UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
Commission file number 0-6541
DISCOVERY OIL, LTD.
(Exact name of registrant as specified in its charter)
DELAWARE 83-0207909
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
6127 Ramirez Canyon Road
Malibu, CA
(Address of principal executive offices)
90265
(Zip Code)
(310) 457-1967
(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 No X
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APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of May 3, 2001: 9,313,352
Page 1 of 9
TABLE OF CONTENTS
PART I
PAGE
ITEM 1
Statement of Financial Position as of March 31, 2001
and December 31, 2000 3
Statement of Operations For the Three Month Periods Ended
March 31, 2001 and 2000 4
Statement of Cash Flows For the Three Month Periods
Ended March 31, 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
Page 2 of 9
Statement of Financial Position as of
DISCOVERY OIL, LTD. March 31, 2001 and December 31, 2000
- --------------------- ------------------------------------------
March 31, December 31,
2001 2000
(Unaudited)
------------- -------------
ASSETS
CURRENT ASSET - Cash $ 28,892 $ 0
------------- -------------
TOTAL ASSETS $ 28,892 $ 0
============= ==============
LIABILITIES AND STOCKHOLDERSEQUITY (DEFICIT)
CURRENT LIABILITIES
Related party payable $ 156,964 $ 172,457
Interest payable to related party 273,383 268,904
Convertible notes payable 52,250 0
Interest payable 330 0
------------- -------------
Total Current Liabilities 482,927 441,361
------------- -------------
STOCKHOLDERSEQUITY (DEFICIT)
Preferred stock; $1.00 par value; 5,000,000
shares authorized; no shares outstanding - -
Common stock; $.01 par value; 25,000,000
shares authorized; 9,313,352 shares
issued and outstanding 93,134 93,134
Discount on common stock (4,634) (4,634)
Accumulated deficit (542,535) (529,861)
------------- -------------
Total StockholdersEquity (Deficit) (454,035) (441,361)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERSEQUITY (DEFICIT) $ 28,892 $ 0
============= =============
Page 3 of 9
DISCOVERY OIL, LTD. Statement of Operations for the Three Month
(UNAUDITED) Periods Ended March 31, 2001 and 2000
- ----------- -------------------------------------------
March 31, March 31,
2001 2000
------------- -------------
REVENUES $ 4,417 $ 2,506
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OPERATING EXPENSES
Legal and accounting 7,739 3,000
Bank charges 10 30
Office expense 55 53
Fees 2,070 269
Telephone 1,109 1,045
Travel 1,000 500
Tax & licenses - 3,330
Miscellaneous expense 300 -
Interest 4,809 5,127
------------- -------------
Total Operating Expenses 17,092 13,354
------------- -------------
NET (LOSS) $ (12,675) $ (10,848)
============= =============
NET (LOSS) PER SHARE $ (NIL) $ (NIL)
============= =============
WEIGHTED AVERAGE NUMBER OF SHARES 9,563,340 9,563,340
============= =============
Page 4 of 9
DISCOVERY OIL, LTD. Statement of Cash Flows for the Three Month
(UNAUDITED) Periods Ended March 31, 2001 and 2000
- ----------- --------------------------------------------
March 31, March 31,
2001 2000
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $ (12,675) $ (10,848)
Increase in interest payable 4,809 5,127
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Net cash flows used from operating activities (7,866) (5,721)
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CASH FLOWS FROM INVESTING ACTIVITIES - -
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in related
party payables (15,492) 5,000
Increase in convertible notes payable 52,250 -
------------- -------------
Net cash flows provided from financing activities 36,758 5,000
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NET INCREASE (DECREASE) IN CASH 28,892 (721)
CASH AT BEGINNING OF PERIOD - 897
------------- -------------
CASH AT END OF PERIOD $ 28,892 $ 176
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Page 5 of 9
DISCOVERY OIL, LTD.
(UNAUDITED) Notes to Financial Statements
- ----------- -------------------------------------
The financial statements of Discovery Oil, LTD. 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, Discovery Oil, LTD. 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 included in Discovery Oil, LTD.'s annual report on
Form 10-K for the fiscal year ended December 31, 2000.
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 a full year.
Page 6 of 9
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 three-month period ended March 31, 2001 compared to the three-month
period ended March 31, 2000
For the three months ended March 31, 2001, the Company experienced a net loss of
$12,675 compared to a net loss of $10,848 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 transfer agent fees.
During the three-month periods ended March 31, 2001 and 2000, the Company
generated revenue from operations of $4,417 and $2,506, respectively.
FINANCIAL CONDITION AND LIQUIDITY
During the three-month period ended March 31, 2001, the Company used $7,866 of
cash in operating activities and generated $52,250 of cash through the issuance
of short-term notes. The Company has minimal recurring revenue from operating
activities and plans to fund its future operations through additional sales of
its common stock.
Page 7 of 9
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
Page 8 of 9
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.
Discovery Oil, LTD.
-------------------
(Registrant)
/S/ Andrew V. Ippolito May 16, 2001
- ----------------------------- --------------
Andrew V. Ippolito Date
President and Director
Page 9 of 9