UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________

 

FORM 10-K

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017

 

Commission File Number:  333-151300

_______________________________

 

SEARS OIL AND GAS CORPORATION

(Exact name of registrant as specified in its charter)

 

NEVADA		20-3455830
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

1661 Lakeview Circle

Ogden, Utah 84403

(Address of principal executive offices, including zip code)

 

(801) 399-3632

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

None

 

Securities registered pursuant to Section 12(g) of the Act:

None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in 405 of the Securities Act.    Yes o    No  x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. 

   Yes o    No x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                                                                           Yes x          No 

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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    o

  

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

 

Large accelerated filer o		Accelerated filer o
Non-accelerated filer  o (Do not check if smaller reporting company)		Smaller Reporting Company  x Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes x   No o

 

As of June 30, 2017, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the outstanding shares of the registrant's common stock held by non-affiliates was $179,487, based upon a closing price of $3.10 per common share.

 

As of April 16, 2018, the Registrant had outstanding 3,181,005 shares of Common Stock with a par value of $0.001 per share.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

     List hereunder the following documents if incorporated by reference and the part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated:  (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933.  The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 31, 2017).

None.

 

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INDEX

SEARS OIL AND GAS CORPORATION

 

		PAGE NO
PART I
ITEM 1	DESCRIPTION OF BUSINESS	4
ITEM 1A	RISK FACTORS	6
ITEM 1B	UNRESOLVED STAFF COMMENTS	8
ITEM 2	PROPERTIES	8
ITEM 3	LEGAL PROCEEDINGS	8
ITEM 4	MINE SAFETY DISCLOSURES	8
PART II
ITEM 5	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	8
ITEM 6	SELECTED FINANCIAL DATA	9
ITEM 7	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	9
ITEM 7A	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	10
ITEM 8	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	10
ITEM 9	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	10
ITEM 9A	CONTROLS AND PROCEDURES	10
ITEM 9B	OTHER INFORMATION	11
PART III
ITEM 10	DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	12
ITEM 11	EXECUTIVE COMPENSATION	13
ITEM 12	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	13
ITEM 13	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	14
ITEM 14	PRINCIPAL ACCOUNTANT FEES AND SERVICES	14
PART IV
ITEM 15	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	14
SIGNATURES		15

 

 

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PART I.

 

Cautionary Note

 

This Annual Report on Form 10-K contains forward-looking statements which are subject to a number of risks and uncertainties. All statements that are not historical facts are forward-looking statements, including statements about our business strategy, the effect of Generally Accepted Accounting Principles ("GAAP") pronouncements, uncertainty regarding our future operating results and our profitability, anticipated sources of funds and all plans, objectives, expectations and intentions and the statements regarding future potential revenue, gross margins and our prospects for fiscal 2018. These statements appear in a number of places and can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "future," "intend," or "certain" or the negative of these terms or other variations or comparable terminology, or by discussions of strategy.

 

Actual results may vary materially from those in such forward-looking statements as a result of various factors that are identified in "Item 1A.—Risk Factors" and elsewhere in this document. No assurance can be given that the risk factors described in this Annual Report on Form 10-K are all of the factors that could cause actual results to vary materially from the forward-looking statements.  References in this Annual Report on Form 10-K to (i) the "Company," the "Registrant," "Sears,” "we," "our," “SRSG,” and "us" refer to Sears Oil and Gas Corporation.

Investors and security holders may obtain a free copy of the Annual Report on Form 10-K and other documents filed by SRSG with the Securities and Exchange Commission ("SEC") at the SEC's website at http://www.sec.gov.

 

ITEM 1	BUSINESS.

 

General

Sears Oil and Gas Corporation (“SRSG”), a Nevada corporation, was incorporated on October 18, 2005. At the time SRSG was organized its principal business objective was to take advantage of the many and varied opportunities presented within the oil and gas industry.  SRSG intended to exploit multiple revenue streams throughout the natural resources industry, including oil, gas and mining areas. However, after various failed efforts, the principals sold controlling interest in the Company. The Company now seeks another company with which to merge or acquire for stock.  SRSG has never declared bankruptcy, it has never been in receivership, and it has never been involved in any legal action or proceedings. Since incorporation, SRSG has not made any significant purchase or sale of assets, nor has it been involved in any mergers, acquisitions or consolidations.  SRSG has no subsidiaries.  Our fiscal year end is December 31st.

 

Description of Business

 

The Company intends to continue to seek, investigate and, if warranted, acquire an interest in a business opportunity. Management has not established any firm criteria with respect to the type of business with which the Company desires to become involved and will consider participating in a business enterprise in a variety of different industries or areas with no limitation as to the geographical location of the enterprise.  The Company’s management will have unrestricted discretion in reviewing, analyzing, and ultimately selecting a business enterprise for acquisition or participation by the Company.  It is anticipated that any enterprise ultimately selected will be selected by management based on its analysis and evaluation of the business and financial condition of the enterprise, as well as its business plan, potential for growth, and other factors, none of which can be anticipated to be controlling.  If the Company is able to locate a suitable business enterprise, the decision to acquire or participate in the enterprise may be made by the Company’s board of directors without stockholder approval.  Approval may also be obtained pursuant to the consent of a majority of the Company’s stockholders and, since the principal stockholders of the Company own approximately 96% of the Company’s outstanding shares, they would be able to approve any transaction with the affirmative vote of a limited number of additional shares.  Further, it is anticipated that the acquisition of or participation in an enterprise may involve the issuance by the Company of a controlling interest in the Company, which would dilute the respective equity interests of the Company’s stockholders and may also result in a reduction of the Company’s net tangible asset value per share.  

The activities of the Company will continue to be subject to several significant risks which arise primarily as a result of the fact that the Company has no specific business and may acquire or participate in a business opportunity based on the decision of management which will, in all probability, act without the consent, vote, or approval of the Company’s stockholders.  The risks faced by the Company are further increased as a result of its limited resources and its inability to provide a prospective business opportunity with additional capital.  (See “Item 1A.Risk Factors.”)

Although management believes that it is in the best interest of the Company to acquire or participate in a business enterprise, there is no assurance that the Company will be able to locate a business enterprise which management believes is suitable for acquisition or participation by the Company or that if an enterprise is located, it can be acquired on terms acceptable to the Company.  Similarly, there can be no assurance

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that if any business opportunity is acquired, it will perform in accordance with management’s expectations or result in any profit to the Company or appreciation in the market price for the Company’s shares.

If business opportunities become available, the selection of an opportunity in which to participate will be complex and extremely risky and may be made on management’s analysis of the quality of the other company’s management and personnel, the anticipated acceptability of new products or marketing concepts, the merit of technological changes, and numerous other factors which are difficult, if not impossible to analyze through the application of any objective criteria.  There is no assurance that the Company will be able to identify and acquire any business opportunity which will ultimately prove to be beneficial to the Company and its stockholders.

It is anticipated that business opportunities may be introduced to the Company from a variety of sources, including its sole officer and director, and his business and social contacts, professional advisors such as attorneys and accountants, securities broker-dealers, venture capitalists, members of the franchise community, and others who may present unsolicited proposals.  

The Company will not restrict its search to any particular business, industry, or geographical location.  The Company may enter into a business or opportunity involving a “start-up” or new company or an established business.  It is impossible to predict the status of any business in which the Company may become engaged.

The period within which the Company may participate in a business opportunity cannot be predicted and will depend on circumstances beyond the Company’s control, including the availability of business opportunities, the time required for the Company to complete its investigation and analysis of prospective business opportunities, the time required to prepare the appropriate documents and agreements providing for the Company’s participation, and other circumstances.  

It is impossible to predict the manner in which the Company may participate in a business opportunity.  Specific business opportunities will be reviewed and, on the basis of that review, the legal structure or method deemed by management to be most suitable will be selected.  The structure may include, but is not limited to, mergers, reorganizations, leases, purchase and sale agreements, licenses, joint ventures, and other contractual arrangements.  The Company may act directly or indirectly through an interest in a partnership, corporation, or other form of organization.  Implementing the structure may require the merger, consolidation, or reorganization of the Company with other corporations or forms of business organization, and there is no assurance that the Company would be the surviving entity.  In addition, the current stockholders of the Company may not have control of a majority of the voting shares of the Company following a reorganization transaction.  As part of the transaction, all or a majority of the Company’s directors may resign and new directors may be appointed without any vote by the stockholders.

The Company will most likely acquire a business opportunity by issuing shares of the Company’s common stock to the owners of the business opportunity.  Although the terms of the transaction cannot be predicted, in many instances the business opportunity entity will require that the transaction by which the Company acquires its participation be “tax-free” under Sections 351 or 368 of the Internal Revenue Code of 1986 (the “Code”).  It is anticipated that any business opportunity acquisition will result in substantial additional dilution to the equity of those who were stockholders of the Company prior to the acquisition.

Notwithstanding the fact that the Company is technically the acquiring entity in the foregoing circumstances, generally accepted accounting principles will ordinarily require that the transaction be accounted for as if the Company had been acquired by the other entity owning the business venture or opportunity and, therefore, will not permit a write up in the carrying value of the assets of the other company.

It is anticipated that securities issued in a transaction of this type would be issued in reliance on exemptions from registration under applicable federal and state securities laws.  In some circumstances, however, as a negotiated element of the transaction, the Company may agree to register such securities either at the time the transaction is consummated or under certain conditions or at specified times thereafter.  The issuance of a substantial number of additional securities and their potential sale into any trading market which may develop in the Company’s common stock may have a depressive effect on the market price for the Company’s common stock.

The Company will participate in a business opportunity only after the negotiation and execution of a written agreement. Although the terms of the agreement cannot be predicted, generally the agreement would require specific representations and warranties by all of the parties thereto, specify certain events of default, detail the terms of closing and the conditions which must be satisfied by each of the parties thereto prior to the closing, set forth remedies on default, and include miscellaneous other terms.

It is emphasized that management of the Company has broad discretion in determining the manner by which the Company will participate in a prospective business opportunity and may enter into transactions having a potentially adverse impact on the current stockholders in that their percentage ownership in the Company may be reduced without any increase in the value of their investment or that the business opportunity in which the Company acquires an interest may ultimately prove to be unprofitable.  The transaction may be consummated without being submitted to the stockholders of the Company for their consideration.  In some instances, however, the proposed participation in a business opportunity may be submitted to the stockholders for their consideration, either voluntarily by the board of directors to seek the stockholders’ advice or consent or because of a requirement to do so by state law.

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The investigation of specific business opportunities and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments may require substantial management time and attention and substantial costs for accountants, attorneys, and others.  If a decision is made not to participate in a specific business opportunity, the costs previously incurred in the related investigation would not be recoverable.  Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to the Company of the related costs incurred.

The Company’s operations following its acquisition of an interest in a business opportunity will be dependent on the nature of the opportunity and interest acquired.  The specific risks of a given business opportunity cannot be predicted at the present time.

The Company is not registered and does not propose to register as an “investment company” under the Investment Company Act of 1940 (the “Investment Act”).  The Company intends to conduct its activities so as to avoid being classified as an “investment company” under the Investment Act and, therefore to avoid application of the registration and other provisions of the Investment Company Act and the related regulations.

Regulation

It is impossible to predict what government regulation the Company may be subject to until it has acquired an interest in a business opportunity.  The use of assets and/or conduct of businesses which the Company may acquire could subject it to environmental, public health and safety, land use, trade, or other governmental regulations and state or local taxation. In selecting a business opportunity to acquire, management will endeavor to ascertain, to the extent of the limited resources of the Company, the effects of government regulation on the prospective business of the Company.  In certain circumstances, however, such as the acquisition of an interest in a new or start-up business activity, it may not be possible to predict with any degree of accuracy the impact of government regulation.

Competition

The Company encounters substantial competition in its efforts to locate a business opportunity.  The primary competition for desirable investments comes from investment bankers, business development companies, venture capital partnerships and corporations, venture capital affiliates of large industrial and financial companies, small business investment companies, other shell companies, and wealthy individuals.  Most of these entities have significantly greater experience, resources, and managerial capabilities than the Company and are in a better position than the Company to obtain access to attractive business opportunities.

Facilities

The Company’s principal executive office is currently located at the home of Mark A. Scharmann, our sole officer and director. Beginning August 2017, the Company entered into an oral agreement to pay Mr. Scharmann $500 per month as payment for use of his personal residence as the Company’s office and mailing address.  

Employees

The Company has no employees and its business and affairs are handled by its president who provides services to the Company on an as needed basis, without compensation.  Management of the Company may engage consultants, attorneys, and accountants on an as needed basis, and does not anticipate a need to engage any full-time employees so long as it is seeking and evaluating business opportunities.  

ITEM 1A	RISK FACTORS

 

Factors Affecting Future Operating Results

 

This Annual Report on Form 10-K contains forward-looking statements concerning our future programs, expenses, revenue, liquidity and cash needs as well as our plans and strategies. These forward-looking statements are based on current expectations and we assume no obligation to update this information, except as required by applicable laws and regulations. Numerous factors could cause actual results to differ significantly from the results described in these forward-looking statements, including the following risk factors.

  

Because our auditors have issued a going concern opinion, there is substantial uncertainty we will continue activities in which case you could lose your investment.

 

Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. As such we may have to cease activities and you could lose your investment. We will continue to look for a merger

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candidate for our business.

 

We currently do not have adequate funds to cover the costs associated with maintaining our status as a Reporting Company.

As of December 31, 2017 the Company had approximately $534 cash available.  

We lack an operating history and have losses which we expect to continue into the future. As a result, we may have to suspend or cease activities, which would result in a complete loss of any investment made into the Company.

 

We were incorporated on October 18, 2005 and we have not started any business activities or realized any revenues. We have no operating history upon which an evaluation of our future success or failure can be made. As of December 31, 2017 our net loss since inception was $579,608.  Based upon current plans, we expect to incur operating losses in future periods.

 As a result, we may not generate revenues in the future.

 

If we are able to complete financing through the sale of additional shares of our common stock in the future, then shareholders will experience dilution.

 

The most likely source of future financing presently available to us is through the sale of shares of our common stock. Any sale of common stock will result in dilution of equity ownership to existing shareholders. This means that if we sell shares of our common stock, more shares will be outstanding and each existing shareholder will own a smaller percentage of the shares then outstanding. To raise additional capital we may have to issue additional shares, which may substantially dilute the interests of existing shareholders. Alternatively, we may have to borrow large sums, and assume debt obligations that require us to make substantial interest and capital payments.

 

Because there is currently limited public trading market for our common stock, you may not be able to resell your stock.

 

Our common stock is quoted on the OTC Pink Marketplace, under the symbol SRSG.  We have limited trading.

 

Because our securities are subject to penny stock rules, you may have difficulty reselling your shares.

 

Our shares are penny stocks are covered by section 15(g) of the Securities Exchange Act of 1934 which imposes additional sales practice requirements on broker/dealers who sell the Company's securities including the delivery of a standardized disclosure document; disclosure and confirmation of quotation prices; disclosure of compensation the broker/dealer receives; and, furnishing monthly account statements. For sales of our securities, the broker/dealer must make a special suitability determination and receive from its customer a written agreement prior to making a sale. The imposition of the foregoing additional sales practices could adversely affect a shareholder's ability to dispose of his stock and as a result the investor may lose his entire investment made into the Company. 

 

ITEM 1B	UNRESOLVED STAFF COMMENTS.

None.

 

ITEM 2	PROPERTIES.

 

We do not own any property. The principal offices are located at 1661 Lakeview Circle, Ogden, Utah 84403

ITEM 3	LEGAL PROCEEDINGS.

 

Sears Oil and Gas is not currently a party to any legal proceedings.

ITEM 4	MINE SAFETY DISCLOSURES.

 None.

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PART II

 

ITEM 5	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

The Company’s common stock is included on the OTC Pink Marketplace under the symbol “SRSG.”  On March 13, 2018, the published closing price was $3.10 for the Company’s common stock on the OTC Pink Marketplace.

At December 31, 2017, there were approximately 35 holders of record of the Company’s common stock, as reported by the Company’s transfer agent.  In computing the number of holders of record, each broker-dealer and clearing corporation holding shares on behalf of its customers is counted as a single stockholder.

The Following represents trading ranges per quarter.

Quarter Ending

3/31/2016

High   $1.99  Low $1.99

Quarter Ending

6/30/2016  

High   $1.80 Low $1.80

Quarter Ending

9/30/2016

High   $2.09 Low $1.80

Quarter Ending

12/31/2016

High   $2.93 Low $2.10

Quarter Ending

3/31/2017

High   $4.00 Low $2.15

Quarter Ending

6/30/2017  

High   $3.90 Low $3.00

Quarter Ending

9/30/2017

High   $ NA  Low $ NA

Quarter Ending

12/31/2017

High   $ NA  Low $ NA

No dividends have ever been paid on the Company’s securities, and the Company has no current plans to pay dividends in the foreseeable future.  

Equity Compensation Plans

We do not have in effect any compensation plans under which our equity securities are authorized for issuance and we do not have any outstanding stock options.

Transfer Agent

New Horizon Transfer Inc, Suite 215-515 West Pender Street, Vancouver, B.C., V6B 6H5, Canada, serves as the transfer agent and registrar for our common stock.

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

We have not adopted a stock repurchase plan and we did not purchase any shares of our equity securities during the 2017 fiscal year.

 

   

ITEM 6	SELECTED FINANCIAL DATA.

 

Not Applicable.  The Company is a “smaller reporting company.”

 

ITEM 7	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following discussion is intended to assist in the understanding and assessment of significant changes and trends related to the results of operations and financial condition of Sears Oil and Gas Corporation for the years ended December 31, 2017 and 2016.

The Company is a shell company that conducts no active business operations and is seeking business opportunities for acquisition or participation by the Company.

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The Report of Independent Registered Public Accounting Firm on the Company’s 2017 audited financial statements addresses an uncertainty about the Company’s ability to continue as a going concern, indicating that the Company has incurred losses since its inception and has no on-going operations.  The report further indicates that these factors raise substantial doubt about the Company’s ability to continue as a going concern.  At December 31, 2017, the Company had a working capital deficit of $234,084 and a stockholders’ deficit of $234,084.  The Company incurred net losses of $224,387 and $63,591 for its fiscal years ended December 31, 2017 and 2016, respectively.  The Company has not entered into any agreements or arrangements for the provision of additional debt or equity financing and there can be no assurance that it will be able to obtain the additional debt or equity capital required to continue its operations.  

Critical Accounting Policies

 

The preparation of our financial statements and notes thereto requires management to make estimates and assumptions that affect the amounts and disclosures reported within those financial statements. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, contingencies, litigation and income taxes. Management bases its estimates and judgments on historical experiences and on various other factors believed to be reasonable under the circumstances. Actual results under circumstances and conditions different than those assumed could result in differences from the estimated amounts in the financial statements. There have been no material changes to these policies during fiscal 2017 and 2016.  As of December 31, 2017 the Company has not identified any critical estimates that are used in the preparation of the financial statements.

 

Liquidity and Capital Resources. As of December 31, 2017 we had cash of $534 and a negative working capital of $234,084.  This compares with cash of $93 and negative working capital of $253,221 as of December 31, 2016.

Net cash used by operating activities totaled $23,704 for the year-ended December 31, 2017 consisting of a loss from operations of $224,387 which was partially offset by a $164,794 loss on extinguishment of debt, a change in accounts payable and accrued expenses of $17,452 and a change in accrued interest – related parties of $18,437. This compares with net cash used in operating activities of $28,751 for the year-ended December 31, 2016 consisting of a loss from operations of $63,591 and a change in accounts payable and accrued expenses of $24,012 and a change in accrued interest – related parties of $10,828.

There were no investing activities in either the year-ended December 31, 2017 or 2016.

Net cash provided by financing activities totaled $24,145 for the year-ended December 31, 2017 consisting of loans and advances from related parties.  This compares with net cash provided by financing activities of $27,725 for the year-ended December 31, 2016 consisting of loans and advances from related parties.  

We must secure additional funds in order to continue our business. We will be required to secure a loan to pay expenses relating to filing this report including legal, accounting and filing fees.  We believe that we will be able to obtain this loan from a current shareholder of the Company; however we cannot provide any assurance that we will be able to raise additional proceeds or secure additional loans in the future to cover our expenses related to maintaining our reporting company status.  Furthermore, there is no guarantee we will receive the required financing to complete our business strategies; we cannot provide any assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations.  If we are unable to accomplish raising adequate funds then any it would be likely that any investment made into the Company would be lost in its entirety.

Results of Operations. We did not have revenue for either the year-ended December 31, 2017 or 2016. For the year-ended December 31, 2017, we incurred $30,830 of administrative expenses compared to $34,971 for the year-ended December 31, 2016.  For the year-ended December 31, 2017 we incurred $28,763 of interest expense on notes payable and a loss on extinguishment of debt in the amount of $164,794.  The loss on extinguishment of debt arose from the excess value of shares that were issued over the value of the debt settled.  This compares with $28,620 of interest expense for the year-ended December 31, 2016.

As a result of the foregoing, we incurred a loss of $224,387 for the year-ended December 31, 2017 compared to a loss of $63,591 for the year-ended December 31, 2016. Since incorporation we have incurred a loss of $579,608.

  

Off-Balance Sheet Arrangements. None

 

Contractual Obligations.  None

Recent Accounting Pronouncements

We have reviewed accounting pronouncements issued during the past two years and have adopted any that are applicable to our company.  We have determined that none had a material impact on our financial position, results of operations, or cash flows for the years ended December 31, 2017 and 2016.

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ITEM 7A	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We do not currently hold any market risk sensitive instruments entered into for hedging transaction risks related to foreign currencies. In addition, we have not entered into any transactions with derivative financial instruments for trading purposes.

ITEM 8	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

Our financial statements appear beginning on page F-17, immediately following the signature page of this report.

ITEM 9	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None

 

ITEM 9A	CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2017, these disclosure controls and procedures were ineffective to ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rule and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no material changes in internal control over financial reporting that occurred during the fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.   Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and Chief Financial Officer and effected by our 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 generally accepted accounting principles.

Our evaluation of internal control over financial reporting includes using the COSO framework, an integrated framework for the evaluation of internal controls issued by the Committee of Sponsoring Organizations of the Treadway Commission, to identify the risks and control objectives related to the evaluation of our control environment.

Our management conducted an evaluation of the effectiveness of our internal control over financial reporting.  Based on our evaluation, management concluded that our internal control over financial reporting was ineffective for both of our fiscal years ended December 31, 2017 and December 31, 2016.  A material weakness in internal control over financial reporting is defined by the Public Company Accounting Oversight Board’s Audit Standard No. 5 as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.  A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting. 

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation requirements by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of controls.  Accordingly,

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even an effective internal control system may not prevent or detect material misstatements on a timely basis.  Also, 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.

Changes in Internal Controls

There have been no changes in our internal control over financial reporting that occurred during our fiscal year ended December 31, 2017 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

 

ITEM 9B	OTHER INFORMATION.

NONE

11

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PART III

 

ITEM 10	DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Sears Oil and Gas Corporation’s executive officer and director and his respective age as of December 31, 2017 are as follows:

Directors:

	Name of Director	Age
	Mark A. Scharmann	59

 

Executive Officers:

	Name of Officer	Age	Office
	Mark A. Scharmann	59	President, Chief Executive Officer
			Chief Financial Officer, Secretary and Treasurer

The term of office for each director is one year, or until the next annual meeting of the shareholders.

Biographical Information

Set forth below is a brief description of the background and business experience of our executive officer and director for the past five years

Mark A. Scharmann – President and Director –   For the past several years Mr. Scharmann has been a private investor in residential real estate and private and public companies.  Mr. Scharmann became interested in investing in emerging growth companies in December 1979 while attending Weber State College. He compiled and edited a publication titled Digest of Stocks Listed on the Intermountain Stock Exchange (Library of Congress Cat. No. 80-82407). In 1981, he compiled and edited an industry directory called the OTC Penny Stock Digest (Library of Congress Cat. No. 80-82471). For the past several years Mr. Scharmann has also consulted with both public and privately held companies relating to management, mergers and acquisitions, debt and equity financing, capital market access, and introductions to investor relations groups. In addition to being and officer and director of the Company, Mr. Scharmann is an officer and director of Bioethics, LTD., a shell company listed on the OTC Markets under the symbol (“BOTH”). He is an officer of Roycemore Corporation, a private firm specializing in the development and acquisition of self-storage facilities. Mr. Scharmann is a co-founder of wffl.com and wasatchbasketballleague.com, both youth sports information web sites. He graduated from Weber State University, Ogden, UT in 1997 with a Bachelors of Integrated Studies Degree in Business, Psychology and Health Education.

Sear Oil and Gas Corporation’s Officer and sole Director has not been involved, during the past five years, in any bankruptcy, conviction or criminal proceedings; has not been subject to any order, judgment, or decree, not subsequently reversed or suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and has not been found by a court of competent jurisdiction, the Commission or the Commodity Futures trading Commission to have violated a federal or state securities or commodities law.

Significant Employees. We do not employ any non-officers who are expected to make a significant contribution to its business.

Corporate Governance

Nominating Committee.   We have not established a Nominating Committee because of our limited operations; and because we have only one director and officer, we believe that we are able to effectively manage the issues normally considered by a Nominating Committee.

Audit Committee.   We have not established an Audit Committee because of our limited operations; and because we have only one director and officer, we believe that we are able to effectively manage the issues normally considered by a Audit Committee.

 

Code of Ethics. We have adopted a Code of Ethics for our principal executive and financial officers.  Our Code of Ethics is filed as an Exhibit to our registration statement filed on May 30, 2008.

ITEM 11	EXECUTIVE COMPENSATION.

 

Summary Compensation Table

 

	Annual Compensation				Long-Term Compensation
Name and Principal Position	Year	Salary ($)	Bonus	Other Annual Compensation ($)		Restricted Stock Awards ($)	Securities Underlying Options (#)	LTIP Payouts ($)	All Other Compensation ($)
Mark A. Scharmann	2016	-	-	-		-	-	-	-
Officer and Director	2017	-	-	-		-	-	-	-

There has been no cash payment paid to the executive officer for services rendered in all capacities to us for the period ended December 31, 2017. There has been no compensation awarded to, earned by, or paid to the executive officer by any person for services rendered in all capacities to us for the fiscal period ended December 31, 2017.  No compensation is anticipated within the next six months to any officer or director of the Company.

Stock Option Grants

 

We did not grant any stock options to the executive officer during the most recent fiscal period ended December 31, 2017.  We have also not granted any stock options to the executive officer of the Company.

ITEM 12	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 The following table provides the names and addresses of each person known to Sears Oil and Gas Corporation to own more than 5% of the outstanding common stock as of December 31, 2017, and by the Officers and Directors, individually and as a group. Except as otherwise indicated, all shares are owned directly.

 

Title Of Class	Name, Title and Address of Beneficial Owner of Shares		Amount of Beneficial Ownership
							%
Common	Mark A. Scharmann, President and Director 1661 Lakeview Cir, Ogden, UT 84403			3,061,553				96.24	%
	All Directors and Officers as a group			3,061,553				96.24	%

The percent of class is based on 3,181,005 shares of common stock issued and outstanding as of December 31, 2017.

 

ITEM 13	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

During the year ended December 31, 2017, related parties of the company loaned a total of $24,145 to the Company in order to pay for expenses and continue the reporting requirements with the Securities and Exchange Commission.  The balance due to these related parties was $167,803 plus accrued interest of $45,584 as of December 31, 2017.

13

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Beginning August 2017, the Company entered into an oral agreement to pay the Company’s sole director $500 per month as payment for use of his personal residence as the Company’s office and mailing address.

During the three months ended September 30, 2017, a convertible promissory note totaling $15,000 was assigned to the Company’s sole director.  The note and $63,730 in accrued interest were subsequently converted into 3,000,000 shares of common stock valued at $243,524, resulting in a loss on extinguishment of debt of $164,794.

There were no other material transactions between the Company and any Officer, Director or related party.  Other than the foregoing, there has not, since the date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us.

 Any future transactions between us and our Officers, Directors, and Affiliates will be on terms no less favorable to us than can be obtained from unaffiliated third parties. Such transactions with such persons will be subject to approval of our Board of Directors.

ITEM 14	PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The amounts paid to our independent auditing firm for each of the past two calendar years are as follows:

2017

2016

Auditing                         

$8 900

$7,600

Tax services

Other servicesⁱ

________         __________

 Total                               

$8,900

$7,600

PART IV

 

ITEM 15		EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a)	The following documents have been filed as a part of this Annual Report on Form 10-K.

1.	Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	F-16
Balance Sheets	F-18
Statements of Operations	F-19
Statements of Stockholders' Equity	F-20
Statements of Cash Flows	F-21
Notes to Financial Statements	F-22-26

2.	Financial Statement Schedules.

All schedules are omitted because they are not applicable or not required or because the required information is included in the Financial Statements or the Notes thereto.

3.	Exhibits.

The following exhibits are filed as part of, or incorporated by reference into, this Annual Report:

Exhibit Number		SEC Reference Number		Title of Document		Location
3.1		3		Articles of  Incorporation		Incorporated by Reference(1)
3.2		3		Bylaws		Incorporated by Reference(1)
31.1		31		Section 302 Certification of Chief Executive and Chief Financial Officer		This Filing
32.1		32		Section 1350 Certification of Chief Executive and Chief Financial Officer		This Filing
101.INS(2)				XBRL Instance Document		This Filing
101.SCH(2)				XBRL Taxonomy Extension Schema		This Filing
101.CAL(2)				XBRL Taxonomy Extension Calculation Linkbase		This Filing
101.DEF(2)				XBRL Taxonomy Extension Definition Linkbase		This Filing
101.LAB(2)				XBRL Taxonomy Extension Label Linkbase		This Filing
101.PRE(2)				XBRL Taxonomy Extension Presentation Linkbase		This Filing

⁽¹⁾Incorporated by reference to Exhibits 3(i) and 3(ii) of the Company’ 2003 Form 10-KSB report, filed March 30, 2004.

⁽²⁾XBRL information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and is not subject to liability under those sections, is not part of any registration statement or prospectus to which it relates and is not incorporated or deemed to be incorporated by reference into any registration statement, prospectus or other document.

SIGNATURE

 

Pursuant to the requirements of Section 13 or 15(d) 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.

	SEARS OIL AND GAS CORPORATION
	By:		/s/ Mark A. Scharmann
			Mark A. Scharmann
			President
			Chief Executive Officer, Director
		By: /s/ Mark A. Scharmann
			Mark A. Scharmann Chief Financial Officer
			Treasurer, Secretary,
			Date: April 17, 2018

15

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Sears Oil and Gas Corporation

Salt Lake City, Utah

Opinion on the Financial Statements

We have audited the accompanying balance sheet of Sears Oil and Gas Corporation (the Company) as of December 31 2017, and the related statements of operations,  stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  The Company has suffered recurring losses and has no operations which raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Pinnacle Accountancy Group of Utah

We have served as the Company’s auditor since February 2018.

Pinnacle Accountancy Group of Utah

Farmington, Utah

Farmington Office:                                            Members of the AICPA and UACPA                                           Ogden Office:

1438 North Highway 89, Ste. 120               www.pinncpas.com     3590 Harrison Blvd. Ste. GL-2

Farmington, UT 84025  Ogden, UT 84403

(801) 447-9572            (801) 399-1183

F-16

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PRITCHETT, SILER & HARDY, P.C.

CERTIFIED PUBLIC ACCOUNTANTS

A PROFESSIONAL CORPORATION

1438 N. HIGHWAY 89, STE. 130

FARMINGTON, UTAH 84025

_______________

(801) 447-9572     FAX (801) 447-9578

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Sears Oil and Gas, Corporation

Ogden, Utah

We have audited the accompanying balance sheet of Sears Oil and Gas, Corporation as of December 31, 2016 and the related statements of operations, stockholders’ deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sears Oil and Gas, Corporation as of December 31, 2016 and the results of its operations and cash flows for the years then ended in conformity with generally accepted accounting principles in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  The Company has suffered recurring losses and has no operations which raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Pritchett, Siler & Hardy, P.C.

Pritchett, Siler & Hardy, P.C

Farmington, Utah

April 10, 2017

SEARS OIL AND GAS CORPORATION
Statements of Operations
			For the Years Ended
			December 31,
			2017		2016
NET REVENUES			$                   -		$                   -
OPERATING EXPENSES
	Selling, general and administrative		30,830		34,971
		Total Operating Expenses	30,830		34,971
LOSS FROM OPERATIONS			(30,830)		(34,971)
OTHER INCOME (EXPENSES)
	Loss on extinguishment of debt		(164,794)		-
	Interest expense		(28,763)		(28,620)
		Total Other Income (Expenses)	(193,557)		(28,620)
LOSS BEFORE INCOME TAXES			(224,387)		(63,591)
PROVISION FOR INCOME TAXES			-		-
NET LOSS			$      (224,387)		$        (63,591)
BASIC NET LOSS PER SHARE			$            (0.19)		$            (0.35)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING			1,183,745		181,005
The accompanying notes are an integral part of these financial statements.

SEARS OIL AND GAS CORPORATION
Statements of Cash Flows
									For the Years Ended
									December 31,
									2017				2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss									$      (224,387)				$        (63,591)
Adjustments to reconcile net loss to net cash
used by operating activities:
		Loss on extinguishment of debt							164,794				-
Changes in operating assets and liabilities:
		Accounts payable and accrued interest							17,452				24,012
		Accrued interest - related parties							18,437				10,828
		Net Cash Used by Operating Activities							(23,704)				(28,751)
CASH FLOWS FROM INVESTING ACTIVITIES									-				-
CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from loans payable - related parties								24,145				27,725
		Net Cash Provided by Financing Activities							24,145				27,725
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS								441				(1,026)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD								93				1,119
CASH AND CASH EQUIVALENTS AT END OF PERIOD									$              534				$                93
SUPPLEMENTAL DISCLOSURES:
	Cash paid for interest								$                   -				$           5,000
	Cash paid for income taxes								$                   -				$                   -
	Non-cash investing and financing activities:
		Assignment of Convertible Notes Payable to Related Party						$         15,000				$                   -
		Conversion of related party debt and accrued interest into common stock						$         78,730				$                   -
The accompanying notes are an integral part of these financial statements.

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SEARS OIL AND GAS CORPORATION

Notes to the Financial Statements

December 31, 2017 and 2016

NOTE 1 - ORGANIZATION AND HISTORY

Sears Oil and Gas Corporation (the Company) was incorporated on October 18, 2005 in the State of Nevada. The Company was formed to use a patented technology to produce crude oil from “tar sands” deposits. The Company will also conduct administrative, correlated transportation and delivery of product, financial management, and the marketing and sales programs of the operation. The Company has not commenced principle operations.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Basic Loss Per Share - The computations of basic loss per share of common stock are based on the weighted average number of shares outstanding at the date of the financial statements. The convertible debt was not included as it would be anti-dilutive due to continuing losses.

Year Ended	Loss (Numerator)	Shares (Denominator)	Per Share Amount
December 31, 2017	$             (224,387)	1,183,745	$             (0.19)
December 31, 2016	$             (63,591)	181,005	$             (0.35)

Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Fair Value of Financial Instruments - On January 1, 2008, the Company adopted FASB ASC 820-10-50, “Fair Value Measurements.”  This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures.  The three levels are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

---

The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

We have reviewed accounting pronouncements issued during the past two years and have adopted any that are applicable to our company.  We have determined that none had a material impact on our financial position, results of operations, or cash flows for the years ended December 31, 2017 and 2016.

Long-lived Assets - The Company’s long lived assets are recorded at its cost. The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

Concentration of Risk - Cash - The Company at times may maintain a cash balance in excess of insured limits. At December 31, 2017, the Company has no cash in excess of insured limits.

SEARS OIL AND GAS CORPORATION

Notes to the Financial Statements

December 31, 2017 and 2016

Revenue Recognition - The Company will determine its revenue recognition policy when it determines a business model and achieves successful operations.  

Accounts Receivable - Accounts receivable are carried at the expected net realizable value. The allowance for doubtful accounts is based on management's assessment of the collectability of specific customer accounts and the aging of the accounts receivables.  If there were a deterioration of a major customer's creditworthiness, or actual defaults were higher than historical experience, our estimates of the recoverability of the amounts due to us could be overstated, which could have a negative impact on operations.

Cash and Cash Equivalents - For purposes of the Statement of Cash Flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.

Property and Equipment - Property and equipment are carried at cost, net of accumulated depreciation. Depreciation is computed straight-line over periods to be determined based on the nature of the assets.

NOTE 3 -   INCOME TAXES

Income Taxes - The Financial Accounting Standards Board (FASB) has issued FASB ASC 740-10.  FASB ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements.  This standard requires a company to determine whether it is more likely than not that a tax position will be sustained will be sustained upon examination based upon the technical merits of the position.  If the more-likely-than- not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.  As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10.

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

At December 31, 2017 the Company had net operating loss carryforwards of approximately $580,000 that may be offset against future taxable income through 2037.  No tax benefits have been reported in the financial statements, because the potential tax benefits of the net operating loss carry forwards are offset by a valuation allowance of the same amount.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations.  Should a change in ownership occur, net operating loss carryforwards may be limited as to use in the future.

Net deferred tax assets consist of the following components as of December 31, 2017 and 2016:

	2017		2016
Deferred tax assets:
NOL Carryover	$     151,000		$       92,000
Valuation allowance	(151,000)		(92,000)
Net deferred tax asset	$   -		$   -

SEARS OIL AND GAS CORPORATION

Notes to the Financial Statements

December 31, 2017 and 2016

The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates to pretax income from continuing operations for the years ended December 31, 2017 and 2016 due to the following:

	2017		2016
Current Federal Tax (34%)	$               76,300		$                 21,621
Current State Tax (5%)	11,200		3,180
Impact of Newly Enacted rates on deferred taxes	(28,500)		-
Change in valuation allowance	(59,000)		(24,801)
	$ -		$ -

At December 31, 2017, the Company had no unrecognized tax benefits that, if recognized, would affect the effective tax rate.

The Company did not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months.

The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes.  As of December 31, 2017 and 2016, the Company had no accrued interest or penalties related to uncertain tax positions.

The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended December 31, 2017, 2016 and 2015.

NOTE 4 -   GOING CONCERN

 

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  However, the Company has incurred losses since inception and does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.  The Company intends to raise additional capital when required to produce crude oil from tar sands.  When and if these activities provide sufficient revenues it would allow it to continue as a going concern. In the interim the Company is working toward raising operating capital through the private placement of its common stock or debt instruments.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations.  The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

NOTE 5 – LOANS AND ADVANCES FROM RELATED PARTIES

During the years ended December 31, 2017 and 2016, the sole officer and director of the company and another affiliated shareholder made loans to the Company in order to pay for expenses and continue the reporting requirements with the Securities and Exchange Commission.  These loans accrue interest at the rate of 12% per annum, are due on demand and are not convertible into common stock of the Company.

During the year ended December 31, 2017, these related parties loaned a total of $24,145 to the Company.  Interest in the amount of $11,837 accrued on these loans.  As of December 31, 2017 the balance due to these related parties for these loans was $112,803 principal and accrued interest of $20,703.

During the year ended December 31, 2016, these related parties loaned a total of $27,725 to the Company.  Interest in the amount of $9,228 accrued on these loans and interest in the amount of $5,000 was paid.  As of December 31, 2016 the balance due to these related parties for these loans was $88,658 principal and accrued interest of $8,866.

Beginning August 2017, the Company entered into an oral agreement to pay the Company’s sole director $500 per month as payment for use of his personal residence as the Company’s office and mailing address.  The Company has recorded rent expense of

SEARS OIL AND GAS CORPORATION

Notes to the Financial Statements

December 31, 2017 and 2016

$2,500 during the year ended December 31, 2017 which is included in the selling, general and administrative expenses on the statements of operations.

During the three months ended September 30, 2017, a convertible promissory note held by two non-affiliated entities was assigned to the Company’s sole director and majority shareholder, and subsequently converted into common stock as noted in Note 6.

NOTE 6 – CONVERTIBLE PROMISSORY NOTES / RELATED AND NON-RELATED PARTIES

In March 2014, the Company issued a $40,000 convertible promissory note to the sole officer and director of the Company and a $15,000 convertible promissory note to another affiliated shareholder (the “Convertible Notes”). The Convertible Notes had a term of one year expiring March 2015, and are now payable on demand, and accrue interest at the rate of 12% per annum. The holders of the Convertible Notes, may, at their option, convert all or any portion of the outstanding principal balance of, and all accrued interest on the Convertible Notes into shares of the Company’s common stock, par value $0.001 per share, at a conversion rate of $1.00 per share. For the years ended December 31, 2017 and 2016 additional interest accrued on these Notes in the amount of $6,600 and $6,600, respectively.  No interest has been paid on these Notes.  

As of December 31, 2017 the balance due to these related parties for these Notes was $55,000 principal and accrued interest of $24,881. (See Note 8)

During the year ended December 31, 2009, a shareholder of the Company loaned $15,000 to the Company. The note was later assigned to two non-affiliated entities. During the three months ended September 30, 2017, the note was assigned to the Company’s sole director and majority shareholder.  The Note was accruing interest at the default rate of 23% per annum. The holder of the Note had the option to convert all of the outstanding principal balance and all accrued interest on the Note into 3,000,000 shares of the Company’s common stock, par value $0.001 per share.  In August 2017, the convertible promissory note along with accrued interest of $63,730 was converted into 3,000,000 shares of  the Company’s previously authorized but unissued common stock.  The value of the shares issued was determined to be $243,524, based on the Company’s enterprise value at the effective date of the agreement, as the lack of trading volume of the Company’s public shares was not a feasible determinant of value. The excess of the fair value of the stock issued over the value of the debt settled of $164,794 has been recorded as a loss on extinguishment of debt.  The issuance of common stock resulted in a change in control of the Company [See Note 7].

NOTE 7 – CHANGE IN CONTROL

During the three months ended September 30, 2017, a convertible promissory note was assigned to the Company’s sole officer and director, and subsequently converted into 3,000,000 shares of the Company’s previously authorized but unissued common stock.  This resulted in a change of control, as our sole officer and director owns 96% of the Company’s issued and outstanding shares [See Note 6].

SEARS OIL AND GAS CORPORATION

Notes to the Financial Statements

December 31, 2017 and 2016

NOTE 8 – CONVERTIBLE NOTES AND LOANS PAYABLE – RELATED PARTIES

Convertible notes and loans payable – related parties consisted of the following:
		December 31, 2017		December 31, 2016
Loans payable to related parties, interest at 12%  per annum, due on demand		112,803		88,658
Convertible notes payable to related parties, interest at 12% per annum, due on March 7, 2015 (in default), convertible into common stock at $1.00 per share		55,000		55,000
Total Convertible Notes and Loans Payable – Related Parties		167,803		143,658
Less: Current Portion		(167,803)		(143,658)
Long-Term Convertible Notes and Loans Payable – Related Parties		$ -		$ -

The Company did not record beneficial conversion feature elements on the convertible debt due to the conversion rate of $1.00 per share being greater than the estimated fair market value of the underlying shares on the date of issuance.  

NOTE 9 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events for the period of December 31, 2017 through the date the financial statements were issued, and concluded there were no other events or transactions occurring during this period that required recognition or disclosure in its financial statements.

Endnotes