10-Q 1 t304337.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) |X| QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008 OR | | 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 000-32747 GULF COAST OIL & GAS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) NEVADA 98-0128688 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 5847 SAN FELIPE, SUITE 1700 HOUSTON, TEXAS 77057 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (713) 821-1731 (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 |X| 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 definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large Accelerated filer | | Accelerated filer | | Non-accelerated filer | | Smaller reporting company |X| (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes | | No |X| APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court. Yes | | No | | APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of May 15, 2008, 999,952,788 shares of common stock. SEC2334(9-05) PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENT VALID OMB CONTROL NUMBER. GULF COAST OIL & GAS, INC. AND SUBSIDIARY FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2008 INDEX

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-3- GULF COAST OIL & GAS, INC. AND SUBSIDIARY (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES HISTORY Otish Mountain Diamond Company (formerly First Cypress, Inc.), a Nevada corporation, was organized on September 14, 1999. From inception to September 30, 2003, the Company had not generated any revenues and was considered a development stage enterprise, as defined in Financial Accounting Standards Board No. 7. The Company was in the process of developing an internet computer software program known as EngineMax. Essentially, software development was suspended in November 2002 due to cash flow constraints. In October 2002, the Company acquired certain items constituting the "Money Club Financial" business concept and business plan. Due to the Company's inability to raise the necessary equity capital to further the Money Club Financial business concept, no monies were spent furthering the business concept from the date of acquisition to September 30, 2003. The Company discontinued its involvement in these operations in the third quarter of 2003. On November 30, 2003, the Company successfully acquired 100% of Otish Mountain Diamond Corp. ("Otish Corp."). The business activities of Otish Corp. became the business activities of the Company. In connection with the merger the capitalization of the Company was amended to reflect a 220:1 reverse stock split and to increase the authorized capital to 600,000,000 shares, consisting of 500,000,000 common shares with a par value of $0.001, and 100,000,000 preferred shares with a par value of $0.001. Also, 1,000,000 shares of a Serial A Preferred were issued for services rendered. Finally, the then president of the Company entered into two agreements with the Company; one, assumed all the known liabilities of the company, and the second, agreed to convert debt owed the president of $236,000 into 236,000 shares of Company common stock. The Company's income statement at the date of merger was as follows: Revenues $ -0- Expenses: Exploration costs $ 36,293 Administrative $ 136,284 Net Loss $ 172,577 Otish Mountain Diamond Corp. was incorporated in the state of Nevada on August 4, 2003. The Company was formerly engaged in the mining and exploration business and had mineral rights in the Otish Mountain and Superior Craton regions of Canada. On November 30, 2003, the Company declared a 1 for 220 reverse stock split. On July 13, 2005, the Company declared a 3 for 1 forward stock split. All shares amount referenced in these footnotes represent the share equivalents after taking into account, to the extent applicable, the effect of the reverse -4- GULF COAST OIL & GAS, INC. AND SUBSIDIARY (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED stock split and the forward stock split. All share amounts in the financial statements have also been adjusted retroactively for the reverse and forward stock split. In August and November 2003, the Company issued 40,909 shares of its common stock and paid $77,745 for mineral rights in the Otish Mountain and Superior Craton regions of Quebec, Canada. In the first quarter of 2004 the Company issued 60,900,150 shares of common stock for services valued at $5,180,053. Valuation was based on the approximate trading value of the Company's shares on the date issued. During the third quarter of 2004 the Company issued 7,902,000 shares of common stock to liquidate $263,400 of advances. On January 13, 2005, the Company changed its name to Gulf Coast Oil & Gas, Inc. On April 15, 2005, the Company settled an accounts payable debt of $232,120 for 696,360 shares of common stock. On May 2, 2005, the Company received $100,000 for 1,665,000 shares of common stock. On May 26, 2005, the Company settled a current period debt of $5,000 for 300,000 of common stock. On June 17, 2005, the Company received $100,000 for 1,200,000 shares of common stock. On July 17, 2005, the Company received $50,000 for 625,000 shares of common stock. On August 15, 2005, the Company issued 300,000 shares of common stock for consulting services valued at $24,000. On September 26, 2005, the Company received $50,000 for 625,000 shares of common stock. On November 14, 2006, the Company issued 1,500,000 shares of common stock for consulting services valued at $24,000. On December 31, 2006, the Company issued 500,000 shares of common stock for consulting services valued at $11,000. On January 1, 2007, the Company issued 1,700,000 shares of common stock for consulting services valued at $1,700. -5- GULF COAST OIL & GAS, INC. AND SUBSIDIARY (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED FINANCIAL STATEMENT PRESENTATION The Company was a shell at the time of the acquisition having only $192 in assets; the acquisition was treated as a reverse merger whereby the acquired company is treated as the acquiring company for accounting purposes. AN EXPLORATION STAGE COMPANY The Company is an Exploration Stage Company since it is engaged in the search for mineral deposits, which are not in the development or productions stage. As an exploration stage company the Company will present, Since Inception, results on its statements of operations, stockholders' equity and cash flows. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There was no cash paid during the periods for interest or taxes. PROPERTY AND EQUIPMENT Property and equipment are carried at cost. Maintenance, repairs and renewals are expensed as incurred. Depreciation of property and equipment is provided for over their estimated useful lives, which range from three to five years, using the straight-lined method. WEBSITE DEVELOPMENT COSTS The Company has expended $1,500 in Website Development Costs, for internal use software. These costs are being amortized over a three year estimated life. MINERAL RIGHTS The Company uses the "full costs method" of accounting for its mineral reserves. Under this method of accounting, properties are divided into cost centers. The Company presently has two cost centers. All acquisition, exploration, and development costs for properties within each cost center are capitalized when incurred. The Company intends to deplete these costs equally over the estimated units to be recovered from the properties. These costs were written off at December 31, 2004 as part of the cost of mineral rights abandoned. DEPOSIT ON INTEREST IN UNPROVED OIL AND GAS LEASES On June 8, 2005, the Company paid $100,000 to acquire, subject to lease availability, a 75% working interest in oil and gas leases in Louisiana. Under the terms of the agreement the Company will pay 100% of the costs of acquisition, exploration and development of the leases, the lease are subject to overriding royalties, and has one year to submit the remaining portion of the total costs. In the event the leases are unavailable, the funds advanced, less expense incurred will be returned to the Company. -6- GULF COAST OIL & GAS, INC. AND SUBSIDIARY (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED In August 2006, the Company paid $30,000 to renew the lease in Louisiana for two additional years. On May 9, 2006, the Company paid a deposit of $262,500 on oil and gas property (the Weil 8-C) in Corpus Christi Texas. Under the agreement, the Company acquired an undivided 28% working interest and a 21% net revenue interest in the Weil 8-C well for a 46.66% billing interest. On August 1, 2006, the Company paid $104,533 to hookup the 8-C to bring the well production ready. The facility had not been placed into service at December 31, 2006. When placed into service the asset was moved from investments to fixed assets and will be depreciated on a straight-line basis over a seven year life. On August 15, 2006, the Company paid a deposit of $108,251 on oil & gas property, namely, the Weil 3-C, in Corpus Christi, Texas. Under the agreement, the Company acquired an undivided 28% working interest and a 21% net revenue interest in the Weil 3-C well for a 46.66% billing interest. On August 31, 2006, The Company paid a deposit of $134,520.78 on oil & gas property, namely, the Weil 7-C, in Corpus Christi, Texas. Under the agreement, the Company acquired an undivided 28% working interest and a 21% net revenue interest in the Well 7-C well for a 46.66% billing interest. On September 19, 2006, the Company paid $135,948.57 to bring the 3-C and 7-C wells into production as well as convert both the 2-C and 6-C wells on property to Salt Water disposal wells. It is the intent of the Company to offer Salt Water disposal services to neighboring companies as a side revenue generating service. In the first quarter of 2007, all the wells, except the Louisiana wells, generated revenues. Accordingly $49,897 was transferred to depreciable assets and $732,926 to Oil reserves. USE OF ESTIMATES The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. -7- GULF COAST OIL & GAS, INC. AND SUBSIDIARY (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 2008 NOTE 2 - MINERAL RIGHTS Otish Mountain Diamond Corporation On August 19, 2003 the Company purchased the mineral rights for 60,933 acres in the Otish Mountain and Superior Craton regions of Quebec, Canada. The claims were purchased for $42,506 and 17,045 shares of common stock. The Company is required to spend a minimum of $135 CDN per mining claim on exploration before the expiration date of each claim. The Company is required to spend $105 CDN per claim maintenance/renewal fee to the appropriate governmental authority before the expiration date of the mining claim. If the Company fails to meet its obligations under this agreement the seller has the option to make the expenditures and to reassume title to the mining claims. On November 4, 2003 the Company purchased the mineral rights for 775 acres in the Otish Mountain region of Quebec, Canada. The Claims were purchased for $1,855 and 3409 shares of common stock. The Company is required to pay a 2% royalty of the net smelter returns and a 2% royalty on the gross overriding royalty as defined in the agreement. The Company shall also pay to the seller $5,000 CDN minimum annual advance royalty beginning on November 1, 2004 and each year thereafter. The Company is also required to keep the property in good standing for 1 year or the seller shall be entitled to reacquire the claims. On November 4, 2003 the Company entered into a joint venture agreement for the mineral rights for 15,361 acres in the Otish Mountain region of Quebec, Canada. The investment was $33,383 and 20454 shares of common stock. The Company paid the required claim tax/renewal fees of $12,495 CDN by the due date of November 27, 2003. The Company was required to make a minimum advanced royalty payment of $15,000 CDN once mining stage began. Royalties were subject to underlying royalties of 2% of the net smelter returns and 2% of the gross overriding royalty as defined in the agreement. The Company's total outlay for the joint venture was not to exceed $375,000 CDN. The Company owned 45% of the joint venture. At December 31, 2004 the Company decided to abandon the above mineral rights. The balance of the rights and the net book value of the website development costs were expensed. The total amount written off was $195,226. -8- GULF COAST OIL & GAS, INC. AND SUBSIDIARY (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 2008 NOTE 3 - DEPOSIT ON INTEREST IN UNPROVED OIL AND GAS LEASES On June 8, 2005, the Company paid $100,000 to acquire, subject to lease availability, a 75% working interest in oil and gas leases in Louisiana. Under the terms of the agreement the Company will pay 100% of the costs of acquisition, exploration and development of the leases, the leases are subject to overriding royalties, and has one year to submit the remaining portion of the total costs. In the event the leases are unavailable, the funds advanced, less expenses incurred will be returned to the Company. In August 2006, the Company paid $30,000 to renew the lease in Louisiana for two additional years. On May 9, 2006, the Company paid a deposit of $262,500 on oil and gas property (the Weil 8-C) in Corpus Christi, Texas. Under the agreement, the Company acquired an undivided 28% working interest and a 21% net revenue interest in the Weil 8-C well for a 46.66% billing interest. On August 1, 2006, the Company paid $104,533 to hookup the 3-C to bring the well production ready. The facility had not been placed into service at December 31, 2006. When placed into service the asset will be moved from investments to fixed assets and depreciated on a straight-line basis over a seven year life. On August 15, 2006, the Company paid a deposit of $108,251 on oil & gas property, namely, the Weil 3-C, in Corpus Christi, Texas. Under the agreement, the Company acquired an undivided 28% working interest and a 21% net revenue interest in the Weil 3-C well for a 46.66% billing interest. On August 31, 2006, the Company paid a deposit of $134,520.78 on oil & gas property, namely, the 7-C in Corpus Christi Texas. Under the agreement, the Company acquired an undivided 28% working interest and a 21% net revenue interest in the Weil 7-C well for a 46.66% billing interest. On September 19, 2006, the Company paid $135,948.57 to bring the 3-C and 7-C wells into production as well as convert both the 2-C and 6-C wells on property to Salt Water disposal wells. It is the intent of the Company to offer Salt Water disposal services to neighboring companies as a side revenue generating service. In the first quarter of 2007, all the wells, except the Louisiana wells, generated revenues. Accordingly $49,897 was transferred to depreciable assets and $732,926 to Oil reserves. In the first quarter of 2007, all the wells, except the Louisiana wells generated revenues. Accordingly $49,897 was transferred to depreciable assets and $732,926 to Oil reserves. During the second quarter of 2007, the Company invested $139,177 in the Corpus Christi project to improve the efficiency of the wells. -9- GULF COAST OIL & GAS, INC. AND SUBSIDIARY (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 2008 NOTE 4 - NOTES PAYABLE On February 1, 2006, the Company entered into a Securities Purchase Agreement with Cornell Capital Partners, L.P., Certain Wealth, Ltd., and TAIB Bank, B.S.C. pursuant to which the Buyers agreed to purchase secured convertible debentures in the principal amount of $2,000,000. On February 2, 2006 the Company sold and issued $1,000,000 in principal amount of Debentures to the Buyers. In connection with the Securities Purchase Agreement, the Company issued Cornell Capital five-year warrants to purchase 30,000,000 shares of our common stock at the following exercise prices: 7,500,000 at $0.02 per share, 7,500,000 at $0.03 per share, 5,000,000 at $0.04 per share, 5,000,000 at $0.05 per share, and 5,000,000 at $0.06 per share. The debentures are convertible at the option of the Buyers any time up to maturity into shares of the Company's common stock. The debentures have a three-year term and accrue interest at 10% per year. All unpaid interest and principal are due on or before February 1, 2009. On April 5, 2006, the Company sold the balance, $1,000,000, of the secured convertible debentures. The terms and conditions are the same. The debentures have a three-year term and accrue interest at 10% per year. All unpaid interest and principal are due on or before April 5, 2009. On September 14, 2006, the Company exchanged 892,857 shares of common stock for the retirement of $20,000 of convertible notes payable. In the fourth quarter of 2006, the Company exchanged 12,448,984 shares of common stock for the retirement of $12,449 of convertible notes payable. In the first quarter of 2007, the Company exchanged 21,301,587 shares of common stock for the retirement of $170,000 of convertible notes payable. In the second quarter of 2007, the Company exchanged 88,728,878 shares of common stock for the retirement of $277,049 of convertible notes payable. In the third quarter of 2007, the Company exchanged 291,837,000 shares of common stock for the retirement of $823,222 of convertible notes payable. In the fourth quarter of 2007, the Company exchanged 291,837,000 shares of common stock for the retirement of $440,280 of convertible notes payable. In the first quarter of 2008, the Company exchanged 293,413,060 shares of common stock for the retirement of $186,900 of convertible notes payable. At quarter end, the Company no longer had the necessary shares of common stock in treasury to effect the conversion of the notes to common stock as required under the convertible loan agreements. The Company is therefore in default under the Notes. -10- GULF COAST OIL & GAS, INC. AND SUBSIDIARY (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2008 NOTE 4 - NOTES PAYABLE - CONTINUED Maturities of long term debt at December 31, 2007 were as follows: 2006 $ -0- 2007 $ -0- 2008 $ -0- 2009 $ 943,028 NOTE 5 - DERIVATIVE LIABILITY ARISING FROM WARRANTS The Company accounts for debt with embedded conversion features and warrant issues in accordance with EITF 98-5: ACCOUNTING FOR CONVERTIBLE SECURITIES WITH BENEFICIAL CONVERSION FEATURES OR CONTINGENCY ADJUSTABLE CONVERSION and EITF No. 00-27: APPLICATION OF ISSUE NO 98-5 TO CERTAIN CONVERTIBLE INSTRUMENTS. Conversion features determined to be beneficial to the holder are valued at fair value and recorded to additional paid in capital. The Company determines the fair value to be ascribed to the detachable warrants issued with the convertible debentures utilizing the BLACK-SCHOLES method. Any discount derived from determining the fair value to the debenture conversion features and warrants is amortized to financing cost over the life of the debenture. The unamortized discount, if any, upon the conversion of the debentures is expensed to financing cost on a pro rata basis. Debt issue with the variable conversion features are considered to be embedded derivatives and are accountable in accordance with FASB 133; ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. The fare value of the embedded derivative is recorded to derivative liability. This liability is required to be marked each reporting period. The resulting discount on the debt is amortized to interest expense over the life of the related debt. NOTE 6 - SERIES A PREFERRED STOCK Each share of preferred has 15 votes compared to each share of common, which has only one vote. In the second quarter 2004 all outstanding shares of Preferred Stock were redeemed for $1,000. NOTE 7 - RELATED PARTIES The Company owed its present President $23,619 and $43,619 for compensation and expense reimbursement at March 31, 2008 and December 31, 2007, respectively. -11- GULF COAST OIL & GAS, INC. AND SUBSIDIARY (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 2008 NOTE 8 - GOING CONCERN The Company has not generated significant revenues or profits to date. This factor among others may indicate the Company will be unable to continue as a going concern. The Company's continuation as a going concern depends upon its ability to generate sufficient cash flow to conduct its operations and its ability to obtain additional sources of capital and financing. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. -12- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION LIQUIDITY AND FINANCIAL CONDITION At March 31, 2008, cash and cash equivalents were $137,284, a decrease of $97,099 over December 31, 2007. Total liabilities at March 31, 2008 were $1,212,015, of which $455,887 were current liabilities. The remainder of the liabilities relate to the February and April, 2006 issuance of $2,000,000 of convertible debentures (the "Convertible Debentures") to three investors and recognition of a derivative liability arising from the warrants issued in that transaction. The Company's sole source of revenues has been from its interest in three wells located in Corpus Christi. Those wells had to be reworked in late 2007 and the operator has not recovered the costs and has not therefore commenced paying distributions as of the date of this Report. The Company does not anticipate the receipt of revenues in the second quarter of 2008 but believes that production will be sufficient so that distributions will be received in the third quarter of 2008. As of March 31, 2008 we had a working deficit of $163,437, as compared to a working capital deficit of $43,680 at December 31, 2007. The decrease in working capital is largely attributable to an increase in accrued interest on the Convertible Debentures and a decrease in cash. The decrease in cash is largely attributable to administrative overhead expenses not offset by any revenues in the first quarter. The Corpus Christi wells continue to produce oil and gas. However, revenues have been used to pay the costs of the rework and the Company anticipates that it will receive distributiions again commencing in the third quarter of 2008. The Company will use such revenues to pay its administrative overhead. The Company is currently negotiating with several prospective partners with respect to the Saratoga Prospect, but revenues, if any, from such project will not be realized in the near term. The Company also intends to seek additional financing for future projects. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2008 COMPARED TO THREE MONTHS ENDED MARCH 31, 2007 REVENUES The Company generated $94,197 in sales for the three months ended March 31, 2007 which reflect distributions from the Company's interest in three producing oil and gas wells in Corpus Christi, Texas. In the first quarter of 2008, the Company did not have any revenues as revenues from the Corpus Christi wells were used to pay rework expenses. GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses during the three months ended March 31, 2008 declined slightly to $164,000 from $174,000 in the same period in 2007. This decrease was the result of slightly lower fees paid to outside professionals. -13- NET GAIN/LOSS TO COMMON SHAREHOLDERS Net operating loss to common shareholders was ($162,957) or ($0.00) per share for the three months ended March 31, 2008 as compared to a net operating loss of ($96,155) or ($0.00) for the three months ended March 31, 2007. The increase in net loss results from the Company's failure to generate any revenues in the first quarter of 2008 for the reason set forth above. ACCUMULATED DEFICIT Since inception, we have incurred substantial operating losses and may incur substantial additional operating losses over the next several years. As of March 31, 2008, our accumulated deficit was ($7,751,083). ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a "smaller reporting company" as defined by Item 10-K of Regulation S-K, the Company is not required to provide this information. ITEM 4T. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules, regulations and related forms, and that such information is accumulated and communicated to our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. As of March 31, 2008, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and our principal financial officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. CHANGES IN INTERNAL CONTROLS There have been no changes in our internal controls over financial reporting during the quarter ended March 31, 2008 that have materially affected or are reasonably likely to materially affect our internal controls. -14- PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES The Company received a letter dated March 17, 2008 from YA Global Investments, L.P. (f/k/a Cornell Capital Partners, L.P.) ("YA") serving as notice that the Company is in default under the terms of the Debentures and related agreements. YA's letter states that the Company is in default for, among other things, the Company's failure to reserve a sufficient number of authorized shares of common stock to allow for full conversion of the Debentures and YA demanded full payment of the YA Debenture. Pursuant to the terms of the Debentures, the Company covenanted that it would reserve a sufficient number of authorized common shares to permit the conversion of the Debentures. As of the date hereof, YA has not taken any further action pursuant to the notice of default. The Company is currently evaluating options for attempting to increase the number of authorized common shares in order to cure the default. The Company has also had oral discussions with representatives of Taib Bank B.S.C. (c) and Certain Wealth, Ltd. concerning the default and potential cure. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS (a) The following Exhibits are filed as part of this Report or incorporated herein by reference: 31.1 Certification of Chief Executive Officer and Chief Financial Officer 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. 1350, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002. -15- SIGNATURES Pursuant to the requirements 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. Date: May 15, 2008 GULF COAST OIL & GAS, INC. BY: /s/ Rahim Rayani ----------------------------------------- Rahim Rayani Chief Executive Officer and President (Principal Executive Officer) BY: /s/ Rahim Rayani ----------------------------------------- Rahim Rayani Chief Financial Officer (Principal Financial and Accounting Officer) -16-

Gulf Coast Oil & Gas Inc. 10-Q