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, 2002
[ ] 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,
2002 2001
------------- ------------
<s> <c> <c>
ASSETS
------
Current assets:
Cash and cash equivalents $ 51,522 55,986
Accounts receivable:
Trade 43,088 25,950
Other 9,498 9,498
---------- ----------
52,586 35,448
Inventory 26,111 21,228
Prepaid expenses 11,688 4,247
---------- ----------
Total current assets 141,907 116,909
---------- ----------
Property and equipment, at cost:
Land 7,000 7,000
Developed and undeveloped oil and gas
properties-successful efforts method 3,730,739 4,131,447
Trucks and other operating equipment 344,003 357,773
Furniture and fixtures 33,986 33,722
---------- ----------
4,115,728 4,529,942
Less accumulated depreciation, depletion
and amortization 4,021,837 4,450,985
---------- ----------
93,891 78,957
---------- ----------
Other assets 1,107 1,107
---------- ----------
$ 236,905 196,973
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 54,803 39,143
Payable to interest owners 340,019 335,427
Payable to officer, net 928,590 886,898
Notes payable 224,692 106,856
Accrued expenses 98,675 89,335
---------- ----------
Total current liabilities 1,646,779 1,457,659
---------- ----------
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 (1,569,594) (1,420,406)
---------- ----------
Total stockholders' deficit (1,409,874) (1,260,686)
---------- ----------
$ 236,905 196,973
========== ==========
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PETROL INDUSTRIES, INC.
Consolidated Statements of Operations
(unaudited)
Quarter Ended Year Ended
September 30, September 30,
-------------------- ---------------------
2002 2001 2002 2001
--------- --------- ---------- ----------
<s> <c> <c> <c> <c>
Revenues:
Oil and gas sales $ 114,097 123,461 308,305 411,021
Other operating income 20,843 7,070 29,802 23,550
--------- --------- --------- ---------
134,940 130,531 338,107 434,571
--------- --------- --------- ---------
Expenses:
Lease operating expense 124,342 140,692 366,969 400,293
General and administrative 27,246 39,127 104,791 130,513
Depreciation, depletion
and amortization 2,775 2,775 8,325 8,325
--------- --------- --------- ---------
154,363 182,594 480,085 539,131
--------- --------- --------- ---------
Operating loss $ (19,423) (52,063) (141,978) (104,560)
--------- --------- --------- ---------
Other income and (expense):
Gain on sale of assets --- 1,700 38,057 5,740
Interest income --- 26 54 461
Interest expense (15,653) (10,959) (45,321) (31,892)
--------- --------- --------- ---------
(15,653) (9,233) (7,210) (25,691)
--------- --------- --------- ---------
Net loss $ (35,076) (61,296) (149,188) (130,251)
========= ========= ========= =========
Net loss per share $ (0.02) (0.04) (0.09) (.09)
========= ========= ========= =========
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, 2002 and 2001
(unaudited)
2002 2001
---- ----
<s> <c> <c>
Operating activities:
Net loss $ (149,188) (130,251)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation, depletion and amortization 8,325 8,325
Gain on sale of assets (38,057) (5,740)
Losses on retirements of property and
equipment included in lease operating
expenses --- ---
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (17,138) 17,588
Decrease (increase) in inventory (4,883) 8,505
Increase in prepaid expenses (7,441) (10,978)
Increase in accounts payable and
accrued expenses 25,000 21,029
Increase in payable to officer, net 41,692 40,712
Increase in payable to interest owners 4,592 6,330
-------- --------
Net cash (used) provided by operating
activities (137,098) (44,480)
Investing activities:
Capital expenditures (25,520) (8,440)
Proceeds from sale of property and equipment 40,318 5,740
-------- --------
Net cash used by investing activities 14,798 (2,700)
Financing activities:
Proceeds from gross borrowings 138,900 18,500
Payments on gross borrowings (21,064) ---
-------- --------
Net cash provided (used) by financing
activities 117,836 18,500
Increase (decrease) in cash and cash equivalents (4,464) (28,680)
Cash and cash equivalents at beginning of period 55,986 50,725
-------- --------
Cash and cash equivalents at end of period $ 51,522 22,045
======== ========
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PETROL INDUSTRIES, INC.
Consolidated Statements of Changes in Stockholders' Deficit
Nine months ended September 30, 2002 and 2001
(unaudited)
2002 2001
---- ----
<s> <c> <c>
Stockholder's deficit at January 1 $ (1,260,686) (1,055,014)
Net loss for the nine-month period (149,188) (130,251)
---------- ----------
Stockholder's deficit at September 30 $ (1,409,874) (1,185,265)
========== ==========
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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 2001 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 2002 or 2001.
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
------------------
2001 2002
---- ----
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 2002 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, 2002.
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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 7.6% in the third
quarter of 2002, compared to the third quarter of 2001, the result being
an approximate 4.2% decrease in production. The Company suffered a net
loss for the period of $35,076, or ($.02) per share, compared to a net
loss of $61,296 in the 2001 period, or ($.04) per share.
The Company sustained an operating loss of $19,423 in the third
quarter of 2002, compared to an operating loss of $52,063 in the prior
year's third quarter. For the nine-month period ending September 30,
2002, the Company's net loss increased approximately 14.5% to $149,188
from the $130,251 net loss in the prior year's period caused principally
by a reduction in the Company's overall production of approximately 18.6%.
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 $25.16 per barrel during the third quarter of
2002, compared to an average of $23.48 per barrel in the 2001 period. For
the nine-month period, oil prices averaged $21.95 per barrel in 2002
compared to $24.46 in 2001.
The Company had cash and cash equivalents at September 30, 2002, of
$51,522, compared to $55,986 at the end of the 2001 fiscal year.
Management estimates that it owes $340,019 from the settlement of the
Horne Lease dispute with Oryx to owners of other interests in the Horne
Lease.
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 13, 2002
PETROL INDUSTRIES, INC.
s/Joseph M. Rodano
By:_____________________________
Joseph M. Rodano
President and Treasurer