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, 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.
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(Exact Name of Small Business Issuer as Specified in its Charter)
Nevada 75-1282449
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(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
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(Issuer's Telephone Number, Including Area Code)
N/A
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(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,
2004 2003
------------- ------------
<s> <c> <c>
ASSETS
------
Current assets:
Cash and cash equivalents $ 67,796 25,074
Accounts receivable:
Trade 79,241 66,502
Other 9,498 9,498
---------- ----------
88,739 76,000
Inventory 28,468 26,681
Prepaid expenses 11,288 7,483
---------- ----------
Total current assets 196,291 135,238
---------- ----------
Property and equipment, at cost:
Land 7,000 7,000
Developed and undeveloped oil and gas
properties-successful efforts method 3,115,631 3,204,029
Trucks and other operating equipment 379,072 387,429
Furniture and fixtures 36,306 36,306
---------- ----------
3,538,009 3,634,764
Less accumulated depreciation, depletion and
amortization 3,455,021 3,540,136
---------- ----------
82,988 94,628
Other assets 1,107 1,107
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$ 280,386 230,973
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 53,795 65,811
Payable to interest owners 323,284 310,048
Payable to officer, net 1,042,717 999,735
Notes payable 185,256 269,756
Accrued expenses 100,339 104,440
---------- ----------
Total current liabilities 1,705,391 1,749,790
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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 (1,584,725) (1,678,537)
---------- ----------
Total stockholders' deficit (1,425,005) (1,518,817)
---------- ----------
$ 280,386 230,973
========== ==========
PETROL INDUSTRIES, INC.
Consolidated Statements of Operations
(unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
2004 2003 2004 2003
------------------- ------------------
<s> <c> <c> <c> <c>
Revenues:
Oil and gas sales $ 210,254 185,332 622,729 558,574
Other operating income 5,927 3,195 8,448 10,829
--------- --------- --------- ---------
216,181 188,527 631,177 569,403
--------- --------- --------- ---------
Expenses:
Lease operating expense 178,144 176,852 500,429 473,350
General and administrative 46,292 47,581 141,807 124,756
Depreciation, depletion
and amortization 2,865 3,330 8,595 9,990
--------- --------- --------- ---------
227,301 227,763 650,831 608,096
--------- --------- --------- ---------
Operating loss $ (11,120) (39,236) (19,654) (38,693)
--------- --------- --------- ---------
Other income and (expense):
Gain on sale of assets --- 72,000 148,144 133,500
Interest income 65 2 696 65
Interest expense (15,436) (17,016) (47,774) (50,702)
--------- --------- --------- ---------
(15,371) 54,986 101,066 82,863
--------- --------- --------- ---------
Net income/(loss) $ (26,491) 15,750 81,412 44,170
========= ========= ========= =========
Net loss per share $ (0.02) 0.01 0.05 0.03
========= ========= ========= =========
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, 2004 and 2003
(unaudited)
2004 2003
---- ----
<s> <c> <c>
Operating activities:
Net income/(loss) $ 81,412 44,170
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation, depletion and amortization 8,595 9,990
Gain on sale of assets (148,144) (133,500)
Losses on retirements of property and equipment
included in lease operating expenses --- ---
Changes in assets and liabilities:
Increase in accounts receivable (12,739) (19,283)
Decrease (increase) in inventory 1,787 5,185
Increase in prepaid expenses (3,805) (4,971)
Decrease in accounts payable and accrued expenses (16,116) (26,807)
Decrease in accrued director fees 12,400 ---
Increase in payable to officer, net 42,982 42,719
Increase (decrease) in payable to interest owners 13,236 (35,290)
-------- --------
Net cash (used) provided by operating activities (23,966) (117,787)
Investing activities:
Capital expenditures (4,312) (18,050)
Proceeds from sale of property and equipment 155,500 133,500
-------- --------
Net cash used by investing activities 151,188 115,450
Financing activities:
Proceeds from gross borrowings --- 25,000
Payments on gross borrowings (84,500) (11,937)
-------- --------
Net cash provided (used) by financing activities (84,500) 13,063
Increase (decrease) in cash and cash equivalents 42,722 10,726
Cash and cash equivalents at beginning of period 25,074 47,405
-------- --------
Cash and cash equivalents at end of period $ 67,796 58,131
======== ========
PETROL INDUSTRIES, INC.
Consolidated Statements of Changes in Stockholders' Deficit
Nine months ended September 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 the nine-month period 81,412 44,170
---------- ----------
Stockholder's deficit at September 30 $ (1,425,005) (1,454,914)
========== ==========
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 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
------------------
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
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 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 September 30, 2004.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYISIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Oil and gas sales revenues increased approximately 13.4% in the third
quarter of 2004, compared to the third quarter of 2003, the result being an
approximate 46.4% increase in average oil prices. The Company sustained a
net loss for the period of $26,491, or $(0.02) per share, compared to a net
income of $15,750 in the 2003 period, or $0.01 per share.
The Company sustained an operating loss of $11,120 in the third quarter
of 2004, compared to an operating loss of $39,236 in the prior year's third
quarter. For the nine-month period ending September 30, 2004, the Company
realized a net income of $81,412 as compared to a net loss of $44,170 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 $41.55 per barrel during the third quarter of 2004,
compared to an average of $28.38 per barrel in the 2003 period. For the nine-
month period, oil prices averaged $36.89 per barrel in 2004 compared to
$26.80 in 2003.
The Company had cash and cash equivalents at September 30, 2004, of
$67,796, compared to $25,074 at the end of the 2003 fiscal year. Management
estimates that it owes $323,284 from the settlement of the Horne Lease dispute
with Oryx to owners of other interests in the Horne Lease.
In August 2004, Joseph M. Rodano, President and Treasurer of Petrol
Industries, Inc., as well as a member of its Board of Directors, purchased a
total of 23,400 Shares Common Stock, $.10 par value per share, of Petrol
Industries, Inc. Each purchase was made in an open-market transaction, and
all of the shares purchased by Mr. Rodano were purchased with his personal
funds. As of September 30, 2004, Mr. Rodano owns an aggregate of 599,725
Shares, comprising approximately 37.5% of the outstanding shares.
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 15, 2004
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 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 15, 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 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 15, 2004
S/Arlys C. Milan
________________________________
Arlys C. Milan
Vice President & 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 quarter ended September 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.
Dated: November 15, 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.
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