1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[xx] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended: September 30, 2001
[ ] Transition report under Section 13 or 15(d) of the Exchange Act.
For the transition period from __________ to __________
Commission file number: 0-3912
PETROL INDUSTRIES, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
NEVADA 75-1282449
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
202 N. THOMAS, SUITE 4, SHREVEPORT, LA 71107-6539
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code: (318) 424-6396
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
past 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 [xx] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13, or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date: 1,597,196
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Balance Sheets
September 30, December 31,
2001 2000
------------- ------------
<s> <c> <c>
ASSETS
------
Current assets:
Cash and cash equivalents $ 22,045 50,725
Accounts receivable:
Trade 34,813 52,401
Other 9,498 9,498
---------- ----------
44,311 61,899
Inventory 32,648 41,153
Prepaid expenses 13,868 2,890
---------- ----------
Total current assets 112,872 156,667
---------- ----------
Property and equipment, at cost:
Land 7,000 7,000
Developed and undeveloped oil and gas
properties-successful efforts method 4,130,365 4,138,480
Trucks and other operating equipment 358,273 366,560
Furniture and fixtures 33,347 33,133
---------- ----------
4,528,985 4,545,173
Less accumulated depreciation, depletion
and amortization 4,447,293 4,463,596
---------- ----------
81,692 81,577
---------- ----------
Other assets 1,107 1,107 ---------- ----------
---------- ----------
$ 195,671 239,351
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 51,071 39,045
Payable to interest owners 334,803 328,473
Payable to officer, net 872,964 832,252
Note payable 20,500 2,000
Accrued expenses 101,598 92,595
---------- ----------
Total current liabilities 1,380,936 1,294,365
---------- ----------
Stockholders' deficit:
Preferred stock-no par value. Authorized
1,000,000 shares; no shares issued or
outstanding --- ---
Common stock-$.10 par value. Authorized
10,000,000 shares; issued and outstanding
1,597,196 shares in 2001 and 2000 159,720 159,720
Accumulated deficit (1,344,985) (1,214,734)
---------- ----------
Total stockholders' deficit (1,185,265) (1,055,014) ---------- ----------
---------- ----------
$ 195,671 239,351
========== ==========
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PETROL INDUSTRIES, INC.
Consolidated Statements of Operations
(unaudited)
Quarter Ended Year Ended
September 30, September 30,
-------------------- --------------------
2001 2000 2001 2000
--------- --------- --------- ---------
<s> <c> <c> <c> <c>
Revenues:
Oil and gas sales $ 123,461 206,530 411,021 579,103
Other operating income 7,070 6,430 23,550 23,437
--------- --------- --------- ---------
130,531 212,960 434,571 602,540
--------- --------- --------- ---------
Expenses:
Lease operating expense 140,692 144,803 400,293 390,375
General and administrative 39,127 43,899 130,513 189,144
Depreciation, depletion
and amortization 2,775 1,740 8,325 5,146
--------- --------- --------- ---------
182,594 190,442 539,131 584,665
--------- --------- --------- ---------
Operating loss $ (52,063) 22,518 (104,560) 17,875
--------- --------- --------- ---------
Other income and (expense):
Gain on sale of assets 1,700 --- 5,740 1,000
Interest income 26 563 461 1,213
Interest expense (10,959) (11,925) (31,892) (34,704)
--------- --------- --------- ---------
(9,233) (11,362) (25,691) (32,491)
--------- --------- --------- ---------
Net loss $ (61,296) 11,156 (130,251) (14,616)
========= ========= ========= =========
Net loss per share $ (0.04) 0.01 (0.09) (.01)
========= ========= ========= =========
Average common shares
outstanding 1,597,196 1,597,196 1,597,196 1,597,196
========= ========= ========= =========
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PETROL INDUSTRIES, INC.
Consolidated Statements of Cash Flows
Nine months ended September 30, 2001 and 2000
(unaudited)
2001 2000
---- ----
<s> <c> <c>
Operating activities:
Net loss $ (130,251) (14,616)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation, depletion and amortization 8,325 5,146
Gain on sale of assets (5,740) (1,000)
Losses on retirements of property and
equipment included in lease operating
expenses --- 495
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 17,588 (5,993)
Decrease (increase) in inventory 8,505 (682)
Increase in prepaid expenses (10,978) (4,621)
Increase in accounts payable and
accrued expenses 21,029 2,394
Increase in payable to officer, net 40,712 96,319
Increase in payable to interest owners 6,330 263
-------- --------
Net cash (used) provided by operating
activities (44,480) 77,705
Investing activities:
Capital expenditures (8,440) (20,000)
Proceeds from sale of property and equipment 5,740 1,000
-------- --------
Net cash used by investing activities (2,700) (19,000)
Financing activities:
Proceeds from gross borrowings 18,500 ---
Payments on gross borrowings --- (20,000)
-------- --------
Net cash provided (used) by financing
activities 18,500 (20,000)
Increase (decrease) in cash and cash equivalents (28,680) 38,705
Cash and cash equivalents at beginning of period 50,725 34,138
-------- --------
Cash and cash equivalents at end of period $ 22,045 72,843
======== ========
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PETROL INDUSTRIES, INC.
Consolidated Statements of Changes in Stockholders' Deficit
Nine months ended September 30, 2001 and 2000
(unaudited)
2001 2000
---- ----
Stockholder's deficit at January 1 $ (1,055,014) (1,020,246)
Net loss for the nine-month period (130,251) (14,616)
---------- ----------
Stockholder's deficit at September 30 $ (1,185,265) (1,034,862)
========== ==========
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PETROL INDUSTRIES, INC.
Notes to Consolidated Financial Statements
(unaudited)
1. The accompanying unaudited consolidated financial statements have been
prepared by the Registrant in accordance with generally accepted
accounting principles, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
Disclosures normally included in financial statements have been
condensed or omitted pursuant to such rules and regulations, although
management believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of management, the
accompanying financial statements contain all adjustments necessary for
a fair statement of the results for the interim periods presented. It
is suggested that these consolidated financial statements be used in
conjunction with the consolidated financial statements and the notes
thereto included in the Registrant's 2000 Annual Report on Form 10-KSB.
2. The consolidated financial statements included herein are consolidated
with the accounts of Petrolind Drilling Funds, Inc. and Realco, Inc.,
both wholly owned subsidiaries of the Registrant, neither of which was
active during 2001 or 2000.
3. Net income per share of common stock is computed on the weighted average
number of shares outstanding during the nine months ended September 30.
Totaling the number of shares outstanding at the end of each month and
dividing that total by the number of months determined the weighted
average number of shares outstanding.
Total Number of
Shares Outstanding
------------------
2000 2001
---- ----
January 31 1,597,196 1,597,196
February 28 1,597,196 1,597,196
March 31 1,597,196 1,597,196
April 30 1,597,196 1,597,196
May 31 1,597,196 1,597,196
June 30 1,597,196 1,597,196
July 31 1,597,196 1,597,196
August 31 1,597,196 1,597,196
September 30 1,597,196 1,597,196
4. The expected tax benefit resulting from operating losses for the first
nine months of 2001 has not been recorded because it is not expected to
be realizable. Additionally, there were no significant changes in the
temporary differences that give rise to significant portions of the
deferred tax assets and deferred tax liabilities at September 30, 2001.
5. The Company has entered into a loan agreement with a stockholder of the
corporation in which it has the ability to borrow an amount in the
aggregate not to exceed $98,000, including any amounts advanced prior to
the execution of said agreement. Borrowings under this note will bear
interest at 10.75% and funds borrowed may be used to fund the operations
of the Company. Payment of all accrued and unpaid interest and all
unpaid principal is due May 1, 2003. Until such date, the Company will,
on a quarterly basis, pay only the accrued unpaid interest on the note
on the 10th day of the month for the preceding calendar quarter or
portion thereof; such payments will be due January 10, April 10, July 10
and October 10. The Company has the right under the note agreement to
make principal payments at any time before they are due without
incurring any prepayment penalties. In addition to the protections
given under this agreement, a mortgage on certain real property owned by
the Company is pledged as security on said agreement. Gross borrowings
under the agreement as of September 30, 2001, was $18,500.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYISIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Oil and gas sales revenues decreased approximately 40.3% in the third
quarter of 2001, compared to the third quarter of 2000, the result being an
approximate 29.7% decrease in production. The Company suffered a net loss
for the period of $61,296 or ($.04) per share, compared to a net income of
$11,156 in the 2000 period, or $.01 per share.
The Company sustained an operating loss of $52,063 in the third quarter
of 2001, compared to an operating income of $22,518 in the prior year's third
quarter. For the nine-month period ending September 30, 2001, the Company's
net loss increased approximately 791.2% to $130,251 from the $14,616 net loss
in the prior year's period caused principally by serious inclement weather
conditions that prevailed during the first quarter, which reduced the
Company's overall production by 21.5%.
Profitability is contingent essentially upon two factors: increasing
production from the Company's mineral leases and increases in world oil
prices. Management continues to explore possible approaches to increasing
oil production, including technological developments or pursuing drilling
operations.
Oil prices averaged $23.48 per barrel during the third quarter of 2001,
compared to an average of $28.69 per barrel in the 2000 period. For the
nine-month period, oil prices averaged $24.46 per barrel in 2001 compared to
$26.63 in 2000.
The Company had cash and cash equivalents at September 30, 2001, of
$22,045, compared to $50,725 at the end of the 2000 fiscal year. Management
estimates that it owes $334,803 from the settlement of the Horne Lease
dispute with Oryx to owners of other interests in the Horne Lease.
In July, 2001, Joseph M. Rodano, President and Treasurer of Petrol
Industries, Inc., as well as a member of its Board of Directors, purchased a
total of 20,000 Shares Common Stock, $.10 par value per share, of Petrol
Industries, Inc. The purchase was made in an open-market transaction, and
all of the shares purchased by Mr. Rodano were purchased with his personal
funds. As of September 30, 2001, Mr. Rodano owns an aggregate of 576,325
Shares, comprising approximately 36% of the outstanding shares.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
None.
Item 2. CHANGES IN SECURITIES.
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES.
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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SIGNATURE
---------
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 14, 2001
PETROL INDUSTRIES, INC.
s/Joseph M. Rodano
By:_____________________________
Joseph M. Rodano
President and Treasurer