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, 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
June 30, December 31,
2004 2003
-------- ------------
ASSETS
------
<s> <c> <c>
Current assets:
Cash and cash equivalents $ 189,858 25,074
Accounts receivable:
Trade 44,744 66,502
Other 9,498 9,498
---------- ----------
54,242 76,000
Inventory 32,646 26,681
Prepaid expenses 11,585 7,483
---------- ----------
Total current assets 288,331 135,238
---------- ----------
Property and equipment, at cost:
Land 7,000 7,000
Developed and undeveloped oil and gas
properties-successful efforts method 3,115,630 3,204,029
Trucks and other operating equipment 378,606 387,429
Furniture and fixtures 36,306 36,306
---------- ----------
3,537,542 3,634,764
Less accumulated depreciation, depletion and
amortization 3,452,156 3,540,136
---------- ----------
85,386 94,628
Other assets 1,107 1,107
---------- ----------
$ 374,824 230,973
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 49,479 65,811
Payable to interest owners 318,521 310,448
Payable to officer, net 1,028,258 999,735
Notes payable 266,756 269,756
Accrued expenses 110,325 104,440
---------- ----------
Total current liabilities 1,773,339 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 (1,558,235) (1,678,537)
---------- ----------
Total stockholders' deficit (1,398,515) (1,518,817)
---------- ----------
$ 374,824 230,973
========== ==========
PETROL INDUSTRIES, INC.
Consolidated Statements of Operations
(unaudited)
Quarter Ended Year Ended
June 30, June 30,
------------------------- -----------------------
2004 2003 2004 2003
------------------------- -----------------------
<s> <c> <c> <c> <c>
Revenues:
Oil and gas sales $ 200,390 173,457 412,475 194,208
Other operating income 1,286 1,598 2,521 8,959
--------- --------- --------- ---------
201,676 175,055 414,996 203,167
--------- --------- --------- ---------
Expenses:
Lease operating expense 160,637 161,429 322,285 242,627
General and administrative 47,276 41,674 95,516 77,545
Depreciation, depletion
and amortization 2,865 3,330 5,730 5,550
--------- --------- --------- ---------
210,778 206,433 423,531 325,722
--------- --------- --------- ---------
Operating loss $ (9,102) (31,378) (8,535) (122,555)
--------- --------- --------- ---------
Other income and (expense):
Gain on sale of assets 148,144 --- 148,144 61,500
Interest income 628 61 631 63
Interest expense (15,164) (16,941) (32,338) (33,686)
--------- --------- --------- ---------
133,608 (16,880) 116,437 27,877
--------- --------- --------- ---------
Net income/(loss) $ 124,506 (48,258) 107,902 28,420
========= ========= ========= =========
Net income/(loss)per share $ 0.08 (0.03) 0.07 .02
========= ========= ========= =========
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, 2004 and 2003
(unaudited)
2004 2003
---- ----
<s>
Operating activities: <c> <c>
Net income/(loss) $ 107,902 28,420
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation, depletion and amortization 5,730 6,660
Gain on sale of assets (148,144) (61,500)
Losses on retirements of property and equipment
included in lease operating expenses --- ---
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 21,758 (33,965)
Decrease (increase) in inventory (5,965) 7,262
Increase in prepaid expenses (4,102) (6,709)
Decrease in accounts payable and accrued expenses (10,447) (28,836)
Increase in payable to officer, net 28,523 28,457
Decrease in accrued director fees 12,400 ---
Increase (decrease) in payable to interest owners 8,473 (38,274)
--------- ---------
Net cash used by operating activities 16,128 (98,495)
Investing activities:
Capital expenditures (3,844) (6,561)
Proceeds from sale of property and equipment 155,500 61,500
--------- ---------
Net cash provided (used) by investing activities 151,656 54,939
Financing activities:
Proceeds from gross borrowings --- 25,000
Repayments of gross borrowings (3,000) (5,000)
--------- ---------
Net cash provided by financing activities (3,000) 20,000
Decrease in cash and cash equivalents 164,784 (23,556)
Cash and cash equivalents at beginning of period 25,074 47,405
--------- ---------
Cash and cash equivalents at end of period $ 189,858 23,849
========= =========
PETROL INDUSTRIES, INC.
Consolidated Statements of Changes in Stockholders' Deficit
Six months ended June 30, 2004 and 2003
(unaudited)
2004 2003
---- ----
<s> <c> <c>
Stockholder's deficit at January 1 $ (1,518,817) (1,499,084)
Prior period adjustment (12,400) ---
Net income/(loss) for six-month period 107,902 28,420
---------- ----------
Stockholder's deficit at June 30 $ (1,398,515) (1,470,664)
========== ==========
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 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
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
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 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 June 30, 2004.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYISIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Oil and gas sales revenues increased approximately 15.5% in the second
quarter of 2004, compared to the second quarter of 2003, the result being an
approximate 35.1% increase in received oil prices. The Company realized a net
income for the period of $124,506, or $0.08 per share, as compared to a net
loss of $48,258, or ($.03) per share, in the 2003 period.
The Company sustained an operating loss of $9,102 in the second quarter
of 2004, compared to an operating loss of $31,378 in the prior year's second
quarter. For the six-month period ending June 30, 2004, the Company realized
a net income of $107,902 as compared to a net income of $28,420 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 $36.41 per barrel during the second quarter of 2003,
compared to an average of $26.95 per barrel in the 2003 period. For the six-
month period, oil prices averaged $34.82 per barrel in 2004 compared to $26.11
in 2003.
The Company had cash and cash equivalents at June 30, 2004, of $189,858,
compared to $25,074 at the end of the 2003 fiscal year. Management estimates
that it owes $318,521 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
---------
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 11, 2003
-------------------
PETROL INDUSTRIES, INC.
s/Joseph M. Rodano
By:__________________________
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 11, 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 11, 2003
---------------------------
s/Arlys C. Milan
- --------------------------------
Arlys C. Milan
Vice President & Secretary
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AND 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 June 30, 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.
s/Joseph M. Rodano
Dated: August 11, 2004 ________________________________
------------------ Joseph M. Rodano
President
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.
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