1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended: September 30, 1996
[ ] 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 (I.R.S. Employer Identification No.)
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: 1,599,696
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Item 1. Financial Statements
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Balance Sheets
September 30, December 31,
1996 1995
(unaudited)
------------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 231,406 $ 170,012
Accounts receivable:
Trade 86,605 79,136
Other 9,498 11,852
--------- ---------
96,103 90,988
Inventory 46,525 29,990
Prepaid expenses 12,880 15,208
--------- ---------
Total current assets 386,914 306,198
--------- ---------
Property and equipment, at cost:
Land 7,000 7,000
Developed and undeveloped oil and gas
properties successful efforts method 4,258,432 4,366,904
Trucks and other operating equipment 330,674 327,041
Furniture and fixtures 37,072 37,072
--------- ---------
4,633,178 4,738,017
Less accumulated depreciation, depletion and
amortization 4,582,973 4,687,020
--------- ---------
50,205 50,997
--------- ---------
Cash surrender value of life insurance, net 47,701 39,376
Other assets 1,107 1,107
--------- ---------
$ 485,927 $ 397,678
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 48,086 $ 42,219
Payable to interest owners 269,268 244,078
Payable to officer, net 213,493 110,708
Accrued expenses 131,261 82,355
--------- ---------
Total current liabilities 662,108 479,360
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 and
1,597,241 shares in 1996 and 1995, respectively 159,720 159,724
Accumulated deficit (335,901) (241,406)
--------- ---------
Total stockholders' deficit (176,181) (81,682)
--------- ---------
$ 485,927 $ 397,678
========= =========
3
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
-------------------- --------------------
Revenues:
Oil and gas sales $ 245,766 205,270 686,360 630,574
Other operating income 3,741 3,475 10,912 9,337
--------- --------- --------- ---------
249,507 208,745 697,272 639,911
--------- --------- --------- ---------
Expenses:
Lease operating expense 192,366 174,452 532,460 498,496
General and administrative 89,836 84,974 265,631 252,669
Depreciation, depletion and
amortization 1,710 3,525 5,130 10,575
--------- --------- --------- ---------
283,912 262,951 803,221 761,740
--------- --------- --------- ---------
Operating loss (34,405) (54,206) (105,949) (121,829)
--------- --------- --------- ---------
Other income and (expense):
Gain on sale of assets --- --- 19,473 4,212
Interest income 2,635 3,261 7,387 8,738
Interest expense (5,680) (4,657) (15,402) (12,649)
--------- --------- --------- ---------
(3,045) (1,396) 11,458 301
--------- --------- --------- ---------
Net loss $ (37,450) (55,602) (94,491) (121,528)
========= ========= ========= =========
Net loss per share $ (.02) (.04) (.06) (.08)
========= ========= ========= =========
Average common shares 1,597,196 1,597,241 1,597,196 1,597,241
outstanding ========= ========= ========= =========
4
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows
Nine months ended September 30, 1996 and 1995
(unaudited)
1996 1995
---- ----
Operating activities:
Net loss $ (94,491) (121,528)
Adjustments to reconcile net loss to net cash
(used) provided by operating activities:
Depreciation, depletion and amortization 5,130 10,575
Gain on sale of assets (19,473) (4,212)
Losses on retirements of property and
equipment included in lease operating
expenses 3,667 13,124
Increase in cash surrender value of life
insurance (8,325) (8,325)
Decrease (increase) in accounts receivable (5,115) 19,670
Increase in inventory (16,535) (21,162)
Decrease in prepaid expenses 2,328 8,937
Increase in accounts payable, accrued expenses
payable to interest owners and officer 182,748 95,357
-------- --------
Net cash (used) provided by operating
activities 49,934 (7,564)
Investing activities:
Purchases of property and equipment (8,532) (17,299)
Proceeds from sale of property and equipment 20,000 12,550
-------- --------
Net cash (used) provided by investing
activities 11,468 (4,749)
Financing activities:
Purchase and retirement of common stock (8) ---
-------- --------
(8) ---
(Decrease) increase in cash and cash equivalents 61,394 (12,313)
Cash and cash equivalents at beginning of period 170,012 292,795
-------- --------
Cash and cash equivalents at end of period $ 231,406 280,482
======== ========
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PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
Nine months ended September 30, 1996 and 1995
(unaudited)
1996 1995
---- ----
Stockholders' equity (deficit) at January 1 $ (81,682) $ 89,938
Retirement of stock (8) ---
Net loss for the nine-month period (94,491) (121,528)
-------- --------
Stockholders' deficit at September 30 $ (176,181) $ (31,590)
======== ========
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PETROL INDUSTRIES, INC. AND SUBSIDIARIES
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 1995 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 1995 or 1994.
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. The weighted average number of shares outstanding was determined by
totaling the number of shares outstanding at the end of each month and
dividing that total by the number of months.
Total Number of
Shares Outstanding
1996 1995
--------- ---------
January 31 1,597,241 1,597,241
February 28 1,597,241 1,597,241
March 31 1,597,241 1,597,241
April 30 1,597,241 1,597,241
May 31 1,597,231 1,597,241
June 30 1,597,231 1,597,241
July 31 1,597,231 1,597,241
August 31 1,597,231 1,597,241
September 30 1,597,196 1,597,241
4. The expected tax benefit resulting from operating losses for the
first nine months of 1996 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, 1996.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Oil and gas sales revenues increased approximately 19.8% in the third
quarter of 1996, compared to the third quarter of 1995, the result being an
approximate 30% increase in oil prices. The Company's net loss decreased to
$37,450, or ($.02) per share, compared to a net loss of $55,602, or ($.04) per
share in the 1995 period. Revenues increased by 19.6%, but were offset by an
increase in expenses by approximately 8.0% to $283,912 compared to $262,951 in
the first nine months of 1995.
The Company sustained an operating loss of $34,405 in the third quarter
of 1996, compared to an operating loss of $54,206 in the third quarter of
1995. For the nine month period ending September 30, 1996, the Company's net
loss decreased approximately 22.3% to $94,491 from the $121,528 net loss in
the prior year's period. Operating losses in the 1996 period decreased
approximately 13.1% compared to the 1995 period.
Oil prices averaged $20.69 per barrel ($20.57 including the barrel
equivalent of gas) during the third quarter of 1996, compared to an average of
$15.92 per barrel in the 1995 period ($15.82 including the barrel equivalent
of gas). For the nine month period, oil prices averaged $19.57 per barrel in
1996 ($19.45 including the barrel equivalent of gas) compared to $16.71
($16.61 including the barrel equivalent of gas) in 1995.
The Company had cash and cash equivalents at September 30, 1996, of
$231,406 compared to $170,012 at the end of the 1995 fiscal year. Management
estimates that it owes $269,268 from the settlement of the Horne Lease dispute
with Oryx to owners of other interests in the Horne Lease.
In September, 1996, Joseph M. Rodano, President and Treasurer of Petrol
Industries, Inc., as well as a member of its Board of Directors, purchased a
total of 2,000 Shares Common Stock, $.10 par value per share, of Petrol
Industries, Inc. The 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, 1996, Mr. Rodano owns an aggregate of 411,825 Shares,
comprising approximately 26% of the outstanding shares.
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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.
PETROL INDUSTRIES, INC.
Dated: November 12, 1996 By: Joseph M. Rodano
--------------------------------------
Joseph M. Rodano
President and Treasurer
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EXHIBIT INDEX
Exhibit
No. Description
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27 Financial Data Schedule