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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
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Exchange Act of 1934
For the quarterly period ended March 31, 1998 or
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Transition report under to Section 13 or 15 (d) of the Securities
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Exchange Act of 1934
For the transition period from to .
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Commission File Number 0-5833
OASIS OIL CORPORATION
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(Exact name of small business issuer as specified in its charter)
NEVADA 94-1713830
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1800 ST. JAMES PLACE, SUITE 101. HOUSTON. TEXAS 77056
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(Address of principal executive office & zip code)
(713) 627-8875
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(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 No X
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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
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Common Stock, $0.05 par value 6,150,000
Series B Preferred Stock, $1.00 par value 63,694
Transitional Small Business Disclosure Format (check one) Yes No X
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Page 1 of 10
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OASIS OIL CORPORATION
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INDEX
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Page
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PART 1. - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet at March 31, 1998 3
Consolidated Statement of Operations for the three
months Ended March 31, 1998 and 1997 4
Consolidated Statement of Cash Flows for the three
months ended March 31, 1998 and 1997 5
Condensed Notes to Interim Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 9
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings 9
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PART 1 FINANCIAL INFORMATION
Item 1 - Financial Statements
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OASIS OIL CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands of dollars, unaudited)
<S> <C>
March 31,
1998
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ASSETS
CURRENT ASSETS
Cash $ 113
Accounts Receivable - trade 1,798
Inventories 373
Prepaid Expenses 390
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TOTAL CURRENT ASSETS 2,674
Property, equipment, and leasehold improvements, net 898
Deposits 6
Goodwill,net 187
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TOTAL ASSETS $3,765
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LIABILITIES AND EQUITY
CURRENT LIABILITIES
Notes payable - Line of credit $ 200
Accounts payable 2,346
Accrued expenses 145
Current maturities of long-term debt 188
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TOTAL CURRENT LIABILITIES 2,879
Long-term debt, less current maturities 515
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TOTAL LIABILITIES 3,394
STOCKHOLDERS' EQUITY
Preferred Stock, $1 par value, 1,000,000 shares authorized 637
Common Stock, $.05 par value, 50,000,000 shares 308
authorized
Additional paid-in capital 378
Current Dividends Payable ( 21)
Deficit (931)
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TOTAL STOCKHOLDERS' EQUITY 371
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TOTAL LIABILITIES AND EQUITY $ 3765
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OASIS OIL CORPORATION
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of dollars)
(Unaudited)
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THREE MONTHS ENDED
MARCH 31,
1998 1997
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Sales $ 9,618 $ 3,552
Cost of sales 8,789 3,168
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Gross Margin 829 384
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Operating expenses
Selling 80 5
General and administrative 680 407
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Total operating expenses 760 412
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Net operating income (loss) 69 (28)
Other income (expense)
Interest expense (18) (13)
Other ( 4) (7)
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Total other expenses, net (22) (20)
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Net income (loss) $ 47 $ (48)
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Per share - basic and assuming dilution $ 0 $ (.01)
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Weighted average number of common
shares outstanding 6,150,000 6,000,000
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OASIS OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
<TABLE>
THREE MONTHS ENDED
MARCH 31,
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1998 1997
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Net cash provided by (used in) operating activities $ (20) $ 61
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Cash flows from investing activities:
Purchases of fixed assets (36) (11)
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Cash flows from financing activities:
Repayments on line of credit -- (100)
Repayments on long-term debt (104) (5)
Current dividends on preferred stock (21) -
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Net cash provided by (used in)
financing activities (125) (105)
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Net decrease in cash (181) (55)
Cash, beginning of period 294 134
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Cash, end of period $ 113 $ 79
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Cash paid during the periods for:
Interest $ 21,578 $ 13,674
Taxes 0 0
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OASIS OIL CORPORATION
CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. The accompanying condensed consolidated financial statements
are unaudited, but, in the opinion of management, include all
adjustments (consisting of normal recurring accruals) necessary
for a a fair presentation of financial position and results of
operations. Interim results are not necessarily indicative of
results for a full year. The information included in this Form
10-QSB should be read in conjunction with Management's Discussion
and Analysis and Consolidated Financial Statements and notes
thereto included in the Oasis Oil Corporation's 1997 Form 10-KSB.
NOTE 2. Effective for the year ended December 31, 1997, the Company was
required to adopt Statement of Financial Standards No. 128,
"Earnings Per Share" ("SFAS 128"). In accordance with SFAS
128, the Company is required to provide basic and dilutive
earnings per common share information.
The basic net income per common share is computed by dividing the
net income available to common shareholders by the weighted
average number of common shares outstanding.
Diluted net income per common share is computed by dividing the
net income available to common shareholders, adjusted on an as if
converted basis, by the weighted average number of common shares
outstanding plus potential dilutive securities.
Income available to common shareholders was reduced by preferred
stock dividends. There were no potential dilutive securities.
NOTE 3. Effective March 31, 1999, the Company sold 100% of its ownership in
Oasis Transportation and Marketing Corporation ("OTMC"),
representing the discontinuation of all of its existing operations.
The Company received $350,000 in cash and a note receivable for
$1,500,000. The note receivable has no stated interest rate, is due
in monthly installments of $45,000 as defined in the agreement and
the installments are payable starting in May 1999. All amounts that
remain unpaid after 24 months are due April 30, 2001.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
General
Since February 1996, the Company was principally engaged in the service
of gathering, transporting and marketing of domestic crude oil through its
wholly-owned subsidiary, OTMC. As a first purchaser of crude oil, the Company
offered a complete division order and royalty disbursement service to its
producer accounts. During this period the Company sustained substantial
operating losses and effective March 31, 1999, the Company sold 100% of its
ownership in OTMC, representing the discontinuation of all of its existing
operations. Management believes the proceeds from the sale of OTMC is
sufficient to cover the overhead of the exisiting Company, and the credit
facility due November 6, 1999 will be renewed through the bank or paid through
private financing.
The Company's remaining three employees are currently exploring merger
and acquisition possibilities that will maximize shareholder value. Oasis
will continue to evaluate oil and natural gas ventures as well as pipeline
opportunities. The Company is also exploring areas outside the oil and
natural gas business. The present management believes that internet and high
tech companies may be a positive way to maximize shareholder value, and
management is currently looking into several opportunities.
Results of Operations
Revenue increased $6,066,000 (171%) in the first quarter of 1998 over
the first quarter of 1997. The increase is a result of increased transporting
volume. During the first quarter of 1998, OTMC transported and marketed
approximately 196,600 barrels of crude oil per month compared to approximately
54,000 barrels per month during the first quarter of 1997.
The Company's sales and purchase contracts are based upon the purchase
price of crude oil which reduces the effect of normal price fluctuations
because it is considered a widely traded commodity. Most of the Company's
expenses are fixed except for crude oil purchases and field expenses (drivers
payroll, fuel, etc.). These variable expenses are directly related to the
number of barrels transported. As a result, gross margin as a percentage of
sales was 8.62% the first quarter of 1998 compared to 10.81% during the same
period of 1997.
Selling expenses increased during the first quarter of 1998 compared to
the first quarter of 1997 due to the hiring of two new marketing personnel in
late 1997 along with increased commission costs. The increase in general and
administrative expenses in 1998 was primarily due to the Company's move to
West Texas, increased personnel required to handle the increased business and
the due diligence associated with potential acquisitions.
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Liquidity and Capital Resources
In 1996, a major customer notified the Company that the Company
delivered an improper product into their pipeline that subsequently damaged
their refinery. The customer filed a lawsuit in the 347th Judicial District
Court in Nueces County, Texas asserting damages in the amount of $1,000,000.
The Company is covered by a general liability insurance policy that provides
for defense and indemnity for damages arising from negligence up to $1,000,000
per occurrence and an aggregate amount of $2,000,000. The policy is subject
to a deductible of $10,000. The Company notified the insurance company of the
event described above and paid the deductible amount. Representatives of the
insurance company took charge of the defense of the case and in April 1999,
the case was settled for $700,000 paid by the insurance company. The
Company's total out-of-pocket cost was the $10,000 deductible.
At December 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% (9.75% at March 31, 1998). The line of credit is
collateralized by substantially all the Company's assets. Borrowings under
this agreement at March 31, 1998 were $200,000.
Year 2000
The Company's internal business information systems are primarily
comprised of commercial application software products offered by recognized
providers. Because these provider's products are widely distributed,
commercially developed applications, the Company anticipates these
applications have been or will be brought into compliance by the
manufacturers. On January 1, 1999, the Company began using its new accounting
and financial reporting software implemented during 1998. The reasons for
such purchase included the assurance of Year 2000 compliance. Costs incurred
specifically related to Year 2000 issues have totaled less than $2,000 as of
December 1998.
The Company does not anticipate any Year 2000 compliance issues to arise
related to its primary internal business information systems. The Company is
not aware of any further material operational issues or costs associated with
preparing internal systems for the Year 2000. However, the Company utilizes
other third party network equipment, telecommunications products, and other
third party software products that may or may not be Year 2000 compliant.
Although the Company is currently taking steps to address the impact, if any,
of the Year 2000 issue surrounding such third party products, failure of any
critical technology to operate properly in the Year 2000 may have an adverse
impact on business operations or financial results.
The Company cannot anticipate the impact of Year 2000 compliance on its
clients at this time. The Company is unaware of any client who may be
impacted by the Year 2000 issue. A failure of a client to appropriately
handle issues related to the Year 2000 might have an adverse impact on the
financial results of the Company.
Page 8 of 10
<PAGE> 9
Forward Looking Statements
This quarterly report for the quarter ended March 31, 1998 as well as other
public documents of the Company contains forward-looking statements which
involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievement of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such statements
include, without limitation, the Company's expectations and estimates as to
future financial performance, cash flows from operations, capital expenditures
and the availability of funds from refinancings of indebtedness. Readers are
urged to consider statements which use the terms "believes," "intends,"
"expects," "plans," "estimates," "anticipated," or "anticipates" to be
uncertain and forward looking. In addition to other factors that may be
discussed in the Company's filings with the Securities and Exchange
Commission, including this report, the following factors, among others, could
cause the Company's actual results to differ materially from those expressed
in any forward-looking statement made by the Company: (i) general economic and
business conditions, acts of God and natural disasters which may effect the
demand for the Company's products and services or the ability of the Company
to manufacture and/or provide such products and services; (ii) the loss,
insolvency or failure to pay its debts by a significant customer or customers;
(iii) increased competition; (iv) changes in customer preferences and the
inability of the Company to develop and introduce new products to accommodate
these changes; and (v) the maturing of debt and the ability of the Company to
raise capital to repay or refinance such debt on favorable terms.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
In 1996, a major customer notified the Company that the Company
delivered an improper product into their pipeline that subsequently damaged
their refinery. The customer filed a lawsuit in the 347th Judicial District
Court in Nueces County, Texas asserting damages in the amount of $1,000,000.
The Company is covered by a general liability insurance policy that provides
for defense and indemnity for damages arising from negligence up to $1,000,000
per occurrence and an aggregate amount of $2,000,000. The policy is subject
to a deductible of $10,000. The Company notified the insurance company of the
event described above and paid the deductible amount. Representatives of the
insurance company took charge of the defense of the case and in April 1999,
the case was settled for $700,000 paid by the insurance company. The
Company's total out-of-pocket cost was the $10,000 deductible.
Page 9 of 10
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SIGNATURES
Pursuant to the requirements 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.
OASIS OIL CORPORATION
Date: August 31, 1999 /s/ C. A. Beane
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C. A. Beane, President
Page 10 of 10
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<MULTIPLIER> 1,000
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 113
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<RECEIVABLES> 1,798
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<PP&E> 898
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0
637
<COMMON> 308
<OTHER-SE> (574)
<TOTAL-LIABILITY-AND-EQUITY> 3,765
<SALES> 9,618
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</TABLE>
