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: March 31, 2004
[ ] 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
March 31, December 31,
2004 2003
--------- ------------
ASSETS
------
<s> <c> <c>
Current assets:
Cash and cash equivalents $ 23,924 25,074
Accounts receivable:
Trade 71,717 66,502
Other 9,498 9,498
---------- ----------
81,215 76,000
Inventory 33,410 26,681
Prepaid expenses 11,880 7,483
---------- ----------
Total current assets 150,429 135,238
---------- ----------
Property and equipment, at cost:
Land 7,000 7,000
Developed and undeveloped oil and gas
properties-successful efforts method 3,231,799 3,204,029
Trucks and other operating equipment 362,831 387,429
Furniture and fixtures 36,306 36,306
---------- ----------
3,637,936 3,634,764
Less accumulated depreciation, depletion and
amortization 3,543,001 3,540,136
---------- ----------
94,935 94,628
---------- ----------
Other assets 1,107 1,107
---------- ----------
$ 246,471 230,973
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 59,314 65,811
Payable to interest owners 314,494 310,448
Payable to officer, net 1,013,972 999,735
Note payable 268,256 269,756
Accrued expenses 116,856 104,440
---------- ----------
Total current liabilities 1,772,892 1,749,790
---------- ----------
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 (1,686,141) (1,678,537)
---------- ----------
Total stockholders' deficit (1,526,421) (1,518,817)
---------- ----------
$ 246,471 230,973
========== ==========
PETROL INDUSTRIES, INC.
Consolidated Statements of Operations
Three Months Ended March 31, 2004 and 2003
(unaudited)
2004 2003
---- ----
<s> <c> <c>
Revenues:
Oil and gas sales $ 221,085 199,785
Other operating income 1,235 6,036
---------- ----------
222,320 205,821
Expenses:
Lease operating expense 161,648 135,069
General and administrative 48,240 35,501
Depreciation, depletion
and amortization 2,865 3,330
---------- ----------
212,753 173,900
---------- ----------
Operating income 9,567 31,921
---------- ----------
Other income and (expense):
Gain on sale of assets --- 61,500
Interest income 3 2
Interest expense (17,174) (16,745)
---------- ----------
(17,171) 44,757
---------- ----------
Net income/(loss) $ (7,604) 76,678
========== ==========
Net income/(loss) per share $ (0.01) 0.05
========== ==========
Average common shares
outstanding 1,597,196 1,597,196
========== ==========
PETROL INDUSTRIES, INC.
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2004 and 2003
(unaudited)
2004 2003
---- ----
<s> <c> <c>
Operating activities:
Net income/(loss) $ (7,604) 76,678
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation, depletion and amortization 2,865 3,330
Gain on sale of assets --- (61,500)
Losses on retirements of property and equipment
included in lease operating expenses --- ---
Changes in assets and liabilities:
Increase in accounts receivable (5,215) (27,595)
Increase in inventory (6,729) (1,123)
Increase in prepaid expenses (4,397) (4,676)
(Decrease) increase in accounts payable and
accrued expenses 5,919 (41,598)
Increase in payable to officer, net 14,237 14,366
(Decrease) increase in payable to interest owners 4,446 (41,556)
------- -------
Net cash (used) provided by operating activities 3,522 (83,674)
------- -------
Investing activities:
Capital expenditures (3,172) (4,337)
Proceeds from sale of property and equipment --- 61,500
------- -------
Net cash provided (used) by investing activities (3,172) 57,163
------- -------
Financing activities:
Proceeds from gross borrowings --- 25,000
Repayments of gross borrowings (1,500) (3,500)
------- -------
Net cash provided by financing activities (1,500) 21,500
------- -------
Increase (decrease) in cash and cash equivalents (1,150) (5,011)
Cash and cash equivalents at beginning of period 25,074 47,405
------- -------
Cash and cash equivalents at end of period $ 23,924 42,394
======= =======
PETROL INDUSTRIES, INC.
Consolidated Statements of Changes in Stockholders' Deficit
Three Months Ended March 31, 2004 and 2003
(unaudited)
2004 2003
---- ----
<s> <c> <c>
Stockholder's deficit at January 1 $ (1,518,817) (1,499,084)
Net income/(loss) for the three month period (7,604) 76,678
---------- ----------
Stockholder's deficit at March 31 $ (1,526,422) (1,422,406)
========== ==========
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 2003 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 2004 or 2003.
3. Net income per share of common stock is computed on the weighted average
number of shares outstanding during the three months ended March 31.
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
2004 2003
------------------
January 31 1,597,196 1,597,196
February 28 1,597,196 1,597,196
March 31 1,597,196 1,597,196
4. The expected tax benefit resulting from operations for the first three
months of 2004 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 March 31, 2004.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYISIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
With an increase of approximately 31.9% in average oil prices, oil and
gas sales revenues increased significantly during the first quarter of 2004,
as compared to the 2003 period. The Company sustained a net loss of $7,604,
or ($.01) per share, as compared to a net income of $76,678, or $.05 per
share, in the 2003 period.
The Company realized an operating income of $9,567 in the first quarter
of 2004, compared to an operating income of $31,921 in the prior year's first
quarter. Oil prices averaged $33.50 per barrel during the first quarter of
2004, compared to an average of $25.40 per barrel in the 2003 period.
Profitability is contingent essentially upon two factors: increasing
production from the Company's mineral leases and continued increases in world
oil prices. Management continues to explore possible approaches to increasing
oil production, including technological developments or pursuing drilling
operations.
The Company had cash and cash equivalents at March 31, 2004, of $23,924,
compared to $25,074 at the end of the 2003 fiscal year. Management estimates
that it owes $314,494 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.
Item 5. Other Information.
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.
Dated: May 14, 2004 PETROL INDUSTRIES, INC.
s/Joseph M. Rodano
By:__________________________
Joseph M. Rodano
President & 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 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: May 14, 2004 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 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: May 14, 2004 s/Arlys C. Milan
_______________________
Arlys C. Milan
Secretary
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Petrol Industries, Inc. (the
"Company") on Form 10-QSB for the period ended March 31, 2004, as filed with
the Securities and Exchange commission on the date hereof (the "Report"), the
undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Dated: May 14, 2004 s/Joseph M. Rodano
_______________________________
Joseph M. Rodano
President & Treasurer
A signed original of this written statement required by Section 906 of the
Sarbanes-Oxley Act has been provided to Petrol Industries, Inc. and will be
retained by Petrol Industries, Inc. and furnished to the Securities and
Exchange Commission or its staff upon request.