NOWEA ENERGY, INC. - FORM 10-Q

Attached files

file	filename
EX-32.2 - CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER AS ADOPTED PURSUANT TO SECTION 906 - NOWEA ENERGY, INC.	exhibit_32-2.htm
EX-32.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AS ADOPTED PURSUANT TO SECTION 906 - NOWEA ENERGY, INC.	exhibit_32-1.htm
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO THE SECURITIES EXCHANGE ACT - NOWEA ENERGY, INC.	exhibit_31-2.htm
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO THE SECURITIES EXCHANGE ACT - NOWEA ENERGY, INC.	exhibit_31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended November 30, 2019


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

For the transition period from to

Commission File Number: 333-229036

NORTHWEST OIL & GAS TRADING COMPANY, INC.

(Exact name of Registrant as specified in its charter)

Nevada		1311		82-3552932
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

4650 Wedekind Road, #2

Sparks, Nevada 89431

(775) 882-7549

(Address, including zip code, and telephone number, including area code,

of Registrant’s principal executive offices)

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 (Exchange Act) 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	☐	Accelerated Filer	☐

Non-accelerated Filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	Yes ☒

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. ☐

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of the date of filing of this report, there were outstanding 21,563,245 shares of the issuer’s common stock, par value $0.001 per share.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION

Item 1	Consolidated Financial Statements	F-1

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3

Item 3	Quantitative and Qualitative Disclosures About Market Risk	7

Item 4	Controls and Procedures	7

PART II – OTHER INFORMATION

Item 1	Legal Proceedings	8

Item 1A	Risk Factors	8

Item 2	Recent Sales of Unregistered Securities	8

Item 3	Defaults Upon Senior Securities	8

Item 4	Other Information	8

Item 5	Exhibits	8

	Signatures	9

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Item Regulation S-X, Rule 10-01(c) Interim Financial Statements, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the six months ended November 30, 2019, are not necessarily indicative of the results that can be expected for the year ended December 31, 2019.

NORTHWEST OIL & GAS TRADING COMPANY, INC.

Condensed Interim Financial Statements

For the Six Months Ending November 30, 2019

(Expressed in US Dollars)

(unaudited)

F-1

NORTHWEST OIL & GAS TRADING COMPANY, INC.

Condensed interim balance sheets

(expressed in US dollars)

	November 30, 2019 $	May 31, 2019 $
	(unaudited)
ASSETS

Current Assets

Cash	1,796	1,020
Prepaid expenses	957	-

Total Current Assets	2,753	1,020

Non-current assets

Advance for oil and gas properties (Note 4)	29,000	-

Total Assets	31,753	1,020


Current Liabilities

Accounts payable and accrued liabilities	42,795	6,979
Due to related parties (Note 6)	53,388	39,685
Loans payable to related parties (Note 6)	275,732	277,262

Total Current Liabilities	371,915	323,926

Nature of operations and continuance of business (Note 1)
Commitments (Note 8)
Subsequent events (Note 9)

Stockholders’ Deficit

Common stock, 75,000,000 shares authorized, $0.001 par value 21,410,000 shares issued and outstanding	21,410	21,410
Additional paid-in capital	3,690	3,690
Share subscriptions received (Note 7)	188,295	-
Shares issuable (Note 7)	12,300	-
Deficit	(565,857)	(348,006)

Total Stockholders’ Deficit	(340,162)	(322,906)

Total Liabilities and Stockholders’ Deficit	31,753	1,020

(The accompanying notes are an integral part of these condensed interim financial statements)

F-2

NORTHWEST OIL & GAS TRADING COMPANY, INC.

Condensed interim statements of operations and comprehensive loss

(expressed in US dollars)

(unaudited)

	For the three months ended November 30, 2019 $	For the three months ended November 30, 2018 $	For the six months ended November 30, 2019 $	For the six months ended November 30, 2018 $

Operating expenses

Consulting	74,297	–	93,693	–
General and administrative	13,312	379	19,313	654
Investor relations	12,300	–	12,300	–
Oil refinery costs (Note 5)	25,000	–	45,000	–
Professional fees	9,750	3,500	20,830	9,000
Property maintenance	6,900	575	6,900	2,325
Transfer agent fees	4,215	375	19,815	1,025

Total operating expenses	145,774	4,829	217,851	13,004

Net loss and comprehensive loss for the period	(145,774)	(4,829)	(217,851)	(13,004)

Loss per share, basic and diluted	(0.01)	–	(0.01)	–

Weighted average shares outstanding	21,410,000	21,410,000	21,410,000	21,410,000

(The accompanying notes are an integral part of these condensed interim financial statements)

F-3

NORTHWEST OIL & GAS TRADING COMPANY, INC.

Condensed interim statements of stockholders’ deficit

(expressed in US dollars)

(unaudited)

	Common Shares
	Number of Shares	$	Additional Paid-In Capital $	Share subscriptions received $	Shares issuable $	Deficit $	Total $

Balance, May 31, 2019	21,410,000	21,410	3,690	-	-	(348,006)	(322,906)
Subscriptions received	-	-	-	80,295	-	-	80,295
Net loss for the period	-	-	-	-	-	(72,077)	(72,077)

Balance, August 31, 2019	21,410,000	21,410	3,690	80,295	-	(420,083)	(314,688)

Subscriptions received	-	-	-	108,000		-	108,000
Shares issuable for services	-	-	-	-	12,300	-	12,300
Net loss for the period	-	-	-	-	-	(145,774)	(145,774)

Balance, November 30, 2019	21,410,000	21,410	3,690	188,295	12,300	(565,857)	(340,162)

Balance, May 31, 2018	21,410,000	21,410	3,690	-	-	(42,642)	(17,542)
Net loss for the period	-	-	-	-	-	(8,175)	(8,175)

Balance, August 31, 2018	21,410,000	21,410	3,690	-	-	(50,817)	(25,717)

Net loss for the period	-	-	-	-	-	(4,829)	(4,829)

Balance, November 30, 2018	21,410,000	21,410	3,690	-	-	(55,646)	(30,546)

(The accompanying notes are an integral part of these condensed interim financial statements)

F-4

NORTHWEST OIL & GAS TRADING COMPANY, INC.

Condensed interim statements of cash flows

(unaudited)

(expressed in US dollars)

	For the six months ended November 30, 2019 $	For the six months ended November 30, 2018 $

Operating activities

Net loss	(217,851)	(13,004)

Adjustments to reconcile net loss to net cash used in operating activities:
Shares issuable for services	12,300	–

Changes in operating assets and liabilities:
Prepaid expenses	(957)	–
Accounts payable and accrued liabilities	35,816	3,550

Net cash used in operating activities	(170,692)	(9,454)

Investing activities

Advances for acquisition of oil and gas properties	(29,000)	–

Net cash used in investing activities	(29,000)	–

Financing activities

Share subscriptions received	188,295	–
Proceeds from related party advances	20,500	5,375
Repayments of related party advances	(6,797)	–
Repayment of related party loans payable	(1,530)	–

Net cash provided by financing activities	200,468	5,375

Change in cash	776	(4,079)

Cash, beginning of period	1,020	4,110

Cash, end of period	1,796	31

Supplemental disclosures:

Interest paid	–	–
Income taxes paid	–	–

(The accompanying notes are an integral part of these condensed interim financial statements)

F-5

NORTHWEST OIL & GAS TRADING COMPANY, INC.

Notes to the condensed interim financial statements

For the six months ended November 30, 2019 and 2018

(expressed in US dollars)

(unaudited)

Nature of Operations and Continuance of Business

Northwest Oil & Gas Company Inc. (the “Company”) was incorporated on April 7, 2017 in the State of Nevada, USA. The Company is in the business of oil exploration. On December 21, 2017, the Company formalized an agreement whereby it was assigned partial interest in two operating oil and gas leases in Warren County, Kentucky. Two other leases were assigned on April 24, 2018.

These condensed interim financial statements have been prepared on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for its next twelve months. Realization values may be substantially different from carrying values as shown and these condensed financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. As at November 30, 2019, the Company had not yet recorded any revenues, has a working capital deficit of $369,162, and has an accumulated deficit of $565,857. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available. These condensed interim financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Summary of Significant Accounting Policies

(a)

Basis of Presentation

These condensed interim financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in US dollars. The Company’s fiscal year-end is May 31.

(b)

Use of Estimates

The preparation of these condensed interim financial statements in conformity with US GAAP 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. The Company regularly evaluates estimates and assumptions related to the recoverability of advances for oil and gas properties, fair value of stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

(c)

Condensed Interim Financial Statements

These condensed interim financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

F-6

NORTHWEST OIL & GAS TRADING COMPANY, INC.

Notes to the condensed interim financial statements

For the six months ended November 30, 2019 and 2018

(expressed in US dollars)

(unaudited)

Summary of Significant Accounting Policies (continued)

(d)

Basic and Diluted Net Loss per Share

The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As of November 30 and May 31, 2019, the Company had no potentially dilutive shares.

(e)

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Oil and Gas Leases

	November 30, 2019 $	May 31, 2019 $

Hardcastle	43,987	43,987
Whittaker	215,048	215,048
Ennis	12,500	12,500
Daviess	12,500	12,500
Impairment	(284,035)	(284,035)

	-	-

Hardcastle

On December 21, 2017, the Company acquired an 8% overriding royalty interest, 100% working interest, and 60% net revenue interest in wells located in Warren County, Kentucky from North West Oil and Gas Trading Company Inc., a related party through ownership.

Whittaker

On April 24, 2018, the Company acquired a 7% overriding royalty interest, 25% working interest, and 10% net revenue interest in additional wells located in Warren County, Kentucky from North West Oil and Gas Trading Company Inc., a related party through common ownership.

Ennis

On April 24, 2018, the Company acquired 51% net revenue interest at 71% working interest in four wells located in Warren County, Kentucky from NEO Oil and Gas.

Daviess

On June 16, 2018, the Company acquired a 51% net revenue interest and 71% working interest in two wells located in the county of Daviess, Kentucky from Magna Bures Oil LLC

During the year ended May 31, 2019, the Company recorded an impairment loss of $284,035 as the Company was unable to provide an independent reserve report to support the continued capitalization of the properties. However, the Company continues to hold the rights and ownership of the properties.

F-7

NORTHWEST OIL & GAS TRADING COMPANY, INC.

Notes to the condensed interim financial statements

For the six months ended November 30, 2019 and 2018

(expressed in US dollars)

(unaudited)

Advances on Oil & Gas Properties

The Company entered into a Purchase Agreement on October 9, 2019 with Mystic Energy Services (USA) Inc. (“Mystic”) to purchase 10 wells for $98,750. Once the Company fulfills the payment, all drilling rights, equipment, and future production becomes the property of the Company. The Company will acquire 84% working interest in the 10 wells and a 62.64% net revenue interest. The wells are located in state of Kentucky.

The payment terms of the agreement are as follows:

9 days after acceptance of agreement	$9,000	(paid)
November 2019	$20,000	(paid)
December 2019	$20,000	(paid – refer to Note 9(d))
January 2020	$20,000	(paid – refer to Note 9(d))
February 2020	$20,000
March 2020	$9,750

Total	$98,750

The Company will not acquire any working interest on the property until the full payment has been made, in accordance with the agreement.

Investment in Oil Refinery Technology

The Company invested in an advanced unique oil refinery technology for a total aggregate of $45,000. The investment entitles the Company to 25% of the future net earning which might be generated from the distribution of this technology. As the investment is not the core business of the Company and there is no reasonable certainty that the investment will result in positive future net earnings, the Company has expensed the amount as incurred.

Related Party Transactions

(a)

As at November 30, 2019, the Company owed $23,703 (May 31, 2019 - $30,500) to the President and Chief Executive Officer (“CEO”) of the Company, which is non-interest bearing, unsecured, and due on demand.

(b)

As at November 30, 2019, the Company owed $275,732 (May 31, 2019 - $277,262) to Northwest Oil & Gas Trading Company Inc. (Delaware), a company that is controlled by the President and CEO of the Company, which is non-interest bearing, unsecured, and due on demand.

(c)

As at November 30, 2019, the Company owed $7,225 (May 31, 2019 - $7,225) to the former President and CEO of the Company, which is non-interest bearing, unsecured, and due on demand.

(d)

As at November 30, 2019, the Company owed $1,960 (May 31, 2019 - $1,960) to the Director of the Company, which is non-interest bearing, unsecured and due on demand.

(e)

As at November 30, 2019, the Company owed $20,500 (May 31, 2019 - $nil) to Northwest Oil & Gas Trading Ltd. (UK), a company controlled by the President and CEO of the Company, which is non-interest bearing, unsecured, and due on demand.

(f)

During the six months ended November 30, 2019, the Company incurred $20,074 (2019 - $nil) consulting fees to Northwest Smart Technology AG, a company controlled by the President and CEO of the Company.

F-8

NORTHWEST OIL & GAS TRADING COMPANY, INC.

Notes to the condensed interim financial statements

For the six months ended November 30, 2019 and 2018

(expressed in US dollars)

(unaudited)

Common Stock

(a)

During the six months ended November 30, 2019, the Company received $188,295 pursuant to a private placement of shares of common stock of $1.20 to $1.25 per share. The shares were issued subsequent to November 30, 2019.

(b)

During the six months ended November 30, 2019, the Company entered into IR agreements to issue common shares with a fair value of $12,300. The amounts were recorded as shares issuable at the fair value of the common shares on the date that the shares became issuable. Refer to Notes 8(a) and (b).

Commitments

(a)

On July 15, 2019, the Company entered into an IR agreement with a related company, Northwest Smart Technology AG. The Company agreed to pay Northwest Smart Technology AG 1,000 common shares per month, payable at the end of each quarter, subject to approval at the annual general Shareholder’s Meeting of the Company. The agreement provides for travel expenses but no remuneration other than the 6.5% commission on funds raised.

(b)

On July 22, 2019, the Company entered into an IR agreement with SS Finansal, an unrelated company. The Company agreed to pay 1,000 common shares per month, payable at the end of each quarter, subject to approval at the annual general Shareholder’s Meeting of the Company. The agreement provides for travel expenses but no remuneration other than the 6.5% commission on funds raised.

(c)

The Company entered into an operations agreement with Mystic for a period of 6 months for the operations of the wells located at Kentucky as disclosed in Note 4. The agreement will automatically renew for a period of one year if no notice is provided thirty days prior to the end of the six-month period. The Company agreed to pay $2,500 per month for each state where assets are to be overseen, an additional $1,000 per state shall be added for additional work in other states, a pumping fee of $75 per well per month, and all out-of-pocket expenses incurred by Mystic.

Subsequent Events

(a)

Subsequent to November 30, 2019, the Company received share subscription proceeds of $463,232 pursuant to a private placement of shares of common stock to be issued at $1.20, and the shares have not been issued as of the date of filing.

(b)

On December 3, 2019, the Company issued 88,000 common shares at $1.25 per share for proceeds of $110,000 which was received prior to November 30, 2019. Refer to Note 7(a).

(c)

On December 3, 2019, the Company issued 65,245 common shares for proceeds of $78,295 which was received prior to November 30, 2019. Refer to Note 7(a).

(d)

Subsequent to November 30, 2019, the Company paid Mystic $40,000 relating to the purchase of the working interest in the Kentucky wells as disclosed in Note 4.

(e)

Subsequent to November 30, 2019, the Company received a loan of $82,500 from a company controlled by the President and CEO of the Company, which is non-interest bearing, unsecured, and due on demand.

(f)

On December 28, 2019, the Company entered into a joint venture arrangement with Pegasus Oilfield Services LLC, a Wyoming company, whereby both parties agreed to develop, explore, and exploit crude oil and natural gas located in the state of Kansas. The joint venture will concentrate mainly on the Cisco oil and gas field for the exploration and extraction of helium. The joint venture will be shared equally for all costs and profits.

F-9

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of such financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate these estimates, including those related to useful lives of real estate assets, bad debts, impairment, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates. The analysis set forth below is provided pursuant to applicable SEC regulations and is not intended to serve as a basis for projections of future events. See “Cautionary Statement Regarding Forward Looking Statements” above.

Plan of Operations

Northwest Oil & Gas Trading Company, Inc. (“NWOG”, the “Company” “we” or “us”) is a development stage company. We were incorporated under the laws of the state of Nevada on April 7, 2017. We are in the business of oil exploration. On December 21, 2017, we formalized an agreement whereby we were assigned partial interest in two (2) operating oil and gas leases in Warren County, Kentucky. Two additional leases were assigned to us on April 24, 2018. Our fiscal year end is May 31. The leases cover the following nine (9) wells:

●	Hardcastle 1 Well

7% Overriding Royalty Interest

25% Working Interest

10% Net Revenue Interest

●	Whittaker 1 and 2 wells

5% Overriding Royalty Interest

100% Working Interest

60% Net Revenue Interest

●	Daviess Wells 1 and 2

71% Working Interest

51% Net Revenue Interest

●	Ennis 4 wells

71% Working Interest

51% Net Revenue Interest

This wells are operated by Mystic Energy Services LLC.

Our plan is to develop the above mentioned oil wells within the next twelve (12) months and to increase the oil production by enhancement procedures. Further to start a drilling program to drill ten (10) new wells within the coming twenty-four months.

The following chart provides an overview of our budgeted expenditures by significant area of activity over the next twelve (12) months as well over the next twenty-four (24) months, assuming we are able to attract sufficient debt or equity financing. We anticipate that we shall need to raise an additional $550,500 in debt or equity financing in the next twelve (12) months to meet our objectives and execute our business plan. There can be no assurance that we will be able to attract financing and we may be required to scale back operations accordingly.

	Month 1-3	Month 4-6	Month 7-9	Month 10-12	Total

Expenditures
Payroll	$0	$3,000	$6,000	$6,000	$15,000
Travel	$2,500	$5,000	$2,500	$2,500	$12,500
Accounting	$3,000	$3,000	$3,000	$3,000	$12,000
Legal	$8,000	$4,000	$2,000	$2,000	$16,000
Auditing	$3,000	$3,000	$3,000	$3,000	$12,000
Oil Field
Operator	$1,500	$1,500	$1,500	$1,500	$6,000
Maintenance	$3,000	$3,000	$3,000	$3,000	$12,000
Work over	$10,000	$10,000	$0	$0	$20,000
New drilling	$0	$0	$200,000	$200,000	$400,000
Marketing
Promotion	$9,000	$6,000	$3,000	$3,000	$21,000
Investor Relations	$6,000	$6,000	$6,000	$6,000	$24,000

Sum	$46,000	$44,500	$230,000	$230,000	$550,500

Earnings
Sale of oil
Hardcastle	$0	$1,500	$1,500	$1,500	$4,500
Whittaker	$1,800	$5,400	$10,000	$12,500	$29,700
Daviess	$1,500	$4,500	$9,000	$9,000	$24,000
Ennies	$4,500	$16,800	$16,800	$16,800	$54,900
New well 1			$12,000	$18,000	$30,000
New well 2			$12,000	$18,000	$30,000
New well 3				$12,000	$12,000
New well 4				$12,000	$12,000
New well 5
New well 6
New well 7
New well 8
New well 9
New well 10

Sum	$7,800	$28,200	$61,300	$99,800	$143,100

	Month 13-15	Month 16-18	Month 19-21	Month 22-24	Total

Expenditures
Payroll	$6,000	$6,000	$9,000	$9,000	$30,000
Travel	$2,500	$2,500	$2,500	$2,500	$10,000
Accounting	$3,000	$3,000	$3,000	$3,000	$12,000
Legal	$2,000	$2,000	$2,000	$2,000	$8,000
Auditing	$3,000	$3,000	$3,000	$3,000	$12,000
Oil Field
Operator	$1,500	$1,500	$1,500	$1,500	$6,000
Maintenance	$3,000	$3,000	$3,000	$3,000	$12,000
Work over	$10,000	$0	$0	$0	$10,000
New drilling	$225,000	$225,000	$0	$0	$450,000
Marketing
Promotion	$3,000	$3,000	$3,000	$3,000	$12,000
Investor Relations	$6,000	$6,000	$6,000	$6,000	$24,000

Sum	$265,000	$255,000	$33,000	$33,000	$586,000

Earnings
Sale of oil
Hardcastle	$1,500	$1,500	$1,500	$1,500	$6,000
Whittaker	$12,500	$12,500	$12,500	$12,500	$50,000,00
Daviess	$9,000	$9,000	$9,000	$9,000	$36,000
Ennies	$16,800	$16,800	$16,800	$16,800	$67,200
New well 1	$18,000	$18,000	$18,000	$18,000	$72,000,00
New well 2	$18,000	$18,000	$18,000	$18,000	$72,000
New well 3	$18,000	$18,000	$18,000	$18,000	$72,000
New well 4	$18,000	$18,000	$18,000	$18,000	$72,000
New well 5	$12,000	$18,000	$18,000	$18,000	$66,000
New well 6	$12,000	$18,000	$18,000	$18,000	$66,000
New well 7	$12,000	$18,000	$18.000	$18,000	$66,000
New well 8		$12,000	$18,000	$18,000	$48,000
New well 9		$12,000	$18,000	$18,000	$48,000
New well 10		$12,000	$18,000	$18,000	$48,000

Sum	$147,800	$201,800	$219,800	$219,800	$789,200

During the three months periode ending November 30, 2019 the Company signed an operating agreement with Mystic Energy Services LLC. Mystic Energy Services LLC is now our contractor for the operation services of all Kentucky Wells as well for some future United States developments. Each of their supervisors have over 20-year experience in the oil and gas industry.

We also signed a „Sale and Purchase Agreement“ about the purchase of 10 wells in Kentucky for the complete sum of $98,750 payable in tranches until March 2020. The Company is buying 10 wells in total – 7 of the wells are currently producing crude oil, 2 must be plugged, however all drilling rights in the leases, equipment, and future production becomes the property of the Company once this agreement is fulfilled. An 84% (Eighty four percent) working interest and a 62.63% (Sixty-two-point six three percent) Net Revenue Interest will be assigned to NWO upon completion of this agreement.

This purchase was selected because it allows a company increase in both profits and assets at a low cost but with a high ownership percentage. The wells are in the same general area of Kentucky where NWOG currently has assets. These wells are already generating a profit of about $26,750 per year as is. This will automatically provide a return on investment money of about 27% per year. Two of the wells involved have no revenue value but were included in the deal for the equipment it will provide for other NWOG assets in need of maintenance, specifically the Ennis location. The tank will be removed and placed on the Ennis. The equipment savings alone that we will use on other NWOG assets will have us $20,300 dollars.

If work is performed on all the wells, which will include a swab, diesel wash, repairs of downhole equipment (if needed) then the production of these wells should increase to over 1,000 barrels of oil per year (or more). For each well an additional $4,000 per well should be considered to bring production to its highest point, however, not every well will need be done and not every well will have an additional $4,000 maintenance cost. That will be determined later and as funds become available for these re-works. The work suggested will be, per well, 10 hours of rig time, parts, chemical, swabs, dozer time, and crew. From the information already provided to NWOG, the records indicate some of the wells produced over 10 barrels of oil per day when initial production began, third party (Black Gold Oil) has verified the information provided as accurate.

Liquidity and Results of Operations

Total operating expenses was $145,774 for the three months period ended November 30, 2019, as compared to $4,829 for the three months ended November 30, 2018 and $217,851 for the six months period ended November 30, 2019, as compared to $13,004 for the six months ended November 30, 2018. The Company was inactive in the comparative period of the year 2018.

The increase is mainly attributable to professional fees incurred in this period because of the preparatory work in view of the listing of the shares, as well transfer agent and filing fees and cost related to an investment in an advanced oil technology.

Liquidity and Capital Resources

The Company’s principal sources and uses of funds are investments from accredited investors or from financing from management and officers. During the six months ended November 30, 2019 net cash provided by financing activities increased from $5,375 (November 30, 2018) to $200,468 (November 30, 2019) mainly based on share subscriptions received in the amount of $188,295.

The Company would need to raise additional capital in order to meet its business plan. Management intends to secure additional funds using borrowing or the further sale of securities to accredited investors in the future. There is no assurance that we may secure funding, or whether it can do so on terms acceptable to us, or at all, and its liquidity would be severely compromised.

The Company entered into an operations agreement with Mystic Energy Services (USA) (“Mystic”) for a period of 6 months for the operations of the wells located at Kentucky. The Company agreed to pay $2,500 per month, a pumping fee of $75 per well per month and all out-of-pocket expenses incurred by Mystic.

Further the Company entered into a Purchase Agreement on October 9, 2019 with Mystic to purchase 10 wells for $98,750. Once the Company fulfills the payment, all drilling rights, equipment, and future production becomes the property of the Company. The Company will acquire 84% working interest in the 10 wells and a 62.64% net revenue interest. During the three months period ended November 30, 2019 the company paid $29,000. This lead to an increase of total assets from $1,020 at May 31, 2019 to $31,753 at November 31, 2019. A further amount of $40,000 was paid subsequent to November. The Company will not acquire any working interest on the property until the full payment has been made, in accordance with the agreement.

During the six months period ending November 30, 2019 total current liabilities increased from $323,926 at May 31, 2019 to $371,915 at November 31, 2019 mainly caused by an increase of the accounts payable and accrued liabilities from $6,979 at May 31, 2019 to $42,795 at November 31, 2019.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates, amongst other things, the realization of assets and satisfaction of liabilities in the course of business.

We anticipate that our future liquidity requirements will arise from the need to fund our growth, pay our current obligations and future capital expenditures. The primary sources of funding for such requirements are expected to be cash generated from operations and raising additional funds from private sources and/or debt financing.

Going Concern Consideration

Our independent auditors included an explanatory paragraph in their report on the accompanying financial statements expressing concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies

The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosures about contingent assets and liabilities. We base these estimates and assumptions on historical experience and on various other information and assumptions that are believed to be reasonable under the circumstance. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as additional information is obtained, as more experience is acquired, as our operating environment changes and as new events occur. Our critical accounting policies are listed in the notes to our audited financial statements included on Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluations of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013). Based on such evaluation, our management concluded that our internal control over financial reporting were ineffective as of November 30, 2019 due to the lack of an established Audit Committee to provide oversight of management.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified by management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, misstatements, errors, and instances of fraud, if any, within our company have been or will be prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls also can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, internal controls may become inadequate as a result of changes in conditions, or through the deterioration of the degree of compliance with policies or procedures.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company has no knowledge of existing or pending legal proceedings against the Company, nor is the Company involved as a plaintiff in any proceeding or pending litigation. There are no proceedings in which any of the Company’s directors, officers or any of their respective affiliates, or any beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS

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

ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES

We issued a total of 410,000 shares to 41 separate accredited foreign shareholders on March 31, 2018, pursuant to a private placement of our common stock exempt from registration under Regulation S of the Securities Act of 1933, for total proceeds of approximately $4,100. We issued an additional 21,000,000 shares to three founding shareholders for services rendered in connection with the formation and organization of the Company issued pursuant to a private placement of our common stock exempt from registration under Regulation S of the Securities Act of 1933 for a total value of approximately $21,000.

During the three months ended August 31, 2019, the Company received $80,295 pursuant to a private placement of shares of common stock at $1.20 to $1.25 per share. During the three months ended November 30, 2019, the Company received $108,000 pursuant to a private placement of shares of common stock at $1.20 to $1.25 per share. These shares were issued to only accredited investors pursuant to exemptions from registration set forth in Regulation D and Regulation S of the Securities Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4. OTHER INFORMATION

None

ITEM 5. EXHIBITS

INDEX TO EXHIBITS

Exhibit		Description
31.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NORTHWEST OIL & GAS TRADING COMPANY, INC. (Registrant)

Signature	Title	Date

/s/ Joachim Haas
Joachim Haas	Chief Executive Officer	January 28, 2020
	Principal Executive Officer
/s/ Thomas Hoeder
Thomas Hoeder	Chief Financial Officer Principal Financial Officer	January 28, 2020

NOWEA ENERGY, INC. - FORM 10-Q - January 28, 2020

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