PART
I - Financial Information
|
3
|
Item
1. Financial Statements
|
3
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
10
|
Item
3. Controls and Procedures
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13
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PART
II - OTHER INFORMATION
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13
|
Item
1. Legal Proceedings
|
13
|
Item
2. Changes in Securities
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13
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Item
3. Defaults upon Senior Securities.
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13
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Item
4. Submission of Matters to a Vote of Security Holders.
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13
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Item
5. Other Information.
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13
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Item
6. Exhibits
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13
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MAJESTIC
OIL & GAS, INC. (A Development Stage
Company)
|
|||||||
CONDENSED
CONSOLIDATED BALANCE
SHEETS
|
March
31,
|
|||||||
2007
|
December
31
|
||||||
UNAUDITED
|
2006
|
||||||
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
176,867
|
$
|
189,304
|
|||
Trade
receivables
|
8,795
|
8,444
|
|||||
Total
Current Assets
|
185,662
|
197,748
|
|||||
PROPERTY
AND EQUIPMENT
|
|||||||
Oil
and gas properties, using the full
|
|||||||
cost
method of accounting:
|
|||||||
Properties
being amortized
|
192,187
|
192,187
|
|||||
Less
accumulated depletion, amortization and impairment
|
(54,000
|
)
|
(50,500
|
)
|
|||
Net
Property and Equipment
|
138,187
|
141,687
|
|||||
Total
Assets
|
$
|
323,849
|
$
|
339,435
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Accounts
payable
|
$
|
15,442
|
$
|
3,319
|
|||
Production
taxes and royalties payable
|
2,211
|
12,225
|
|||||
17,653
|
15,544
|
||||||
Common
stock, no par value-
|
|||||||
Authorized
Shares - 100,000,000
|
|||||||
Issued
& Outstanding: 6,240,000 shares
|
624,000
|
624,000
|
|||||
(Deficit)
accumulated during the development stage
|
(317,804
|
)
|
(300,109
|
)
|
|||
Total
Stockholders' Equity
|
306,196
|
323,891
|
|||||
$
|
323,849
|
$
|
339,435
|
MAJESTIC
OIL & GAS, INC. (A Development Stage
Company)
|
CONDENSED
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
Three
Months
|
|
Three
Months
|
|
Inception
|
|
|||||
|
|
Ended
|
|
Ended
|
|
(April
16, 2002)
|
|
|||
|
|
March
31, 2007
|
|
March
31, 2006
|
|
To
March 3, 2007
|
|
|||
|
|
UNAUDITED
|
|
UNAUDITED
|
|
UNAUDITED
|
||||
REVENUE
|
$
|
8,795
|
$
|
21,632
|
$
|
264,202
|
||||
EXPENSES
|
||||||||||
Administrative
staff
|
2,109
|
1,615
|
17,267
|
|||||||
Organization
expenses
|
-
|
-
|
301,115
|
|||||||
Taxes
& royalties
|
2,211
|
5,438
|
72,730
|
|||||||
Well
operating fees
|
125
|
250
|
6,669
|
|||||||
Legal,
accounting and filing fees
|
15,859
|
12,830
|
82,495
|
|||||||
Consulting
|
-
|
-
|
28,000
|
|||||||
Engineering
|
-
|
-
|
1,500
|
|||||||
Travel
|
-
|
-
|
2,699
|
|||||||
Depletion
and amortization
|
3,500
|
5,000
|
54,000
|
|||||||
Transfer
Agent Fees
|
875
|
450
|
8,268
|
|||||||
Bank
Charges
|
-
|
-
|
358
|
|||||||
Field
expenses
|
824
|
218
|
2,827
|
|||||||
Office
Expenses
|
797
|
275
|
1,851
|
|||||||
Phone
and utilities
|
190
|
218
|
2,313
|
|||||||
Currency
exchange (gain) loss
|
-
|
-
|
(86
|
)
|
||||||
26,490
|
26,294
|
582,006
|
||||||||
NET
INCOME (LOSS)
|
$
|
(17,695
|
)
|
(4,662
|
)
|
$
|
(317,804
|
)
|
||
EARNINGS
PER SHARE
|
||||||||||
Net
Income, basic and diluted
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
||||
Weighted
average number of shares
|
||||||||||
outstanding
|
6,240,000
|
6,240,000
|
||||||||
Diluted
potential shares -
|
||||||||||
stock
warrants
|
-
|
-
|
||||||||
Adjusted
weighted average shares
|
6,240,000
|
6,240,000
|
MAJESTIC
OIL & GAS, INC. (A Development Stage
Company)
|
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
|
|
|
|
|
(Deficit)
|
|
|
|
||||||
|
|
|
|
|
|
Accumulated
|
|
|
|
||||
|
|
|
|
|
|
During
|
|
|
|
||||
|
|
Common
Stock
|
|
|
|
Development
|
|
|
|
||||
|
|
Shares
|
|
Amount
|
|
Stage
|
|
Total
|
|||||
BEGINNING
BALANCE, INCEPTION
|
|||||||||||||
(APRIL
16, 2002) TO
|
|||||||||||||
DECEMBER
31, 2004
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Common
stock issued
|
6,240,000
|
624,000
|
-
|
624,000
|
|||||||||
Net
loss
|
-
|
-
|
(346,422
|
)
|
(346,422
|
)
|
|||||||
BALANCE,
DECEMBER 31, 2004
|
6,240,000
|
624,000
|
(346,422
|
)
|
277,578
|
||||||||
Common
stock issued
|
-
|
-
|
-
|
-
|
|||||||||
Net
income
|
-
|
-
|
66,381
|
66,381
|
|||||||||
BALANCE,
DECEMBER 31, 2005
|
6,240,000
|
624,000
|
(280,041
|
)
|
343,959
|
||||||||
Common
stock issued
|
-
|
-
|
-
|
-
|
|||||||||
Net
loss
|
-
|
-
|
(20,068
|
)
|
(20,068
|
)
|
|||||||
BALANCE,
DECEMBER 31, 2006
|
6,240,000
|
624,000
|
(300,109
|
)
|
323,891
|
||||||||
Common
stock issued
|
-
|
-
|
-
|
-
|
|||||||||
Net
loss for the three months
|
|||||||||||||
ended
March 31, 2007 (UNAUDITED)
|
-
|
-
|
(17,695
|
)
|
(17,695
|
)
|
|||||||
BALANCE,
MARCH 31, 2007
|
6,240,000
|
$
|
624,000
|
$
|
(317,804
|
)
|
$
|
306,196
|
MAJESTIC
OIL & GAS, INC. (A Development Stage
Company)
|
||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
|
|
|
|
Inception
|
|
|||
|
|
Three
Months
|
|
Three
Months
|
|
(April
16, 2002)
|
|
|||
|
|
Ended
|
|
Ended
|
|
Through
|
|
|||
|
|
March
31, 2007
|
|
March
31, 2006
|
|
March
31, 2007
|
|
|||
|
|
UNAUDITED
|
|
UNAUDITED
|
|
UNAUDITED
|
|
|||
|
|
|
|
|
|
|||||
OPERATING
ACTIVITIES
|
||||||||||
Net
income (loss)
|
$
|
(17,695
|
)
|
$
|
(4,662
|
)
|
$
|
(317,804
|
)
|
|
Changes
and credits to net income (loss)
|
||||||||||
not
affecting cash
|
||||||||||
Depletion
and amortization
|
3,500
|
5,000
|
54,000
|
|||||||
Organizational
expenses paid with
|
||||||||||
stock
|
-
|
-
|
300,000
|
|||||||
Legal
fees paid with stock
|
-
|
-
|
25,000
|
|||||||
Changes
in assets and liabilities
|
||||||||||
Trade
receivables
|
(351
|
)
|
11,077
|
(8,795
|
)
|
|||||
Production
taxes and royalties payable
|
(10,014
|
)
|
5,079
|
2,211
|
||||||
Accounts
payable
|
12,123
|
1,059
|
15,442
|
|||||||
NET
CASH FROM (USED FOR)
|
||||||||||
OPERATING
ACTIVITIES
|
(12,437
|
)
|
17,553
|
70,054
|
||||||
INVESTING
ACTIVITIES
|
||||||||||
Additions
to property and equipment
|
-
|
-
|
(32,187
|
)
|
||||||
NET
CASH USED FOR INVESTING
|
||||||||||
ACTIVITIES
|
-
|
-
|
(32,187
|
)
|
||||||
FINANCING
ACTIVITIES
|
||||||||||
Proceeds
from issuance of stock
|
-
|
-
|
139,000
|
|||||||
NET
CASH USED FROM FINANCING
|
||||||||||
ACTIVITIES
|
-
|
-
|
139,000
|
|||||||
NET
CHANGE IN CASH AND CASH
|
||||||||||
EQUIVALENTS
|
(12,437
|
)
|
17,553
|
176,867
|
||||||
CASH
AND CASH EQUIVALENTS AT
|
||||||||||
BEGINNING
OF PERIOD
|
189,304
|
162,732
|
-
|
|||||||
CASH
AND CASH EQUIVALENTS AT
|
||||||||||
END
OF PERIOD
|
$
|
176,867
|
$
|
180,285
|
$
|
176,867
|
MAJESTIC
OIL & GAS, INC. (A Development Stage
Company)
|
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
|
Notes
to Unaudited March 31, 2007 Financial Statements:
|
Note
1 - Business Activity and Basis of Presentation
|
Principle
Business Activity
|
Majestic
Oil & Gas, Inc. (Company) is a development stage enterprise and its
operations consist of oil and natural gas development and production
in
the Rocky Mountain region. The financial statements and notes to
the
financial statements are the representation of the Company's management,
who is responsible for their integrity and objectivity. The accounting
polices of the Company are in accordance with generally accepted
accounting principles and conform to the standards applicable to
development stage enterprises.
|
Basis
of Presentation
|
The
accompanying interim financial statements of the Company are unaudited.
In
the opinion of management, the interim data includes all adjustments,
consisting only of normal recurring adjustments necessary for a
fair
presentation of the results for the interim period. The results
of
operations for the three months ended March 31, 2007 are not necessarily
indicative of the operating results for the entire
year.
|
We
have prepared the financial statements included herein pursuant
to the
rules and regulations of the Securities and Exchange Commission.
Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and
regulations. We believe the disclosures made are adequate to make
the
information not misleading and recommend that these condensed financial
statements be read in conjunction with the financial statements
and notes
included in our Form 10-KSB for the year ended December 31,
2006.
|
Note
2 - Basis of Accounting
|
The
accompanying financial statements have been prepared using accounting
principles applicable to a going concern, which contemplates the
realization of assets and extinguishment of liabilities in the
normal
course of business. As shown in the accompanying condensed balance
sheet
the Company has an accumulated deficit of ($317,804) through March
31,
2007. This and other factors may indicate that the Company may
be unable
to continue in existence. The Company's financial statements do
not
include any adjustments related to the realization of the carrying
value
of assets or the amounts and classification of liabilities that
might be
considered necessary should the Company be unable to continue in
existence. The Company's ability to establish itself as a going
concern is
dependent upon its ability to obtain additional financing in order
to fund
exploration and development activities of oil and gas interests
and,
ultimately, to achieve profitable operations. Management believes
that it
can be successful in obtai
|
These
interim financial statements are prepared using the significant
accounting
policies disclosed in the Company's December 31, 2006 annual audited
financial statements, except that the following significant accounting
policies were adopted during the three months March 31,
2007:
|
Oil
and Gas Interests
|
The
Company utilizes the full cost method of accounting for oil and
gas
activities. Under this method, subject to a limitation based on
estimated
value, all costs associated with property acquisition, exploration
and
development, including costs of unsuccessful exploration, are capitalized
within a cost center. No gain or loss is recognized upon the sale
or
abandonment of undeveloped or producing oil and gas interests unless
the
sale represents a significant portion of oil and gas interests
and the
gain significantly alters the relationship between capitalized
costs and
proved oil and gas reserves of the cost center. Depreciation, depletion
and amortization of oil and gas interests is computed on the units
of
production method based on proved reserves, or upon reasonable
estimates
where proved reserves have not yet been established due to the
recent
commencement of production. Amortizable costs include estimates
of future
development costs of proved undeveloped
reserves.
|
MAJESTIC
OIL & GAS, INC. (A Development Stage
Company)
|
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
Notes
to Unaudited March 31, 2007 Financial Statements
(continued):
|
Capitalized
costs of oil and gas interests may not exceed an amount equal to
the
present value, discounted at 10%, of the estimated future net cash
flows
from proved reserves plus the cost, or estimated fair market value
if
lower, of unproved interests. Should capitalized costs exceed this
ceiling, an impairment is recognized. The present value of estimated
future net cash flows is computed by applying year end prices of
oil and
gas to estimated future production of proved oil and gas reserves
as of
year end, less estimated future expenditures to be incurred in
developing
and producing the proved reserves and assuming continuation of
existing
economic conditions.
|
|
Revenue
Recognition
|
The
Company recognizes oil and gas revenues from its interests in producing
wells as oil and gas is produced and sold from the wells and when
ultimate
collection is reasonably assured.
|
|
Note
3 - Organization and Development of the Company
|
|
The
Company was formed on April 16, 2002 as a corporation. The Company
is
considered a development stage enterprise as defined by Statement
of
Financial Accounting Standards No. 7 ("SFAS 7"). The accompanying
interim
financial statements reflect limited oil and gas development and
production activities and they are not necessarily indicative of
what the
financial statements will reflect once the intended operations
of the
Company are fully underway.
|
|
The
Company is currently trading on the Over the Counter Bulletin Board
under
the symbol MJOG.OB.
|
|
Note
4 - Asset Retirement Obligations
|
|
The
Company follows SFAS No. 143 "Accounting for Asset Retirement
Obligations". SFAS No. 143 addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS No. 143
requires
recognition of the present value of obligations associated with
the
retirement of tangible long-lived assets in the period in which
it is
incurred. As of March 31, 2007, the estimated future cost to plug
and
abandon the Company's gas wells was not significant. The estimated
liability is based on historical experience in plugging and abandoning
wells, estimated cost to plug and abandon wells in the future and
federal
and state regulatory requirements.
|
|
Note
5 - Related Party Transactions
|
|
Altamont
Oil & Gas, Inc. (Altamont), an entity related through common ownership
and management, is the operator of the wells in which the Company
owns its
working interests. As the operator of the wells, Altamont is responsible
for remitting production taxes to the taxing authorities and royalty
payments to the royalty interest owners. As of March 31, 2007,
the Company
had an outstanding receivable from Altamont of $8,795 for gas sales,
and a
payable to Altamont of $2,211 for production taxes and
royalties.
|
|
Note
6 - Subsequent Events
|
|
The
Company entered into a Farm-out Agreement with Altamont and Numbers,
Inc
to drill a 10-well natural gas development program. This development
program will involve the drilling of 5 wells in the Lake Frances
Gas Field
and 5 wells in the Williams Gas Field, located in Pondera County,
Montana.
The Lake Frances Field is located south of Valier, Montana just
offsetting
the Lake Frances reservoir. The Williams Field is located 7 miles
east of
the town of Valier, Montana. The locations for the development
program
were determined from information gathered from a geological and
engineering study. The surveying of each location and the permitting
of
each drill site with the Montana Board of Oil & Gas is currently being
completed. The Company will receive 100% of the revenues until
the
drilling and completion costs have been recovered, at which time
the
Company's interest will revert to 50%.
|
The
Company has adopted a stock option plan, and on April 17, 2007
granted
options to purchase a total of 450,000 shares to its employees
and
directors. The exercise price of the options is $0.23 per share
and they
have no expiration date.
|
Ludwig
State 36-1
|
Share
of
Production
Volumes
|
Price
Per
MCF
|
Share
of
Production
Volumes
|
Price
Per
MCF
|
2007
|
2006
|
|||
January
|
426.94
|
3.57
|
446.33
|
9.00
|
February
|
365.06
|
3.53
|
380.33
|
5.80
|
March
|
397.24
|
3.83
|
434.36
|
4.60
|
Boucher
27-1
|
Share
of
Production
Volumes
|
Price
Per
MCF
|
Share
of
Production
Volumes
|
Price
Per
MCF
|
2007
|
2006
|
|||
January
|
297.83
|
3.57
|
590.70
|
9.00
|
February
|
242.14
|
3.53
|
408.17
|
5.80
|
March
|
262.14
|
3.83
|
422.19
|
4.60
|
1
|
31
|
Certification
of the Chief Executive Officer and Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
||
|
||
Attached | ||
2
|
32
|
Certification
of the Chief Executive Officer and Chief
Executive Officer and Chief Financial
Officer pursuant to U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
|
|
|
Majestic
Oil & Gas, Inc.
Date:
May 14, 2007
/s/
Patrick Montalban
Patrick
Montalban
Chief
Executive Officer and Chief Financial
Officer
|