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, 1997
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 ororganization)
3817 Carson Avenue, P.O. Box 310
Evans, Colorado 80620
(Address of principal executive offices) (ZipCode)
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, 1997
(Common stock, $.01 par value) 9,441,657
UNIOIL
INDEX
Page No.
Part I Financial Information
Condensed balance sheets- 1
March 31, 1997 and December 31, 1996
Condensed statements of operations- 2
three months ended March 31, 1997
and 1996
Condensed statements of cash flows- 3
three months ended March 31, 1997
and 1996
Notes to condensed financial statements 4
Management's Discussion and Analysis of 5
Financial Condition 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,
1997 1996
(Unaudited) *
____________ ____________
Current Assets
Cash $ 113,955 $ 118,886
Joint Interest and Trade
Acct. Rec. 112,937 124,480
Prepaid Expenses 2,085 3,562
Deferred Loan Costs, net -0- -0-
____________ ____________
Total current assets 228,977 246,928
Property and Equipment 55,601 53,524
Less accumulated depreciation 50,630 50,388
____________ ____________
4,971 3,136
Investment in Oil and Gas Properties 9,477,260 9,446,260
Less accumulated depletion,
depreciation 5,747,409 5,716,007
and amortization ____________ ____________
3,729,851 3,730,253
Deferred Tax Assets -0- -0-
Other Assets 2,152 2,152
____________ ____________
Total Assets $ 3,965,951 $ 3,982,469
____________ ____________
LIABILITIES
Current Liabilites
Accounts Payable & Taxes Payable $ 154,808 $ 149,734
Accrued Interest 8,241,016 8,096,242
Other Current Liabilities 156,266 156,266
Note Payable 6,141,000 6,141,000
Deferred Tax Liabilities -0- -0-
____________ ____________
Total Current Liabilites 14,693,090 14,543,242
Stockholders' Deficit
Common Stock 94,417 94,417
Capital in Excess of Par 4,062,520 4,062,519
Retained Earnings (Deficit) (14,884,076) (14,717,709)
____________ ____________
Total Stockholders' Deficit (10,727,139) (10,560,773)
Total Liabilities and
Stockholders' Deficit $ 3,965,951 $ 3,982,469
____________ ____________
* 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,
1997 1996
____________ ____________
Revenue
Oil & Gas Sales $ 115,890 $ 67,884
Interest Income 873 426
Income from serving as
operator 8,553 6,977
Miscellaneous Income (Expense) 1,076 158
____________ ____________
Total Revenue 126,392 75,445
Costs & Expenses
Production Costs and
Related Taxes 63,154 53,388
General and Administrative
Expenses 46,167 51,124
Depletion, Depreciation
& Amortization 31,644 21,972
Interest Expense 151,794 160,102
____________ ____________
Total Costs & Expenses 292,759 286,586
____________ ____________
Loss before income taxes (166,367) (211,141)
Income Taxes --- ---
Net Loss $ (166,367) $ (211,141)
____________ ____________
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,
1997 1996
____________ ____________
Cash Flows From (To) Operating
Activities
Net Loss $ (166,367) $ (211,140)
____________ ____________
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation, Depletion
& Amortization 31,644 21,972
Changes in Assets and Liabilities
Joint Interest & Trade
Receivables 11,542 15,419
Other Assets 1,478 2,645
Accounts Payable and Taxes
Payable 5,075 (14,436)
Accrued Interest Payable 144,774 144,774
____________ ____________
194,513 170,374
____________ ____________
Net Cash Provided (Used)
by Operations 28,146 (40,766)
____________ ____________
Cash Flows From (To) Investing
Activities
Disposition of Property
& Equipment (33,076) ----
Acquisition of Oil &
Gas Properties ---- ----
Deferred Loan Costs ---- ----
____________ ____________
Net Cash Provided (Used) by
Investing Activities (33,076) ----
____________ ____________
Cash Flows From (To) Financing
Activities
Proceeds from Notes Payable -0- 36,676
____________ ____________
Net Cash Used by Financing
Activities -0- 36,676
____________ ____________
Net Increase (Decrease) in Cash (4,930) (4,090)
Cash at Beginning of Period 118,886 61,636
____________ ____________
Cash at End of Period $ 113,956 $ 57,546
____________ ____________
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, 1997 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 $16,100,000 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,
the 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 1997. 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, 1997, the unpaid note balance was $5,791,000.00
and the related Accrued Interest balance was $8,241,016.00.
During the three months ending March 31, 1997, 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, 1997, 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 14 million dollars. Management of
the Company and JAGI intend to work out some restructuring
of this debt; however, at March 31, 1997 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 loan
from a local bank 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.
RESULTS OF OPERATIONS
Due to its bankruptcy and adverse financial
condition the issuer had not engaged in drilling any new
wells or acquiring any additional properties since 1985.
Operations of the issuer had been limited to continued
operation of wells previously drilled on properties already
acquired. However, during 1996 the Company did enter into
two agreements to resume drilling activity in 1997 with
respect to the leasehold interests of the Company and
provide financing for such drilling. In November, 1996 the
Company and JAGI entered into an agreement with Prima Oil &
Gas Company ("Prima") pursuant to which the Company
contributed 26 potential drillsites and Prima contributed
another 26 potential drillsites into a drillsite pool.
Prima will act as operator and finance the drilling of the
wells, for which it will be entitled to 100% of the working
interest until payout, after which the working interest will
be divided 72.5% to Prima and 27.5% to the Company and JAGI.
In addition, 8 potential recompletion well sites were
contributed to this pool, on which Prima will also act as
operator, and at its discretion and sole cost, recomplete in
return for a 72.5% working interest after recompletion.
Upon recompletion, the Company will immediately be entitled
to its working interest share (27.5%) of all production
payments, without waiting for payout. In December, 1996,
the Company entered into an agreement with PanEnergy
Financial Services, Inc. ("PanEnergy") to provide financing
for the drilling and completion costs of wells. Under this
agreement, PanEnergy will provide financing on a
reimbursement basis for up to 95% of the Company's working
interest costs of drilling and completing 8 wells which the
Company, as operator, considers capable of producing oil
and/or gas in commercial quantities. PanEnergy will be
entitled to repayment of the amounts advanced plus interest
at 1% over prime, through a 95% allocation of the production
payments attributable to the Company's interest in these
wells. As of the date of this report the Unioil/Prima
agreement has resulted in the drilling of 6 new wells and
the recompletion of 4 wells. The Unioil/PanEnergy program
will commence in May and should be completed in June. The
Issuer has continued to incur net losses due primarily to
interest expense.
-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 1997 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 1997 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 1997.
-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: May 15, 1997 /s/Charles E. Ayers, Jr.
___________________ __________________________________
Charles E. Ayers, Jr., Chairman,
Chief Executive Officer and Director
Date: May 14, 1997 /s/Fred C. Jones
____________________ ____________________________________
Fred C. Jones
Vice President, Secretary and Director