FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period of ____________ to ____________
Commission file number 0-10089
UNIOIL
(Exact name of registrant as specified in its charter)
Nevada 93-0782780
(State or other jurisdiction (I.R.S. Employer identification number)
of incorporation or organization)
3817 Carson Avenue, P.O. Box 310
Evans, Colorado 80620.
(Address of principal executive offices) (Zip Code)
Registrant's phone number, including area code (970) 330-6300
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act during the
preceding 12 months (or for a shorter period that the registrant was
required to file such reports),
Yes X No ___
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No ___
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
Class Outstanding at March 31, 1996
(Common stock, $.01 par value) 9,441,657
UNIOIL
INDEX
Page No.
Part I Financial Information
Condensed balance sheets- 1
March 31, 1996 and December 31, 1995
Condensed statements of operations- 2
three months ended March 31, 1996 and 1995
Condensed statements of cash flows- 3
three months ended March 31, 1996 and 1995
Notes to condensed financial statements 4
Management's Discussion and Analysis of Financial Condition 5
and Results of Operations
Part II Other Information
Item 1 Legal Proceedings 6
Item 2 Changes in Securities 7
Item 3 Defaults upon Senior Securities 7
Item 4 Submission of Matters to a Vote of 7
Security Holders
Item 5 Other Information 7
Item 6 Exhibits and Reports on Form 8-K 7
PART I - FINANCIAL INFORMATION
UNIOIL
CONDENSED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
1996 1995
(Unaudited) *
Current Assets
Cash $ 57,546 $ 61,636
Joint Interest and Trade Acct. Rec. 74,968 90,387
Prepaid Expenses 1,982 4,627
Deferred Loan Costs, net 49,550 49,550
Total current assets 184,046 206,200
Property and Equipment 57,839 57,838
Less accumulated depreciation 57,539 57,295
300 543
Investment in Oil and Gas Properties 9,445,940 9,445,940
Less accumulated depletion, depreciation 5,608,431 5,586,702
and amortization
3,837,509 3,859,238
Deferred Tax Assets -0- -0-
Other Assets 2,152 2,152
Total Assets $ 4,024,007 $ 4,068,133
LIABILITIES
Current Liabilites
Accounts Payable & Taxes Payable $ 152,427 $ 166,864
Accrued Interest 7,661,920 7,517,146
Other Current Liabilities 156,266 156,266
Note Payable 6,400,976 6,364,300
Deferred Tax Liabilities -0- -0-
Total Current Liabilites 14,371,589 14,204,576
Stockholders' Deficit
Common Stock 94,417 94,417
Capital in Excess of Par 4,062,520 4,062,520
Retained Earnings (Deficit) (14,504,519) (14,293,379)
Total Stockholders' Deficit (10,347,582) (10,136,442)
Total Liabilities and Stockholders' Deficit $ 4,024,007 $ 4,068,134
* Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed financial
statements.
-1-
UNIOIL
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31, March 31,
1996 1995
Revenue
Oil & Gas Sales $67,884 $84,454
Interest Income 426 515
Income from serving as operator 6,977 13,203
Miscellaneous Income (Expense) 158 (1,662)
Total Revenue 75,445 96,511
Costs & Expenses
Production Costs and Related Taxes 53,388 54,256
General and Administrative Expenses 51,124 95,899
Depletion, Depreciation & Amortization 21,972 18,320
Interest Expense 160,102 159,619
Total Costs & Expenses 286,586 328,094
Loss before income taxes (211,141) (231,583)
Income Taxes --- ---
Net Loss $(211,141) $(231,583)
Net Loss per share $ (.02) $ (.02)
The accompanying notes are an integral part of these condensed financial
statements.
-2-
UNIOIL
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31, March 31,
1996 1995
Cash Flows From (To) Operating Activities
Net Loss $(211,140) $(231,583)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation, Depletion & Amortization 21,972 18,320
Changes in Assets and Liabilities
Joint Interest & Trade Receivables 15,419 18,644
Other Assets 2,645 3,213
Accounts Payable and Taxes Payable (14,436) 7,539
Accrued Interest Payable 144,774 144,774
170,374 192,490
Net Cash Provided (Used) by Operation s (40,766) (39,093)
Cash Flows From (To) Investing Activities
Disposition of Property & Equipment --- ----
Acquisition of Oil & Gas Properties --- (100)
Deferred Loan Costs --- (35,000)
Net Cash Provided (Used) by Investing Activities --- (35,100)
Cash Flows From (To) Financing Activities
Proceeds from Notes Payable 36,676 79,827
Net Cash Used by Financing Activities 36,676 79,827
Net Increase (Decrease) in Cash (4,090) 5,634
Cash at Beginning of Period 61,636 72,628
Cash at End of Period $57,546 $78,262
Supplemental Schedule of Noncash Investing and Financing
Activities:
None
The accompanying notes are an integral part of these condensed financial
statements.
-3-
UNIOIL
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: BASIS OF PRESENTATION
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting soley of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of financial position, results of operation and cash flows for
the interim periods.
The results of operations for the three month period ending March 31, 1996
are not necessarily indicative of the results to be expected for the full
year.
NOTE 2: INCOME TAXES
No provision for income taxes has been recorded due to net operating losses.
The Company has net operating loss carryforwards of approximately
$15,800,000 which may be applied against future taxable income expiring in
various years beginning in 1999 through 2010.
NOTE 3; RELATED PARTY TRANSACTIONS
During 1985, the Company borrowed approximately $6,000,000 from Joseph
Associates, Inc. [JA] in order to fund the reorganization plan approved by
the bankruptcy court. The loan is secured by basically all of the assets of
the Company, including interests in oil and gas wells. The original term of
the loan was for 60 months with the principal and interest payments due the
first day of each month beginning October 1, 1985. Almost from the
beginning Company has been in default with respect to payments due on this
loan. In 1989 JA exercised its right under the loan agreement to receive
directly from purchasers all proceeds derived from the sale of oil and gas
by the Company. Accordingly, all monies received from oil and gas purchasers
were then deposited into a checking account controlled by JA and transferred
as needed to accounts owned by the Company to cover operating expenditures.
During 1990 the rights of Joseph Associates, Inc. were acquired by Joseph
Associates of Greeley, Inc. and the same procedure is still in effect during
1996. It is presently contemplated that this debt will be restructured, but
the terms of such restructuring have not been determined or agreed to as of
the date hereof.
At March 31, 1996, the unpaid note balance was $5,791,000.00 and the related
Accrued Interest balance was $7,661,920.00.
During the three months ending March 31, 1996, interest in the amount of
$144,774.00 was accrued on the note and charged to expense. Additionally,
the Company has a non-interest bearing payable to Joseph Associates of
Greeley, Inc. in the amount of $156,266.00.
On September 28, 1988, the United States Securities and Exchange Commission
filed a complaint against the Company and its former president for allegedly
manipulating its common stock price and for misleading promotions with
regard to the "Soberz" pill. The Company was also charged with failure to
file required SEC reports. Final judgments and a permanent injunction were
entered against the Company on October 19, 1989. The Company filed a motion
to set aside the judgment which was not granted. Management believes that
the judgment will ultimately be dismissed as they demonstrate their ability
to file currently required SEC filing (see Legal Proceedings No. 1).
-4-
UNIOIL
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
operating results during the periods included in the accompanying condensed
financial statements.
LIQUIDITY and CAPITAL RESOURCES
At March 31, 1996, the issuer was insolvent, in that liabilities
greatly exceed assets. Revenues from operations were insufficient to
discharge liabilities or even pay interest accruing thereon. In such a
financial condition, the issuer cannot raise additional funds to meet such
commitments. Continuation as a going concern is dependent upon the ability
of the issuer to negotiate a settlement to discharge its principal
outstanding liability. The issuer has been able to continue operations only
because Joseph Associates of Greeley, Inc. ("JAGI"), whose secured position
has priority, has been foregoing its right to foreclose upon all the issuer's
assets, but is asserting its right to take direct payment of the proceeds
of production attributable to the issuer's interest in oil and gas properties.
However, during 1993, JAGI commenced a foreclosure action against
the assets of the Company in Laramie County, Wyoming. This action was
commenced by JAGI in part to demonstrate its willingness and ability to
foreclose upon all the issuer's assets and thereby extinguish the claims of
other creditors, as a means of inducing such creditors settle their claims
on a reasonable basis or have them extinguished. As of February 10, 1995,
this action was dismissed and JAGI has taken no further action to foreclose
on its Mortgage or to assert any rights under that Mortgage other than the
rights to take the direct payment of the Company's oil and gas proceeds. As
a result of this action and the fact that the Company was able to obtain a
line of credit with which to make cash offers in settlement of its remaining
judgment liabilities, during 1994 the Company was able to reach settlements
with all judgment creditors. Refer to December 31, 1994 Form 10-KSB for
details.
There are two major areas of indebtedness of the Company. The
principal one is the secured debt owed to JAGI. With the interest that has
been accrued each year, this debt is in excess of 13 million dollars.
Management of the Company and JAGI are attempting to work out some
restructuring of this debt; however, at March 31, 1996 and as of the date
hereof, the debt has not been restructured and remains on the books. The
other secured debt is a $350,000 line of credit from a local bank and a
$350,000 loan. As of March 31, 1996 the Company had used $609,976.00
against the loan and line of credit and is collateralized by a first lien on
the Company's Colorado oil and gas properties. The Company used
approximately $287,500 of these proceeds to settle outstanding judgment
liabilities. Management intends to use the remaining balance to recommence
drilling activity and reworking existing wells.
RESULTS OF OPERATIONS
Due to its bankruptcy and adverse financial condition the issuer
has not engaged in drilling any new wells or acquiring any additional
properties since 1985. Operations of the issuer have been limited to
continued operation of wells previously drilled on properties already
acquired. The issuer continues to incur net losses due primarily to
interest expenses, except for the year 1994 when the gain from settlements
of judgment liabilities was recognized as an extraordinary item, and resulted
in net income. Management anticipates production can be increased if
sufficient capital can be generated to re-work producing wells.
-5-
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The issuer had been involved in numerous legal proceedings.
Those legal proceedings have been resolved by the registrant. The following
discussion outlines the current status, to the best knowledge of present
management.
1. On September 28, 1988 the United States Securities and
Exchange Commission ("SEC") filed a complaint in United States District
Court for the District of Columbia (Civil Action No. 88-2803) naming the
issuer and its former President as defendants. The complaint charged
securities laws violations arising from an alleged attempt to manipulate the
price of the Company's stock by conducting an allegedly false and misleading
publicity campaign during 1986 about a purported company product known as
the "Soberz" pill. The pill allegedly lowered a person's blood-alcohol
level rendering a drunk person sober. The complaint also charged the
defendants with violating securities laws by failing to file timely and
accurate periodic reports as required. On October 19, 1989 the SEC obtained
by default final judgments of permanent injunction enjoining the defendants
from violating the securities laws by failing to file such reports, or
violating the anti-fraud provisions of the securities laws.
In October,1990, after filing the Annual Report on Form 10-K for
the fiscal year ended December 31, 1989 (which report included financial and
other information covering the intervening period since reports had last
been filed), the issuer made a motion to have the injunction against itself
set aside. By order dated January 8, 1991 the U.S. District Court of the
District of Columbia denied the issuer's motion without prejudice "pending
demonstration of Unioil's ability and willingness to comply with filing
requirements in the future over a reasonable period of time." The issuer
intends to renew its motion to set aside the judgment sometime in the future
after it has complied with the filing requirements over a reasonable period
of time. Current management believes that such motion will be granted at
that time.
The legal proceedings regarding the "Soberz" pill were filed
against the issuer and its former President by the SEC in response to
certain meetings held with stockbrokers and others to promote such pill, two
press releases which made certain claims regarding the pill, and a statement
concerning the pill which was included in the issuer's Annual Report on
Form 10-K for the year ended December 31, 1985, which was filed on or about
August 6, 1986. In addition to making the claims about such pill which
resulted in the SEC action, the statement in the Form 10-K report indicated
that the issuer agreed to acquire Guardian Laboratories, Inc., the company
which supposedly had rights to the pill in the form of a patent pending. The
statement further indicated that the issuer agreed to issue 500,000 shares
of its stock in consideration thereof. Successor management of the issuer
has determined from the transfer records that such stock was in fact issued,
but can find no evidence that the issuer ever received anything in
consideration of such issuance. The Board of Directors has therefore decided
to treat such stock as cancellable for lack of consideration and has placed
stop transfer orders with the transfer agent to prevent any attempted
transfer of such stock. The issuer also notified the recipient of the
action taken and instructed him to return the certificate for cancellation.
The issuer received a response which disputed the issuer's position, but no
further action has been taken by either party in regard to the matter.
-6-
Item 2. Changes in Securities
No changes in securities occurred in the first quarter of 1996
covered by this report.
Item 3. Defaults upon Senior Securities
All of the issuer's liabilities are classified as current because
they mature currently or are already past due. The issuer is in default with
respect to its principal outstanding liability. This liability is the
secured indebtedness to Joseph Associates of Greeley, Inc. This item,
including accrued interest, comprise approximately 95% of the issuer's total
liabilities. In its present financial condition, the issuer is not able to
pay off this liability or even pay interest which accrues thereon. Management
is therefore attempting to negotiate some restructuring of the secured
indebtedness as a means of curing such default. There is no assurance
management will be able to do this.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders through the
solicitation of proxies or otherwise during the first quarter of 1996
covered by this report. The last meeting of stockholders of Unioil was held
in July, 1983.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. None
(b) Reports on Form 8-K. No reports on Form 8-K have been filed
during the first quarter of the year 1996.
-7-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Date June 27, 1996 /s/ Charles E. Ayers
____________________ __________________________________________
Charles E. Ayers, Jr., Chairman,
Chief Executive Officer and Director
Date June 26, 1996 /s/ Fred C. Jones
____________________ _________________________________________
Fred C. Jones
Vice President, Secretary and Director