UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number: 000-32531
NOVA OIL, INC.
(Exact name of small business issuer 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)
Common Stock None
Title of each class Name and exchange on
which registered
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 as the registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.
Yes [X] No [ ]
At November 1, 2001, 4,400,000 shares of the registrant's common stock were
outstanding.
1
NOVA OIL, INC.
(A Development Stage Company)
TABLE OF CONTENTS
PART I
PAGE
ITEM 1 Financial Statements..................................................3
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
2
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
NOVA OIL, INC.
(A Development Stage Company)
Balance Sheets
September 30, 2001 and December 31, 2000
ASSETS
(Unaudited)
September 30, December 31,
2001 2000
---- ----
Current assets:
Cash $ 41,895 $ 46,494
Accounts receivable 2,803 2,014
------------ ------------
Total current assets 44,698 48,508
------------ ------------
Fixed assets:
Oil properties (successful efforts method), net 27,615 29,456
------------ ------------
Total assets $ 72,313 $ 77,964
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,122 $ 591
------------ ------------
Total current liabilities 1,122 591
------------ ------------
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 (6,309) (127)
------------ ------------
Total stockholders' equity 71,191 77,373
------------ ------------
Total liabilities and stockholders' equity $ 72,313 $ 77,964
============ ============
See the accompanying notes.
3
NOVA OIL, INC.
(A Development Stage Company)
Statements of Operations
From the date of inception (February 25, 2000) through September 30, 2001 and
for the three and nine-month periods ended September 30, 2001 and 2000
(Unaudited)
Date of inception
(February 25, 2000)
through
September 30, 2001 September 30, 2001 September 30, 2000
------------------ ------------------------- ---------------------------
Three Nine Three Nine
Months Months Months Months
------------ ------------ ------------ ------------
Sales of oil $ 15,546 $ 5,998 $ 13,532 $ - $ -
------------------ ------------ ------------ ------------ ------------
Operating expenses:
Production expenses 6,164 1,982 5,573 - -
General and administrative expenses 15,366 1,634 13,125 115 1,778
Amortization expense 2,085 861 1,841 - -
------------------ ------------ ------------ ------------ ------------
Total operating expenses 23,615 4,477 20,539 115 1,778
------------------ ------------ ------------ ------------ ------------
Other income:
Interest income 1,760 230 825 422 445
------------------ ------------ ------------ ------------ ------------
Net income (loss) $ (6,309) $ 1,751 $ (6,182) $ 307 $ (1,333)
================== ============ ============ ============ ============
Net income (loss) per share-basic $ Nil $ Nil $ Nil $ Nil $ Nil
================== ============ ============ ============ ============
Weighted average common shares 3,760,895 4,400,000 4,400,000 3,657,391 2,688,848
outstanding-basic ================== ============ =========== ============ ============
See the accompanying notes.
4
NOVA OIL, INC.
(A Development Stage Company)
Statements of Cash Flows
From the date of inception (February 25, 2000) through September 30, 2001 and
for the nine-month periods ended September 30, 2001 and 2000 (Unaudited)
Date of inception
(February 25, 2000) September 30,
through ----------------------------
September 30, 2001 2001 2000
------------------ ------------- -------------
Cash flows from operating activities:
Net loss $ (6,309) $ (6,182) $ (1,333)
------------------ ------------- -------------
Adjustments to reconcile net loss to net cash
used by operating activities:
Amortization 2,085 1,841 -
Change in:
Accounts receivable (2,803) (789) -
Accounts payable 1,122 531 -
------------------ ------------- -------------
Net cash used by operating activities (5,905) (4,599) (1,333)
------------------ ------------- -------------
Cash flows from investing activities:
Purchase of oil and gas properties (29,700) - -
------------------ ------------- -------------
Net cash used by investing activities (29,700) - -
------------------ ------------- -------------
Cash flows from financing activities:
Sales of common stock for cash 77,500 - 77,500
------------------ ------------- -------------
Net cash provided by financing activities 77,500 - 77,500
------------------ ------------- -------------
Net change in cash 41,895 (4,599) 76,167
Cash, beginning of period - 46,494 -
------------------ ------------- -------------
Cash, end of period $ 41,895 $ 41,895 $ 76,167
================== ============= =============
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 United States. Unless otherwise indicated, 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
September 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.
Results of Operations
For the nine-month period ended September 30, 2001 compared to the nine-month
period ended September 30, 2000
During the nine-month period ended September 30, 2001, the Company continued to
generate revenue from its working interests in two producing oil wells. Sales of
568 barrels of oil generated gross revenues of $13,532 for the nine-month period
ended September 30, 2001.
For the nine months ended September 30, 2001, the Company experienced a net loss
of $6,182 compared to a net loss of $1,333 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 nine-month period ended September 30, 2001, the Company generated
revenue from operations of $13,532 as compared to no revenue generated for the
comparable period of 2000. The increase in revenues from 2000 to 2001 is due to
the Company's inactivity during the first nine months of 2000 and the subsequent
purchase of revenue generating oil and gas properties in the fourth quarter of
2000.
For the three-month period ended September 30, 2001 compared to the three-month
period ended September 30, 2000
For the three months ended September 30, 2001, the Company generated net income
of $1,751 compared to a net income of $307 during the comparable period in 2000.
The increase in the third quarter income in 2001 as compared to the same quarter
in 2000 is primarily due to increased revenues generated from sales of oil
production.
Financial Condition and Liquidity
During the nine-month period ended September 30, 2001, the Company used $4,599
of cash in operating activities. The Company plans to fund its future operations
through oil and gas revenues as well as additional sales of its common stock.
7
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. November 13, 2001
- ------------------------------- --------------------
Mr. Arthur P. Dammarell, Jr. Date
Treasurer
9