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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 September 30, 1999 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 practical date:
As of November 1, 1999:
CLASS OF EQUITY OUTSTANDING
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Common Stock, $0.05 par value 7,150,000
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 11
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OASIS OIL CORPORATION
INDEX
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Page
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PART 1. - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet at September 30, 1999 3
Consolidated Statement of Discontinued Operations for the three
months Ended September 30, 1999 and 1998 4
Consolidated Statement of Discontinued Operations for the nine
Months Ended September 30, 1999 and 1998 5
Consolidated Statement of Discontinued Cash Flows for the nine
months ended September 30, 1999 and 1998 6
Condensed Notes to Interim Consolidated Financial Statements 7
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 -10
Item 4. Submission of Matters to a Vote of Security-Holders 10
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PART 1 FINANCIAL INFORMATION
Item 1 - Financial Statements
OASIS OIL CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands of dollars, unaudited)
September 30, 1999
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ASSETS
CURRENT ASSETS
Cash $ 18
Accounts Receivable - trade 78
Note receivable - sale of Oasis Transportation
And Marketing Corporation 1,261
Prepaid Expenses 17
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TOTAL CURRENT ASSETS 1,374
Property, equipment, and leasehold improvements, net 29
Deposits 4
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TOTAL ASSETS $1,407
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LIABILITIES AND EQUITY
CURRENT LIABILITIES
Notes payable - Line of credit $ 400
Accounts payable 16
Current maturities of long-term debt 2
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TOTAL CURRENT LIABILITIES 418
Long-term debt, less current maturities 3
Dividends payable 215
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TOTAL LIABILITIES 636
STOCKHOLDERS' EQUITY
Preferred Stock, $1 par value, 1,000,000 shares authorized 637
Common Stock, $.05 par value, 50,000,000 shares
authorized 358
Additional paid-in capital 2,328
Current Dividends Payable ( 67)
Deficit ( 485)
Receivable from shareholder (2,000)
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TOTAL STOCKHOLDERS' EQUITY 771
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TOTAL LIABILITIES AND EQUITY $ 1,407
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OASIS OIL CORPORATION
CONSOLIDATED STATEMENTS OF DISCONTINUED OPERATIONS
(In thousands of dollars, except per share amounts)
(Unaudited)
THREE MONTHS ENDED
SEPTEMBER 30,
1999 1998
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Sales $ -- $ 9,720
Cost of sales -- 9,086
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Gross Margin -- 634
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Operating expenses
Selling -- 50
General and administrative 150 674
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Total operating expenses 150 724
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Operating loss (150) (90)
Other income (expense)
Interest expense (9) (24)
Interest income 15 --
Other -- ( 5)
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Total other income (expenses), net 6 (29)
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Loss from continuing operations $ (144) $ (119)
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Loss on disposal of Oasis Transportation
And Marketing Corporation $ (10) $ --
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Net loss $ (154) $ (119)
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Per share - basic and assuming dilution
Continuing operations $ (.02) $ (.02)
Discontinued operations .00 --
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Net income (loss) $ (.02) $ (.02)
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Weighted average number of common
shares outstanding 7,150,000 6,476,087
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OASIS OIL CORPORATION
CONSOLIDATED STATEMENTS OF DISCONTINUED OPERATIONS
(In thousands of dollars, except per share amounts)
(Unaudited)
NINE MONTHS ENDED
SEPTEMBER 30,
1999 1998
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Sales $ 8,083 $29,749
Cost of sales 7,448 27,497
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Gross Margin 635 2,252
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Operating expenses
Selling 49 191
General and administrative 875 2,028
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Total operating expenses 924 2,219
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Operating income (loss) $ (289) $ 33
Other income (expense)
Interest expense ( 40) ( 59)
Interest income 25 --
Other ( 1) ( 12)
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Total other expenses, net ( 16) ( 71)
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Income (loss) from continuing operations $ (305) $ (38)
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Gain on disposal of Oasis Transportation
and Marketing Corporation $ 1,619 $ --
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Net income $ 1,314 $ (38)
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Per share - basic and assuming dilution
Continuing operations $ (.05) $ (.02)
Discontinued operations .23 --
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Net income (loss) $ .18 $ (.02)
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Weighted average number of common
shares outstanding 7,150,000 6,259,890
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OASIS OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF DISCONTINUED CASH FLOWS
(In thousands of dollars)
(Unaudited)
NINE MONTHS ENDED
SEPTEMBER 30,
1999 1998
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Net cash provided by (used in) operating activities $ 1,237 $ (246)
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Cash flows from investing activities:
Purchases of fixed assets ( 7) (525)
Collections on notes receivable 239 --
Net assets of discontinued
Operations - OTMC (1,627) --
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Net cash provided by (used in) investing
Activities (1,395) (525)
Cash flows from financing activities:
Borrowings (repayments) on line of credit -- 150
Borrowings on long-term debt 806
Repayments on long-term debt (199) (289)
Current dividends on preferred stock
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Net cash provided by (used in)
financing activities (199) 667
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Net decrease in cash (357) (104)
Cash, beginning of period 375 294
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Cash, end of period $ 18 $ 190
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Cash paid during the periods for:
Interest $ 66 $ 71
Taxes 0 0
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<PAGE> 7
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 1998 Form 10-KSB.
NOTE 2. 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.
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. 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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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.
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 September 30, 1999, the Company had a revolving line of credit facility with
a bank. The credit agreement provides for maximum borrowings of $500,000 and
is due November 6, 1999. The credit agreement bears interest at prime plus one
percent (9% at September 30, 1999), and is guaranteed by directors of the
Company. Borrowings under this agreement at September 30, 1999 were $400,000.
The Company plans to renew the Credit Facility on November 6, 1999, or if they
cannot renew with the Bank, they will seek private financing.
Management believes the proceeds from the sale of OTMC is sufficient to cover
the overhead of the existing Company, and the credit facility due November 6,
1999 will be renewed through the bank or paid through private financing.
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
September 30, 1999.
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
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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.
Forward Looking Statements
This quarterly report for the quarter ended September 30, 1999 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
Page 9 of 11
<PAGE> 10
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.
Item 4. Submission of Matters to a Vote of Security-Holders
On September 3, 1999, the Company held its 1999 Annual Meeting of
Shareholders, at which time the shareholders elected C.A. Beane, James hagan
and Dale Hill to serve as directors until the year 2000 annual meeting of
shareholders and until their successors are elected. The holders of record of
6,483,302 voting shares out of a total of 7,468,470 voting shares on the
record date were present, in person or by proxy, at the annual meeting of
shareholders.
Page 10 of 11
<PAGE> 11
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: November 1, 1999 /s/ C. A. Beane
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C. A. Beane, President
Page 11 of 11
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 18
<SECURITIES> 0
<RECEIVABLES> 78
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,374
<PP&E> 29
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,407
<CURRENT-LIABILITIES> 418
<BONDS> 0
0
637
<COMMON> 358
<OTHER-SE> (224)
<TOTAL-LIABILITY-AND-EQUITY> 1,407
<SALES> 8,083
<TOTAL-REVENUES> 8,083
<CGS> 7,448
<TOTAL-COSTS> 924
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40
<INCOME-PRETAX> (305)
<INCOME-TAX> 0
<INCOME-CONTINUING> (305)
<DISCONTINUED> 1,619
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,314
<EPS-BASIC> .18
<EPS-DILUTED> .18
</TABLE>
