U. S. 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 MARCH 31, 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 0-5833
OASIS OIL CORPORATION
(Exact name of small business issuer as specified in its charter)
NEVADA 94-1713830
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1800 ST. JAMES PLACE, SUITE 101. HOUSTON. TEXAS 77056
(Address of principal executive office & zip code)
(713) 627-8875
(Issuer's telephone number)
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 [_]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by court.
Yes [_] No [_]
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Class Of Equity Outstanding
--------------- -----------
Common Stock, $0.05 par value 6,000,000
Series A Preferred Stock, $1.00 par value 40,494
Transitional Small Business Disclosure Format (check one) Yes [_] No [X]
2
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OASIS OIL CORPORATION
INDEX
Page
PART 1. - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet at March 31, 1997 and
December 31, 1996.............................................4
Consolidated Statement of Operations for the three
months Ended March 31, 1997 and 1996..........................5
Consolidated Statement of Cash Flows for the three
months ended March 31, 1997 and 1996..........................6
Condensed Notes to Consolidated Financial Statements...........7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................8-9
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings...............................................10
Item 2. Changes in Securities...........................................10
Item 3. Defaults Upon Senior Securities.................................10
Item 4. Submission of Matters to a Vote of Security Holders.............10
Item 5. Other Information...............................................11
Item 6. Exhibits and Reports on Form 8-K................................11
3
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OASIS OIL CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands of dollars)
March 31, December 31,
1997 1996
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash ......................................... $ 79 $ 134
Accounts Receivable - trade .................. 1040 1522
Inventories .................................. 31 33
Prepaid Expenses ............................. 54 59
------------ ------------
TOTAL CURRENT ASSETS ................... 1204 1748
PROPERTY AND EQUIPMENT
Property, equipment, and leasehold
improvements, net .......................... 556 576
------------ ------------
TOTAL PROPERTY AND EQUIPMENT ........... 556 576
OTHER ASSETS
Deposits ..................................... 5
Goodwill,net ................................. 204 206
------------ ------------
TOTAL OTHER ASSETS ........................... 209 206
------------ ------------
TOTAL ASSETS ................................. $ 1969 $ 2530
------------ ------------
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Notes payable ................................ $ 350 $ 450
Accounts payable ............................. 1113 1533
Accrued expenses ............................. 25 13
Current maturities of long-term debt ......... 23 21
------------ ------------
TOTAL CURRENT LIABILITIES .............. 1511 2017
Long-term debt, less current maturities ...... 18 25
------------ ------------
TOTAL LIABILITIES ...................... 1529 2042
STOCKHOLDERS' EQUITY
Preferred Stock, $1 par value,
1,000,000 shares authorized ............... 405 405
Common Stock, $.05 par value,
50,000,000 shares authorized .............. 300 300
Additional paid-in capital ................... 85 85
Deficit ...................................... (350) (302)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY ............. 440 488
------------ ------------
TOTAL LIABILITIES AND EQUITY ................. $ 1969 $ 2530
------------ ------------
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OASIS OIL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of dollars)
(Unaudited)
THREE MONTHS ENDED MARCH 31,
-------------------------------
1997 1996
------------ ------------
Sales .................................... $ 3552 $ 3703
Cost of sales ............................ 3168 3363
------------ ------------
Gross Margin ....................... 384 340
------------ ------------
Operating expenses
Selling ............................... 5 23
General and administrative ............ 407 341
------------ ------------
Total operating expenses ........... 412 364
------------ ------------
Net operating loss ................. (28) (24)
------------ ------------
Other income (expense)
Interest income ....................... 4
Interest expense ...................... (13) (10)
Loss on sale of fixed assets ..........
Other ................................. (7) (1)
------------ ------------
Total other expenses, net .......... (20) (7)
------------ ------------
Net loss ................................. $ (48) $ (31)
------------ ------------
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OASIS OIL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
Increase (decrease) in cash
THREE MONTHS ENDED MARCH 31,
---------------------------
1997 1996
------------ ------------
Cash flows from operating activities:
Net loss ...................................... $ (48) $ (31)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization .............. 33 6
Changes in assets and liabilities:
Accounts receivable .................... 482 (58)
Inventories ............................ 2 4
Prepaid expenses ....................... 5 34
Other assets ........................... (5) (271)
Accounts payable and accrued expenses .. (408) 1638
------------ ------------
Net cash provided by operating activities .. 61 1322
------------ ------------
Cash flows from investing activities:
Purchases of fixed assets ..................... (11) --
Purchase of Oasis Oil Ltd. Co. ................ -- (1822)
------------ ------------
Net cash used in investing activities ...... (11) (1822)
------------ ------------
Cash flows from financing activities:
Net borrowings on line of credit .............. (100) 496
Payments of long-term debt .................... (5) (1)
------------ ------------
Net cash provided by (used in)
financing activities ..................... (105) 495
------------ ------------
Net decrease in cash ............................. (55) (5)
Cash, beginning of fiscal quarter ................ 134 2
------------ ------------
Cash, end of fiscal quarter ...................... $ 79 $ 7
============ ============
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OASIS OIL CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BUSINESS
Business
Oasis Oil Corporation (the "Company") is a Nevada corporation organized in
1955. The Company is principally engaged in the service of gathering,
transportation and marketing of domestic crude oil. As a first purchaser of
crude oil, the Company offers a complete division order and royalty disbursement
service to its producer accounts.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary. All significant intercompany accounts and
transactions have been eliminated.
Inventories
Inventories consist of crude oil and are valued at the current market
price. Market price is determined based on an average monthly quoted price
established by oil and gas traders who take into consideration such factors as
the supply and demand of oil and gas. Actual cost is not materially different
from market.
Property, Equipment and Leasehold Improvements
Property, equipment and leasehold improvements are stated at cost.
Depreciation and amortization on equipment is provided using the straight-line
method over the estimated useful lives of the assets ranging from 3 to 15 years.
For income tax purposes, depreciation is calculated using accelerated methods.
Revenue Recognition
Sales are recorded in the periods that crude oil is delivered.
Goodwill
Goodwill is amortized on the straight-line method over fifteen years. On a
periodic basis, the Company estimates the future undiscounted cash flows of the
business to which goodwill relates in order to ensure that the carrying value of
goodwill has not been impaired.
7
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NOTE 3 - SUPPLEMENTAL CASH FLOW INFORMATION
During the first quarter of 1996 the Company purchased all of the assets
of Oasis Oil Ltd. Co. For $2,576,088. The March 31, 1996 financial statements
were the first statements available after the purchase. In conjunction with the
acquisition, the purchase price allocation is as follows:
Fair value of assets acquired: Amount
Accounts receivable ................. $ 1,324
Inventory ........................... 23
Prepaid expenses .................... 76
Fixed assets ........................ 382
Goodwill ............................ 17
------------
1822
Cash received .......................... 552
------------
$ 2,374
------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General Discussion
During the first quarter of 1997 OTMC continued to operate its fleet and
purchase crude oil in South Texas. For the fiscal quarter ending March 31, 1997,
OTMC showed a net loss of $48,744 compared to a net loss of $31,000 for the same
period last year. The loss in 1996 was due to unprofitable contracts, high
overhead and the lack of proper blending facilities. Effective February 1, 1996
the Company purchased Oasis Oil Ltd., Co. Over the following 60 days the Company
was able to turn around the operations by not renewing unprofitable contracts,
tightening cost controls and maximizing blending opportunities. By the end of
1996 the Company had increased its gross profit margin by 4% due to blending
operations and decreased its General and Administrative expenses by more than 1%
overall. OTMC continued to be profitable going into 1997.
January 1997 was profitable although sales were down slightly due to cold
weather conditions. This drop in sales is typical during the winter months.
February showed a slight loss of $5,003 which was also attributable to an
increase in General and Administrative expenses, specifically legal and
professional fees associated with our stock transfer agent.
March 1997 was a difficult month due to OTMC being notified that they had
delivered approximately 300 barrels of improper product into the purchasers
pipeline. Once OTMC received this notification it was not possible for OTMC to
use its local sales facilities which are owned by the purchaser. OTMC had to
long haul most all of its crude oil purchases which increased driver payroll 25%
and fuel costs increased by 53%. OTMC continues to strive to resolve this
situation (see Plan of Operation). General and Administrative expenses have
continued to remain high compared to last year due to legal and professional
fees, specifically the cost of the audit for year end 1996.
8
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Liquidity and Capital Resources
The Company's sales and purchase contracts are all based upon the posted
price of crude oil which reduces the effect of normal price fluctuations because
it is considered a widely traded commodity. The Company transports and markets
approximately 60,000 barrels of crude oil per month. Most of the Company's
expenses are fixed except for crude oil purchases and field expenses (drivers
payroll and fuel). These variable expenses are directly related to the number of
barrels transported.
At March 31, 1997, the Company had a revolving line of credit facility
with a foreign bank. The credit agreement provides for a maximum borrowing base
of 70% of eligible receivables and is due on demand. The credit agreement bears
interest at prime plus 1.25% (9.5% at March 31, 1997). The line of credit is
collateralized by substantially all the Company's assets. Borrowings under this
agreement at March 31, 1997 were $350,000.
The Company anticipates that its future operating needs will be satisfied
from the operations which are expected to generate positive cash flows and from
time to time the Company may seek to borrow funds for actual or anticipated
funding needs.
From time to time in recent years, there has been an oversupply of crude
oil in the marketplace. This in turn has led to a reduced level of prices for
crude oil, and, as a result, there is a high degree of uncertainty regarding the
future market price for crude oil. Historically, however, demand for crude oil
has been in balance with readily available supplies, and OTMC believes the
long-term prospects for the oil industry continue to be good.
Plan of Operation
The main objective of the Company is to market as many barrels of crude
oil as possible and to increase sales through acquisitions. The Company has
increased significantly the number of barrels which it markets since the
acquisition of Oasis Oil Ltd., Co. and the Company continues to seek new sources
of oil to transport. The Company is currently looking into several acquisitions
to increase their marketing capabilities and to compliment their existing
operations. Specifically, the Company is currently negotiating an asset purchase
agreement with a crude oil marketing company. The merger of the two companies
would greatly enhance the capabilities and profitability of both companies. The
Company would have marketing opportunities that it has not had available before
and the marketing company would have trucking capabilities that would enhance
its net profit.
The Company is also currently planning its expansion into the West Texas
crude oil market. Several trucking contracts are now in the negotiation process.
Management believes the expansion should be in effect by May 1, 1997
To finance these acquisitions, the Company is evaluating various financing
alternatives and is negotiating with several potential sources of financing.
Until such acquisitions are made, management believes that its present sources
of working capital from the line of credit and cash provided by operations are
adequate.
9
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OASIS OIL CORPORATION
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
At the end of February 1997, OTMC was notified by a major customer that
OTMC had delivered approximately 300 barrels of improper product into the
purchaser's pipeline. The customer has asserted that the product may have
damaged it. OTMC is covered by a general liability insurance policy which
provides for defense and indemnity for damages arising from negligence up to the
aggregate amount of $2,000,000, subject to a deductible of $5,000. OTMC has
notified the insurance company of the event described above and representatives
of the insurance company have taken charge of the investigation. As a result of
the insurance coverage, management does not anticipate that this event will
result in a material loss to the Company. Currently, the investigation is
on-going and there have been no claims filed against OTMC.
It is the belief of management that the general liability policy of OTMC
is adequate. OTMC has stringent policies with regard to product quality control
and operating procedures. When a problem does occur, OTMC attempts to discover,
isolate, and correct it quickly thus to minimize any adverse effects.
Item 2. Changes in Securities.
No securities of the registrant have been materially modified.
No securities of the registrant have been materially limited.
Item 3. Defaults Upon Senior Securities.
The registrant has no outstanding senior debt securities.
Item 4. Submission of Matters to a Vote of Security Holders.
The registrant held no meeting of its security holders during the first
quarter of 1997. During this period, the stock of the registrant has not
traded.
No directors have been elected by a vote of the registrant's securities
holders.
No matter has been voted upon by the registrant's securities holders.
10
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Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
Exhibits. None.
Reports on Form 8-K. A Form 8-K was filed by the registrant during this
quarter. The 8-K indicated a change in the registrant's certifying
accountant. The Company engaged BDO Seidman, LLP as its independent
accountants as of February 15, 1997. BDO Seidman, LLP conducted an audit
of Oasis Oil Corporation for the period of March 1995 through December
1996.
11
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
cause this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
OASIS OIL CORPORATION
(Registrant)
Date: MAY 15, 1997 /s/ C. A. BEANE
C. A. Beane, President
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FINANCIAL STATEMENTS AT QUARTER ENDING MARCH 31, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 79,273
<SECURITIES> 0
<RECEIVABLES> 1,040,152
<ALLOWANCES> 0
<INVENTORY> 31,291
<CURRENT-ASSETS> 1,204,540
<PP&E> 694,471
<DEPRECIATION> 137,981
<TOTAL-ASSETS> 1,968,536
<CURRENT-LIABILITIES> 1,510,474
<BONDS> 0
0
404,940
<COMMON> 300,000
<OTHER-SE> 85,169
<TOTAL-LIABILITY-AND-EQUITY> 1,968,536
<SALES> 3,552,165
<TOTAL-REVENUES> 3,552,165
<CGS> 3,167,511
<TOTAL-COSTS> 412,636
<OTHER-EXPENSES> 7,489
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,274
<INCOME-PRETAX> (48,744)
<INCOME-TAX> 0
<INCOME-CONTINUING> (48,744)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (48,744)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
