1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended: September 30, 1999
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)
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 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
September 30, December 31,
ASSETS 1999 1998
------ ------------- ------------
(unaudited)
Current assets:
Cash and cash equivalents $ 34,958 56,729
Accounts receivable:
Trade 47,765 28,688
Other 9,497 9,497
---------- --------
57,262 38,185
Inventory 31,386 16,685
Prepaid expenses 10,484 3,804
---------- ---------
Total current assets 134,090 115,403
---------- ---------
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 4,536,945 4,530,195
---------- ----------
60,763 68,237
---------- ---------
Cash surrender value of life insurance, net --- ---
Other assets 1,107 1,107
---------- ---------
$ 195,960 184,747
========== =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 42,394 37,242
Note payable 52,147 ---
Payable to interest owners 318,020 313,168
Payable to officer, net 681,481 562,682
Accrued expenses 110,009 106,770
---------- ---------
Total current liabilities 1,204,051 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 (1,167,811) (994,835)
---------- ---------
Total stockholders' deficit (1,008,091) (835,115)
---------- ---------
$ 195,960 184,747
========== =========
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PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
------------- -----------------
1999 1998 1999 1998
---- ---- ---- ----
Revenues:
Oil and gas sales $ 143,535 93,012 341,645 344,434
Other operating income 14,020 7,231 24,223 21,725
--------- --------- --------- ---------
157,555 100,243 365,868 366,159
--------- --------- --------- ---------
Expenses:
Lease operating expense 110,948 120,514 295,172 401,424
General and administrative 70,672 69,542 210,198 234,009
Depreciation, depletion and
amortization 2,250 2,700 6,750 6,900
--------- --------- --------- ---------
183,870 192,756 512,120 642,333
--------- --------- --------- ---------
Operating loss (26,315) (92,513) (146,252) (276,174)
--------- --------- --------- ---------
Other income and (expense):
Gain/(loss) on sale of assets --- --- --- (408)
Interest income 134 1,536 470 5,579
Interest expense (11,095) (10,118) (27,194) (28,519)
--------- --------- --------- ---------
(10,961) (8,582) (26,724) (23,348)
--------- --------- --------- ---------
Net loss $ (37,276) (101,095) (172,976) (299,522)
========= ========= ========= =========
Net loss per share $ (.03) (.06) (.11) (.19)
========= ========= ========= =========
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
Nine months ended September 30, 1999 and 1998
(unaudited)
1999 1998
---- ----
Operating activities:
Net loss $ (172,976) (299,522)
Adjustments to reconcile net loss to net cash
(used) provided by operating activities:
Depreciation, depletion and amortization 6,750 6,900
Loss/(gain) on sale of assets --- 408
Losses on retirements of property and
equipment included in lease operating expenses 724 1,511
Changes in assets and liabilities:
Cash surrender value of life insurance --- (8,325)
Accounts receivable (19,077) 25,531
Inventory (14,701) 18,890
Prepaid expenses (6,680) (2,399)
Accounts payable and accrued expenses 8,391 20,251
Note Payable 52,147 ---
Payable to officer, net 118,799 132,431
Payable to interest owners 4,852 7,753
-------- --------
Net cash provided by operating activities (21,771) (96,571)
Investing activities:
Capital expenditures --- (23,190)
Net cash (used) provided by investing -------- --------
activities --- (23,190)
(Decrease)/increase in cash and cash equivalents (21,771) (119,761)
Cash and cash equivalents at beginning of period 56,729 174,809
--------- ---------
Cash and cash equivalents at end of period $ 34,958 55,048
========= =========
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PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Deficit
Nine months ended September 30, 1999 and 1998
(unaudited)
1999 1998
---- ----
Stockholders' deficit at January 1 $ (835,115) (451,125)
Net loss for the nine-month period (172,976) (299,522)
Stockholders' deficit at September 30 $ (1,008,091) (750,647)
__________ _________
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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 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
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
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 operating losses for the first
nine 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 September 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 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
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January 10, April 10, July 10, and October 10. The Company has the right
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 pledge as security on said agreement. Gross borrowing
under the agreement as of September 30, 1999, was $50,000.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Oil and gas sales revenues increased approximately 54.3% in the third
quarter of 1999, compared to the third quarter of 1998, the result being an
increase in average oil prices of approximately $7.35 per barrel. The
Company's net loss for the period decreased to $37,276, or ($.03) per share,
compared to $101,095 or ($.06) per share in the 1998 period.
The Company sustained an operating loss of $26,315 in the third quarter
of 1999, compared to an operating loss of $92,513 in the third quarter of
1998. For the nine month period ended September 30, 1999, the Company's net
loss decreased approximately 42.3% to $172,976 from the $299,522 net loss in
the prior year's period. Operating losses in the 1999 period also decreased
approximately 47.1% compared to the 1998 period.
Oil prices averaged $18.73 per barrel during the third quarter of 1999,
compared to an average of $11.38 per barrel in the 1998 period. For the nine
month period, oil prices averaged $14.82 in 1999 compared to $12.51 in 1998.
The Company had cash and cash equivalents at September 30, 1999, of
$34,958 compared to $56,729 at the end of the 1998 fiscal year. Management
estimates that it owes $318,020 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 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.
Dated: November 12, 1999
PETROL INDUSTRIES, INC.
s/Joseph M. Rodano
By:_____________________________________
Joseph M. Rodano
President and Treasurer
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EXHIBIT INDEX
Exhibit
No. Description
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27 Financial Data Schedule