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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
OMB Approval
OMB Number: xxxx-xxxx
Expires: Approval Pending
Estimated Average Burden Hours Per Response: 1.0
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended: June 30, 1999
[ ] 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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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Balance Sheets
June 30, December 31,
1999 1998
ASSETS ----------- ------------
------ (unaudited)
Current assets:
Cash and cash equivalents $ 34,755 56,729
Accounts receivable:
Trade 43,314 28,688
Other 9,497 9,497
--------- ---------
52,811 38,185
Inventory 25,182 16,685
Prepaid expenses 8,293 3,804
--------- ---------
Total current assets 121,041 115,403
--------- ---------
Property and equipment, at cost:
Land 7,000 7,000
Developed and undeveloped oil and gas
properties-successful efforts method 4,178,709 4,179,433
Trucks and other operating equipment 367,984 367,984
Furniture and fixtures 44,015 44,015
--------- ---------
4,597,708 4,598,432
Less accumulated depreciation, depletion and
amortization 4,534,695 4,530,195
--------- ---------
63,013 68,237
--------- ---------
Cash surrender value of life insurance, net --- ---
Other assets 1,107 1,107
--------- ---------
$ 185,161 184,747
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 41,696 37,242
Note payable 50,000 ---
Payable to interest owners 315,656 313,168
Payable to officer, net 641,283 562,682
Accrued expenses 107,339 106,770
--------- ---------
Total current liabilities 1,155,974 1,019,862
--------- ---------
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 1999 and 1998 159,720 159,720
Accumulated deficit (1,130,533) (994,835)
--------- ---------
Total stockholders' deficit (970,813) (835,115)
--------- ---------
$ 185,161 184,747
========= =========
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PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
------------- ----------------
1999 1998 1999 1998
---- ---- ---- ----
Revenues:
Oil and gas sales $ 119,639 114,398 198,110 251,422
Other operating income 6,532 7,863 10,203 14,493
--------- --------- --------- ---------
126,171 122,261 208,313 265,915
--------- --------- --------- ---------
Expenses:
Lease operating expense 95,541 132,295 184,223 280,911
General and administrative 69,099 77,680 139,525 164,466
Depreciation, depletion and
amortization 2,250 2,400 4,500 4,200
--------- --------- --------- ---------
166,890 212,375 328,248 449,577
--------- --------- --------- ---------
Operating loss $ (40,719) (90,114) (119,935) (183,662)
--------- --------- --------- ---------
Other income and (expense):
Loss on sale of assets --- --- --- (408)
Interest income 66 1,849 336 4,043
Interest expense (8,346) (9,503) (16,099) (18,401)
--------- --------- --------- ---------
(8,280) (7,654) (15,763) (14,766)
--------- --------- --------- ---------
Net loss $ (48,999) (97,768) (135,698) (198,428)
========= ========= ========= =========
Net loss per share $ (.03) (.06) (.09) (.12)
========= ========= ========= =========
Average common shares
outstanding 1,597,196 1,597,196 1,597,196 1,597,196
========= ========= ========= =========
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PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows
Six months ended June 30, 1999 and 1998
(unaudited)
1999 1998
---- ----
Operating activities:
Net loss $ (135,698) (198,428)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation, depletion and amortization 4,500 4,200
Loss on sale of assets --- 408
Losses on retirements of property and
equipment included in lease operating expenses 724 (857)
Changes in assets and liabilities:
Cash surrender value of life insurance --- (5,550)
Accounts receivable (14,626) 17,229
Inventory (8,497) 20,255
Prepaid expenses (4,489) (6,973)
Accounts payable and accrued expenses 5,023 13,757
Note payable 50,000 ---
Payable to officer, net 78,601 93,464
Payable to interest owners 2,488 5,548
--------- ---------
Net cash (used) provided by operating
activities (21,974) (56,947)
Investing activities:
Capital expenditures --- (23,190)
--------- ---------
Net cash used by investing activities --- (23,190)
Decrease in cash and cash equivalents (21,974) (80,137)
Cash and cash equivalents at beginning of period 56,729 174,809
--------- ---------
Cash and cash equivalents at end of period $ 34,755 94,672
========= =========
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PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Deficit
Six months ended June 30, 1999 and 1998
(unaudited)
1999 1998
---- ----
Stockholders' deficit at January 1 $ (835,115) (451,125)
Net loss for the six-month period (135,698) (198,428)
--------- ---------
Stockholders' deficit at June 30 $ (970,813) (649,553)
========= =========
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PETROL INDUSTRIES, INC. & 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 1998 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 1999 or 1998.
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. 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
1999 1998
---- ----
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 operating losses for the first
six months of 1999 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, 1999.
5. The Company has entered into a loan agreement with a stockholder of the
corporation in which it has the ability to borrow an amount in the aggregate
not to exceed $100,000, including any amounts advanced prior to the execution
of said agreement. Borrowings under this note will bear interest at 10.75%
and funds borrowed may be used to fund the operations of the Company. Payment
of all accrued and unpaid interest and all unpaid principal is due May 1,
2001. Until such due date, the Company will on a quarterly basis pay only the
accrued unpaid interest on the note on the 10th day of the month for the
preceding calendar quarter or portion thereof; such payments will be due
January 10, April 10, July 10, and October 10. The Company has the right
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under the note agreement to make principal payments at any time before they
are due without incurring any prepayment penalties. In addition to the
protections given under this agreement, a mortgage on certain real property
owned by the Company is pledged as security on said agreement. Gross
borrowing under the agreement as of June 30, 1999, was $50,000.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Oil and gas sales revenues increased approximately 4.6% in the second
quarter of 1999, compared to the second quarter of 1998, the result being an
approximate 23.0% increase in average oil prices of approximately $2.80 per
barrel. The Company's net loss for the period decreased to $48,999, or ($.03)
per share, compared to $97,768 in the 1998 period, or ($.06) per share.
The Company sustained an operating loss of $40,719 in the second quarter
of 1999, compared to an operating loss of $90,114 in the prior year's second
quarter. For the six month period ended June 30, 1999, the Company's net loss
decreased approximately 31.6% to $135,698 from the $198,428 net loss in the
prior year's period.
Management has attempted to reduce operating costs over the past several
years in an effort to restore profitability in the face of current oil prices.
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 $15.01 per barrel during the second quarter of 1999,
compared to an average of $12.21 per barrel in the 1998 period. For the six
month period, oil prices averaged $12.87 per barrel in 1999 compared to $12.94
in 1998.
The Company had cash and cash equivalents at June 30, 1999, of $34,755,
compared to $56,729 at the end of the 1998 fiscal year. Management estimates
that it owes $315,656 from the settlement of the Horne Lease dispute with Oryx
to owners of other interests in the Horne Lease.
In July, 1999, the National Association of Securities Dealers changed the
stock symbol of Petrol Industries, Inc. from PTRL to PTLD. The new symbol
became effective July 22, 1999. The Company's common stock is traded
over-the-counter.
The Company is working to resolve the potential impact of the year 2000
on the ability of the Company's computerized information systems to accurately
process information that may be date-sensitive. Any of the Company's programs
that recognize a date using "00" as the year 1900 rather than the year 2000
could result in errors or system failures. The Company utilizes a limited
number of computer programs across its entire operation. The Company has not
completed its assessment, but currently believes that costs of addressing this
issue will not have a material adverse impact on the Company's financial
position, as its computer programs will be updated by third party vendors.
However, if the Company and third parties upon which it relies are unable to
address this issue in a timely manner, it could result in a material financial
risk to the Company. In order to assure that this does not occur, the Company
plans to devote all resources required to resolve any significant year 2000
issues in a timely manner.
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PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
None.
Item 1. 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.
Dated: August 13, 1999
PETROL INDUSTRIES, INC.
By: Joseph M. Rodano
-----------------------
Joseph M. Rodano
President and Treasurer
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EXHIBIT INDEX
Exhibit Description
No. -----------
-------
27 Financial Data Schedule