U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997.
OR
[ ] 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 0-28686
OILEX, INC.
_________________________________________________________________
(Exact name of small business issuer as specified in its charter)
Nevada 33-0194489
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3050 Post Oak Blvd.,Suite 1760 Houston, Texas 77056
(Address of principal executive offices) (Zip Code)
(713) 629-5998
(Issuer's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the Issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
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 ____
The aggregate number of shares outstanding of the Issuer's Common
Stock, its sole class of common equity, was 33,262,775 as of
June 30, 1997.
This report consists of 12 pages.<PAGE>
Quarterly Report on Form 10-QSB
Index
Part I. Financial Information
Item I. Financial Statements (unaudited)
Balance Sheet - June 30, 1997; December 31, 1996
Statement of Operations -
Six Months Ended June 30, 1996 and 1997,
and Quarter Ended June 30, 1996 and 1997
Statement of Cash Flows -
Six Months Ended June 30, 1996 and 1997
Notes to Financial Statements
Statement of Changes in Stockholder's Equity
From January 1, 1997 to June 30, 1997
<PAGE>
OILEX, INC.
BALANCE SHEETS (UNAUDITED)
June 30, December 31,
1997 1996
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 707 $ 14,630
Oil and Gas Receivables 9,929 9,929
Due from Related Parties 240,558 -
Prepaid Expenses 11,503 11,503
Total Current Assets 262,697 36,062
PROPERTY AND EQUIPMENT
Oil and Gas Properties, Using Full
Cost Accounting
Proved Properties 9,151,500 7,519,000
Unproved Properties 1,217,000 1,217,000
10,368,500 8,736,000
Production Equipment 300,584 300,584
Furniture and Fixtures 61,081 61,081
10,730,165 9,097,665
Less:
Accumulated Depreciation, Depletion and
Amortization ( 79,692) ( 66,549)
Net Oil and Gas Properties 10,650,473 9,031,116
INVESTMENT 2,200,000 -
ORGANIZATION COSTS 59,252 59,252
TOTAL ASSETS $ 13,172,422 $9,126,430
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable and
Accrued Expenses $ 186,490 $ 13,063
Amounts Due for Oil and
Gas Properties 130,000 925,000
Bonds Payable 154,848 220,348
Due to Related Parties 35,484 47,094
Total Current Liabilities 506,822 1,205,505
Deferred Tax Liability 3,032,000 3,032,000
Commitment and Contingencies - -
TOTAL LIABILITIES 3,538,822 4,237,505
STOCKHOLDERS' EQUITY
Common Stock - $.001 Par Value Authorized
50,000,000 Shares; 33,262,775 and 24,726,775
Issued and Outstanding at June 30, 1997 and
December 31, 1996, respectively
33,263 24,727
Additional Paid-in Capital 18,180,111 12,768,434
Accumulated Deficit ( 8,579,774) ( 7,904,236)
TOTAL STOCKHOLDERS' EQUITY 9,633,600 4,888,925
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 13,172,422 $ 9,126,430
The Accompanying Notes are an Integral Part of the Financial
Statements.
<PAGE>
OILEX, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
For the Quarter Ended For The Six Months
Ended
June 30, June 30,
1997 1996 1997 1996
REVENUES
Oil and Gas Sales $ 39,272 $ 2,770 $ 65,716 $ 4,730
Other 17,137 - 22,637 -
Total Revenues 56,409 2,770 88,353 4,730
EXPENSES
Lease Operating 297,282 23,440 479,448 26,756
General and
Administrative 112,279 137,707 261,540 775,262
Interest Expense 4,018 5,502 9,760 11,004
Depreciation, Depletion
and Amortization 7,854 5,836 13,143 9,966
Total Expenses 421,433 172,485 763,891 822,988
LOSS BEFORE PROVISION FOR
INCOME TAXES ( 365,024) (169,715) (675,538) (818,258)
PROVISION FOR
INCOME TAXES - - - -
NET LOSS $( 365,024) $(169,715) $(675,538) $(818,258)
LOSS PER COMMON
SHARE $( .01) $( .01) $( .02) $( .05)
The Accompanying Notes are an Integral Part of the Financial
Statements.
<PAGE>
OILEX, INC.
STATEMENT OF CASH FLOWS (UNAUDITED)
For The Six Months Ended
June 30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $( 675,538) $( 818,258)
Adjustments to Reconcile Net Loss to Net
Cash Provided (Used) by Operating Activities:
Common Stock Cancelled for Services
Not Performed ( 100,000) -
Common Stock Issued for Services 12,500 798,610
Depreciation, Depletion and
Amortization 13,143 9,966
Changes in Certain Assets and Liabilities:
Increase in Due from Related
Parties ( 174,558) ( 386,623)
Increase in Prepaid Expenses - ( 23,000)
Increase in Accounts Payable and
Accrued Expenses 174,990 10,042
Increase in Amounts Due for Oil and
Gas Properties 130,000 -
Increase in Due to Related Parties 738,390 1,004
Net Cash Provided (Used) by Operating
Activities 118,927 ( 408,259)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in Oil and Gas Properties (132,500) ( 659,710)
Sale of Marketable Securities - 2,500,000
Increase in Deferred Tax Liability - 1,442,541
Purchase of Furniture and Equipment - ( 358,372)
Net Cash Provided (Used) By Investing
Activities (132,500) 2,924,459
CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of Treasury Stock ( 350) -
Cancellation of Preferred Stock - (2,500,000)
Net Cash Provided by Financing
Activities ( 350)
Net Increase (Decrease) in Cash and
Cash Equivalents ( 13,923) 16,200
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 14,630 15,272
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 707 $ 31,472
CASH PAID DURING THE PERIOD FOR:
Interest Expense $ - $ -
Income Taxes $ - $ -
<PAGE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCIAL ACTIVITIES:
1) On January 24, 1997, the Company issued common stock
totalling 500,000 shares as payment of an outstanding related
party payable;
2) On January 24, 1997, the Company issued common stock
totalling 1,000,000 shares in exchange for amounts due for oil
and gas properties;
3) On February 20, 1997, the Company issued common stock
totalling 500,000 shares in exchange for certain oil and gas
properties;
4) On February 20, 1997, certain bondholders converted their
15.0% bonds totalling $131,500 and related accrued interest of
$1,563 in exchange for 436,000 shares of the Company's common
stock;
5) On February 20, 1997, the Company issued common stock
totalling 25,000 shares in exchange for personal services.
6) On April 16, 1997, the Company issued common stock totalling
125,000 shares in exchange for amounts due for oil and gas
properties;
7) On April 16, 1997, the Company cancelled common stock
totalling 200,000 shares relating to consulting services that
were never performed;
8) On April 16, 1997, the Company issued common stock totalling
3,000,000 shares for an investment.
9) On June 9, 1997, the Company issued common stock totalling
1,000,000 shares as payment of an outstanding related party
payable;
10) On June 9, 1997, the Company issued common stock totalling
2,500,000 shares in exchange for certain oil and gas properties;
The Accompanying Notes are an Integral Part of the Financial
Statements.
<PAGE>
OILEX, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation and Nature of Business
The accompanying financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-QSB and Regulation S-B. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting only of normal
recurring adjustments) considered necessary for a fair
presentation have been included.
For further information refer to the financial statements
and footnotes included in Form 10-KSB for the year ended December
31, 1996.
The accompanying financial statements include the accounts
of Oilex, Inc., (the "Company"), incorporated under the laws of
the State of Nevada on June 10, 1986 under the name of Akteck,
Inc. The Company subsequently changed its name to Oilex
International Investments, Inc. and then in July, 1996 changed
its name to Oilex, Inc. The Company is active in oil and gas
exploration and development primarily in Texas, Mississippi,
Colorado, West Virginia and Utah.
Certain financial statement items have been reclassified to
conform to the current period's format.
(b) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
(c) Cash and Cash Equivalents
Cash and cash equivalents include cash in banks and other
cash equivalents which mature within three months of the date of
purchase.
(d) Oil and Gas Properties
The Company follows the full cost method of accounting
whereby all costs, including direct and general and
administrative expenses, associated with property acquisition,
exploration and development activities are capitalized. Cost
associated with proved reserves are amortized by the
unit-of-production method using independent engineers' estimates
of unrecorvered proved oil and gas reserves. The costs of
unproved properties are excluded from amortization until the
properties are evaluated. Interest is capitalized on oil and gas
properties not subject to amortization and in the process of
development. Proceeds from the sale of properties are accounted
for as reductions to capitalized costs unless such sales involve
a significant change in the relationship between costs and the
estimated value of proved reserves or the underlying value of
unproved properties, in which case, a gain or loss is recognized.
Unamortized costs of proved properties are subject to a ceiling
which limits such costs to the estimated present value of oil and
gas reserves reduced by future operating expenses, development
expenditures and income taxes.
(e) Depreciation and Amortization
Furniture, fixtures and equipment are stated at cost and are
depreciated using the straight-line method over their estimated
useful lives.
The cost of maintenance and repairs are charged to expense
when incurred; costs of renewals and betterments are capitalized.
Upon the sale of retirement of furniture, fixtures and equipment,
the cost and related accumulated depreciation are eliminated from
the respective accounts and the resulting gain or loss is
included in operations.
(f) Organization Costs
Organization costs consist of legal and other administrative
costs incurred relating to the formation of the Company. These
costs have been capitalized and are being amortized over a period
of five years.
(g) Fair Value of Financial Instruments
The Company's financial instruments consist of cash,
accounts receivable and accounts payable. The carrying amounts
of cash, accounts receivable and accounts payable approximate
fair value due to the highly liquid nature of these short-term
instruments. The fair value of bonds payable was determined
based upon interest rates currently available to the Company for
borrowings with similar terms. The fair value of bonds payable
approximates the carrying amounts as of June 30, 1997.
(h) Long-Lived Assets
Long-lived assets to be held and used are reviewed for
impairment whenever events or changes in circumstances indicate
that the related carrying amount may not be recoverable. When
required, impairment losses on assets to be held and used are
recognized based on the fair value of the asset and long-lived
assets to be disposed of are reported at the lower of carrying
amount or fair value less cost to sell.
(i) Income Taxes
Income taxes are provided for based on the liability method
of accounting pursuant to Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes". The
liability method requires the recognition of deferred tax assets
and liabilities for the expected future tax consequences of
temporary differences between the reported amount of assets and
liabilities and their tax basis.
(j) Loss Per Share
Loss per share is based on the weighted average number of
shares of common stock and common stock equivalents outstanding
during the period. Weighted average common shares outstanding
were 28,141,823 and 18,079,703 at June 30, 1997 and 1996,
respectively. Average common equivalent shares outstanding have
not been included, as the computation would be dilutive.
NOTE 3 - BONDS PAYABLE
Bonds payable consisted of the following at:
June 30, December 31,
1997 1996
10.0% bonds payable, secured by certain
of the Company's oil and gas properties;
due on demand and convertible into
common stock at $2.00 per share. $184,848 $ 154,848
15.0% convertible subordinated bonds
payable, due April, 1997, and
convertible into common stock at
$0.28 per share. - 65,500
$184,848 $ 220,348
During January, 1997, an additional $66,000 of 15%
convertible subordinated bonds were issued.
On February 20, 1997, the 15.0% convertible bonds totalling
$131,500 and the related accrued interest of $1,563 were
converted into 238,000 shares of the Company's common stock.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
a) The Company's future minimum annual aggregate
rental payments required under operating leases that have an
initial or remaining non-cancelable lease term in excess of one
year are dependent upon production only.
b) The Company is currently in dispute with a
corporation owned by certain stockholders of the Company. These
stockholders were formerly part of the management team of the
Company. They contend that the Company owes the this corporation
approximately $141,000 on a demand note. The Company believes
and has recorded a related liability of $35,484 as of June 30,
1997. The liability is included in due to related parties. The
amount in dispute is related to certain general and
administrative expense reimbursements. Although no lawsuit has
been filed, management intends to vigorously defend its position
in this matter should a lawsuit arise. It believes that the
amounts recorded in its financial statements at June 30, 1997,
for this liability is correct and accurate. Accordingly, no
provision has been made for the disputed difference herein.
NOTE 5 - STOCKHOLDERS' EQUITY
On February 20, 1997, the holders of the 15.0% Convertible
Subordinated Bonds elected to convert their bonds into 238,000
shares of Oilex common stock, par value $0.001 per share, at
$0.28 per share.
Additionally, on February 20, 1997, the Company issued
198,000 shares of Oilex common stock, par value $0.001 per share,
to three individual investors.
In January, 1997, the Board of Directors approved the
acquisition from a related party of a 20% interest it owned in
Oil Retrieval Systems, Inc. ("ORS"), an Arizona corporation. ORS
designs, engineers, produces and sells portable swabbing units to
the oil and gas industry. ORS is a development stage company.
Oilex issued 3,000,000 shares of common stock to the related
party in exchange for its ownership of 1,205,420 common shares of
ORS.
NOTE 6 - SIGNIFICANT SUBSEQUENT EVENTS:
In May 1997, Funscape Corp. (formerly Imperial Energy
Corp.), a Colorado corporation, acquired ORS. Funscape Corp.
issued 2.5 million shares of its common stock in exchange for all
of the outstanding shares of ORS.
Funscape Corp. has stockholders and management who are also
stockholders and have management responsibilities in Oilex and
ORS.
<PAGE>
<PAGE>
OILEX, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE PERIOD FROM JANUARY 1, 1997 TO JUNE 30, 1997
<TABLE>
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 24,726,775 24,727 12,768,434 (7,904,236) 4,888,925
Common Stock Issued in Exchange
for Oil and Gas Properties 3,000,000 3,000 1,497,000 - 1,500,000
Common Stock Issued for Personal
Services 25,000 25 12,475 - 12,500
Common Stock Issued for Personal
Services (Refunded) ( 200,000) ( 200) ( 99,800) - (100,000)
Common Stock Issued for Conversion
of Subordinated Bonds 436,000 436 132,627 - 133,063
Retirement of Treasury Stock ( 350,000) ( 350) - - ( 350)
Common Stock Issued for Conversion
of Amount Due for Oil and Gas
Properties to Common Stock 1,125,000 1,125 923,875 - 925,000
Common Stock Issued for Conversion
of Amount Due to Related Parties
to Common Stock 1,500,000 1,500 748,500 - 750,000
Common Stock Issued for Investment
in Oil Retrieval Services 3,000,000 3,000 2,197,000 - 2,200,000
Net Loss for the Period from
January 1, 1997 to June 30, 1997 - - - ( 675,538) (675,538)
33,262,775 $33,263 $18,180,111 (8,579,774) 9,633,600
</TABLE>
Part II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Default 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 of Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
September 3, 1997
OILEX, INC.
(Registrant)
By: /s/ Oliver Timmins III
Oliver Timmins III, President
