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 June 30, 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 Identification Number)
incorporation or organization)
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 (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 July 24, 2001: 9,313,352
TABLE OF CONTENTS
PART I
PAGE
ITEM 1 Balance Sheets as of June 30, 2001
and December 31, 2000 3
Statement of Operations For the Three and Six Month
Periods Ended June 30, 2001 and 2000 4
Statement of Cash Flows For 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 8
BALANCE SHEETS AS OF
DISCOVERY OIL, LTD. JUNE 30, 2001 AND DECEMBER 31, 2000
- --------------------- -----------------------------------------
ITEM 1: FINANCIAL STATEMENTS
(Unaudited)
June 30, December 31,
2001 2000
-------------- --------------
ASSETS
- ------
CURRENT ASSET - Cash $ 10,414 $ -
-------------- --------------
TOTAL ASSETS $ 10,414 $ -
============== ==============
LIABILITIES AND STOCKHOLDERSDEFICIT
- -------------------------------------
CURRENT LIABILITIES
Related party payable $ 157,464 $ 172,457
Interest payable to related party 235,096 268,904
Convertible notes payable 77,000 -
Interest payable 1,856 -
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Total Current Liabilities 471,416 441,361
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 (549,502) (529,861)
-------------- --------------
Total StockholdersDeficit (461,002) (441,361)
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TOTAL LIABILITIES AND STOCKHOLDERSDEFICIT $ 10,414 $ -
============== ==============
DISCOVERY OIL, LTD. STATEMENT OF OPERATIONS FOR THE THREE AND SIX
(UNAUDITED) MONTH PERIODS ENDED JUNE 30, 2001 AND 2000
- ----------- -------------------------------------------------
June 30, 2001 June 30, 2000
-------------------------- --------------------------
Three Six Three Six
Months Months Months Months
------------ ------------ ------------ ------------
REVENUES $ 5,910 $ 10,328 $ 8,136 $ 10,642
------------ ------------ ------------ ------------
OPERATING EXPENSES
General and
administrative expenses 7,050 19,334 5,311 13,538
------------ ------------ ------------ ------------
Total Operating Expenses 7,050 19,334 5,311 13,538
------------ ------------ ------------ ------------
OTHER EXPENSES
Interest expense 5,827 10,635 4,974 10,101
------------ ------------ ------------ ------------
Total Other Expenses 5,827 10,635 4,974 10,101
------------ ------------ ------------ ------------
LOSS BEFORE INCOME TAXES (6,967) (19,641) (2,149) (12,997)
------------ ------------ ------------ ------------
INCOME TAXES - - - -
------------ ------------ ------------ ------------
NET (LOSS) $ (6,967) $ (19,641) $ (2,149) $ (12,997)
============ ============ ============ ============
NET (LOSS) PER SHARE $ (NIL) $ (NIL) $ (NIL) $ (NIL)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING
BASIC AND DILUTED 9,313,352 9,313,352 9,313,352 9,313,352
============ ============ ============ ============
DISCOVERY OIL, LTD. STATEMENT OF CASH FLOWS FOR THE SIX MONTH
(UNAUDITED) PERIODS ENDED JUNE 30, 2001 AND 2000
- ------------------- -------------------------------------------
2001 2000
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $ (19,641) $ (12,997)
Increase (decrease) in interest payable (31,953) 10,101
-------------- --------------
Net cash flows (used) provided from
operating activities (51,594) (2,896)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in related party payable (14,992) 2,000
Increase in convertible notes payable 77,000 -
-------------- --------------
Net cash flows provided (used) from
financing activities 62,008 2,000
-------------- --------------
NET (DECREASE) INCREASE IN CASH 10,414 (896)
CASH AT BEGINNING OF PERIOD - 897
-------------- --------------
CASH AT END OF PERIOD $ 10,414 $ 1
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
INFORMATION
Cash paid during the year for:
Interest $ 42,588 $ -
============== ==============
Income tax $ - $ -
============== ==============
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.
[The balance of this page left intentionally blank.]
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 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
$19,641 compared to a net loss of $12,997 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 six-month periods ended June 30, 2001 and 2000, the Company generated
revenue from operations of $10,328 and $10,642.
For the three-month period ended June 30, 2001 compared to the three-month
period ended June 30, 2000
For the three months ended June 30, 2001, the Company had a loss of $6,967
compared to a net loss of $2,149 during the comparable period in 2000. The
increase in the second quarter 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 audit of its financial statements
and the preparation and filing of reports necessary to be in compliance with the
Securities and Exchange Commission.
FINANCIAL CONDITION AND LIQUIDITY
During the six-month period ended June 30, 2001, the Company used $51,594 of
cash in operating activities and generated $62,008 of cash through the issuance
of debt to be converted into stock in the near future less amounts paid on
related party notes. The Company has minimal recurring revenue from operating
activities and plans to fund its future operations through additional sales of
its common stock.
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
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 August 9, 2001
- ---------------------------------- --------------
Andrew V. Ippolito Date
President and Director