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
September 30, 2000 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
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(Address of principal executive offices) (Postal Code)
Registrant's telephone number, including area code: (604) 689-4407
--------------
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 X No
------ -----
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 September 30, 2000
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DRUCKER INDUSTRIES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(Stated in U.S. dollars)
(Unaudited)
---------
<PAGE>
<TABLE>
<CAPTION>
SEE ACCOMPANYING NOTES
DRUCKER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 2000 and December 31, 1999
(Unaudited)
(Stated in U.S. dollars)
----------------------
<S> <C> <C>
ASSETS September 30 December 31,
------
2000 1999
---- ----
Current
Cash and cash equivalents $ 1,243,156 $ 1,867,417
Receivables - oil 253,296 -
- interest 2,075 10,958
Prepaid expenses - 1,089
Advances receivable 11,545 8,202
----------------- -----------------
1,510,072 1,887,666
Oil and gas projects 2,330,958 1,606,290
Capital assets, net 3,169 -
----------------- -----------------
$ 3,844,199 $ 3,493,956
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable and accrued expenses $ 299,333 $ 81,109
---------------- -----------------
Stockholders' Equity - Note 2
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 ( 2,794,052) ( 2,926,071)
---------------- -----------------
3,544,866 3,412,847
---------------- -----------------
$ 3,844,199 $ 3,493,956
================= =================
</TABLE>
Commitment - Note 2
Subsequent Event - Note 3
SEE ACCOMPANYING NOTES
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
for the nine months ended September 30, 2000 and 1999
(Unaudited)
(Stated in U.S. dollars)
<S> <C> <C> <C> <C>
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
Revenue
Oil and natural gas $ 934,312 $ - $ 2,223,398 $ -
Royalties ( 407,016) - ( 961,822) -
---------------- ---------------- ---------------- ----------------
527,296 - 1,261,576 -
Interest income 17,194 37,961 61,002 105,449
---------------- ---------------- ---------------- ----------------
544,490 37,961 1,322,578 105,449
---------------- ---------------- ---------------- ----------------
Expenses
Production - Schedule 2 294,882 - 606,707 -
Depletion 14,597 - 33,262 -
General and administrative expenses
- Schedule 1 56,889 32,426 145,299 138,492
Exploration expenses
- Geological/geophysical - seismic 360,072 - 401,474 -
- Drilling and other - Schedule 3 2,207 406,964 3,817 704,737
---------------- ---------------- ---------------- ----------------
728,647 439,390 1,190,559 843,229
---------------- ---------------- ---------------- ----------------
Net income (loss) $ ( 184,157) $ ( 401,429) $ 132,019 $ ( 737,780)
================ ================ ================ ================
Net income (loss) per share $ ( 0.01) $ ( 0.01) $ 0.00 $ ( 0.02)
================ ================ ================ ================
Weighted average shares outstanding 32,476,250 32,476,250 32,476,250 32,476,250
================ ================ ================ ================
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the nine months ended September 30, 2000 and
1999 and February 4, 1971 (Date of Incorporation) to September 30, 2000
(Unauditd)
(Stated in U.S. dollars)
----------------------
<S> <C> <C> <C> <C> <C>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Exploration
------------
Shares Amount Capital Stage Total
------ ------ ------- ----- -----
Balance, December 31, 1998 32,476,250 $ 32,115 $ 6,306,803 $ ( 2,352,887) $ 3,986,031
Net loss for the nine months ended
September 30, 1999 - - - ( 737,780) ( 737,780)
---------- -------------- --------------- --------------- ---------------
Balance, September 30, 1999 32,476,250 32,115 6,306,803 ( 3,090,667) 3,248,251
Net income for the three months ended
December 31, 1999 - - - 164,596 164,596
---------- -------------- --------------- --------------- ---------------
Balance, December 31, 1999 32,476,250 32,115 6,306,803 ( 2,926,071) 3,412,847
Net income for the nine months ended
September 30, 2000 - - - 132,019 132,019
---------- -------------- --------------- --------------- ---------------
Balance, September 30, 2000 32,476,250 $ 32,115 $ 6,306,803 $ ( 2,794,052) $ 3,544,866
========== ============== =============== =============== ===============
</TABLE>
SEE ACCOMPANYING NOTES
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<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
for the nine months ended September 30, 2000 and 1999
(Unaudited)
(Stated in U.S. dollars)
----------------------
<S> <C> <C>
Nine months ended September 30,
2000 1999
---- ----
Cash flow from operating activities:
Net income (loss) $ 132,019 $ ( 737,780)
Add items not affecting cash:
Amortization 511 -
Depletion 33,262 -
------------------ ------------------
165,792 ( 737,780)
Net changes in non-cash working capital items
related to operations:
Receivable - oil ( 253,296) -
- interest 8,883 ( 1,669)
Prepaid expenses 1,089 2,269
Advance receivable ( 3,343) -
Accounts payable and accrued expenses 218,224 95,238
------------------ ------------------
Cash flow provided by (used in) operating activities 137,349 ( 641,942)
------------------ ------------------
Cash flows used in investing activities
Oil and gas projects costs ( 757,930) 776,700
Capital assets ( 3,680) -
------------------ ------------------
Cash flow provided by (used in) investing activities ( 761,610) 776,700
------------------ ------------------
Net increase (decrease) in cash ( 624,261) 134,758
Cash and cash equivalents, beginning of period 1,867,417 2,763,628
------------------ ------------------
Cash and cash equivalents, end of period $ 1,243,156 $ 2,898,386
================== ==================
Cash and cash equivalents consists of:
Cash (bank overdraft) $ 55,471 $ ( 1,060,594)
Term deposits 1,187,685 3,958,980
------------------ ------------------
$ 1,243,156 $ 2,898,386
================== ==================
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC. Schedule 1
CONSOLIDATED SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
for the nine months ended September 30, 2000 and 1999
(Unaudited)
(Stated in U.S. dollars)
----------------------
<S> <C> <C> <C> <C>
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
Accounting and audit fees $ 9,740 $ 1,824 $ 27,417 $ 39,481
Amortization 307 - 511 -
Consulting 11,166 10,763 33,004 43,537
Foreign exchange loss 944 662 1,732 1,213
Interest and bank charges 501 1,095 1,143 1,707
Investor relations 9,035 9,611 30,863 21,028
Legal 11,225 - 13,910 66
Office and general 8,570 5,726 23,805 18,290
Rent 3,249 2,010 8,800 6,049
Transfer agent fee 920 425 2,425 1,074
Travel 1,232 310 1,689 6,047
--------------- -------------- --------------- --------------
$ 56,889 $ 32,426 $ 145,299 $ 138,492
=============== ============== =============== ==============
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC. Schedule 2
CONSOLIDATED SCHEDULE OF PRODUCTION EXPENSES
for the nine months ended September 30, 2000 and 1999
(Unaudited)
(Stated in U.S. dollars)
----------------------
<S> <C> <C> <C> <C>
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
Administration $ 49,958 $ - $ 107,775 $ -
General operating expenses 135,954 - 244,178 -
Handling and trucking 108,970 - 254,754 -
-------------- -------------- -------------- --------------
$ 294,882 $ - $ 606,707 $ -
============== ============== ============== ==============
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC. Schedule 3
CONSOLIDATED SCHEDULE OF EXPLORATION EXPENSES - DRILLING AND OTHER
for the nine months ended September 30, 2000 and 1999
(Unaudited)
(Stated in U.S. dollars)
----------------------
<S> <C> <C> <C> <C>
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
Administration $ - $ 8,559 $ - $ 44,845
Consumables - - - 111,119
Drilling - 368,821 - 409,841
General operating expenses - 29,584 - 55,546
Geological/Geophysical - other 2,207 - 3,817 83,386
-------------- -------------- -------------- --------------
$ 2,207 $ 406,964 $ 3,817 $ 704,737
============== ============== ============== ==============
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
DRUCKER INDUSTRIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
(Stated in U.S. dollars)
----------------------
Note 1 Interim Reporting
While the information presented in the accompanying interim nine
months financial statements is unaudited, (except for as indicated
in Independent Accountants' Report), it includes all adjustment
which are, in the opinion of management, necessary to present
fairly the financial position, results of operations and cash
flows for the interim periods presented. All adjustments are of a
normal recurring nature. It is suggested that these interim
financial statements be read in conjunction with the company's
December 31, 1999 annual financial statements.
Note 2 Common Stock
Commitments
Share Purchase Warrants
At September 30, 2000, 5,542,065 share purchase warrants are
outstanding. Each warrant entitles the holder to purchase one
additional unit of the company at $0.40 per unit until the earlier
of March 31, 2001 and the 90th day after the date on which the
weighted average trading price of the company's shares exceed
$2.50 per share for 10 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 $0.60 per share. The
additional warrants will expire one year after the occurrence of
the exercise of the original warrants.
Share Purchase Options
At September 30, 2000, 2,950,000 share purchase options are
outstanding. Each option entitles the holder thereof the right to
acquire one new common share of the company at $0.40 per share to
June 30, 2004
Note 3 Subsequent Event
Subsequent to September 30, 2000, the company advanced $600,000
pursuant to a cash call for its share of costs for a second well
in Algeria.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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RESULTS OF OPERATIONS FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000
COMPARED TO THE SAME PERIOD IN 1999.
For the first nine months of 2000, gross oil revenue amounted to $2,223,398
compared to no revenue from production in the same nine months in 1999. This
revenue was generated from oil produced from the West Gharib project in Egypt
where the Company has a 20% working interest. Expenses of production were
$606,707 for the Company's share of production of 95,732 barrels or $6.34 per
barrel, depletion was $33,262, general and administrative costs were $145,299
and exploration expenses (mostly for 3-D seismic acquisition program) were
$405,291, for total expenses of $1,190,559 in the first nine months in 2000. In
the same period in 1999, the general and administrative expenses were $138,492,
and the exploration expenses were $704,737 for a total of $843,229. The
operating income for the first nine months in 2000 was $71,017 compared to an
operating loss of $737,780 in the same period in 1999. The Company had interest
income of $61,002 in the first six months in 2000 and $105,449 in 1999. The net
income from the period in 2000 was $132,019 and for 1999 the net loss was
$737,780. The profit per share was $.0041 in 2000 compared to a loss of $.023 in
1999.
To date, six wells are in production in the Hana field in West Gharib, Egypt and
are currently producing an average of 2,000 barrels of oil per day. Recently,
the Hana-7 well was successfully drilled and completed as an infill producer. As
part of the ongoing Hana field development plan, additional producers and
several waterflood pressure maintenance wells will be drilled in the next few
months to further boost sustainable production rates from current levels.
Besides the Hana field, a 400 sq km 3D seismic acquisition program has been
completed over a portion of the prospective lands in the 2,530 sq km West Gharib
Block. The processing and interpretation of these data will be completed by year
end. A multi-well exploration program will be conducted in 2001 to evaluate
several of the numerous large drilling prospects validated by this 3D program.
In Algeria, the recent successfully drilled SMRE-1 well, within the 3,192 square
kilometer onshore Hassi Bir Rekaiz concession, was a 15 kilometer stepout to the
east of the SMR-1 discovery well and the data shows that a continuous oil column
of at least 60 meters in height is present between the two wells (light sweet
crude of 40 degrees API). The upcoming Sahara El Mehadjer-1 (SEM-1) well will be
a 10 kilometer stepout to the north from these two wells and is prognosed to
intersect the main reservoirs at least 20 meters higher, thereby potentially
establishing an even larger oil column and confirming the continuity of a
significant portion of the Semhari structure. The Semhari structure is one of
the largest structures in northern Africa and is one of several promising
structures within the Hassi Bir Rekaiz concession. The project is located within
a prolific
<PAGE>
oil producing region hosting multi-billion barrel oil fields with extensive oil
facilities and pipeline infrastructure in place.
In the last week of October 2000, BP Amoco has hired a new contractor to drill
the upcoming SEM-1 well. BP, the third largest oil company in the world (next to
Exxon) and Shell) is the operator of the project and holds a 50% interest. The
SEM-1 will be the third well drilled on the 70,000 acre (283 sq km) Semhari
mega-structure, following the two successful SMR-1 and SMRE-1 wells. The access
road to the SEM-1 location has already been completed and the drill site
prepared. Spudding of the well is anticipated in the latter part of November,
2000. The rig to be used is a Pride Forasol Rig 2. It has a top drive which will
allow the well to be drilled more quickly and with a reduced potential for lost
time and drilling related problems. The rig was recently used in the area and
the crew is familiar with operating the rig and drilling the targeted
reservoirs. Pride are internationally recognized contractors with an excellent
reputation.
Drucker has an indirect 2.5% interest through Santa Catalina (Algeria) Ltd.
which holds a 25% interest in the Hassi Bir Rekaiz concession. ARCO Ghadames,
Inc. (BP Amoco) is the operator holding a 50% interest. Turkish Petroleum holds
the remaining 25%.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2000 COMPARED TO
QUARTER ENDED SEPTEMBER 30, 1999
The Company had revenues of $934,312 in the quarter ended September 30,
2000 and no revenues in the quarter in 1999. Royalties on revenues in the
quarter were $407,016, resulting in net revenue of $527,296 in the quarter in
2000. The Company had interest income of $17,194 and $37,961 in the quarter in
2000 and 1999 respectively.
The Company incurred production expenses of $294,882 and depletion of
$14,597 in the quarter in 2000 and none in 1999 in the quarter. The Company had
$362,274 in exploration expenses in the third quarter in 2000 compared to
$406,964 in the quarter in 1999.
The general and administrative expenses for the quarter in 2000 were
$56,889, compared to $32,426 in the quarter in 1999.
Total expenses including general and administrative were $728,647 and
$439,390 in the quarter in 2000 and 1999 respectively. The Company had net loss
of ($184,157) in the quarter in 2000 compared to ($401,429) in 1999. The
reduction in loss was as a direct result of the commencement of revenue from oil
production in the West Gharib field in Egypt.
The Company had a net loss per share of ($.01) in the quarter in both 2000
and 1999. The Company expects the trend of losses to continue as it invests in
further oil exploration projects, which may not produce revenues or sufficient
revenues to offset costs and expenses of operations and exploration.
LIQUIDITY AND CAPITAL RESOURCES
The Company had $1,243,156 cash on hand at September 30, 2000 and $253,296
in receivables. These amounts are deemed sufficient by the Company for continued
operations at the current level in the following three months, assuming that oil
revenues from the Hana field in Egypt continue, which cannot be assured.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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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
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On September 26, 2000, the company held an annual shareholder's
meeting at which the shareholders approved:
a. A change of name to Drucker, Inc.
b. A Stock Option Plan
At the Annual Meeting of Shareholders on September 26, 2000, the
shareholders re- elected as Directors Patrick Chan, Ernest Cheung, Gerald
Runolfson, and Joseph S. Tong.
ITEM 5. OTHER INFORMATION
------- ---------------------------------------------------
Ken Kow was appointed a director in October 2000. Mr. Kow's experience
is as follows:
Ken A. Kow, Director, age 58, has been a consultant to the Company and
as Manager, Petroleum Operations in charge of petroleum exploration since
1997. He received a Bachelor of Science in Chemistry in 1965 and a Ph.D in
Chemistry in1980 from University of London, England. From 1984 to 1986, he
was Manager of Core Analysis with Geotechnical Resources Ltd. in Calgary,
Alberta and from 1986 to 1988 he was Technical Manager with C&G
Laboratories in Calgary, Alberta. From 1988 to 1997, he was employed with
Waha Oil Company as a Petroleum Analyst in Tripoli, Libya, North Africa. He
has served as Secretary since 1997 to present, and as Director since 1998
to present, of Richco Investors Inc. (CDN, and CDNX from 2000).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
------- ---------------------------------------------------
(a) The following are filed as Exhibits to this Quarterly Report.
The numbers refer to the Exhibit Table of Item 601 of
Regulation S-K:
None
(b) Reports on Form 8-K filed during the three months ended Septem-
ber 30, 2000. (incorporated by reference):
8-K filed 10/18/00
<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.
/s/ Ernest Cheung
Date: November 17, 2000 ---------------------------------
Ernest Cheung, Secretary
