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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10QSB
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
CIK NO.: 0001042053
For Quarter Ended Commission File Number
June 30, 1998 0-29670
DRUCKER INDUSTRIES, INC.
---------------------------
(Exact name of registrant as specified in its charter)
DELAWARE N/A
------------------------ ---------------------
(State of incorporation) (I.R.S. Employer
Identification No.)
#1- 1035 RICHARDS STREET, VANCOUVER, B.C. CANADA V6B 3E4
- -----------------------------------------------------------------
(Address of principal executive offices) (Postal Code)
Registrant's telephone number, including area code: (604)681-4421
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 the filing
requirements for at least the past 90 days.
Yes ______ No _X__
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
32,476,250 as of June 30, 1998
<PAGE>
DRUCKER INDUSTRIES, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
June 30, 1998 and December 31, 1997
(Stated in U.S. dollars)
(UNAUDITED - SEE NOTE 1)
June 30, December 31,
ASSETS 1998 1997
------ ---- ----
Current
Cash and term deposits - Note 3 $ 2,949,968 $ 3,238,576
Advances receivable - 250,709
Accrued interest receivable 4,227 -
--------- ----------
2,954,195 3,489,285
Oil and gas projects costs 1,662,293 1,275,217
--------- ----------
$ 4,616,488 $ 4,764,502
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable and accrued expenses $ 21,345 $ 86,539
Advance payable - 50,802
--------- ----------
Total current liabilities 21,345 137,341
--------- ----------
Stockholders' Equity - Note 3
Common stock $.001 par value,
authorized 50,000,000 shares:
32,476,250 shares issued and outstanding 32,115 32,115
Additional paid-in capital 6,306,803 6,306,803
Deficit accumulated during the
development stage ( 1,743,775) ( 1,711,757)
--------- ----------
Total stockholders' equity 4,595,143 4,627,161
--------- ----------
$ 4,616,488 $ 4,764,502
========= ==========
See Accompanying Notes
<PAGE>
DRUCKER INDUSTRIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS for
the three months ended and the six months ended June 30, 1998, 1997
and January 1, 1997 (Date of Inception of Development Stage) to June 30, 1998
(Stated in U.S. dollars)
(UNAUDITED - SEE NOTE 1)
January 1, 1997
(Date of
Inception of
Development
THREE MONTHS SIX MONTHS Stage)
ENDED JUNE 30 ENDED JUNE 30 to June 30,
1998 1997 1998 1997 1998
------- ------- ------ ----- ------
General and
administrative
expenses-Schedule 1 $ 32,541 $ 63,035 $ 103,435 $ 76,088 $354,720
Dryhole expenses
- Schedule 2 - - - - 147,281
Exploration expenses
- - Schedule 3 - - - - 286,514
----------- --------- ---------- ---------- -------
Loss before the
following: ( 32,541) ( 63,035) (103,435) ( 76,088) 788,515
Interest income 26,979 39,063 71,417 39,063 206,684
----------- --------- ---------- ---------- -------
Net loss $ ( 5,562) $( 23,972) $ (32,018) $(37,025) $581,831
=========== ========= ========== ========== =======
Net loss per share $ ( 0.00) $( 0.00) $ ( 0.00) $( 0.00)
=========== ========= ========== ==========
Weighted average shares
outstanding 32,476,250 7,797,435 32,476,250 27,797,435
=========== ========= ========== ==========
See Accompanying Notes
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the six months ended June 30, 1996, 1997 and 1998 and years
December 31, 1989 to December 31, 1997 and February 4, 1971
(Date of Inception) to June 30, 1998
(Stated in U.S. dollars)
(UNAUDITED - SEE NOTE 1)
Deficit Deficit
Additional Accumulated
COMMON STOCK Paid-in During the
SHARES AMOUNT CAPITAL Development TOTAL
Stage
------- --------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Shares issued to acquire Monetary Metals, Inc. 675,000 $ 675 $ ( 675) $ -
Shares issued to acquire net assets of Drucker Sound Design
Corporation 2,700,000 2,700 65,046 67,746
Net loss from inception to December 31, 1989 $ ( 8,115) ( 8,115)
Net loss for year ended December 31, 1990 (144,333) (144,333)
Five for one forward split of outstanding shares 13,500,000 13,500 ( 13,500) -
Funds contributed by stockholder 124,196 124,196
Sale of units for cash, September 1991 1,050,000 1,050 103,950 105,000
Sale of units for cash, December 1991 750,000 750 74,250 75,000
Shares issued to settle debts 52,500 53 5,197 ( 5,250) -
Shares issued to directors as compensation 450,000 450 44,550 ( 45,000) -
Correct funds contributed to stockholders ( 24,990) (24,990)
Interest on note payable ( 7,370) ( 7,370)
Net loss for year ended December 31, 1991 ( 38,417) (38,417)
Balance, December 31, 1991, as previously reported 19,177,500 19,178 378,024 (248,485) 148,717
Adjustments to previously reported amounts:
Fiscal agent fees ( 18,000) ( 7,300) ( 25,300)
Balance, December 31, 1991, as restated 19,177,500 19,178 360,024 (255,785) 123,417
Sale of common stock, March 1992 700,000 700 69,300 70,000
Sale of common stock, September 1992 500,000 500 54,500 55,000
Net loss for year ended December 31, 1992 ( 78,078) ( 78,078)
----------------- -------- ------ --------- ---------
Balance, December 31, 1992, as previously reported 20,377,500 20,378 483,824 (333,863) 170,339
See Accompanying Notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the six months ended June 30, 1996, 1997 and 1998 and
years ended December 31, 1989 to December 31, 1997
and February 4, 1971 (Date of Inception) to June 30, 1998
(Stated in U.S. dollars)
(UNAUDITED - SEE NOTE 1) Deficit
Deficit Accumulated
Additional During the
COMMON STOCK Paid-in Development
SHARES AMOUNT CAPITAL STAGE TOTAL
-------------- ------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Balance Forward, December 31, 1992, as previously reported 20,377,500 20,378 483,824 ( 333,863) 170,339
Adjustments to previously reported amounts:
Fiscal agent fees ( 12,500) ( 20,600) ( 33,100)
-------------- ------- --------- ---------- ---------
Balance, December 31, 1992, as restated 20,377,500 20,378 471,324 (354,463) 137,239
Net loss for the year ended December 31, 1993 ( 134,081) (134,081)
-------------- ------- --------- ---------- ---------
Balance, December 31, 1993 20,377,500 20,378 471,324 ( 488,544) 3,158
Adjustment to previously reported amounts:
Fiscal agent fees ( 27,280) ( 27,280)
-------------- ------- --------- ---------- ---------
Balance, December 31, 1993, as restated 20,377,500 20,378 471,324 ( 515,824) ( 24,122)
Sale of common stock, July, 1994 200,000 200 29,800 30,000
Fiscal agent fees ( 3,000) ( 3,000)
Net loss for the year ended December 31, 1994 ( 563,546) (563,546)
-------------- ------- ---------- ----------- ---------
Balance, December 31, 1994 20,577,500 20,578 498,124 (1,079,370) (560,668)
Shares issued to settle debts 5,976,683 5,977 596,739 602,716
Net loss for the year ended December 31, 1995 ( 79,455) ( 79,455)
-------------- ------- ---------- ----------- ---------
Balance, December 31, 1995 26,554,183 26,555 1,094,863 (1,158,825) ( 37,407)
SEE ACCOMPANYING NOTES
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the six months ended June 30, 1996, 1997 and 1998 and
years ended December 31, 1989 to December 31, 1997
and February 4, 1971 (Date of Inception) to June 30, 1998
(Stated in U.S. dollars)
(UNAUDITED - SEE NOTE 1)
Deficit
Additional Accumulated
COMMON STOCK Paid-in During the Dev-
SHARES AMOUNT CAPITAL ELOPMENT STAGE TOTAL
------------- --------------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Balance Forward, December 31, 1995 26,554,183 26,555 1,094,863 (1,158,825) ( 37,407)
Net loss for the six months ended June 30, 1996 - -
------------- --------------- ------------- --------------- -----------------
Balance, June 30, 1996 26,554,183 26,555 1,094,863 (1,158,825) ( 37,407)
Shares issued to settle debts 380,002 380 37,620 38,000
Net loss for the six months ended
December 31, 1996 ( 3,118) ( 3,118)
------------- --------------- ------------- --------------- -----------------
Balance, December 31, 1996 26,934,185 26,935 1,132,483 ( 1,161,943) ( 2,525)
Sale of units for cash, May, 1997 5,179,500 5,180 5,174,320 5,179,500
Shares issued for finders' fee 362,565 -
Net loss for the six months ended June 30, 1997 ( 37,025) ( 37,025)
------------- --------------- ------------- --------------- -----------------
Balance, June 30, 1997 32,476,250 32,115 6,306,803 ( 1,198,968) 5,139,950
Net loss for the six months ended
December 31, 1997 - - - ( 512,789) ( 512,789)
------------- -------------- ------------- --------------- -----------------
Balance, December 31, 1997 32,476,250 32,115 6,306,803 ( 1,711,757) 4,627,161
Net loss for the six months ended
June 30, 1998 - - - ( 32,018) ( 32,018)
------------- --------------- ------------- --------------- ----------------
Balance, June 30, 1998 32,476,250 $ 32,115 $ 6,306,803 $ ( 1,743,775) $ 4,595,143
============= =============== ============= =============== ================
SEE ACCOMPANYING NOTES
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOW
for the six months ended June 30, 1998, 1997
and January 1, 1997 (Date of Inception of Development Stage) to June 30, 1998
(Stated in U.S. dollars)
(UNAUDITED - SEE NOTE 1)
January 1, 1997
(Date of
Inception of
Development
Stage)
SIX MONTHS ENDED JUNE 30, to June 30,
1998 1997 1998
-------------- -------------- ---------------
<S> <C> <C> <C>
Cash flow from operating activities:
Net loss $ ( 32,018) $ ( 37,025) $ ( 581,832)
Adjustments to reconcile net loss to net cash used
in operations
Advances receivable 250,709 ( 3,000) -
Accrued interest receivable ( 4,227) - ( 4,227)
Accounts payable and accrued expenses ( 65,194) 6,972 18,820
Advance payable ( 50,812) - ( 50,812)
-------------- ------------ -------------
Net cash provided by (used in) operating activities 98,458 ( 33,053) ( 618,051)
-------------- ------------ -------------
Cash flows used in investing activities
Oil and gas projects costs ( 387,066) ( 1,395,763) ( 1,611,481)
-------------- ------------ -------------
Cash flow from financing activities:
Proceeds from sale of common stock - 5,179,500 5,179,500
Advance payable - 25,000 -
-------------- ------------ -------------
Net cash provided by financing activities - 5,204,500 5,179,500
-------------- ------------ -------------
Net increase (decrease) in cash ( 288,608) 3,775,684 2,949,968
Cash and term deposits, beginning of period 3,238,576 - -
-------------- ------------ -------------
Cash and term deposits, end of period $ 2,949,968 $ 3,775,684 $ 2,949,968
============== ============ =============
SEE ACCOMPANYING NOTES
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC. SCHEDULE 1
(A Development Stage Company)
SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
for the three months ended and six months ended June 30, 1998, 1997
and January 1, 1997 (Date of Inception of Development Stage) to June 30, 1998
(Stated in US Dollars)
(UNAUDITED - SEE NOTE 1)
January 1, 1997
(Date of
Inception of
Development
Stage)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, to June 30,
1998 1997 1998 1997 1998
------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Accounting and audit $ 633 $ 1,108 $ 40,647 $ 4,137 $ 50,187
Consulting fee 9,027 6,492 20,163 6,492 52,347
Foreign exchange (gain) loss 1,766 ( 1,764) 2,196 ( 1,764) 1,418
Filing fees 710 - 710 - 710
Fiscal agent fees 402 2,767 1,762 2,767 5,481
Franchise tax - - 1,482 - 1,482
Interest and bank charges 164 61 236 61 642
Investor relations 1,049 17,500 1,945 17,500 47,224
Legal 4,939 8,911 6,139 18,935 65,935
Office and general 7,229 8,494 14,456 8,494 44,230
Printing 2,569 7,646 2,994 7,646 13,054
Promotion 499 826 969 826 2,378
Rent 2,044 - 4,157 - 11,533
Telephone 621 - 2,764 - 9,505
Travel 889 10,994 2,815 10,994 48,594
------------- ------------- ------------- ------------- -------------
$ 32,541 $ 63,035 $ 103,435 $ 76,088 $ 354,720
============= ============= ============= ============= =============
SEE ACCOMPANYING NOTES
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule 2
DRUCKER INDUSTRIES, INC.
SCHEDULE OF DRY HOLE EXPENSES
for the three months ended and the six months ended June 30, 1998, 1997
and January 1, 1997 (Date of Inception of Development Stage)
to June 30, 1998
(Stated in US Dollars)
(UNAUDITED - SEE NOTE 1)
January 1, 1997
(Date of
Inception of
Development
Stage)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, to June 30,
FUXIAN CONCESSION 1998 1997 1998 1997 1998
- ----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Administration $ - $ - $ - $ - $ 3,484
Amortization - - - - 2,827
Audit - - - - 1,875
Consulting - - - - 10,875
Entertainment - - - - 2,347
Office supplies - - - - 582
Other - - - - 4,454
Surveying - - - - 105,625
Travel - - - - 14,713
Wages and benefits - - - - 499
------------ ------------ ------------ ------------ ----------
$ - $ - $ - $ - $ 147,281
============ ============ ============ ============ ==========
SEE ACCOMPANYING NOTES
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule 3
DRUCKER INDUSTRIES, INC.
(A Development Stage Company)
SCHEDULE OF EXPLORATION EXPENSES
for the three months ended and six months ended June 30, 1998, 1997
and January 1, 1997 (Date of Inception of Development Stage)
to June 30, 1998
(Stated in US Dollars)
(UNAUDITED - SEE NOTE 1)
January 1, 1997
(Date of
Inception of
Development
Stage)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, to June 30,
1998 1997 1998 1997 1998
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Administration $ - $ - $ - $ - $ 6,173
Amortization - - - - 10,141
Audit - - - - 3,125
Entertainment - - - - 7,469
Insurance - - - - 5,256
Office Supplies - - - - 5,690
Other - - - - 3,072
Rental - - - - 918
Repairs and maintenance - - - - 1,983
Surveying and testing - - - - 157,357
Telephone - - - - 3,375
Travel - - - - 48,005
Wages and benefits - - - - 33,950
-------------- -------------- ------------- -------------- --------------
$ - $ - $ - $ - $ 286,514
============== ============== ============== ============== ==============
SEE ACCOMPANYING NOTES
</TABLE>
<PAGE>
DRUCKER INDUSTRIES, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
(Stated in U.S. dollars)
(UNAUDITED - SEE NOTE 1)
Note 1 INTERIM REPORTING
These consolidated financial statements have not been audited or
reviewed and have been prepared on a compilation basis only.
Readers are cautioned that these statements may not be appropriate
for their purposes. While the information presented in the
accompanying interim six months financial statements is unaudited,
it includes all adjustments which are, in the opinion of
management, necessary to present fairly the financial position
results of operations and changes in financial position fo the
interim period presented.
Note 2 SIGNIFICANT ACCOUNTING POLICY
Principles of Consolidation
These financial statements include the accounts of its wholly-
owned subsidiary, Drucker Petroleum, Inc. a British Virgin Island
company. All intercompany transactions have been eliminated.
Note 3 TERM DEPOSIT
The company's subsidiary, Drucker Petroleum, Inc. ("DPI") has
entered into a letter of credit in the amount of $2,000,000. As a
condition of the letter of credit, DPI paid a financing deposit of
$2,000,000. The deposit will be used as payment for the costs
incurred in exploring the concession located in West Gharib, Gulf
of Suez, Egypt.
Note 4 OIL AND GAS PROJECTS COSTS
The company's newly incorporated wholly-owned subsidiary, Drucker
Petroleum, Inc. ("DPI"), a British Virgin Island company, entered
into a farm-out agreement dated April 1998 to acquire an undivided
20% participating interest in the right to explore for and exploit
petroleum in a concession located in West Gharib, Gulf of Suez,
Egypt.
DPI shall pay:
- $352,000 within seven days of the execution of the agreement
(paid)
- pay 20% of all costs and expenses incurred subsequent to the
execution of the agreement related to this concession.
- 40% of the costs and expenses associated with the drilling of
an exploratory well to a maximum cost to the company of
$600,000; thereafter, DPI shall pay 20% of all costs and
expenses associated with any further activity related to this
well
In addition, DPI is required to provide a bank guarantee of
$2,000,000 within seven days of the execution of the agreement,
being 40% of a letter of guarantee (provided).
Note 4 OIL AND GAS PROJECTS COSTS - (cont'd)
DPI agrees to pay a finders fee of 7% net profit interest from the
profits generated from the concession, after recovery of all
exploration and development expenditures.
<PAGE>
Note 5 COMMON STOCK
Commitment
Share Purchase Warrants
At June 30,1998, 5,179,500 share purchase warrants are
outstanding. Each warrant entitles the holder to purchase one
additional unit of the company at $1.50 per unit until the earlier
of:
(i) March 31, 2000; and
(ii)the ninetieth day after the day on which the weighted average
trading price of the shares exceeds $2.50 per share for ten
consecutive trading days.
Each unit consists of one common share of the company and one
additional warrant. Each additional warrant entitles the holder to
purchase one additional common share of the company at $2.00. The
term of the additional warrant will be adjusted accordingly to
expire one year after the occurrence of (i) or (ii) above.
<PAGE>
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THREE MONTH PERIOD ENDED JUNE 30, 1998
The Company had expenses for the three month period in 1998 of $32,541 as
compared to $63,035 in expenses in the 1997 period. There were no revenues for
the period in 1997 or 1998, however, interest income was received in the amount
of $26,979 in 1998 and $39,063 in 1997. The Company recorded a net loss on
operations of ($5,562) for the period in 1998 and a net loss of ($23,972) in the
1997 period. The Company operating losses may continue until income can be
achieved.
RESULTS OF OPERATIONS FOR SIX MONTH PERIOD ENDED JUNE 30, 1998
The Company had expenses for the six month period in 1998 of $103,435 as
compared to $76,088 in expenses in the 1997 period. There were no revenues for
the period in 1997 or 1998, however, interest income was received in the amount
of $39,063 in 1997 and $71,417 in the period in 1998. The Company recorded a net
loss on operations of ($32,018) for the period in 1998 and a net loss of
($37,025) in the 1997 period. The Company operating losses may continue until
income can be achieved. While the Company is seeking additional capital sources
for investment; there is no assurance that sources can be found, and there is no
assurance that its oil and gas exploration efforts in China will be productive.
LIQUIDITY AND CAPITAL RESOURCES
The Company had $2,949,968 in cash capital at the end of the period. Such
capital will be used for oil and gas exploration in China in the following
quarter and thereafter. The investment in oil and gas exploration projects in
China of $1,662,293 is illiquid. Total liabilities were $21,345 at period end.
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 ON FORM 8-K
Form 8-K filed May 7, 1998
Form 8-K filed June 11, 1998
<PAGE>
DRUCKER INDUSTRIES, INC.
(A Development Stage Company)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DRUCKER INDUSTRIES, INC.
Date: August 21, 1998 /s/Ernest Cheung
------------------------------
Ernest Cheung, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,949,968
<SECURITIES> 0
<RECEIVABLES> 4,227
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,662,293
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 21,345
<BONDS> 0
0
0
<COMMON> 6,338,918
<OTHER-SE> (1,743,775)
<TOTAL-LIABILITY-AND-EQUITY> 4,595,143
<SALES> 0
<TOTAL-REVENUES> 71,417
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 103,435
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (32,018)
<INCOME-TAX> 0
<INCOME-CONTINUING> (32,018)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (32,018)
<EPS-PRIMARY> (0)
<EPS-DILUTED> (0)
</TABLE>
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