U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
OMB Approval
OMB Number: xxxx-xxxx
Expires: Approval Pending
Estimated Average Burden Hours per Response: 1.0
(Mark One)
[xx] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended: June 30, 2003
[ ] 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 Number)
Incorporation of Organization)
202 N. THOMAS, SUITE 4 SHREVEPORT, LA 71107-6539
(Address of Principal Executive Offices)
(318) 424-6396
(Issuer's Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) 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 ____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 1,597,196
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Balance Sheets
June 30, December 31,
2003 2002
-------- ------------
<s> <c> <c>
ASSETS
------
Current assets:
Cash and cash equivalents $ 23,849 47,405
Accounts receivable:
Trade 67,211 33,246
Other 9,498 9,498
---------- ----------
76,709 42,744
Inventory 24,165 31,427
Prepaid expenses 13,172 6,463
---------- ----------
Total current assets 137,895 128,039
Property and equipment, at cost:
Land 7,000 7,000
Developed and undeveloped oil and gas
properties-successful efforts method 3,583,578 3,711,155
Trucks and other operating equipment 351,302 365,104
Furniture and fixtures 35,681 35,681
---------- ----------
3,977,561 4,118,940
Less accumulated depreciation, depletion and
amortization 3,881,485 4,022,765
---------- ----------
96,076 96,715
Other assets 1,107 1,107
$ 235,078 225,321
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 54,074 89,068
Payable to interest owners 303,515 341,789
Payable to officer, net 971,162 942,705
Notes payable 278,193 258,193
Accrued expenses 98,798 92,650
---------- ----------
Total current liabilities 1,705,742 1,724,405
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 2002 and 2001 159,720 159,720
Accumulated deficit (1,630,384) (1,658,804)
---------- ----------
Total stockholders' deficit (1,470,664) (1,499,084)
---------- ----------
$ 235,078 225,321
========== ==========
PETROL INDUSTRIES, INC.
Consolidated Statements of Operations
(unaudited)
Quarter Ended Year Ended
June 30, June 30,
---------------------- ----------------------
2003 2002 2003 2002
---------------------- ----------------------
<s> <c> <c> <c> <c>
Revenues:
Oil and gas sales $ 173,457 107,228 373,242 194,208
Other operating income 1,598 4,231 7,634 8,959
--------- --------- --------- ---------
175,055 111,459 380,876 203,167
--------- --------- --------- ---------
Expenses:
Lease operating expense 161,429 111,091 296,498 242,627
General and administrative 41,674 45,180 77,175 77,545
Depreciation, depletion
and amortization 3,330 2,775 6,660 5,550
--------- --------- --------- ---------
206,433 159,046 380,333 325,722
--------- --------- --------- ---------
Operating income/(loss) $ (31,378) (47,587) 543 (122,555)
--------- --------- --------- ---------
Other income and (expense):
Gain on sale of assets --- 38,057 61,500 38,057
Interest income 61 50 63 54
Interest expense (16,941) (15,473) (33,686) (29,668)
--------- --------- --------- ---------
(16,880) 22,634 27,877 8,443
--------- --------- --------- ---------
Net income/(loss) $ (48,258) (24,953) 28,420 (114,122)
========= ========= ========= =========
Net income/(loss)per share $ (0.03) (0.02) 0.02 (.08)
========= ========= ========= =========
Average common shares
outstanding 1,597,196 1,597,196 1,597,196 1,597,196
========= ========= ========= =========
PETROL INDUSTRIES, INC.
Consolidated Statements of Cash Flows
Six months ended June 30, 2003 and 2002
(unaudited)
2003 2002
---- ----
<s> <c> <c>
Operating activities:
Net income/(loss) $ 28,420 (114,112)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation, depletion and amortization 6,660 5,550
Gain on sale of assets (61,500) (38,057)
Changes in assets and liabilities:
Increase in accounts receivable (33,965) (7,300)
Decrease (increase) in inventory 7,262 (11,127)
Increase in prepaid expenses (6,709) (7,215)
Increase (decrease) in accounts payable
and accrued expenses (28,846) 19,024
Increase in payable to officer, net 28,457 27,626
Decrease in payable to interest owners (38,274) (380)
-------- --------
Net cash used by operating activities (98,495) (125,991)
Investing activities:
Capital expenditures (6,561) (25,908)
Proceeds from sale of property and equipment 61,500 40,318
-------- --------
Net cash provided by investing activities 54,939 15,089
Financing activities:
Proceeds from gross borrowings 25,000 128,900
Repayments of gross borrowings (5,000) (19,563)
-------- --------
Net cash provided by financing activities 20,000 109,337
Decrease in cash and cash equivalents (23,556) (1,565)
Cash and cash equivalents at beginning of period 47,405 55,986
-------- --------
Cash and cash equivalents at end of period $ 23,849 54,421
======== ========
PETROL INDUSTRIES, INC.
Consolidated Statements of Changes in Stockholders' Deficit
Six months ended June 30, 2003 and 2002
(unaudited)
2003 2002
---- ----
<s> <c> <c>
Stockholder's deficit at January 1 $ (1,499,084) (1,260,686)
Net income/(loss) for six-month period 28,420 (114,112)
---------- ----------
Stockholder's deficit at June 30 $ (1,470,664) (1,374,798)
========== ==========
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 2002 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 2003 or 2002.
3. Net income per share of common stock is computed on the weighted
average number of shares outstanding during the six months ended June 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
2003 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
4. The expected tax benefit resulting from operations for the first six
months of 2003 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 June 30, 2003.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYISIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Oil and gas sales revenues increased approximately 61.8% in the second
quarter of 2003, compared to the second quarter of 2002, the result being
an approximate 43.9% increase in production. The Company's net loss for
the period increased to $48,258, or ($.03) per share compared to $24,953 in
the 2002 period, or ($.02) per share.
The Company sustained an operating loss of $31,378 in the second
quarter of 2003, compared to an operating loss of $47,587 in the prior
year's second quarter. For the six-month period ending June 30, 2003, the
Company realized a net income of $28,420 as compared to a net loss of
$114,112 in the prior year's period.
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 $26.95 per barrel during the second quarter of
2003, compared to an average of $22.14 per barrel in the 2002 period. For
the six-month period, oil prices averaged $26.11 per barrel in 2003
compared to $20.23 in 2002.
The Company had cash and cash equivalents at June 30, 2003, of
$23,849, compared to $47,405 at the end of the 2002 fiscal year.
Management estimates that it owes $303,515 from the settlement of the Horne
Lease dispute with Oryx to owners of other interests in the Horne Lease.
In April 2003, Stuart A. Meyersburg, a stockholder, purchased a total
of 2,500 Shares Common Stock, $.10 par value per share, of Petrol
Industries (PTLD) in an open market transaction. All of the shares
purchased by Mr. Meyersburg were purchased with his personal funds. This
purchase brought his total holdings to 81,750 shares, comprising
approximately 5.11% of the outstanding shares. Mr. Meyersburg acquired the
previous 4.96% of the shares in open market transactions between March 2002
and March 2003.
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.
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: August 14, 2003
PETROL INDUSTRIES, INC.
By: s/Joseph M. Rodano
-------------------------------
Joseph M. Rodano
President and Treasurer
CERTIFICATION
-------------
I, Joseph M. Rodano, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Petrol
Industries, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: August 14, 2003
S/Joseph M. Rodano
- ------------------------------
Joseph M. Rodano
President & Treasurer
CERTIFICATION
-------------
I, Arlys C. Milan, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Petrol
Industries, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: August 14, 2003
S/Arlys C. Milan
- -------------------------------
Arlys C. Milan
Vice President & Secretary