UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-31945
For the quarter ended March 31, 2002
POWDER RIVER BASIN GAS CORP.
(Exact name of small business issuer as specified in its charter)
P.O. Box 7500
Dallas, Texas 75209
(214) 526-5678
(Address and telephone number of principal executive office)
Colorado 84-1521645
(State of incorporation) (IRS Employer Identification #)
Indicate by checkmark 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
As of March 31, 2002, 20,207,833 shares of common stock, $0.001 par value,
were outstanding.
Transitional Small Business Disclosure Format (check one): [ ] Yes [X] No
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Powder River Basin Gas Corp.
Consolidated Balance Sheet (Unaudited)
March 31, 2002
ASSETS
CURRENT ASSETS
Cash $ 368
Accounts receivable 75,000
-----------
Total current assets 75,368
Oil and gas properties using full cost accounting
Properties not subject to amortization 1,612,069
Accumulated amortization -
-----------
Net oil and gas properties 1,612,069
-----------
Total assets $ 1,687,437
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 357,581
Related party payable 425,566
Notes payable 66,600
-----------
Total current liabilities 849,747
-----------
Total liabilities 849,747
STOCKHOLDERS' EQUITY
Common stock, par value $.001 per share; 50,000,000 shares
authorized; 20,207,833 shares issued and outstanding 20,207
Capital in excess of par value 1,282,617
Retained earnings (465,135)
-----------
Total stockholders' equity 837,689
-----------
Total liabilities and shareholders' equity $ 1,687,437
===========
The accompanying notes are an integral part of these
consolidated financial statements.
2
Powder River Basin Gas Corp.
Consolidated Statement of Operations (Unaudited)
For the Period Ended March 31, 2002
REVENUE
Oil and gas sales $ -
------------
Total revenue -
EXPENSES
General and administrative 65,048
Lease operating costs 55,104
Legal and professional 23,637
Travel 7,816
------------
Total expenses 151,606
NET OPERATING LOSS (151,606)
OTHER INCOME (EXPENSE)
Interest expense (503)
------------
NET LOSS $ (152,109)
BASIC LOSS PER COMMON SHARE $ (0.02)
------------
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 9,341,538
============
The accompanying notes are an integral part of these
consolidated financial statements.
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Powder River Basin Gas Corp.
Consolidated Statement of Stockholders' Equity (Unaudited)
For the Period Ended March 31, 2002
Common Stock Capital in Total
------------------ Excess of Retained Stockholders'
Shares Amount Par Value Deficit Equity
---------- -------- ---------- -------- ------------
Balance at inception on June 13, 2001 - $ - $ - $ - $ -
Common stock issued for organization
costs; $0.001 per share 3,350,000 3,350 (3,350) - -
Common stock issued for services; $0.001 per share 5,650,000 5,650 (5,650) - -
Reverse acquisition adjustment 9,960,000 9,960 (9,960) - -
Common stock issued for related party
payable at $0.81 per share 100,000 100 89,900 - 90,000
Common stock issued for cash at $1.10 per share 600,000 600 664,390 - 664,990
Common stock issued for payable at $1.00 per share 247,833 247 247,587 - 247,834
Net loss for the year ended December 31, 2002 - - - (313,026) (313,026)
---------- -------- ---------- --------- -----------
Balance at December 31, 2001 9,907,833 19,907 982,917 (313,026) 689,798
Common stock issued for payable at $1.00 per share 200,000 200 199,800 - 200,000
Common stock issued for cash at $1.00 per share 100,000 100 99,900 - 100,000
Net loss for the period ended March 31, 2002 - - - (152,109) (152,109)
---------- -------- ---------- --------- -----------
Balance at March 31, 2002 20,207,833 $ 20,207 $1,282,617 $(465,135) $ 837,689
========== ======== ========== ========= ===========
The accompanying notes are an integral part of these
consolidated financial statements.
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Powder River Basin Gas Corp.
Consolidated Statement of Cash Flows (Unaudited)
For the Period Ended March 31, 2002
Cash flows from operating activities
Net income $ (152,109)
Adjustments to net income provided by operating activities:
Common stock issued for services rendered -
Common stock issued for retirement of accounts payable 200,000
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (75,000)
(Decrease) increase in accounts payable (167,313)
------------
Net cash used in operating activities (194,421)
------------
Cash flows from investing activities
Expenditures for oil and gas property development (42,000)
------------
Net cash used in investing activities (42,000)
------------
Cash flows from financing activities
Proceeds from notes payable and long-term liabilities 134,466
Proceeds from issuance of common stock 100,000
------------
Net cash provided by financing activities 234,466
Net decrease in cash and cash equivalents (1,955)
Cash at beginning of year 2,323
------------
Cash at end of year $ 368
============
The accompanying notes are an integral part of these
consolidated financial statements.
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Powder River Basin Gas Corp.
Notes to Consolidated Financial Statements
For the Quarter Ended March 31, 2002
NOTE 1 - PREPARATION OF FINANCIAL STATEMENTS
The unaudited financial statements of Powder River Basin Gas Corp. for the
three months ended March 31, 2002, included herein have been prepared in
accordance with generally accepted accounting principles and the rules and
regulations of the Securities and Exchange Commission ("SEC") and should be
read in conjunction with the audited financial statements and notes thereto
contained in the Company's latest Annual Report filed with the SEC on Form
10-KSB. In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of financial position
and the results of operations for the interim period presented have been
reflected herein. The results of operations for the interim period are not
necessarily indicative of the results to be expected for the full year. Notes
to the financial statements which would substantially duplicate the
disclosures contained in the audited financial statements for the most recent
year, 2001, as reported in the Form 10-KSB, have been omitted.
NOTE 2 - ORGANIZATION
The Company was incorporated under the laws of Colorado on August 27, 1999 as
Celebrity Sports Network, Inc. The principal activities since inception have
been organizational matters and obtaining financing. The Company was formed in
an effort to broaden the scope of public appearances available to current and
former professional athletes. The Company, however, changed their operations
in 2001 through a reverse acquisition with Powder River Basin Gas Corp., an
oil and gas company.
Power River Basin Gas Corp. (PRBG) was incorporated in Colorado on June 13,
2001. The Company is engaged in the business of assembling and managing a
portfolio of undeveloped acreage in the Powder River basin coal bed methane
(CBM) play in Sheridan County, Wyoming. This acreage is located in a proven
geological setting and near operators such as Western Gas Resources, Barrett
Resources, Phillips Petroleum, J.M. Huber and others. The Company has
leasehold interests in 8,096.83 net acres. Two wells have been drilled on one
lease and eleven additional wells have been spudded.
Pursuant to a reverse acquisition and reorganization agreement, PRBG was
acquired by Celebrity Sports on September 5, 2001. At the time of the
acquisition, the Company changed its name to Power River Basin Gas Corp. and
issued 9 million shares of common stock for all the issued and outstanding
stock of PRBG; thus, making PRBG a wholly-owned subsidiary of the Company.
Because PRBG is the accounting acquirer in the reverse acquisition, all
financial history in these financial statements are that of PRBG.
The Company issued 9 million shares of common stock for 9 million shares of
PRBG, therefore, an adjustment to the shares outstanding was necessary to
reflect the other shareholders of the Company at the time of acquisition. No
goodwill was recorded in the acquisition and the purchase method of accounting
was used to record the transaction.
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Powder River Basin Gas Corp.
Notes to Consolidated Financial Statements (continued)
For the Quarter Ended March 31, 2002
NOTE 3 - OIL AND GAS PROPERTIES
The full cost method is used in accounting for oil and gas properties.
Accordingly, all costs associated with acquisition, exploration, and
development of oil and gas reserves, including directly related overhead
costs, are capitalized. In addition, depreciation on property and equipment
used in oil and gas exploration and interest costs incurred with respect to
financing oil and gas acquisition, exploration and development activities are
capitalized in accordance with full cost accounting. Capitalized interest for
the quarter ended March 31, 2002 was $0. All capitalized costs of proved oil
and gas properties subject to amortization are being amortized on the
unit-of-production method using estimates of proved reserves. Investments in
unproved properties and major development projects not subject to amortization
are not amortized until proved reserves associated with the projects can be
determined or until impairment occurs. If the results of an assessment
indicate that the properties are impaired, the amount of the impairment is
added to the capitalized costs to be amortized. As of March 31, 2002, proved
oil and gas reserves had been identified on one of the Company's oil and gas
properties, however, no extraction has begun; therefore, no amortization has
been recorded for the quarter ending March 31, 2002. All other wells are
incomplete as of March 31, 2002.
NOTE 4 - COMMON STOCK
In January 2002, the Company issued 200,000 shares to satisfy debt associated
with the acquisition of oil and gas leases at $1.00 per share.
In February 2002, the Company authorized the issuance of 100,000 shares for
cash of $100,000 at $1.00 per share, pursuant to a Reg. D 506 exempt offering.
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
The Company is including the following cautionary statement to make applicable
and take advantage of the safe harbor provision of the Private Securities
Litigation Reform Act of 1995 for any forward-looking statements made by, or
on behalf of, the Company. This quarterly report on form 10QSB contains
forward-looking statements. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, expectations, future events
or performance and underlying assumptions and other statements which are other
than statements of historical facts. Certain statements contained herein are
forward-looking statements and, accordingly, involve risks and uncertainties
which could cause actual results or outcomes to differ materially from those
expressed in the forward-looking statements. The Company's expectations,
beliefs and projections are expressed in good faith and are believed by the
Company to have a reasonable basis, including without limitations,
management's examination of historical operating trends, data contained in the
Company's records and other data available from third parties, but there can
be no assurance that management's expectations, beliefs or projections will
result or be achieved or accomplished. In addition to other factors and
matters discussed elsewhere herein, the following are important factors that,
in the view of the Company, could cause actual results to differ materially
from those discussed in the forward-looking statements: the ability of the
Company to respond to changes in the information system environment,
competition, the availability of financing, and, if available, on terms and
conditions acceptable to the Company, and the availability of personnel in the
future.
PLAN OF OPERATION
The Company's business strategy for the next twelve months includes focused
acquisitions and drilling operations which may be curtailed, delayed or
canceled as a result of a variety of factors, including unexpected drilling
conditions, pressure or irregularities in formations, equipment failures or
accidents, weather conditions and shortages or delays in equipment delivery.
The Company has drilled two gas wells that will produce commercially viable
gas resources once the appropriate infrastructure (i.e., pipeline) is in
place. The Company plans on implementing its drilling plan and begin
recognizing revenues during the fiscal year 2002.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital deficit on March 31, 2002 was $774,379,
resulting primarily from the use of accounts payable to finance the
acquisition of leasehold interests in the Powder River Basin. The Company has
no established revenue sources and continues to rely on loans from
shareholders, sales of equity and other financing to sustain operations as a
going concern. There is currently no agreement from any officer or shareholder
to continue to provide working capital in order to maintain operations. The
Company, however, anticipates that it will be able to raise the necessary
funds to commence drilling operations on its leasehold properties during 2002.
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CURRENT LIABILITIES
On March 31, 2002, the Company had approximately $849,747 in current
liabilities. Of this amount, approximately $357,581 is due to various entities
for the purchase of leasehold interests in the Powder River Basin and related
expenses incurred by the Company. $425,566 was due to Taghmen Ventures, Ltd.
and Mr. Gregory C. Smith, President of the Company; Mr. Smith is also the
General Partner for Taghmen Ventures Ltd. These amounts represent funds
advanced to the Company by Taghmen Ventures, Ltd. and Mr. Smith for working
capital purposes. $66,600 is due under a note payable to a sub-contractor of
the Company in lieu of payment for services rendered.
NEED FOR ADDITIONAL FINANCING FOR GROWTH
The growth of the Company's business will require substantial capital on a
continuing basis, and there is no assurance that any such required additional
capital will be available on satisfactory terms and conditions, if at all. The
Company may pursue, from time to time, opportunities to acquire oil and
natural gas properties and businesses that may utilize the capital currently
expected to be available for its present operations. The amount and timing of
the Company's future capital requirements, if any, may depend upon a number of
factors, including drilling, transportation, and equipment costs, marketing
expenses, staffing levels, competitive conditions, and purchases or
dispositions of assets, many of which are not in the Company's control.
Failure to obtain any required additional financing could materially adversely
affect the growth, cash flow and earnings of the Company. In addition, the
Company's pursuit of additional capital could result in the incurrence of
additional debt or potentially dilutive issuances of equity securities.
The Company's ability to meet any future debt service obligations will be
dependent upon the Company's future performance, which will be subject to oil
and natural gas prices, the Company's level of production, general economic
conditions and financial, business and other factors affecting the operations
of the Company, many of which are beyond its control. There can be no
assurance that the Company's future performance will not be adversely affected
by such changes in oil and natural gas prices and/or production nor by such
economic conditions and/or financial, business and other factors. In addition,
there can be no assurance that the Company's business will generate sufficient
cash flow from operations or that future bank credit will be available in an
amount to enable the Company to service its indebtedness or make necessary
expenditures. In such event, the Company would be required to obtain such
financing from the sale of equity securities or other debt financing. There
can be no assurance that any such financing will be available on terms
acceptable to the Company. Should sufficient capital not be available, the
Company may not be able to continue to implement its business strategy.
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PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
NONE
ITEM 2: CHANGES IN SECURITIES
The Company effected the following transactions in reliance upon exemptions
from registration under the Securities Act of 1933 as amended (the "Act") as
provided in Section 4(2) thereof. Each certificate issued for unregistered
securities contained a legend stating that the securities have not been
registered under the Act and setting forth the restrictions on the
transferability and the sale of the securities. No underwriter participated
in, nor were any commissions or fees paid to any underwriter in connection
with any of these transactions. None of the transactions involved a public
offering. The Company believes that each person had knowledge and experience
in financial and business matters which allowed them to evaluate the merits
and risks of its securities; and that each person was knowledgeable about its
operations and financial condition.
In January 2002, the Company issued 200,000 shares of its Common Stock to a
single recipient in order to satisfy debt associated with the acquisition of
oil and gas leases at $1.00 per share. This was a private placement made in
reliance on Section 4(2)of the Act.
In February 2002, the Company issued 100,000 shares of its Common Stock to a
single shareholder for cash of $100,000 at $1.00 per share. This was a private
placement made in reliance on Section 4(2)of the Act.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5: OTHER INFORMATION
NONE
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
NONE
(b) Reports
Report on Form 8-K, as amended, on January 24, 2002 and
January 29, 2002, Celebrity Sports Network, Inc.,
reporting on Item 4, Change in Registrant's Certifying
Accountant
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Signatures
Pursuant to the requirements of Section 13 or 15(d) the Securities and
Exchange Act of 1934 the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Powder River Basin Gas Corporation
Registrant
By: \s\ Gregory C. Smith
---------------------------
Gregory C. Smith, President
and Chief Financial Officer
Date: May 20, 2002
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