net income (loss) by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflect the potential dilution of securities that could share

AMAZING ENERGY OIL AND GAS, CO. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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in the earnings of the Company. Potentially dilutive securities outstanding are not included in the calculation when such securities would have an anti-dilutive effect on earnings per share.

Note 4. Oil and Gas Properties

The Company is currently participating in oil and gas exploration activities in Texas. All of the Company's oil and gas properties are located in the United States.

The Company has leasehold rights within approximately 70,000 contiguous acres in Pecos County, Texas, which lies within the Permian Basin. The property is located in the Northeast region of the County. The Pecos leasehold is comprised of multiple leases, and the Company has a variable working interest in twenty-two wells on these leases. The Company has drilled twenty-two wells throughout this property, with sixteen producing and six shut-in. The oil and gas property balances at October 31, 2016 and July 31, 2016 are set forth in the table below:

Note 5. Common Control Acquisition of Jilpetco, Inc.

On April 15, 2016, we entered into an agreement with Jed Miesner, our Chairman, to acquire all of his interest (100% of the total outstanding shares of common stock) of Jilpetco, Inc., a Texas corporation ("Jilpetco") in consideration of $500,000. Jilpetco is engaged in the business of operating and providing oilfield services to oil and gas properties.

On August 25, 2016, we announced that the foregoing agreement was amended to extend the closing date to August 31, 2016 and exclude certain property therefrom. The parties agreed to allow Jed Miesner to assign certain accounts receivable, and to exclude certain personal property from the transaction. In addition, the $500,000 consideration for the acquisition is in the form of a note payable at 6% interest calling for monthly payments of principal and interest and maturing on December 25, 2017. As of October 31, 2016, we have made payments of $150,000 plus interest on this note.

The Company completed the acquisition of Jilpetco on August 31, 2016 (see Note 1. "Description of Business and Basis of Presentation"). As the Company and Jilpetco were under common control at the time of the acquisition, the results of operations have been combined for the Company and Jilpetco as of August 1, 2015. Separate results for the Company and Jilpetco for the three months ended October 31, 2016 and 2015 were as follows:

AMAZING ENERGY OIL AND GAS, CO. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

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	Three Months Ended									Three Months Ended
	October 31, 2016									October 31, 2015
	Amazing			Jilpetco			Total			Amazing			Jilpetco			Total
Operating Revenue	$	51,877		$	132,530		$	184,407		$	122,039		$	108,751		$	230,790
Operating Expenses	$	102,275		$	329,372		$	431,647		$	309,269		$	113,388		$	422,657
Other Income (Expense)	$	(61,624)		$	(31,101)		$	(92,725)		$	(67,356)		$	(403)		$	(67,759)
Net loss	$	(112,022)		$	(227,943)		$	(339,965)		$	(254,586)		$	(5,040)		$	(259,626)
Earnings per common share:
Basic and Diluted	$	(0.002)		$	(0.004)		$	(0.005)		$	(0.005)		$	(0.000)		$	(0.005)

Note 6. Acquisition of Gulf South Securities, Inc.

On July 31, 2016, the Company issued 5,373,528 shares of common stock and 2,674,576 common stock purchase warrants to GSHI and others in consideration of GSHI transferring to us 100,000 shares of common stock of GSSI which constitutes all of the issued and outstanding shares of common stock of GSSI. Further, we issued 50,000 shares of our Series B Preferred Stock to Bories Capital, LLC. These preferred shares were issued to Bories Capital, LLC, owned by Robert Bories, an officer of the Company as of July 31, 2016. Robert Bories is an officer of GSHI and Bories Capital, LLC has released its security interest in the common stock of GSSI. Upon the completion of the foregoing stock exchange, GSSI became our wholly owned subsidiary corporation. GSSI is an SEC, FINRA registered securities broker-dealer.

The unaudited pro forma financial information below represents the combined results of our operations as if the GSSI acquisition had occurred at August 1, 2015. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have occurred if the acquisition had taken place at the beginning of the period presented, nor is it indicative of future operating results.

The unaudited pro forma financial information includes adjustments to 1) eliminate acquisition-related costs and goodwill impairment for the period ended October 31, 2015 which are non-recurring and 2) reflect the issuance of common stock as consideration in the acquisition and for payment of acquisition costs.

Note 7. Related Parties Debt

Related Party Convertible Debt

On January 3, 2011, the Company formalized a loan agreement with Jed Miesner, the Company's CEO and Chairman for $1,940,000. The loan is scheduled to mature on December 31, 2030, bear interest at the rate of 8% per annum, and are collateralized with a leasehold deed of trust covering certain leasehold interests in Pecos County, Texas. At October 31, 2016 and July 31, 2016, the short term components of this loan were $205,448 and $191,029 respectively. The long term amounts at October 31, 2016 and July 31, 2016 were $1,734,551 and $1,748,971 respectively.

AMAZING ENERGY OIL AND GAS, CO. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

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On December 30, 2010, Amazing Energy, LLC, (a wholly owned subsidiary of the Company) entered into a $2,000,000 line of credit facility with JLM Strategic Investments LP, an entity controlled by Jed Miesner. Funds advanced on the line of credit mature on December 31, 2030, bear interest at the rate of 8% per annum and are collateralized with a leasehold deed of trust covering certain leasehold interests in Pecos County, Texas. At October 31, 2016 and July 31, 2016 the short term components of this loan were $32,913 and $30,162 respectively. The long term amounts at October 31, 2016 and July 31, 2016 were $8,258 and $11,008 respectively. There was a reduction in this debt of $287,303 on July 31, 2016 by the issuance of the Series A Preferred Stock (see below).

Contractual principal maturities for the two loan agreements and the credit facility outstanding at October 31, 2016, for the remaining terms are summarized by year as follows:

Effective July 31, 2016, the Company authorized the issuance of 9,000 shares of Preferred Series A stock with par value of $0.01 per share. These shares were issued to Jed Miesner, the Company's controlling shareholder, in exchange for cancellation of related party interest payable in the amount of $612,697 and debt payable to JLM Strategic Investments, LP in the amount of $287,303.

No principal payments have been paid on the two loan agreements and the credit facility since their inception. At October 31, 2016, Mr. Miesner has waived any event of default on the aforementioned delinquent payments of principal and interest due on the loans and credit facility.

Notes Payable - Related Parties

On May 27, 2016 Jilpetco entered into loan agreements with Tony Alford, Robert Bories, Robert Manning, Petro Pro Ltd., and Reese Pinney. Messrs. Alford, Manning are members of the Board of Directors and Miesner is Chairman. Messrs. Bories and Pinney are officers of the Company.

Modification of Debt Agreements

On August 15, 2016, the loan agreements were modified to accept additional amounts from all the individual noteholders except Mr. Manning. As of October 31, 2016, no additional amounts have been loaned. The loan is scheduled to mature on November 23, 2016, bear interest at the rate of 8% per annum and pay a participation fee equal to 10% of the principal amount of the loan.

Contractual principal interest & fees for the loan outstanding at October 31, 2016 are summarized as follows:

AMAZING ENERGY OIL AND GAS, CO. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

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*1 Jed Miesner, the Company's chairman, is a member of Petro Pro Management LLC which is the General Partner of Petro Pro Ltd.

At November 23, 2016, the Noteholders have waived any event of default and have commenced discussion to extend or replace the loan with a new loan agreement. On January 6, 2017, the Company paid 25% of the principal, being $57,500, paid the 10% note fee, being $23,000, and paid the accrued interest through November 23, 2016, being $ 8,035, for a grand total of payments being $88,536.

As of October 31, 2016 and July 31, 2016, the accrued and unpaid interest due to related parties was $91,718 and $0, respectively. Related party interest expense for the quarters ended October 31, 2016 and 2015 was $91,718 and $67,943 respectively.

 

Note 8. Commitments and Contingencies

Note 9. Stockholders' Equity

Shares Issued for cash – On May 16, 2016, the Company began a private placement offering of 20,000,000 restricted shares of common stock at $0.26 per share. As of July 31, 2016, 699,400 shares had been sold for $181,844. For the three months ended October 31, 2016, 5,063,698 additional shares were sold for gross proceeds of $1,316,561. The Company may, in its sole discretion, extend the offering period to March 31, 2017 or terminate the offering at any time. On December 31, 2016, the Company extended the offering period to March 31, 2017.

 

Note 10. Subsequent Event

The Company, through its subsidiary Kisa Gold Mining Inc. ("Kisa"), has an option agreement with Afranex Gold Limited ("Afranex") which grants Afranex the option to purchase all of the outstanding common stock of Kisa or purchase all of Kisa's right, title and interest in certain mining permits and associated assets of Kisa. The option period was to end on December 31, 2016 or such later date which was to be agreed upon by both parties. On January 3, 2017, Afranex paid a $50,000 non-refundable option fee to the Company, as consideration for extending the option period to March 31, 2017. Afranex agrees to pay the Company, on settlement of the acquisition, a total of $120,000 settlement cash consideration.

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion is management's assessment of the current and historical financial and operating results of the Company and of our financial condition. It is intended to provide information relevant to an understanding of our financial condition, changes in our financial condition and our results of operations and cash flows and should be read in conjunction with our unaudited financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the three months ended October 31, 2016 and in our Annual Report on Form 10-K for the year ended July 31, 2016. Note that any reference to "Amazing", the "Company", "we", "us" or "our" mean Amazing Energy Oil and Gas, Co.

Cautionary Statement Regarding Forward-Looking Statements

This Management's Discussion and Analysis includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: "believe," "expect," "plan", "estimate," "anticipate," "intend," "project," "will," "predicts," "seeks," "may," "would," "could," "potential," "continue," "ongoing," "should" and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this Form 10-Q. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or from our predictions. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.

Current Activities

Through October 31, 2016, we have drilled twenty-two wells on our leasehold in Pecos County, Texas. Sixteen of the twenty wells are currently productive, and six wells are shut in. During the quarter ended October 31, 2016, we drilled and completed zero wells on our properties.

Results of Operations

The following table presents selected operational and financial data for the three month periods ended October 31, 2016 and 2015, respectively.

Oil Production and Revenue

During the three month period ended October 31, 2016, our net production was 2,583 BOE, or an average of 28 BOE per day, as compared to 4,509 BOE, or an average of 49 BOE per day during the corresponding three month period in 2015.

During the three month period ended October 31, 2016, we sold 2,531 BOE at an average price of $20.50 per BOE, for net revenues of $51,877, as compared to 4,514 BOE at an average price of $27.04 per BOE, for net revenues of $122,039 during the comparative period in 2015.

Depletion

Depletion of oil and gas properties is calculated under the units of production method, following the full cost method of accounting. For the three month period ended October 31, 2016, depletion was $28,611 or $11.30 per BOE, as compared to $59,022, or $ 13.08 per BOE for the three month period ended October 31 2015. The decrease in depletion of $30,411 was primarily due to a 44% decrease in production.

As of July 31, 2016, our total proved reserves were 745,190 BOE compared to 576,040 BOE for the year ended July 31, 2015.

Lease Operating Expenses

Lease operating expenses decreased from $(1,805) for the quarter ended October 31, 2016 to $106,009 for the quarter ended October 31, 2015. This decrease for the comparable three month period was primarily due to decreased activity in our development and production program, which in turn was due to the drop in oil prices, and a limited access to drilling funds.

General and Administrative Expenses

For the quarter ended October 31, 2016, our selling, general and administrative expenses were $369,430, compared to $138,355 for the comparative quarter ended October 31, 2015. The increase for the comparable three month period was primarily due to the addition of field employees and field subcontractors used in Jilpetco, as well as the increased use of subcontracted consultants and firms for the Company.

Liquidity and Capital Resources

We had a working capital deficit of $354,034 as of October 31, 2016, compared to a working capital deficit of $624,889 as of July 31, 2016. The decrease in the working capital deficit was primarily due to a decrease in accounts payable.

During the quarter ended October 31, 2016, we raised $1,316,561 through the sale of 5,063,698 restricted shares of common stock.

We continue to seek sufficient capital in order to expand our drilling program. The most cost effective source of capital would be joint-ventured working interest participation funds. A typical joint venture would be 100% of the drilling and completion funds provided by such working interest participant and the funding source receiving a 75% working interest in the applicable wells. We would retain a 25% carried working interest in such a drilling program.

Our operating cash flow is dependent upon many factors, including production levels, sales volume, oil and gas prices and other factors that may be beyond our control. Oil and gas prices decreased substantially from the quarter ended October 31, 2015, to the quarter ended October 31, 2016. During the quarter ended October 31, 2015, oil prices were approximately $27 per barrel.

Critical Accounting Policies and Recent Accounting Pronouncements

We have identified the policies below as critical to our business operations and the understanding of our financial statements. The impact of these policies and associated risks is discussed throughout Management's Discussion and Analysis where such policies affect our reported and expected financial results. A complete discussion of our accounting policies is included in Note 3 of the July 31, 2016, Notes to Consolidated Financial Statements included in our annual Form 10-K Report for the year ended July 31, 2016.

Principles of Consolidation

Our consolidated financial statements include all of our subsidiaries.

Business Combinations

When we acquire a business from an entity under common control, whereby the companies are ultimately controlled by the same party or parties both before and after the transaction, it is treated similar to the pooling of interests method of accounting. The assets and liabilities are recorded at the transferring entity's historical cost instead of reflecting the fair value of assets and liabilities.

Oil and Gas Reserve Information

The information regarding our oil and gas reserves, the changes thereto and the estimated future net cash flows are dependent upon reservoir evaluation, price and other assumptions used in preparing our annual reserve study. A qualified independent petroleum engineer was engaged to prepare the estimates of our oil and gas reserves in accordance with applicable reservoir engineering standards and in accordance with Securities and Exchange Commission guidelines. However, there are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting future rates of production and the timing of development expenditures. These uncertainties are greater for properties which are undeveloped or have a limited production history. Changes in prices and cost levels, as well as the timing of future development costs, may cause actual results to vary significantly from the data presented. Our oil and gas reserve data represent estimates only and are not intended to be a forecast or fair market value of our assets.

Full Cost Method of Accounting

We account for our oil and natural gas operations using the full cost method of accounting. Under this method, all costs associated with property acquisition, exploration and development of oil and gas reserves are capitalized. Costs capitalized include acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties and cost of drilling and equipping productive and non-productive wells. Drilling costs include directly related overhead costs. All of our properties are located within the continental United States.

Revenue and Cost Recognition

The Company uses the sales method of accounting for oil and gas revenues. Under this method, revenues are recognized based on the actual volumes of gas and oil sold to purchasers. The volume sold may differ from the volumes the Company may be entitled to, based on the Company's individual interest in the property. Periodically, imbalances between production and nomination volumes can occur for various reasons. In cases where imbalances have occurred, a production imbalance receivable or liability will be recorded when determined. Costs associated with production are expensed in the period in which they are incurred.

Accounts Receivable

Trade accounts receivable are carried at original invoice amount less an estimate for doubtful accounts. There was no allowance for doubtful accounts at October 31, 2016 and 2015. Management determines the allowance by regularly evaluating individual customer receivables and considering a customer's financial condition, credit history and current economic conditions. Trade receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as income when received.

Capitalized Interest Costs

Currently, we do not capitalize interest costs on oil and gas projects under development, including the costs of unproved leasehold and property acquisition costs, wells in progress and related facilities. However, we may begin capitalizing interest in the future. During the three month periods ended October 31, 2016 and 2015, we didn't capitalize any interest.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a smaller reporting company, we are not required to provide the information otherwise required by this Item.

ITEM 4.

CONTROLS AND PROCEDURES.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. As of October 31, 2016, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was because we did not have sufficient personnel in our accounting and financial reporting functions. As a result, we were not able to achieve adequate segregation of duties and were not able to provide for adequate review of financial information, particularly our lack of a sufficient number of accounting staff with experience in public company SEC reporting and technical expertise. This control deficiency, which is pervasive in nature, results in a reasonable possibility that material misstatements of the financial statements will not be prevented or detected on a timely basis. The aforementioned material weakness was identified by our management in connection with the review of our financial statements for the period ended October 31, 2016.

Management of the company believes that these material weaknesses are due to the small size of the company's accounting staff. The small size of the company's accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation. To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of external legal and accounting professionals. As we grow, we expect to increase our number of employees, which will enable us to implement adequate segregation of duties within the internal control framework.

CEO and CFO Certifications

Appearing immediately following the Signatures section of this report there are Certifications of the CEO and the CFO. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended October 31, 2016 that has affected, or are reasonably likely to affect, our internal control over financial reporting.

PART II

ITEM 1.

LEGAL PROCEEDINGS.

None.

ITEM 1A.

RISK FACTORS.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

During the quarter ended October 31, 2016, we raised $1,316,561 through the sale of 5,063,698 restricted shares of common stock to 23 individuals. The shares were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended. Each purchaser was furnished with the same information that can be found in Part I of a Form S-1 Registration Statement and is a "sophisticated investor" as that term is defined in the rules, regulations, and opinions of the Securities and Exchange Commission.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

MINE SAFETY SECURITIES.

Not Applicable.

ITEM 5.

OTHER INFORMATION.

During the quarter ended October 31, 2016, we issued 5,063,698 restricted shares of common stock to 23 individuals. The shares were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended. Each purchaser was furnished with the same information that can be found in Part I of a Form S-1 Registration Statement and is a "sophisticated investor" as that term is defined in the rules, regulations, and opinions of the Securities and Exchange Commission. The foregoing shares accounted for 7.69% of our total outstanding shares. We failed to file a Form 8-K in conjunction therewith as required by Item 3.02 of Form 8-K.

ITEM 6.

EXHIBITS.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amended report to be signed on its behalf by the undersigned thereunto duly authorized on January 13, 2017.

EXHIBIT INDEX