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| BRSH.OB > SEC Filings for BRSH.OB > Form 10-Q on 14-May-2008 | All Recent SEC Filings |
14-May-2008
Quarterly Report
Overview
The following discussion updates our plan of operation for the next twelve months. It also analyzes our financial condition at March 31, 2008 and compares it to our financial condition at December 31, 2007. Finally, the discussion summarizes the results of our operations for the three months ended March 31, 2008 and compares those results to the three months ended March 31, 2007. This discussion and analysis should be read in conjunction with our audited financial statements for the two years ended December 31, 2007, including footnotes thereto, and the discussion and analysis included on Form 10-K as filed with the Securities and Exchange Commission.
We are considered an exploration stage company for accounting purposes, since we have not received any revenue from operations. We are unable to predict with any degree of accuracy when that classification will change.
Plan of Operation
We currently hold an interest in one oil and gas prospect (the Stroh prospect) which is located within an area known as the Denver-Julesburg Basin in northeastern Colorado. The well on this prospect is presently shut-in.
Our plan of operation is to participate in the further development of the Stroh prospect, either by installing a natural gas powered electrical generator and selling electricity into the local grid or constructing a gathering system and delivering natural gas to market, and to evaluate opportunities to acquire other interests in oil and gas properties. Based on the absence of sufficient working capital to meet these objectives, we expect to solicit interest from third party investors to provide financing for these purposes. Although no specific commitments have been made, we expect to obtain such financing in the form of private equity financing. If we are unable to obtain such financing, we may be forced to forego participation in either development project as well as any opportunity to acquire an interest in other oil and gas properties.
We hope to make the Stroh prospect our pilot project for our concept of power generation utilizing shut-in natural gas wells that are located in remote areas where pipeline delivery is unavailable. We believe there is a strong demand for this type of program and have worked with a local electrical cooperative to determine whether this type of operation in this area would be profitable to the company. Along with our operating partners, we plan to acquire and install the necessary equipment to participate in this activity, including a modern natural gas-fired generator, a transformer and the lines to connect the transformer to the power system via a power pole located approximately two miles from the prospect.
Contemporaneously with efforts to put the Stroh prospect into operation, we are investigating and evaluating opportunities to acquire other properties to generate revenue. Most of these opportunities are in the oil and gas industry, although we have also considered prospects in other areas of the natural resource business. Our efforts so far have revealed that due to historic high prices for oil, cash prices for oil and gas prospects are prohibitive, based on our current capital resources. However, we are continuing such efforts and may explore opportunities to structure an acquisition with all or a portion of the consideration in equity instead of cash. In any event, we are continuing to review these opportunities and add more assets to the company.
As of March 31, 2008, we had a working capital deficit of $66,532, comprised of current assets of $27,433 and current liabilities of $93,965. This represents an increased deficit of $26,722 from the working capital deficit of $39,810 reported at December 31, 2007. Our working capital position declined because we have utilized our capital resources as we continue efforts to develop the Company.
We anticipate that we will need to obtain more funding in the next 12 months to continue our business operations. The most significant of our future operating expenses include (i) the amount of $35,000 to $89,000 for our expected portion of the development costs of the Stroh prospect; (ii) approximately $17,500 per month for salaries and other corporate overhead; and (iii) approximately $5,600 per month for legal and accounting fees associated with our status as a public company required to file reports with the SEC.
Our future plans to raise capital include additional sales of equity securities. During 2008, we sold 300,000 shares of common stock for cash proceeds of $150,000, including 200,000 shares sold subsequent to March 31, 2008 for $100,000. Since we do not believe that we are candidates for conventional debt financing, we may postpone or curtail our operations until we can obtain equity financing.
The report of our independent accountants on our financial statements at December 31, 2007 contains an explanatory paragraph about our ability to continue as a going concern. This qualification is based on our lack of operating revenue and limited working capital, among other things. We remain dependent on receipt of capital from outside sources, and ultimately, generating revenue from operations, to continue as a going concern.
All of our capital resources to date have been provided exclusively through the sale of equity securities. Since we are an exploration stage company and have not generated any cash from operations, we have relied on sale of equity to fund all of our capital needs. Our prospects for generating meaningful cash from operations in the near term are remote, as we presently hold an interest in only one property. Accordingly, we are dependent on the sale of stock to acquire additional properties to generate revenue in the future.
Net cash used in operating activities during the first three months of 2008 was $45,863 compared to $49,301 during the first three months of 2007. Cash usage decreased by $3,438. Although our operating expenses increased during the 2008 period, our use of cash decreased because our officers deferred payment of their salaries during the period.
During the three months ended March 31, 2008 and 2007, there was no cash flow from, or used in, investing activities. Cash provided by financing activities during the three months ended March 31, 2008 was $50,000 compared to $150,000 during the three months ended March 31, 2007. In both periods, all of the financing activities represent proceeds from the sale of common stock.
Results of Operations - Three Months Ended March 31, 2008 Compared to the Three Months Ended March 31, 2007
We are in the exploration stage since planned principal operations have not commenced. Our activities to date have been limited to implementing our plan of operation, including the investigation and evaluation of oil, gas and mineral properties. We expect to incur losses until such time, if ever, we begin generating revenue from operations.
During the three months ended March 31, 2008, we reported a net loss of $76,659, or $(0.01) per share, compared to a net loss for the three months ended March 31, 2007 of $49,123 or $(0.01) per share. In neither period did we report any revenue except interest income.
General and administrative expense for the three months ended March 31, 2008 increased to $76,682 compared to $49,491 during the comparable period of 2007. The increase of $27,191 is primarily attributable to increased legal and accounting fees associated with our status as a public company.
Forward-Looking Statements
This Form 10-Q contains or incorporates by reference "forward-looking statements," as that term is used in federal securities laws, about our financial condition, results of operations and business. These statements include, among others:
- statements concerning the benefits that we expect will result from our business activities and results of exploration that we contemplate or have completed, such as increased revenues; and
- statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts.
These statements may be made expressly in this document or may be incorporated by reference to other documents that we will file with the SEC. You can find many of these statements by looking for words such as "believes," "expects," "anticipates," "estimates" or similar expressions used in this report or incorporated by reference in this report.
These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied in those statements. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied. We caution you not to put undue reliance on these statements, which speak only as of the date of this report. Further, the information contained in this document or incorporated herein by reference is a statement of our present intention and is based on present facts and assumptions, and may change at any time and without notice, based on changes in such facts or assumptions.
Risk Factors Impacting Forward-Looking Statements
The important factors that could prevent us from achieving our stated goals and objectives include, but are not limited to, those set forth in our Form 10-K filed with the SEC and the following:
• The worldwide economic situation;
• Volatility in the price of oil and gas;
• Any change in interest rates or inflation;
• The willingness and ability of third parties to honor their contractual commitments;
• Our ability to raise additional capital, as it may be affected by current conditions in the stock market and competition in the oil and gas industry for risk capital;
• Our capital costs, as they may be affected by delays or cost overruns;
• Our costs of production;
• Environmental and other regulations, as the same presently exist and may hereafter be amended;
• Our ability to identify, finance and integrate other acquisitions; and
• Volatility of our stock price.
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