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, 1997
[ ] 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: 1,597,196
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Item 1. Financial Statements
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Balance Sheets
September 30, December 31,
1997 1996
(unaudited)
------------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 230,171 $ 218,355
Accounts receivable:
Trade 74,361 83,287
Other 9,497 9,497
--------- ---------
83,858 92,784
Inventory 39,064 47,647
Prepaid expenses 4,193 5,325
--------- ---------
Total current assets 357,286 364,111
--------- ---------
Property and equipment, at cost:
Land 7,000 7,000
Developed and undeveloped oil and gas
properties successful efforts method 4,186,673 4,262,884
Trucks and other operating equipment 342,659 336,098
Furniture and fixtures 43,640 37,902
--------- ---------
4,579,972 4,643,884
Less accumulated depreciation, depletion and
amortization 4,515,294 4,587,912
--------- ---------
64,678 55,972
--------- ---------
Cash surrender value of life insurance, net 58,801 50,476
Other assets 1,107 1,107
--------- ---------
$ 481,872 $ 471,666
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 49,801 $ 51,064
Payable to interest owners 301,701 278,556
Payable to officer, net 355,726 241,255
Accrued expenses 142,853 115,720
--------- ---------
Total current liabilities 850,081 686,595
--------- ---------
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 1997 and 1996 159,720 159,720
Accumulated deficit (527,929) (374,649)
--------- ---------
Total stockholders' deficit (368,209) (214,929)
--------- ---------
$ 481,872 $ 471,666
========= =========
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PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
-------------------- --------------------
Revenues:
Oil and gas sales $ 204,830 245,766 598,554 686,360
Other operating income 3,681 3,741 11,702 10,912
--------- --------- --------- ---------
208,511 249,507 610,256 697,272
--------- --------- --------- ---------
Expenses:
Lease operating expense 162,720 192,366 505,585 532,460
General and administrative 81,770 89,836 248,313 265,631
Depreciation, depletion and
amortization 915 1,710 3,345 5,130
--------- --------- --------- ---------
245,405 283,912 757,243 803,221
--------- --------- --------- ---------
Operating loss (36,894) (34,405) (146,987) (105,949)
--------- --------- --------- ---------
Other income and (expense):
Gain on sale of assets 7,500 --- 7,500 19,473
Interest income 2,980 2,635 8,649 7,387
Interest expense (8,070) (5,680) (22,442) (15,402)
--------- --------- --------- ---------
2,410 (3,045) (6,293) 11,458
--------- --------- --------- ---------
Net loss $ (34,484) (37,450) (153,280) (94,491)
========= ========= ========= =========
Net loss per share $ (.02) (.02) (.10) (.06)
========= ========= ========= =========
Average common shares 1,597,196 1,597,196 1,597,196 1,597,196
outstanding ========= ========= ========= =========
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PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows
Nine months ended September 30, 1997 and 1996
(unaudited)
1997 1996
---- ----
Operating activities:
Net loss $ (153,280) (94,491)
Adjustments to reconcile net loss to net cash
(used) provided by operating activities:
Depreciation, depletion and amortization 3,345 5,130
Gain on sale of assets (7,500) (19,473)
Losses on retirements of property and
equipment included in lease operating
expenses 2,061 3,667
Changes in assets and liabilities
Cash surrender value of life insurance (8,325) (8,325)
Accounts receivable 8,926 (5,115)
Inventory 8,583 (16,535)
Prepaid expenses 1,132 2,328
Accounts payable and accrued expenses 25,870 54,773
Payable to officer, net 114,471 102,785
Payable to interest owners 23,145 25,190
-------- --------
Net cash provided by operating activities 18,428 49,934
Investing activities:
Capital expenditures (14,112) (8,532)
Proceeds from sale of property and equipment 7,500 20,000
-------- --------
Net cash (used) provided by investing
activities (6,612) 11,468
Financing activities:
Purchase and retirement of common stock --- (8)
-------- --------
--- (8)
Increase in cash and cash equivalents 11,816 61,394
Cash and cash equivalents at beginning of period 218,355 170,012
-------- --------
Cash and cash equivalents at end of period $ 230,171 231,406
======== ========
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PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Deficit
Nine months ended September 30, 1997 and 1996
(unaudited)
1997 1996
---- ----
Stockholders' deficit at January 1 $ (214,929) (81,682)
Retirement of stock --- (8)
Net loss for the nine-month period (153,280) (94,491)
-------- --------
Stockholders' deficit at September 30 $ (368,209) (176,181)
======== ========
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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 1996 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 1996 or 1995.
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
1997 1996
--------- ---------
January 31 1,597,196 1,597,241
February 28 1,597,196 1,597,241
March 31 1,597,196 1,597,241
April 30 1,597,196 1,597,241
May 31 1,597,196 1,597,231
June 30 1,597,196 1,597,231
July 31 1,597,196 1,597,231
August 31 1,597,196 1,597,231
September 30 1,597,196 1,597,196
4. The expected tax benefit resulting from operating losses for the
first nine months of 1997 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, 1997.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Oil and gas sales revenues decreased approximately 16.6% in the third
quarter of 1997, compared to the third quarter of 1996, the result being a
decrease in average oil prices of approximately $3.16 per barrel. The
Company's net loss for the period decreased to $34,484, or ($.02) per share,
compared to $37,450, or ($.02) per share in the 1996 period.
The Company sustained an operating loss of $36,894 in the third quarter
of 1997, compared to an operating loss of $34,405 in the third quarter of
1996. For the nine month period ending September 30, 1997, the Company's net
loss increased approximately 62.2% to $153,280 from the $94,491 net loss in
the prior year's period. Operating losses in the 1997 period also increased
approximately 38.7% compared to the 1996 period.
Oil prices averaged $17.53 per barrel during the third quarter of 1997,
compared to an average of $20.69 per barrel in the 1996 period. For the nine
month period, oil prices averaged $18.67 per barrel in 1997 compared to $19.57
in 1996.
The Company had cash and cash equivalents at September 30, 1997, of
$230,171 compared to $218,355 at the end of the 1996 fiscal year. Management
estimates that it owes $301,701 from the settlement of the Horne Lease dispute
with Oryx to owners of other interests in the Horne Lease.
In the months of August and September, 1997, Joseph M. Rodano, President
and Treasurer of Petrol Industries, Inc., as well as a member of its Board of
Directors, purchased a total of 30,000 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, 1997, Mr. Rodano owns an aggregate of
477,325 Shares, comprising approximately 30% 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.
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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, 1997 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