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: September 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
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(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
September 30, December 31,
2003 2002
------------- ------------
<s> <c> <c>
ASSETS
------
Current assets:
Cash and cash equivalents $ 58,131 47,405
Accounts receivable:
Trade 52,529 33,246
Other 9,498 9,498
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62,027 42,744
Inventory 26,242 31,427
Prepaid expenses 11,434 6,463
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Total current assets 157,834 128,039
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Property and equipment, at cost:
Land 7,000 7,000
Developed and undeveloped oil and gas
properties-successful efforts method 3,229,839 3,711,155
Trucks and other operating equipment 361,124 365,104
Furniture and fixtures 35,681 35,681
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3,633,644 4,118,940
Less accumulated depreciation, depletion and
amortization 3,529,409 4,022,765
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104,235 96,715
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Other assets 1,107 1,107
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$ 263,176 225,321
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 48,588 89,068
Payable to interest owners 306,499 341,789
Payable to officer, net 985,424 942,705
Notes payable 271,256 258,193
Accrued expenses 106,323 92,650
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Total current liabilities 1,718,090 1,724,405
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Stockholders' deficit:
Preferred stock-no par value. Authorized 1,000,000
shares; no shares issued or outstanding --- ---
Common stock-$.10 par value. Authorized 10,000,000
shares; issued and outstanding 1,597,196 shares
in 2003 and 2002 159,720 159,720
Accumulated deficit (1,614,634) (1,658,804)
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Total stockholders' deficit (1,454,914) (1,499,084)
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$ 263,176 225,321
========== ==========
PETROL INDUSTRIES, INC.
Consolidated Statements of Operations
(unaudited)
Quarter Ended Year Ended
September 30, September 30,
------------------------ ----------------------
2003 2002 2003 2002
------------------------ ----------------------
<s> <c> <c> <c> <c>
Revenues:
Oil and gas sales $ 185,332 114,097 558,574 308,305
Other operating income 3,195 20,843 10,829 29,802
--------- --------- --------- ---------
188,527 134,940 569,403 338,107
--------- --------- --------- ---------
Expenses:
Lease operating expense 176,852 124,342 473,350 366,969
General and administrative 47,581 27,246 124,756 104,791
Depreciation, depletion
and amortization 3,330 2,775 9,990 8,325
--------- --------- --------- ---------
227,763 154,363 608,096 480,085
--------- --------- --------- ---------
Operating loss $ (39,236) (19,423) (38,693) (141,978)
--------- --------- --------- ---------
Other income and (expense):
Gain on sale of assets 72,000 --- 133,500 38,057
Interest income 2 --- 65 54
Interest expense (17,016) (15,653) (50,702) (45,321)
--------- --------- --------- ---------
54,986 (15,653) 82,863 (7,210)
--------- --------- --------- ---------
Net income/(loss) $ 15,750 (35,076) 44,170 (149,188)
========= ========= ========= =========
Net loss per share $ 0.01 (0.02) 0.03 (.09)
========= ========= ========= =========
Average common shares
outstanding 1,597,196 1,597,196 1,597,196 1,597,196
========= ========= ========= =========
PETROL INDUSTRIES, INC.
Consolidated Statements of Cash Flows
Nine months ended September 30, 2003 and 2002
(unaudited)
2003 2002
---- ----
<s> <c> <c>
Operating activities:
Net income/(loss) $ 44,170 (149,188)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation, depletion and amortization 9,990 8,325
Gain on sale of assets (133,500) (38,057)
Losses on retirements of property and equipment
included in lease operating expenses --- ---
Changes in assets and liabilities:
Increase in accounts receivable (19,283) (17,138)
Decrease (increase) in inventory 5,185 (4,883)
Increase in prepaid expenses (4,971) (7,441)
Increase (decrease) in accounts payable and
accrued expenses (26,807) 25,000
Increase in payable to officer, net 42,719 41,692
Increase (decrease) in payable to interest owners (35,290) 4,592
-------- --------
Net cash (used) provided by operating activities (137,098) (137,098)
Investing activities:
Capital expenditures (18,050) (25,520)
Proceeds from sale of property and equipment 133,500 40,318
-------- --------
Net cash provided by investing activities 115,450 14,798
Financing activities:
Proceeds from gross borrowings 25,000 138,900
Payments on gross borrowings (11,937) (21,064)
-------- --------
Net cash provided by financing activities 13,063 117,836
Increase (decrease) in cash and cash equivalents 10,726 (4,464)
Cash and cash equivalents at beginning of period 47,405 55,986
-------- --------
Cash and cash equivalents at end of period $ 58,131 51,522
======== ========
PETROL INDUSTRIES, INC.
Consolidated Statements of Changes in Stockholders' Deficit
Nine months ended September 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 the nine-month period 44,170 (149,188)
---------- ----------
Stockholder's deficit at September 30 $ (1,454,914) (1,409,874)
========== ==========
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 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
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
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 operations for the first
nine 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
September 30, 2003.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYISIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Oil and gas sales revenues increased approximately 62.4% in the third
quarter of 2003, compared to the third quarter of 2002, the result being
an approximate 30.5% increase in production and an increase of
approximately 12.8% in average oil prices. The Company realized a net
income for the period of $15,750, or $.01 per share, compared to a net
loss of $35,076 in the 2002 period, or $(0.02) per share.
The Company sustained an operating loss of $39,236 in the third
quarter of 2003, compared to an operating loss of $19,423 in the prior
year's third quarter. For the nine-month period ending September 30,
2003, the Company realized a net income of $44,170 as compared to a net
loss of $149,188 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 $28.38 per barrel during the third quarter of
2003, compared to an average of $25.16 per barrel in the 2002 period.
For the nine-month period, oil prices averaged $26.80 per barrel in 2003
compared to $21.95 in 2002.
The Company had cash and cash equivalents at September 30, 2003, of
$58,131, compared to $47,405 at the end of the 2002 fiscal year.
Management estimates that it owes $306,499 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.
SIGNATURE
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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, 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 in 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: November 13, 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 in 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: November 13, 2003
s/Arlys C. Milan
- ---------------------------------
Arlys C. Milan
Vice President & Secretary