SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10QSB
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended Commission File Number
June 30, 2000 005-59925
US CRUDE, LTD.
-------------------------------------
(New name of Registrant)
Nevada 84-1521101
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(State of incorporation) (I.R.S. Employer
Identification No.)
673 COOLEY DRIVE, SO. SUITE 121, COLTON, CA 92324
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (800) 872-7833
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.
21,475,303 common shares as of June 30, 2000
<PAGE>
Part I: FINANCIAL INFORMATION
<TABLE>
<CAPTION>
U S Crude Ltd
(A Development Stage Company)
Unaudited Balance Sheet
<S> <C> <C>
Three Months Ended Year Ended
June 30, 2000 March 31, 2000
ASSETS
Current Assets
Cash $ 31,410 $ 114,219
Accounts Receivable 525,350 500,000
Inventories
Related Party Receivable
--------------- -------------
Total Current Assets 556,760 614,219
Property, Plant & Equipment
Property, Plant & Equipment - Net 1,159,823 1,154,823
Less Accumulated Depreciation (141,446) (120,196)
--------------- -------------
Net Property, Plant & Equipment 1,018,377 1,034,627
Other Assets
Other Assets - Net 1,989,279 1,847,771
Less Accumulated Amortization (123,040) (96,801)
--------------- -------------
Total Other Assets 1,866,239 1,750,970
--------------- -------------
TOTAL ASSETS $3,441,376 $3,399,816
=============== =============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts Payable $ 450,000 $ 450,000
Other Payables -
Note Payable -
--------------- -------------
Total Current Liabilities 450,000 450,000
Long Term Liabilities
Long Term Debt 273,928 278,662
--------------- -------------
Total Long Term Liabilities 273,928 278,662
Stockholder's Equity
Preferred stock, no par value; 5,000,000 shares issued
and outstanding at June 30, 2000 100,000 100,000
Common stock, no par value; 25,000,000 shares authorized
21,475,303 issued and outstanding at June 30, 2000 3,957,058 3,797,692
Retained Earnings (Deficit) (1,339,610) (1,226,538)
--------------- -------------
Total Stockholder's Equity 2,717,448 2,671,154
--------------- -------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $3,441,376 $3,399,816
=============== =============
</TABLE>
F-1
<PAGE>
U S CRUDE LTD
(A Development Stage Company)
Unaudited Statement of Operations
Three Months Ending June 30
2000 1999
REVENUES
Sales $ 26,239 $ -
--------------- ---------------
TOTAL REVENUES 26,239 -
COST OF GOODS SOLD
Cost of Sales -
--------------- ---------------
TOTAL COST OF GOODS SOLD - -
Gross Profit 26,239 -
OPERATING COSTS
Administrative & Overhead 139,322 150,532
--------------- ---------------
TOTAL OPERATING COSTS 139,322 150,532
OTHER INCOME (EXPENSE)
Interest Income 11 568
Interest Expense -
--------------- ---------------
TOTAL OTHER INCOME (EXPENSE) 11 568
NET INCOME (LOSS) $ (113,072) $ (149,964)
=============== ===============
Net Loss per Share (0.01) (0.01)
Weighted Average Common Shares 21,475,303 17,451,212
F-2
<PAGE>
<TABLE>
<CAPTION>
U S CRUDE LTD
(A Development Stage Company)
UNAUDITED STATEMENT OF CASH FLOWS
<S> <C> <C>
Three Months Ended June 30
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (113,072) $(149,964)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation 21,250 21,250
Depletion 26,239
(Increase) Decrease in current assets (25,350) (53,170)
Increase (Decrease) in current liabilities
(Increase) Decrease in other assets (141,508) (396,124)
------------- --------------
NET CASH PROVIDED (USED) BY (232,441) (578,008)
OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
(Purchase) Sale of property and equipment (5,000)
Increase (Decrease) in notes payable (4,734) 322,422
Capital received 159,366
------------- --------------
NET CASH FLOWS FROM INVESTING ACTIVITIES 149,632 322,422
NET INCREASE (DECREASE) IN CASH (82,809) (255,586)
CASH AT BEGINNING OF PERIOD 114,219 265,675
CASH AT END OF PERIOD $ 31,410 $ 10,089
============= ==============
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
U S CRUDE LTD
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
For the Period from March 31, 1998 to June 30, 2000
<S> <C> <C> <C> <C> <C> <C>
Accumulated Total
Common Stock Preferred Stock
Shares Amount Shares Amount Deficit
------- -------- -------- -------- ----------- -----
Balance - March 31, 1998 7,122,260 $1,507,806 1,000,000 $ 100,000 $ (253,178) $1,354,628
Shares issued for cash 731,751 373,804 373,804
Purchase of U S Thermo Tech 3,738,000 847,232 847,232
Net Loss for year - - - (310,037) (310,037)
--------------- -------------- -------------- -------------- --------------- --------------
Balance - March 31, 1999 11,592,011 2,728,842 1,000,000 100,000 (563,215) 2,265,627
--------------- -------------- -------------- -------------- --------------- --------------
Shares issued for cash 6,976,170 742,308 742,308
Shares issued in exchange for 1,000,000 400,000 400,000
lowering debt
Net Loss for year (663,323) (663,323)
--------------- -------------- -------------- -------------- --------------- --------------
Balance - March 31, 2000 19,568,181 3,871,150 1,000,000 100,000 (1,226,538) 2,744,612
--------------- -------------- -------------- -------------- --------------- --------------
Shares issued for cash 1,907,122 85,908 85,908
Net loss for period (122,774) (122,774)
Balance - June 30, 2000 21,475,303 $3,957,058 1,000,000 $ 100,000 (1,349,312) $2,707,746
=============== ============== ============== ============== =============== ==============
</TABLE>
F-4
<PAGE>
U.S. CRUDE LTD. & SUBSIDIARY
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT POLICIES:
---------------------------------------------
U.S. CRUDE LTD. & SUBSIDIARY ("The Company), was incorporated in California on
May 22, 1996. It is in the development stage, (as defined by Financial
Accounting Standards Board Statement No. 7). The Company's primary business is
to utilize its proprietary portable steam generator technology to stimulate oil
production in marginally producing wells across America. The Company on July 27,
1998 entered into a merger with U.S. Thermo-Tech, Inc. U.S. Thermo- Tech Inc.
was incorporated on May 8, 1997 and is also in the development stage. U.S.
Thermo-Tech, Inc.'s primary business is to utilize its patent pending thermal
gas injector system (the "TM-98") to rekindle marginally producing oil wells.
This merger was accounted for using the pooling of interest method of
accounting. This method combines the income statements from the beginning of the
year of acquisition.
Since inception, the Company's efforts have been devoted to the development of
its product and raising capital. The Company began oil production in January of
1999. Accordingly, the Company is in the development stage and the accompanying
financial statements represent those of a development stage enterprise. As such
the Company has incurred net operating losses since inception of $1,349,312 and
does not have sufficient working capital to fund its planned operations during
the next twelve months. Although sufficient funds are available to meet general
and administrative expenses, additional funding will be required to complete the
Company's expansion plans. These circumstances raise substantial doubt about the
Company's ability to continue as a going concern. In order to meet the Company's
continued financial needs, management of the Company intends to raise working
capital through the sale of common stock or other financings.
The Company has also acquired a 49% interest in 54 oil producing properties
encompassing 960 acres in the state of Oklahoma. The wells were acquired through
a joint venture with a company called Crude Oil Recovery, a California
Corporation. All revenue produced through this venture has been returned back
into oil producing property to build up the infrastructure of the property.
The Company has received exclusive rights to develop, market, sell and utilize
the TM-96, TM-98 as well as three other innovative steam qenerating technologies
from Wave technology Inc. The Company issued Wave Technology 3,160,000 shares of
the Company's common stock and 1,000,000 shares of the Company's Preferred stock
in return for the rights.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less at the date of purchase to be cash equivalents.
F-5
<PAGE>
PROPERTY AND EQUIPMENT AND DEPRECIATION
Property and equipment are carried at cost. Maintenance, repairs and minor
renewals are expensed as incurred. When assets are retired, or otherwise
disposed of, the related costs and accumulated depreciation are removed from the
respective accounts and any gain or loss on disposition is reflected in the
statement of operations.
Depreciation is calculated using the straight-line method, for the Machinery and
Equipment and ACRS for the Truck, over the following estimated useful lives;
Machinery and equipment 7 years
Truck 5 years
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In March of 1995, the Financial Accounting Standards Board issued standard No.
121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets
to be disposed of." The Company has adopted standard No. 121 as of January 1,
1996. The effect on the financial statements of adopting standard No. 121 was
not material.
In October 1995, the Financial Accounting Standards Board issued standard No.
123, "Accounting for Stock-Based Compensation". The accounting or disclosure
requirements of this statement are effective for the Company's fiscal year-end
1996 financial statements. The Company has adopted standard No. 123 as of
January 1, 1996. The effect on the financial statements of adopting standard No.
123 was not material.
In February 1997 SFAS No 128. "Earnings per share" was issued effective for
periods ending after December 15, 1997. There is no impact on the Company's
financial statements from adoption of SFAS No. 128.
RESEARCH AND DEVELOPMENT OF OIL PROPERTIES
The Company follows the full cost method to acc6unt for its oil and gas research
and Development costs. Under this method, all costs incurred which are directly
related to Research and development of its oil properties are capitalized and
subject to depletion. Depletable costs also include estimates of future
development costs of proven reserves.
NET LOSS PER SHARE
Net loss per share is calculated using the weighted average number of shares
outstanding during the periods presented. The Company had stock equivalents at
March 31, 2000 which are listed in note 6. These stock equivalents effect the
earnings per share.
ESTIMATES USED IN FINANCIAL STATEMENT PRESENTATION
The presentation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-6
<PAGE>
DEPLETION
Because of the difficulty in estimating the Depletable oil reserves in the
ground the Company has adopted the percentage depletion method. This method uses
a flat percentage to deplete the capitalized costs of research, drilling and oil
production. This method is limited to 100% of the taxable income before the
depletion allowance.
REVENUE RECOGNITION
The Company is on an accrual basis: thus all sales are booked when earned and
all expenses are expensed when incurred. The Company only recently began
drilling and selling oil so the majority of the sales came from a one time sale
of a TM-96 machine for $500,000 or interest income.
NOTE 2 - INCOME TAXES:
------------
Deferred taxes relate to differences between the basis of assets and liabilities
for financial and tax reporting purposes. Deferred tax assets and liabilities
represent the future tax consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are recovered or settled.
Deferred taxes also are recognized for net operating losses that are available
to offset future taxable income. Deferred tax assets are reduced by a valuation
allowance if it is more likely than not that some or all of the deferred tax
assets will not be realized.
NOTE 3 - STOCKHOLDERS' EOUITY:
--------------------
The Company is authorized to issue up to 70,000,000 shares of common stock, no
par value. Each holder of common stock is entitled to one vote for each Share
held on all mattes properly submitted to the shareholders for their vote.
Cumulative voting is not authorized. At June 30, 2000 21,475,303 shares of
common stock are outstanding.
The Company is authorized to issue up to 5,000,000 shares of Preferred Stock, no
par value. At June 30, 2000 1,000,000 shares of preferred shares were owned by
Wave Tech Inc. These Preferred shares have super voting rights of 10 votes per
each share.
As previously discussed in note 1, The Company merged with U.S. Thermo-Tech,
Inc. on July 27, 1998. In this Merger the remaining Company (U.S. Crude Ltd.
issued a half share of its stock for each share of U.S. Thermal-Tech, Inc.
share. The result was that 3,738,000 shares of the company's shock is now owned
by U.S. Thermo-Tech Inc. (now a 100% owned subsidiary).
F-7
<PAGE>
NOTE 4 - STOCK OPTION PLAN:
-----------------
The Company currently has approximately 3,638,000 outstanding options to
purchase the Company's common stock. Of these outstanding shares 2,650,000 are
owned by directors and officers of the company and the remaining 988,000 options
were granted to various individuals for work they did on behalf of the company.
The options owned by the directors and officers were issued on January 01, 1997
and can be exchanged for one share of common stock at a dollar a share. These
options must be exercised by December 31, 2006. The breakdown of the shares is
as follows:
Anthony Miller-President 750,000 options
Catherine Njie--Secretary 250,000 options
Thomas Meeks-Director 1,000,000 options
Thomas Hobson-Director 650,000 options
Others 988,000 options
NOTE 5 - LEASES:
------
The Company leases office and shop space in Colton, California. The lease term
is one year, with an annual renewal option for one-year periods. The company has
no lease deposit and The current Office rent is $1,000 a month.
The Company currently has 27 different lease contracts outstanding. These leases
cover 8,700 acres of land and 300 oil and natural gas wells. These leases cost
approximately $340,000 to acquire and are almost completely paid for. All of the
leases are perpetual leases (meaning they last until the oil and natural gas
dry's up and the wells are abandoned). The Company has a current certified
geology report that state these leases have approximately 76,630,908 barrel of
proven oil and 34,400,000 which are recoverable. The cost of these leases have
been capitalized under prepaid oil production costs.
NOTE 6 - RELATED PARTY TRANSACTIONS:
--------------------------
In 1999 & 1998 the company paid approximately $1,000,000 to Wave Technologies
Inc. for the purchase of a portable thermos gas injector system (the "TM-98")
and a portable steam generator (the "TM-96). The company entered into an
agreement with Wave Technology Inc. to purchase this equipment along with the
exclusive rights to develop, market, sell and utilize these machines. The
company agreed to pay Wave Technology Inc. $1,000,000 for the Equipment and gave
them another 3,160,000 shares of common stock and 1,000,000 shares of Preferred
stock for the exclusive licensing rights to develop, sell and utilize the
equipment as well as other oil recovery technologies. Wave Technology currently
owns 4,910,000 shares of common stock and 1,000,000 shares of Preferred stock.
This represents approximately 43% of the outstanding Common stock and 100% of
the outstanding Preferred stock of the Company.
Wave Technology Inc. is 100% owned by Tom Meek's wife. He is also a director and
executive officer of U.S. Crude LTD. Other directors and executive officers of
U.S. Crude LTD own approximately 2.3% of the outstanding Common stock of U.S.
Crude LTD. This means that the directors and executive officers of U.S. Crude
LTD. own as a group approximately 45% of the Company.
F-8
<PAGE>
NOTE 7 - NOTE PAYABLE:
------------
In March of 1999 the company received $450,000 from an investor. In return for
this money this investor received 500,000 shares at ten cents a share and an
option to purchase another 1,000,0000 shares. This option was for one year. In
March of 2000 in exchange for relieving this $400,000 Note the company issued
the note holder 1,000,000 shares of common stock. This note included interest at
8%. 11 monthly interest only payments of $3,000 were made on this note during
the year ended March 31, 2000.
NOTE 8 - NOTE PAYABLE-KERN COUNTY OIL LEASE:
----------------------------------
During the prior year the Company purchased an oil lease in Kern County,
California. This lease is a perpetual lease. The cost of the lease was $240,000
and is to be paid off from proceeds from oil production. This note does not bear
any interest. No payments were made on this note as of June 30, 2000. The
Company did not start production of oil on this lease until May of 2000.
NOTE 9 - NOTE PAYABLE ASSOCIATES BANK:
----------------------------
In April of 1999 the Company purchased a large compressor for $84,000.
Approximately $32,000 was paid as a down payment and a 33 month note was taken
out to pay the remaining balance. Monthly payments are made at the rate of
$1,577 per month.
F-9
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS FOR QUARTER ENDED JUNE 30, 2000 COMPARED TO SAME QUARTER
IN 1999
The Company has experienced expenses for the three month period of $139,322 in
2000 compared $150,532 in 1999. The Company had revenues of $26,239 in the
quarter in 2000 and no revenues in 1999. The Company had a net loss of
($113,072) for the quarter in 2000 and a net loss of ($149,964) for the same
period in 1999. The Company losses will continue at a similar rate until
sufficient income can be achieved to offset expenses of operations. While the
Company is seeking capital sources for continuing operations; there is no
assurance that sources can be found. The loss per share was ($.01) in the period
in both 2000 and 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company had $31,410 in cash and $525,350 in receivables at the end of the
quarter. The Company had $450,000 in current liabilities and $273,928 in long
term liabilities at the end of the quarter. The Company will need to either
borrow or make private placements of stock in order to fund operations. No
assurance exists as to the ability to achieve loans or to make private
placements of stock.
<PAGE>
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
a. 8-K filed on May 11, 2000 (incorporated herein by
reference)
<PAGE>
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.
Date: December 8, 2000
US CRUDE LTD.
/s/ Anthony Miller
-------------------------------------------
Anthony Miller, President
