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, 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) 681-4421
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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 June 30, 2000
<PAGE>
DRUCKER INDUSTRIES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(Stated in U.S. dollars)
(Unaudited)
---------
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2000 and December 31, 1999
(Unaudited)
(Stated in U.S. dollars)
----------------------
ASSETS June 30 December 31,
------
2000 1999
---- ----
Current
<S> <C> <C>
Cash and cash equivalents $ 1,365,162 $ 1,867,417
Receivables - oil 281,125 -
- interest 4,043 10,958
Prepaid expenses - 1,089
Advances receivable 11,545 8,202
-------------- -----------
1,661,875 1,887,666
Oil and gas projects 2,425,137 1,606,290
Capital assets, net 3,476 -
-------------- -----------
$ 4,090,488 $ 3,493,956
============== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable and accrued expenses $ 361,465 $ 81,109
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Stockholders' Equity - Note 2
Common stock $.001 par value, authorized 50,000,000 shares:
32,476,250 shares issued and outstanding 32,115 32,115
Additional paid-in capital 6,306,803 6,306,803
Deficit ( 2,609,895) ( 2,926,071)
-------------- -----------
3,729,023 3,412,847
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$ 4,090,488 $ 3,493,956
============== ===========
</TABLE>
Commitment - Note 2
APPROVED BY THE DIRECTORS:
"Gerry Runolfson" "Ernest Cheung"
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, Director , Director
----------------------- ----------------------------
Gerry Runolfson Ernest Cheung
SEE ACCOMPANYING NOTES
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
for the six months ended June 30, 2000 and 1999
(Unaudited)
(Stated in U.S. dollars)
Three months ended June 30, Six months ended June 30,
2000 1999 2000 1999
---- ---- ---- ----
Revenue
<S> <C> <C> <C> <C>
Oil and natural gas $ 758,949 $ - $ 1,289,086 $ -
Royalties ( 324,441) - ( 554,806) -
---------------- ---------------- ---------------- ----------------
434,508 - 734,280 -
Interest income 27,622 44,497 43,808 67,487
---------------- ---------------- ---------------- ----------------
462,130 44,497 778,088 67,487
---------------- ---------------- ---------------- ----------------
Expenses
Production - Schedule 2 193,708 - 311,825 -
Depletion 12,909 - 18,665 -
General and administrative expenses
- Schedule 44,908 73,770 88,410 106,062
Exploration expenses - Schedule 3 42,802 241,465 43,012 297,773
---------------- ---------------- ---------------- ----------------
294,327 315,235 461,912 403,835
---------------- ---------------- ---------------- ----------------
Net income (loss) $ 167,803 $ ( 270,738) $ 316,176 $ ( 336,348)
================ ================ ================ ================
Net income (loss) per share $ 0.01 $ ( 0.01) $ 0.01 $ ( 0.01)
================ ================ ================ ================
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 six
months ended June 30, 2000 and 1999
and February 4, 1971 (Date of Incorporation) to June 30, 2000
(Unauditd)
(Stated in U.S. dollars)
----------------------
Deficit
Accumulated
Common Stock Additional During the
------------ Paid-in Exploration
Shares Amount Capital Stage Total
------ ------ ------- ----- -----
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 32,476,250 $ 32,115 $ 6,306,803 $ ( 2,352,887) $ 3,986,031
Net loss for the six months ended June 30, 1999 - - - ( 336,348) ( 336,348)
---------- ----------- ------------- ---------------- ---------------
Balance, June 30, 1999 32,476,250 32,115 6,306,803 ( 2,689,235) 3,649,683
Balance Forward, June 30, 1999 32,476,250 32,115 6,306,803 ( 2,689,235) 3,649,683
Net loss for the six months ended December 31, 1999 - - - ( 236,836) ( 236,836)
---------- ----------- ------------- ---------------- ---------------
Balance, December 31, 1999 32,476,250 32,115 6,306,803 ( 2,926,071) 3,412,847
Net income for the six months ended June 30, 2000 - - - 316,176 316,176
---------- ----------- ------------- ---------------- ---------------
Balance, June 30, 2000 32,476,250 $ 32,115 $ 6,306,803 $ ( 2,609,895) $ 3,729,023
========== =========== ============= ================ ===============
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
for the six months ended June 30, 2000 and 1999
(Unaudited)
(Stated in U.S. dollars)
----------------------
Six months ended June 30,
2000 1999
---- ----
Cash flow from operating activities:
<S> <C> <C>
Net income (loss) $ 316,176 $ ( 336,348)
Add items not affecting cash:
Amortization 204 -
Depletion 18,665 -
------------------ ------------------
335,045 ( 336,348)
Net changes in non-cash working capital items
Oil receivable ( 281,125) -
Accrued interest receivable 6,915 1,866
Prepaid expenses 1,089 2,269
Accounts payable and accrued expenses 280,356 ( 4,897)
Advance recoverable ( 3,343) -
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Cash flow provided by (used in) operating activities 338,937 ( 337,110)
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Cash flows used in investing activities
Oil and gas projects costs ( 837,512) 776,700
Capital assets ( 3,680) -
------------------ ------------------
Cash flow used in investing activities ( 841,192) 776,700
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Net increase (decrease) in cash ( 502,255) 439,590
Cash and cash equivalents, beginning of period 1,867,417 2,763,628
------------------ ------------------
Cash and cash equivalents, end of period $ 1,365,162 $ 3,203,218
================== ==================
Cash and cash equivalents consists of:
Cash $ 46,616 $ 56,392
Term deposits 1,318,546 3,146,826
------------------ ------------------
$ 1,365,162 $ 3,203,218
================== ==================
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC. Schedule 1
CONSOLIDATED SCHEDULE OF GENERAL AND
ADMINISTRATIVE EXPENSES for the six
months ended June 30, 2000 and 1999
(Unaudited)
(Stated in U.S. dollars)
----------------------
Three months ended June 30, Six months ended June 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Accounting and audit fees $ 5,249 $ 28,377 $ 17,677 $ 37,657
Amortization 204 - 204 -
Consulting 10,797 21,611 21,838 32,774
Foreign exchange loss 527 196 788 551
Interest and bank charges (756) 234 642 608
Investor relations 16,812 9,858 21,828 11,418
Legal 912 - 2,685 66
Office and general 7,347 6,774 15,235 12,563
Rent 2,279 2,051 5,551 4,039
Transfer agent fee 1,080 524 1,505 649
Travel 457 4,145 457 5,737
--------------- -------------- --------------- --------------
$ 44,908 $ 73,770 $ 88,410 $ 106,062
=============== ============== =============== ==============
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC. Schedule 2
CONSOLIDATED SCHEDULE OF PRODUCTION EXPENSES
for the six months ended June 30, 2000 and 1999
(Unaudited)
(Stated in U.S. dollars)
----------------------
Three months ended June 30, Six months ended June 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Administration $ 40,442 $ - $ 57,817 $ -
General operating expenses 66,153 - 108,224 -
Handling and trucking 87,113 - 145,784 -
-------------- -------------- -------------- --------------
$ 193,708 $ - $ 311,825 $ -
============== ============== ============== ==============
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
<TABLE>
<CAPTION>
DRUCKER INDUSTRIES, INC. Schedule 3
CONSOLIDATED SCHEDULE OF EXPLORATION EXPENSES
for the six months ended June 30, 2000 and 1999
(Unaudited)
(Stated in U.S. dollars)
----------------------
Three months ended June 30, Six months ended June 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Administration $ - $ 23,788 $ - $ 36,286
Drilling - 41,020 - 41,020
Consumables - 109,518 - 111,119
General operating expenses - 18,792 - 25,962
Geological/Geophysical 42,802 48,347 43,012 83,386
-------------- -------------- -------------- --------------
$ 42,802 $ 241,465 $ 43,012 $ 297,773
============== ============== ============== ==============
</TABLE>
<PAGE>
DRUCKER INDUSTRIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
(Stated in U.S. dollars)
----------------------
Note 1 Interim Reporting
-----------------
While the information presented in the accompanying interim six
months financial statements is unaudited, it includes all adjust-
ment 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
------------
Commitment
Share Purchase Warrants
At June 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.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
--------------------------------------------------------------------
RESULTS OF OPERATIONS FOR THREE MONTH PERIOD ENDED JUNE 30, 2000 The Company had
general and administrative expenses for the three month period in 2000 of
$44,908 and exploration expenses of $42,802 as compared to $73,770 in general
expenses and $241,465 in exploration expenses in the 1999 period. The Company
incurred $193,708 in production expenses for the three month period in 2000
compared to none in the same period in 1999. There were $434,508 in net revenues
for the 2000 period and no revenues for the 1999 period. Interest income was
received in the amount of $27,622 in 2000 and $44,497 in 1999. The Company
recorded net income on operations of $140,181 in 2000 and a net loss on
operations of ($315,235) in the 1999 period. The Company has achieved a
profitable position due to the fact that it has begun production, and the
current world prices for oil are favorable. Net income after interest income was
$167,803 in the quarter in 2000 and net loss was ($270,738) in 1999.
RESULTS OF OPERATIONS FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2000 COMPARED TO
THE SAME PERIOD IN 1999.
For the first six months of 2000, gross oil revenue amounted to $1,289,086
compared to no revenues from production in the same six 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
$311,825 for the Company's share of production of 57,448 barrels or $5.43 per
barrel, depletion was $18,665, general and administrative costs were $88,410 and
exploration expenses (3-D seismic) were $43,012, for total expenses of $461,912
in the first six months in 2000. In the same period in 1999, the general and
administrative expenses were $106,062, and the exploration expenses were
$297,773 for a total of $403,835. The operating income for the first six months
in 2000 was $272,368 compared to an operating loss of $403,808 in the same
period in 1999. The Company had interest income of $43,808 in the first six
months in 2000 and $67,487 in 1999. The net income from the period in 2000 was
$316,176 and for 1999 the net loss was $336,348. The profit per share was $.0097
in 2000 compared to a loss of $.010 in 1999.
After the oil discovery at Hana-1 and the appraisal well at Hana-2 in
1999, four development wells have been drilled and completed successfully in the
first half of 2000. Hana-1 and 2 have started oil production from December 1999
at a combined output of about 2000 b/d and are joined by three more wells in
June 2000. Oil production is expected to increase from the current 3,000 b/d to
about 5000 b/d when the down-hole pumps are reconfigured. In the next few
months, permanent treating, handling and pipeline facilities will be in place
and more development wells will be drilled to further develop the Hana field.
The total production from the Hana field, Egypt in the first six months in 2000
was 287,242 barrels. Drucker has a 20% working interest in the West Gharib
Block.
<PAGE>
Recently, a 60 sq. kilometer 3-D survey has been acquired and
reprocessed over several prospects adjacent to the Hana field. Drilling targets
will be determined as soon as the 3-D seismic data are interpreted and the first
well will be drilled starting from September this year. Also, the Company and
its partners is about half way through the acquisition of a 400 sq. kilometer
3-D survey to delineate up to 16 identified prospects within the play fairway
containing the Hana field. The acquisition and processing of this regional 3-D
survey will be completed by the end of this year. The Company anticipates
drilling several additional wells during 2001 based on the results of this
survey.
The Company expects the trend of increased exploration and general and
administrative expenses to continue. The Company also expects continued
production revenues from the West Gharib Block.
LIQUIDITY AND CAPITAL RESOURCES
The Company had $1,365,152 cash on hand at the six month end and
$281,125 in receivables. These amounts are deemed sufficient by the Company for
continued operations at the current level in the following six 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
------- ---------------------------------------------------
None
ITEM 5. OTHER INFORMATION
------- ---------------------------------------------------
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
------- ---------------------------------------------------
None
<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/ Gerald Runolfson
Date: 8/11/00 ---------------------------------
Gerald Runolfson, President
