UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2001
Commission file number 000-32531
NOVA OIL, INC.
(Exact name of registrant as specified in its charter)
NEVADA 91-2028450
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
17922 N. Hatch Road
Colbert, WA
(Address of principal executive offices)
99005-9377
(Zip Code)
(509) 466-0576
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 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 X No
--------------- ---------------
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of August 13, 2001:
4,400,000
TABLE OF CONTENTS
PART I
PAGE
----
ITEM 1 Balance Sheets as of June 30, 2001
and December 31, 2000 3
Statements of Operations for the Period from Inception (February 25, 2000)
Through June 30, 2001 and the Three and Six Month Periods Ended June 30, 2001
and 2000 4
Statements of Cash Flows for the Period from Inception (February 25, 2000)
Through June 30, 2001 and the Six Month Periods Ended June 30, 2001
and 2000 5
Notes to Financial Statements 6
ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
PART II
ITEM 1 Legal Proceedings 8
ITEM 2 Changes in Securities 8
ITEM 3 Defaults Upon Senior Securities 8
ITEM 4 Submission of Matters to a Vote of Security Holders 8
ITEM 5 Other Information 8
ITEM 6 Exhibits and Reports on Form 8-K 8
Signatures 9
ITEM 1: FINANCIAL STATEMENTS
NOVA OIL, INC.
(A Development Stage Company)
Balance Sheets
June 30, 2001 and December 31, 2000
ASSETS
(Unaudited)
June 30, December 31,
2001 2000
----------------- -----------------
Current assets:
Cash $ 39,692 $ 46,494
Accounts receivable 1,791 2,014
----------------- -----------------
Total current assets 41,483 48,508
----------------- -----------------
Fixed assets:
Oil properties, (successful efforts method), net 28,476 29,456
----------------- -----------------
Total assets $ 69,959 $ 77,964
----------------- =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 519 $ 591
----------------- -----------------
Total current liabilities 519 591
----------------- -----------------
Stockholders' equity:
Preferred stock; $0.0001 par value; 5,000,000 shares
authorized; no shares outstanding
Common stock; $0.001 par value; 100,000,000 shares
authorized; 4,400,000 shares issued and outstanding 4,400 4,400
Additional paid-in capital 73,100 73,100
Accumulated deficit incurred during the development stage (8,060) (127)
----------------- -----------------
Total stockholders' equity 69,440 77,373
----------------- -----------------
Total liabilities and stockholders' equity $ 69,959 $ 77,964
================= =================
See the accompanying notes
3
NOVA OIL, INC.
(A Development Stage Company)
Statements of Operations
For the date of inception (February 25, 2000) through June 30, 2001 and the
three and six month periods ending June 30, 2001 and 2000 (Unaudited)
Date of inception
(February 25, 2000)
through
June 30, 2001 June 30, 2001 June 30, 2000
------------------- ------------------------------ -------------------------------
Three Six Three Six
Months Months Months Months
------------- -------------- ------------ --------------
Sales of oil $ 9,548 $ 4,806 $ 7,534 $ - $ -
----------------- ------------- -------------- ------------ --------------
Operating expenses:
Production expenses 4,182 1,938 3,591 - -
General and administrative expenses 13,731 4,302 11,490 1,120 1,661
Amortization expense 1,224 661 980
----------------- ------------- -------------- ------------ --------------
Total operating expenses 19,137 6,901 16,061 1,120 1,661
----------------- ------------- -------------- ------------ --------------
Other income:
Interest income 1,529 273 594 22 22
----------------- ------------- -------------- ------------ --------------
Net loss $ (8,060) $ (1,822)$ (7,933) $ (1,098)$ (1,639)
================= ============= ============== ============ ==============
Net loss per share-basic $ (NIL) $ (NIL)$ (NIL) $ (NIL)$ (NIL)
================= ============= ============== ============ ==============
Weighted average common shares
outstanding-basic 3,643,747 4,400,000 4,400,000 2,714,286 1,976,000
================= ============= ============== ============ ==============
See the accompanying notes
4
NOVA OIL, INC.
(A Development Stage Company)
Statements of Cash Flows
For the date of inception (February 25, 200) through June 30, 2001 and for the
six month periods ending June 30, 2001 and 2000 (Unaudited)
Date of inception
(February 25, 2000)
through June 30,
----------------------------------
June 30, 2001 2001 2000
---------------------- -------------- ---------------
Cash flows from operating activities:
Net loss $ (8,060) $ (7,933) $ (1,639)
-------------------- -------------- ---------------
Adjustments to reconcile net loss to net cash
used by operating activities:
Amortization 1,224 980 -
Change in:
Accounts receivable (1,791) 223 -
Accounts payable 519 (72)
-------------------- -------------- ---------------
Net cash used by operating activities (8,108) (6,802) (1,639)
-------------------- -------------- ---------------
Cash flows from investing activities:
Purchase of oil and gas properties (29,700) - 7,500
-------------------- -------------- ---------------
Net cash used by investing activities (29,700) - 7,500
-------------------- -------------- ---------------
Cash flows from financing activities:
Sales of common stock for cash 77,500 - 7,500
-------------------- -------------- ---------------
Net cash provided by financing activities 77,500 - 7,500
-------------------- -------------- ---------------
Net change in cash 39,692 (6,802) 5,861
Cash, beginning of period - 46,494 -
-------------------- -------------- ---------------
Cash, end of period $ 39,692 $ 39,692 $ 5,861
==================== ============== ===============
See the accompanying notes
5
NOVA OIL, INC.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
1. Basis of Presentation:
The financial statements of Nova Oil, Inc. included herein, have been prepared
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Although certain information normally included in financial
statements prepared in accordance with generally accepted accounting principles
has been condensed or omitted, Nova Oil, Inc. believes that the disclosures are
adequate to make the information presented not misleading. These financial
statements should be read in conjunction with the financial statements and notes
thereto for the fiscal year ended December 31, 2000 included in Nova Oil, Inc.'s
registration statement of Form 10-SB.
The financial statements included herein reflect all normal recurring
adjustments that, in the opinion of management, are necessary for a fair
presentation. The results for interim periods are not necessarily indicative of
trends or of results to be expected for the full year ending December 31, 2001.
Included in the Company's production expenses as presented are all direct
expenses of oil production, including severance taxes and royalties, not
included in production expenses are depreciation, depletion and amortization
("DD&A") expenses and corporate administration expenses. All information is
presented on the accrual basis of accounting.
2. Nature of Business:
Nova Oil, Inc. is a Nevada Corporation that was formed on February 25, 2000. The
Company was organized to acquire and develop working interest in oil and gas
properties in the Unite States. Unless otherwise indicate, amounts provided in
these notes to the financial statements pertain to continuing operations. All of
the Company's revenues for the period from inception on February 25, 2000 to
June 30, 2001, were from sales to two customers.
[The balance of this page left intentionally blank.]
6
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
General
This report contains both historical and prospective statements concerning the
Company and its operations. Prospective statements (known as "forward-looking
statements") may or may not prove true with the passage of time because of
future risks and uncertainties. The Company cannot predict what factors might
cause actual results to differ materially from those indicated by prospective
statements.
During the six-month period ended June 30, 2001, the Company prepared a
registration statement on Form 10-SB and filed it with the Securities and
Exchange Commission ("SEC"). In connection with the filing the Company received
comments from the SEC requesting, among other things, the presentation of
certain audited financial information relating to the Company's recently
acquired oil and gas properties in accordance with the requirements of
Regulation S-X of the Exchange Act. While the Company intends on addressing the
SEC's comments in compliance with securities regulations, no audited information
relating to the Company's oil and gas properties prior to their acquisition has
been obtained.
Results of Operations
For the six-month period ended June 30, 2001 compared to the six-month period
ended June 30, 2000
For the six months ended June 30, 2001, the Company experienced a net loss of
$7,933 compared to a net loss of $1,639 during the comparable period in the
previous year. The increase in net loss from 2000 to 2001 was primarily due to
increased general and administrative expenses associated with the Company's
audit of its financial statements and other fees associated with the reporting
requirements of publicly traded companies.
During the six-month period ended June 30, 2001, the Company generated revenue
from the sale of 302 barrels of oil of $7,534. No revenue was generated during
the comparable six-month period ended June 30, 2000, as the Company had not yet
purchased its oil producing properties.
For the three-month period ended June 30, 2001 compared to the three-month
period ended June 30, 2000
During the three-month period ended June 30, 2001, the Company generated revenue
from the sale of 202 barrels of oil of $4,806. No revenue was generated during
the comparable three-month period ended June 30, 2000, as the Company had not
yet purchased its oil producing properties.
For the three months ended June 30, 2001, the Company incurred a net loss of
$1,822 compared to a net loss of $1,098 during the comparable period in 2000.
The increase in the second quarter net loss in 2001 as compared to the net loss
during the same quarter in 2000 is primarily due to increased general and
administrative expenses associated with the Company's formation.
7
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION, CONTINUED:
Financial Condition and Liquidity
During the six-month period ended June 30, 2001, the Company used $6,802 of cash
in operating activities. Management plans to fund future short-term operating
needs through profits from its oil producing properties and existing cash
reserves.
PART II
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
ITEM 5 OTHER INFORMATION
NONE
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
NONE
8
SIGNATURES
Pursuant to the requirements of Section 13 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.
Nova Oil, Inc.
(Registrant)
/s/ARTHUR P. DAMMARELL, JR. August 14, 2001
- ---------------------------- ---------------------
Mr. Arthur P. Dammarell, Jr. Date
Treasurer
9