SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the fiscal year ended March 31, 1997
Commission file number: 0-08507
BLACK GIANT OIL COMPANY
Nevada Corporation 75-1441442
1301 Avenue M
P.O. Box 31
Cisco, Texas 76437
(254) 442-3968
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common stock, par value $.0125
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 such
filing requirements for the past 90 days. Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
The registrant's revnues for its most recent fiscal year were $27,051.
The aggregate market value of the voting stock (10,100,000 shares) held by
non-affiliates of the registrant on March 31, 1997 was approximately
$101,000 based on the bid price of $0.01 of the stock at the close of the
market on that day.
The number of shares outstanding (exclusive of treasury stock, 20,000 shares)
of the registrant's common stock on March 31, 1997 was 14,330,227. On April 7,
1998 the Company had 19,771,477 shares outstanding exclusive of treasury
stock.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
DEFINITIONS
"Gravity" is a measure of the density of an oil. As defined in the petroleum
industry, a higher gravity corresponds to a lower density. Gravities of
crude oils range from about 12 degrees (heavy oil) to 60 degrees (distillate
or gasoline-like oil). Lower gravity oils are generally worth less, and they
may require unconventional technology to produce.
"Gross production" as used herein is defined as the total production of oil,
gas, or natural gas liquids from a property or group of properties, for any
gas, or natural gas liquids from a property or group of properties, for any
specified period of time.
Initial Potential ("IP") is a test performed before any significant
production from a well is marketed. An oil well potential is an indication
of the maximum rate at which a well can produce. Usually, wells produce at
lower rates than their potentials. Reasons for lower rates can involve
natural decline, government regulations, difficulties with operations or
infrastructure, and reservoir management considerations.
The term "overriding royalty" as used herein is defined as an interest carved
out of the lessee's leasehold or working interest. The amounts payable from
overriding royalties referred to in this Form 10K are payments calculated as a
percentage of either gross production or gross revenue from a concession or
lease, free and clear of all costs, except taxes.
The term "payout" is generally defined as a time when the total investment or
acquisition cost has been recaptured from revenues produced from the oil and
gas lease.
The term "royalty" is generally defined as a share of the production reserved
by the grantor of an oil or gas lease or concession. Customarily, the royalty
interest is free of cost or expense incident to exploration, development, or
production, except for production or gathering taxes.
"Spudded in" means that drilling on an oil or gas well has commenced.
The term "working interest" as used herein means all or a fractional part of
the ownership rights granted by a concession or lease. The working interest,
or a part thereof, pays all costs of operation and is entitled to the gross
production less royalties retained by the grantor or lessor and less other
royalties or non-operating interests created and assigned from the working
interest.
ABBREVIATIONS
BOPD - barrels of oil per day
BOPM - barrels of oil per month
MCFGPD - thousand cubic feet gas per day
MMCFGPD - million cubic feet gas per day
NP - non-producing
ORR - overriding royalty
D&A - dry and abandoned
WI - working interest
(a) GENERAL DEVELOPMENT OF BUSINESS
Black Giant Oil Company (the Company) was organized on July 23, 1973 as a
corporation under the laws of the State of Nevada, for the general purpose
of engaging in exploration for oil and gas. More recently, the Company has
shifted its activities to acquiring working interests, royalties, and
overriding royalties in oil and gas properties within the United States and
in foreign countries.
During its fiscal year ended March 31, 1997, the Company was not involved in
any bankruptcy, receivership, or similar proceeding and underwent no
material reclassification, merger, or consolidation. The Company does not
anticipate involvement or participation in any of the above proceedings.
During the period from April 1, 1978 to March 31, 1997, the Company
conducted no substantial business, received no material income and had no
material assets or liabilities. The Company was dormant and virtually
inactive during this period of time.
In August 1997 a group of stockholders met and decided to make an attempt to
revive the Company and initiated a funding campaign. The Company
successfully raised $95,000 through the issuance of 4,750,000 shares of
common stock.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company's oil and gas revenue is derived from Canadian royalties. The
Company continues to review shallow oil and gas plays in Texas, Oklahoma and
Kansas for acquisition. The Company acquired interests in twelve (12) leases
in Texas and Oklahoma subsequent to March 31, 1997. Negotiations continued
for additional oil and gas leases and prospects for drilling subsequent to
the year end.
( c ) NARRATIVE DESCRIPTION OF BUSINESS
The Company was seeking working capital during the years 1986 through 1990
to continue it operations; however, the collapse of the oil industry in
1986/87 caused funding programs for the Company to be unsuccessful. The
lack of working capital eventually led the Company to become dormant.
During the years of being dormant various opportunities were presented to
the management to revive the Company. Each opportunity was either not
favorable to the Company or was not able to close due to lack of financial
commitment or strength by the various interested parties.
Subsequent to March 31, 1997, a group of concerned shareholders met in
August to discuss the Company's future and outlined a plan to revive the
Company. The plan was to sell through private placements the Company's
common stock to raise operating capital to pay for the expense for the
Company to become current in its filings with the Securities Exchange
Commission and other government agencies. The private placement offering
price per share was $0.02. The Company successfully raised $95,000 from the
private placement program offered September through November 1997 which
represented 4,750,000 shares.
COMPETITION AND MARKETS
The oil and gas industry is highly competitive in all of its phases, with
competition for favorable prospects being particularly intense. The Company
believes that price, geological and geophysical skill, and familiarity with
an area of operations are the primary competitive factors in the acquisition
of desirable leases and suitable prospects for oil and gas drilling
operations. The Company competes with independent operators and
occasionally major oil companies, a number of which have substantially
greater technical and financial resources than the Company.
States and countries and other jurisdictions in which the Company plans to
have operations, regulate the exploration, development, production and
prices on the sale of oil and gas. The Federal Power Commission regulates
the sale of natural gas production sold in interstate commerce and the U.S.
Government regulates the price on oil. Markets for, and value of, oil and
gas discovered are dependent on such factors as regulation, including well
spacing and production allowables, import quotes, competitive fuels, and
proximity of pipelines and price- fixing by governments, all of which are
beyond the control of the Company.
On March 31, 1997, 40 degree oil (good gravity crude) was selling for
approximately $19.25 per barrel, compared to a March 31, 1996 figure of
$19.75 per barrel. Prices also vary according to gravity.
FOREIGN TAXES AND UNITED STATES TAX CREDITS
The Company prior to March 31, 1997 did not have any operations outside of
the United States; however, the new management subsequent to March 31, 1997,
plans to work on international projects, primarily in Australia. In the
event operations abroad are established, then the Company will be subject to
the imposition of taxes by foreign governments upon the Company's income
derived from the respective foreign jurisdictions. Such taxes are of various
types, with differing tax rates, and are subject to changes. Generally, the
Company's income from a foreign jurisdiction will be taxed in the same
manner as that for other companies operating in the jurisdiction, but
discriminatory taxation by a particular jurisdiction may occur.
The Company's income is also subject to taxation under the United States
Internal Revenue Code of 1986, as amended (the "Code"). The Code provides
that a taxpayer may obtain a tax credit for certain taxes paid to a foreign
country or may take a deduction for such taxes. A tax credit is generally
more favorable than a deduction. The tax credit applicable to particular
foreign income generally arises when such income is included in the
Company's taxable income under the provisions of the Code. There are,
however, substantial restrictions and limitations on the amount of the tax
credit that can actually be claimed.
OTHER REGULATIONS
Oil and gas operations are and will be subject to federal, state and local
laws and regulations and by political developments. The domestic production
and sale of oil and gas are subject to federal regulation by the Department
of Energy and the Federal Energy Regulation Commission. Rates of production
of oil and gas have for many years been subject to federal and state
conservation laws and regulations. In addition, oil and gas operations are
subject to extensive federal and state regulations concerning exploration,
development, production, transportation and pricing, and to interruption or
termination by governmental authorities.
In foreign countries, the Company may be subject to governmental
restrictions on production, pricing and export controls. Furthermore
regulations existing or imposed upon the Company at the time of its
acquisition of properties may change to an unpredictable extent. The
Company will have little or no control over the change of regulations or
imposition of new regulations and restrictions by foreign governments,
ex-appropriation or nationalization by foreign governments or the imposition
of additional foreign taxes and partial foreign ownership requirements.
PERSONNEL
The business of the Company has been carried on by Ivan Webb, President and
Elizabeth Webb, Secretary/Treasurer from April 1, 1987 through March 15,
1998. Ivan and Elizabeth Webb have devoted such time as has been necessary
to carry on the Company's business. The Company has no bonus, pension, or
profit sharing plans.
Subsequent to year end (March 31, 1997) management initiated a funding
campaign from its existing shareholders to revive the Company. A meeting of
the shareholders planned for May 1998 will elect new directors. These
directors proposed by management are Ivan Webb, Richard M. Hewitt, Gifford
Dieterle and Herbert Wolas.
During the month of September 1997 one part time employee was hired to
assist in the daily operations of the Company.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's assets on March 31, 1997 were $2,156 of which $327 is cash and
the balance is a Canadian royalty which is responsible for the oil and gas
revenues received by the Company.
The following is a description of each of the properties acquired by the
Company subsequent to March 31, 1997:
MOBIL FEE #4 - Black Giant took a 1% working interest in the drilling of a
major structure in Duval County, Texas in November 1997. This well was
drilled to a total depth of 14,200 and encountered a very prolific gas
formation - 14,092 - 14,135 feet. The porosity ranges from 15 to 25% over
the zone. The well was put on line in January 1998 and is producing
approximately 10,000,000 cubic feet per day which yields to Black Giant's
interests approximately $3,200 per month in gas revenues representing a
payout of less than 10 months based on rate of production.
MOBIL FEE #5 - Black Giant exercised its option to take the same interest in
the offset well to the #4 well on February 24, 1998. On April 2, 1998 the
well was drilling ahead at 10,432 feet. Drilling began in March and it takes
about two months for the well to be drilled and about one month to put the
well on line. The geology of this prospect is expected to be better than
the Mobil Fee #4. Based on this information we can project monthly revenues
of $3,200 from this well for Black Giant.
MOBIL FEE ADDITIONAL ACREAGE - Black Giant has first rights on all other
wells to be drilled in the Mobil Fee Gas field. Two more wells are planned
by year end.
THREE PRODUCING LEASES - On September 30, 1997, the Company entered into a
Letter Agreement for the purchase of 10% working interest in three oil and
gas leases located in Nowata and Creek Counties of Oklahoma for 450,000
shares of common stock. These leases total 1510 acres and have a total of
18 producing wells with additional wells to be reworked plus each lease has
its own saltwater disposal wells. The revenues from these leases are
expected to average $900 to $1,200 per month.
FOUR NON-PRODUCING LEASES - On September 30, 1997 the Company entered into a
Letter Agreement for the purchase of 50% working interest in four non
producing oil and gas leases in Oklahoma for development either through
drilling programs or farm outs retaining a carried interest. The Company
agreed to issue 750,000 shares for these leases total 480 acres. Drilling
is planned on these properties over the next 1 to 2 years. It is planned
for Black Giant to recover its cost and keep a carried interest in each
lease as it is drilled.
WOOLDRIDGE LEASES - On October 15, 1997 the Company entered into an
agreement to acquire 90% of the working interest in two leases totaling 320
acres located in Shackelford County Texas for $21,000. These two leases have
a total of 11 wells plus 5 saltwater injection wells. These wells are
producing approximately 4 barrels per day and are expected to increase to 6
barrels per day when changes are implemented in the production operations.
Payout on this acquisition is expected to occur within 30 months.
TROELL LEASES - On October 17, 1997 the Company entered into a ninety day
option agreement to acquire 50% working interest in an oil and gas lease in
Atascosa County, Texas for $58,000 in cash plus 136,000 shares of the
Company's common stock. On February 18, 1998 the Company paid $18,000 on
this debt leaving a balance of $30,000. The option was renewed for another
90 day period. This 120 acre lease is expected to average 15 BOPD when 6
wells are put into production. This lease is expected to be put into
production during the second quarter of 1998. Estimated revenues are
projected to be $2,700 per month.
SPIRES LEASE - On October 20, 1997 the Company entered into an agreement to
acquire 40% working interest in 160 acre oil and gas lease in Nolan County,
Texas for $15,000 plus 250,000 shares of common stock and settle certain
account payables related to the lease. This lease is expected to average
18-20 barrels per day from a single well and is expected to be put on line
during the second quarter of 1998. Estimated revenues are projected to be
$2,100 per month.
ITEM 3. LEGAL PROCEEDINGS
As of April 14, 1998, there were no legal proceedings to which the Company
was a party, and no legal litigation is known to be pending.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters have been submitted to a vote of security holders during the
dormant period from 1987 through 1998. A shareholder meeting is planned
during the month of May 15, 1998 in light of the recent developments that
have caused the Company to be revived with new assets.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
a) MARKET INFORMATION
The Company's common stock is traded on the Over-the Counter market under
the symbol BGOC on the Electronic Bulletin Board.
The following table shows the range of closing bid prices for the Company's
common stock in the over-the-counter market for the quarters indicated, as
reported by the National Association of Securities Dealers (NASD). The
quotations represent prices in the over-the-counter market between dealers
in securities, do not include retail markup, markdown or commission, and do
not necessarily represent actual transactions.
Year Ended March 31, 1997 Bid Prices
High Low
First Quarter $0.03 $0.00
Second Quarter $0.03 $0.00
Third Quarter $0.03 $0.00
Fourth Quarter $0.03 $0.00
The Company's stock was very inactive with few if any trades during the year
end March 31, 1997. The stock price from April 1, 1997 through April 7, 1998
has been from a low of $0.03 to $0.13. On April 7, 1998 the stock was quoted
$0.09 bid and $0.13 ask.
b) APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK
The approximate number of security holders of record of Black Giant Oil
Company on March 30, 1998 was 1,958. Additional stockholders hold stock in
street name; the number of holders in street name is not available to the
Company.
c) DIVIDEND INFORMATION
The Company has not declared or paid dividends in the past, and does not
anticipate doing so in the immediate future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
GENERAL DISCUSSION:
Following the Company's fiscal year ended March 31, 1987, the Company
continued to have difficulty in raising working and operating capital. The
environment for energy deals was very tough as oil prices continue to fall
to $9.50 per barrel. The oil and gas revenues had fallen to less than
$25,000 per year which was less than half of the previous years revenues.
The Company had liabilities of approximately $143,000 which led the Company
to sell the majority of its assets primarily its oil and gas production to
reduce debt. The Company gradually became less active and by 1991 it was
virtually inactive and dormant. The Company made presentations a number of
times each year to prospective merger candidates. Each of these attempts
never materialized either due to financing problems or lack of working
capital to made the merger successful.
Subsequent to March 31, 1997, a group of concerned shareholders met in
August to discuss the Company's future and outlined a plan to revive the
Company. The plan was to sell private placements of the Company's common
stock to raise operating capital to pay for the expense for the Company to
become current in its filings with the Securities and Exchange Commission
and other government agencies. The private placement offering price per
share was $0.02. The Company successfully raised $95,000 from the private
placement program offered September through November 1997.
The Company proceeded to bring the Company back into compliance with the
various government agencies by bringing current the corporation fees in
Nevada, engaging a Tax Accountant to prepare the tax returns for the
delinquent years and prepare the financial statements for audit for the
three years ended March 31, 1995, 1996, and 1997.
LIQUIDITY AND CAPITAL RESOURCES:
The Company's assets as of March 31, 1997 were $2,156 representing only a
small Canadian royalty interest and $327 in cash. As previously stated most
of the assets of the Company were sold to reduce debt.
The principal assets of the Company were considered to be its shareholder
base, approximately 1,900, and the fact that it had only $13,067 in total
debt. This, in the opinion of management, was valuable and was worth keeping
alive until a plan of action could be implemented to cause the Company to be
revived.
The assets of the Company for March 31, 1995, 1996 and 1997 have remained
fairly constant except for March 31, 1996 when the cash balance was higher
due to an attempt to merge with a Dallas based company.
The liabilities have gradually declined from $24,477 on March 31, 1995 to
$13,067 for March 31, 1997. These liabilities were paid from revenues
received from the Canadian royalty. These debts are principally due to
accounts payable for accounting and legal services.
RESULTS OF OPERATIONS:
The $7,293 revenues for 1995 are from the Canadian royalty which is paid in
Canadian dollars. The expense of $2,453 for Foreign Exchange is directly
related to the conversion of the Canadian dollar to United States dollars.
No other revenues were received during the year and the remaining
expenditures were nominal except for $2,225 paid for professional fees.
The fiscal year ended March 31, 1996 included an effort to revive the
Company. In addition to the oil and gas revenues of $8,658, the Company
entered into an agreement with a Dallas based company where they would fund
the cost of bringing the Company current with all of the various government
agencies. The Dallas group provided $35,000 for the revival process,
however, the funds were never used for bringing the Company current. The
Dallas group decided for the Company to take a $10,000 option on a
12,900,000 acre oil and gas concession located in the western part of
Queensland, Australia. The option was never exercised and the option
expired. The Dallas group required $20,000 for another project and failed to
return these funds back to the Company, causing the Company to discontinue
its process of becoming current with its filings. The Company did profit
from the transaction with the Dallas group by approximately $5,000 which was
beneficial to pay on the Company's debt.
The fiscal year ended March 31, 1997 reflects an increase in revenues from
the Company's royalties plus miscellaneous income of $11,875. This
miscellaneous income was derived from coordinating a printing and mailing
job for a public company. The expenses of the Company increased to $24,728
of which $16,078 was paid for contract services which was primarily paid for
printing and mailing services.
The Company reported a profit each of the past three years ended March 31,
1995, 1996 and 1997. These profits were small, representing less than one
cent per share in earnings per share. The Company has 14,350,227 shares
issued and outstanding for each of the three years presented.
SUBSEQUENT EVENTS:
On September 22, 1997, the Company entered into a Debt Agreement with the
Wolas Family for $100,000. The terms of the Debt Agreement are 10% interest
payable in stock on a quarterly basis (125,000 shares per quarter - based on
2 cents per share). The debt can be paid in full or be convertible to
equity, based on 2 cents per share (5,000,000 shares - on the 22nd of
September, 2000 at the election of the Wolas Family). The Wolas Family also
have a warrant to purchase 1,000,000 shares of common stock for $25,000 on
or before the 22nd of September 2002, being $0.025 per share.
During the process of reviving the Company, the Company participated in the
drilling of three wells and purchased working interests in 12 oil and gas
lease. These leases have a total of 78 wells of which 33 are producing, 30
are non producing and 15 are disposal wells for saltwater. The interests
range from 1% to 50%. These oil and gas leases are located in Texas and
Oklahoma. As of March 31, 1998 no oil and gas revenues have been received by
the Company from these leases, however, management expects oil and gas
revenues to begin in April/May 1998. See "Item 2. Description of Property"
for more information about these properties.
In general, the Company has been able to attract working and operating
capital to cause the Company to regain its full reporting status and build
oil and gas income. The Company, after regaining its full reporting status,
will have the opportunity to secure financing from several sources to
further build the Company. Currently, there are three main groups that are
interested in financing the Company.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-K includes "forward-looking" statements within the meaning of
Section 27A of the Securities Act and the Company desires to take advantage of
the "safe harbor" provisions thereof. Therefore, the Company is including
this statement for the express purpose of availing itself of the protections
of such safe harbor provisions with respect to all of such forward-looking
statements. The forward-looking statements in this Form 10-K reflect the
Company's current views with respect to future events and financial
performance. These forward-looking statements are subject to certain risks
and uncertainties that could cause actual results to differ from those
anticipated. In the Form 10-K, the words "anticipates," "believes, "expects,"
"intends," "future" and similar expressions identify forward-looking
statements. The Company undertakes no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that may arise
after the date hereof. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by this section.
YEAR 2000 ISSUE
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" issue. The
"Year 2000" problem is the result of computer programs being written using two
digits rather than four to define the applicable year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a major system failure or
miscalculations. The Company believes that all of its software and equipment
is "Year 2000" compliant and that this problem will have no affect on the
Company's operations.
ITEM 7. FINANCIAL STATEMENTS
The following financial statement information for Black Giant Oil Company is
set forth below:
Report of Independent Certified Public Accountant
Balance Sheets
Statements of Operations
Statements of Changes in Stockholders' Equity
Statements of Cash Flows
Notes to the Financial Statements
<PAGE>
INDEPENDENT AUDITOR'S REPORT
TO THE BOARD OF DIRECTORS OF BLACK GIANT OIL COMPANY
We have audited the accompanying Balance Sheets of Black Giant Oil Company as
of March 31, 1997 1996 and 1995 and the related consolidated statements of
operations, cash flow, and stockholders' equity for the years then ended.
These financial statements are the responsibility of the management of Black
Giant Oil Company. Our responsibility is to express an opinion on these
financial statements based on our audit.
We have conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements are free of material
misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the 1997, 1996 and 1995 financial statements referred to above
present fairly, in all material respects, the financial position of Black
Giant Oil Company as of March 31, 1997, 1996 and 1995 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
_/S/ HARMON & COMPANY, CPA, INC.
HARMON & COMPANY, CPA, INC.
APRIL 3, 1998
<PAGE>
Black Giant Oil Company
Balance Sheets
March 31, 1997, 1996, 1995
3/31/97 3/31/96 3/31/95
Assets
Current Assets:
Cash $327 $3,342 ($144)
Total Current Assets 327 3,342 (144)
Property and Equipment:
(at cost less accumulated depreciation
and depletion)
Producing Royalties 6,372 6,372 6,372
Office Furniture and Equipment 44,950 44,950 44,950
Autos 15,524 15,524 15,524
Accumulated Depreciation & Depletion (65,017) (62,638) (61,237)
Total Property and Equipment 1,829 4,208 5,609
Total Assets $2,156 $7,550 $5,465
Liabilities and Stockholders' Equity:
Liabilities:
Accounts Payable $13,067 $18,515 $24,477
Total Liabilities 13,067 18,515 24,477
Stockholders' Equity:
Common Stock, $0125 par, 20,000,000
shares authorized, 14,370,227 shares
issued, 14,350,227 shares outstanding
in 1997, 1996 and 1995 179,628 179,628 179,628
Paid-in Capital 1,269,513 1,269,513 1,269,513
Retained Earnings (Deficit) (1,418,652) (1,418,706) (1,426,753)
Less Treasury Stock, 20,000 shares (41,400) (41,400) (41,400)
Total Stockholders' Equity (10,911) (10,965) (19,012)
Total Liabilities and Stockholders'
Equity $2,156 $7,550 $5,465
The accompanying notes are an integral part of these financial statements
<PAGE>
Black Giant Oil Company
Statements of Operations
For the Years Ended March 31, 1997, 1996 and 1995
3/31/97 3/31/96 3/31/95
Revenue:
Oil & Gas Income $15,184 $8,658 $7,292
Misc. Income 11,875 14,961 -0-
Total Income 27,059 23,619 7,292
Expenses:
Bank Charge 166 132 220
Contract Services 16,078 1,330 -0-
Depreciation & Depletion 2,379 1,401 1,196
Foreign Exchange 4,018 2,268 2,453
Expired Lease Cost -0- 10,000 -0-
Office Expenses -0- 104 -0-
Professional Fees 3,575 185 2,225
Telephone 790 151 -0-
Total Expenses 27,006 15,571 6,094
Net Income before Federal Income Taxes 53 8,048 1,198
Federal Income Taxes 8 1,207 180
Effect of Net Operating Loss Carryforward (8) (1,207) (180)
Net Income (Loss) $53 $8,048 $1,198
Earnings per share $ 0.00 $ 0.00 $ 0,00
Weighted average of common shares
outstanding 14,350,227 14,350,227 14,350,227
The accompanying notes are an integral part of these financial statements
<PAGE>
<TABLE>
<CAPTION>
Black Giant Oil Company
Statement of Changes in Stockholders' Equity
For the Years Ending March 31, 1997, 1996, 1995
Additional Retained Total
Common Stock Paid-In Earnings Treasury Stockholders
Shares Amount Capital (Deficit) Stock Equity
<S> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1994 14,350,227 $179,628 $1,269,513 ($1,427,951) ($41,400) ($20,210)
Net income for the year 1,198 1,198
Balance at March 31, 1995 14,350,227 179,628 1,269,513 (1,426,753) (41,400) (19,012)
Net income for the year 8,048 8,047
Balance at March 31, 1996 14,350,227 179,628 1,269,513 (1,418,706) (41,400) (10,965)
Net income for the year 53 53
Balance at March 31, 1997 14,350,227 $179,628 $1,269,513 ($1,418,652) ($41,400) ($10,911)
<FN>
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
Black Giant Oil Company
Statements of Cash Flows
For Years Ending March 31, 1997, 1996, 1995
3/3197 3/31/96 3/31/95
Cash Flows from Operating Activities:
Net Income (Loss) $53 $8,048 $1,198
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and Depletion 2,379 1,401 1,196
Changes in operating assets and liabilities:
Increase (Decrease) in Accounts Payable (5,447) (5,963) (2,560)
Net Cash Provided (Used) by Operating
Activities (3,015) 3,486 (166)
Cash Flows from Investing Activities: -0- -0- -0-
Cash Flows from Financing Activities: -0- -0- -0-
Net Increase (Decrease) in Cash ($3,015) $3,486 ($166)
Cash, Beginning of Period $3,342 ($144) $22
Cash, End of Period $327 $3,342 ($144)
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the year for interest $ -0- $ -0- $ -0-
The accompanying notes are an integral part of these financial statements
<PAGE>
BLACK GIANT OIL COMPANY
NOTES TO FINANCIAL STATEMENTS
For the Years Ended March 31, 1997, 1996 and 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND DESCRIPTION OF THE BUSINESS - Black Giant Oil Company (the
Company) was organized on July 23, 1973 as a corporation under the laws of the
State of Nevada, for the general purpose of engaging in exploration for oil
and gas. More recently, the Company has shifted its activities to acquiring
working interests, royalties, and overriding royalties in oil and gas
properties within the United States and in foreign countries.
During its fiscal year ended March 31, 1997, the Company was not involved in
any bankruptcy, receivership, or similar proceeding and under went no material
reclassification, merger, or consolidation. The Company does not anticipate
involvement or participation in any of the above proceedings.
During the period from April 1, 1978 to March 31, 1997, the Company conducted
no substantial business, received no material income and had no material
assets or liabilities. The Company was dormant and virtually inactive during
this period of time.
In August 1997, a group of stockholders met and decided to make an attempt to
revive the Company and initiated a funding campaign. Although a public
company reporting to the Securities and Exchange Commission ("SEC") under
Section 13D or 15 of the Securities Act of 1933, its last report on Form 10-K
was for the Company's fiscal year ended March 31, 1987 until renewed activity
on the Company's behalf by its Board of Directors during the fiscal year 1997.
The Company intends to bring all necessary filings with the SEC current during
1998.
The following is a summary of significant accounting policies followed in the
preparation of these consolidated financial statements. The financial
statements and notes are the representation of the Company's Management, who
is responsible for their integrity and objectivity. The policies conform to
generally accepted accounting principles and have been consistently applied.
USE OF ESTIMATES - The preparation 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
disclosures 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.
PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.
Producing Royalties are stated at cost. Depletion is computed at 15% of gross
income up to the acquisition cost of the individual royalty holdings. Costs
of maintenance and repairs are charged to expense as incurred. Major
improvements and renewals, in general, are capitalized. Acquisitions to fixed
assets are depreciated on the straight-line method, generally over lives of
5-7 years.
Depreciation and depletion charged against operations for the years ended
March 31, 1997, 1996 and 1995 were $2,379, $1,401 and $1,196, respectively.
The Company, as activity increases, intends to use the successful efforts
method of accounting for its oil and gas producing activities. Under this
method, all costs associated with productive exploratory wells and productive
or nonproductive development wells will be capitalized while the costs of
nonproductive exploratory wells are expensed. Indirect exploratory
expenditures, including geophysical costs and annual lease rentals, will be
expensed as incurred. Unproved properties will be assessed periodically, and
if an impairment of value is apparent, a valuation allowance will be provided.
Capitalized costs relating to proved properties will be amortized using the
units of production method on a property-by-property basis. Generally, no
gain or loss will be recognized upon disposition of proved oil and gas
properties unless the disposition encompasses an entire property.
NOTE 2 - DEFERRED TAXES AND INCOME TAXES
As more fully described in Note 1, the Company adopted Financial Accounting
Standards No. 109, "Accounting for Income Taxes" and all years presented
reflect the adoption of this method. The deferred tax asset of $- 0 -, net of
a valuation allowance of $222,275, which arises solely from the estimated
future benefit of the net operating loss carry-forward of approximately
$635,048.
The components of the deferred tax asset are as follows:
1997 1996 1995
Tax asset arising form net
operating loss carryforward:
Federal Deferred Tax Asset $222,275 $222,275 $225,100
Less valuation for deferred
tax assets (222,275) (222,275) (225,100)
Deferred Taxes - net $ -0- $ -0- $ -0-
The amounts and expiration dates of the net operating loss carryforward
available to the Company at March 31, 1997 are as follows:
Amount Expiration
Date
Unused Loss for the year ended March
March 31, 1984 $55,225 1999
Loss for the year ended March 31, 1985 105,432 2000
Loss for the year ended March 31, 1987 67,058 2001
Loss for the year ended March 31, 1989 10,060 2003
Loss for the year ended March 31, 1990 19,698 2004
Loss for the year ended March 31, 1991 137,904 2005
Loss for the year ended March 31, 1993 175,771 2007
Loss for the year ended March 31, 1994 63,900 2008
Total Net Operating Loss Carryforward $635,048
NOTE 3 - LEGAL PROCEEDINGS
As of March 31, 1997, there were no legal proceedings to which the Company was
a party, and no legal litigation is known to be pending.
NOTE 4 - SUBSEQUENT EVENTS
In August 1997, a group of concerned shareholders met to discuss the Company's
future and outlined a plan to revive the Company. The plan was to sell
through private placements the Company's common stock to raise operating
capital to pay for the expense for the Company to become current in its
filings with the Securities Exchange commission and other government agencies.
The private placement offering price per share was $0.02. The Company
successfully raised $95,000 from the private placement program offered during
September through November 1997.
The Company proceeded to bring the Company back into compliance with the
various government agencies by engaging a Tax Accountant to prepare the tax
returns for the delinquent years and prepare the financial statements for
audit for the three years ended March 31, 1997, 1996 and 1995.
On September 22, 1997, the Company entered into a Debt Agreement with the
Wolas Family for $100,000. The terms of the Debt Agreement are 10% interest
payable in stock on a quarterly basis (125,000 shares per quarter - based on 2
cents per share). The debt can be paid in full or be convertible to equity,
based on 2 cents per share (5,000,000 shares - on the 22nd of September, 2000
at the election of the Wolas Family. The Wolas Family also have a warrant to
purchase 1,000,000 share of common stock for $25,000 on or before the 22nd of
September 2002, being $0.025 per share.
During the process of reviving the Company, the Company participated in the
drilling of three wells, purchased working interests in 12 oil and gas leases.
These leases have a total of 78 wells of which 33 are producing, 30 are
non-producing and 15 are disposal wells for saltwater. The interests range
from 1% to 50%. These oil and gas leases are located in Texas and Oklahoma.
As of March 31, 1998, no oil and gas revenues have been received by the
Company from these leases, however, management expects oil and gas revenues to
begin in April 1998.
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL
DISCLOSURE
There are no disagreements between the Company and its auditor, Harmon &
Company, CPA, Inc. regarding accounting and/or financial disclosure.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following are the officers and directors of the Company as of April 14,
1998
Name Age Position
Ivan Webb* 47 President & Director
Elizabeth Webb* 49 Secretary/Treasurer & Director
Gifford Dieterle 65 Director
*Ivan Webb and Elizabeth Webb are husband and wife. There are no other
family relationships between the directors and officers.
The following are directors nominated by the Board on April 2, 1998 for
election the next Annual Meeting of shareholders scheduled for May 15, 1998.
Name Age Position
Ivan Webb 47 President & Director
Richard M. Hewitt 60 Director
Gifford Dieterle 65 Director
Herbert Wolas 64 Director
There are no family relationships between the above listed proposed
directors.
IVAN W. WEBB, president and director, of Cisco, Texas, received his Bachelor
of Business Degree in Business Administration from Tarleton State University
(Texas A&M Branch) in 1978. He was instrumental in the preparation of four
domestic oil and gas public stock offerings. Mr. Webb has been involved in
the negotiations for the acquisition of more than 200 producing oil and gas
properties within the United States during his career. He has international
experience through negotiating with governments for oil and gas concessions
in Australia, Argentina, gold and diamond leases in Guyana, South America
and a bauxite project in Orissa, India. He is currently Chief Financial
Officer of Ness Energy International, Inc., a public company also listed on
the Electronic Bulletin Board.
GIFFORD A. DIETERLE, Director, of New York, New York, graduated from New
York University with a BA in geology in 1956 and with an M.S. in geology in
1959. He also worked (part-time) for the City of New York as a soils
engineer from 1956 to 1959. From 1959 to 1962, he was a geologist with
Pavlo Consulting Engineers and from 1962 to 1964, he worked for Dames and
Moore, as a Soils Engineer, both being firms of engineering geologists. From
1964 until 1973, he worked as an exploration field geologist for Standard
Magnetite Corporation in North, Central and South America with extensive
activity in gold placer operations. He also worked from 1973 to 1975 as
project geologist for Phoenix Rheinrohr A.S. of Germany in Guatemala and for
Carbonera Chimbote, S.A. Lima, Peru. From 1962 until the present, he has
been a consultant mining geologist with activities in North, Central and
South Americas. In 1976, he formed Franklin Consolidated Mining Co.
(NASDAQ-FKCM) and was president, chairman and geologist until 1993. He also
formed Jegeroil Corp. in 1978 (NASDAQ-JEGR) and was vice president and
chairman until 1986. He also formed Leadville Mining & Milling Corp. in 1983
and has been treasurer and chairman since. He also was lecturer and
assistant professor of geology at Long Island University and Hunter College,
City University of New York for twenty-seven (27) years, retiring in 1987.
Mr. Dieterle has had a brokerage license with Datek Securities Corp. since
1979.
RICHARD M. HEWITT, proposed director, of Trophy Club, Texas is a sole
practitioner attorney specializing in securities law with offices in Irving,
Texas. His is a 1958 graduate of Grinnell College, Grinnell, Iowa, with an
AB degree in Political Science. Mr. Hewitt holds a LLB degree from Southern
Methodist University, College of Law, Dallas, Texas (1963). Between 1964 and
1979, Mr. Hewitt was employed by the Fort Worth Regional Office of the U.S.
Securities and Exchange Commission, Fort Worth, Texas, in varying legal
positions including Regional Administrator. He has been in private practice
in the Dallas-Fort Worth area for the last seventeen (17) years.
HERBERT WOLAS, proposed director, of Los Angeles, California, admitted to
bar, 1961, California. Education: University of California at Los Angeles
(A.A., 1953); B.A., 1954; J.D.,1969). Member: Beverly Hills and Los Angeles
County (Member, Sections on Commercial Law; Bankruptcy) Bar Associations;
State Bar of California. Since being admitted to practice in 1961, has
specialized in bankruptcy reorganization and receivership matters.
1961-1963, an associate with Quittner, Stutman & Treister (now Stutman,
Treister & Glatt). 1963-1987, one of the founders of Robinson & Wolas;
Robinson, Wolas & Diamant; and Robinson, Wolas, Diamant & Brill. 1987-1991,
one of the founders of Wolas, Soref & Ickowicz. 1991, to present: principal
of the Law Offices of Herbert Wolas.
ITEM 10. EXECUTIVE COMPENSATION
The following table shows the annual compensation to be paid to the
Company's president. Subject to funding and/or the availability of funds
from revenues the compensation committee may increase the presidents salary.
Name and Principal Position Salary
Ivan Webb, President $15,000
All compensation and other arrangements between the Company and its officers
and directors are to be approved by a Compensation Committee of the Board of
Directors, a majority of whom are to have no affiliation or relationship
with the Company other than as directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below is certain information concerning persons or firms who are
known by the Company to own beneficially more than 5% of the Company's
common stock (19,791,477 shares) and voting shares on April 7, 1998:
Name and Address Number of Percent
Title of Class of Beneficial Owner Shares Owned of Class
Common Stock Ivan Webb* 2,477,176* 12.52%
$0.0125 Par Value 901West 6th Street
Cisco, TX 76437
Common Stock Richard M. Hewitt 40,000 .21%
$0.0125 Par Value 202 Fresh Meadow Drive
Trophy Club, TX 76262
Common Stock Gifford A. Dieterle 102,200 .52%
$0.0125 Par Value 76 Beaver Street
New York, NY 10005
Common Stock Herbert Wolas** 256,250 1.30%
$0.0125 Par Value 1875 Century Park East
Suite 2000
Los Angeles, CA 90067
All directors and officers
as a group (4 persons) 2,875,626 14.55%
Common Stock Stephen Grosberg 2,730,000 13.72%
$0.0125 Par Value 330 Madison Ave., 8th Floor
New York, NY 10017
*Included in Ivan Webb's stock position are 200,000 shares held in the name
of Elizabeth Webb, his wife.
**Herbert Wolas children hold 100,000 shares which are included in the
shares shown. Herbert Wolas also has warrants for The Wolas Family
Partnership to purchase 1,000,000 shares of the Company's common stock for
$25,000. These warrants expire on September 22, 2002. See Item 12 "Certain
Relationships and Related Transactions" for additional information.
There are no family relationships between the proposed directors.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Ivan Webb and Gifford Dieterle both have interests in the oil and gas
business which might directly compete with the interests of the Company.
Although the Company is not aware of any conflict of interest, such present
or future activities on the part of the officers and directors could cause a
conflict of interest. If the Company should enter into transactions in the
future with its officers, directors or other related parties, the
consideration to them as a result of such transactions shall be as favorable
to the Company as those which could be obtained from an unrelated party in
an arm's length transaction.
On September 22, 1997, the Company entered into a Debt Agreement with
Herbert Wolas for the Wolas Family for $100,000. This agreement was entered
into prior to Mr. Wolas agreeing to serve as a director of the Company. The
terms of the Debt Agreement are 10% interest payable in stock on a quarterly
basis (125,000 shares per quarter - based on 2 cents per share). The debt
can be paid in full or be convertible to equity, based on 2 cents per share
(5,000,000 shares - on the 22nd of September, 2000 at the election of the
Wolas Family). The Wolas Family also have a warrant to purchase 1,000,000
shares of common stock for $25,000 on or before the 22nd of September 2002,
being $0.025 per share.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
No reports were filed on Form 8K during the past three years ended March
31,1997; however, on April 14, 1998 a Form 8K was filed reporting the change
of the Company's auditor and acquisition of assets.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, Black Giant Oil Company has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
BLACK GIANT OIL COMPANY
/s/ Ivan Webb
By: Ivan Webb, President,
Chief Executive Officer, Principal
Accounting Officer, Principal
Financial Officer
Date: April 14, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ Elizabeth Webb Secretary/Treasure & Director April 14, 1998
Elizabeth Webb
/s/ Ivan Webb President & Director April 14, 1998
Ivan Webb
/s/ Gifford Dieterle Director April 14, 1998
Gifford Dieterle
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The following schedule contains summary financial information which has been
extracted from the consolidated financial statements of Golden Triangle
Industries, Inc. and subsidiarys for the quarterly financial statements
filed on Form 10-Q for the periods presented. These summary schedules are
qualified in their entirety by reference to such financial statements and
the notes thereto.
</LEGEND>
<CIK> 0000012388
<NAME> BLACK GIANT OIL COMPANY
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1996 MAR-31-1995
<PERIOD-END> MAR-31-1997 MAR-31-1996 MAR-31-1995
<CASH> 327 3342 (144)
<SECURITIES> 0 0 0
<RECEIVABLES> 0 0 0
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 327 3342 (144)
<PP&E> 66846 66846 66846
<DEPRECIATION> (65017) (62638) (61237)
<TOTAL-ASSETS> 2156 7550 5465
<CURRENT-LIABILITIES> 13067 18515 24477
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 179628 179628 179628
<OTHER-SE> (190539) (190593) (198640)
<TOTAL-LIABILITY-AND-EQUITY> 2156 7550 5465
<SALES> 15184 8658 7292
<TOTAL-REVENUES> 27059 23619 7292
<CGS> 0 0 0
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<OTHER-EXPENSES> 27006 15571 6094
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<INTEREST-EXPENSE> 0 0 0
<INCOME-PRETAX> 53 8048 1198
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 53 8048 1198
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<EXTRAORDINARY> 0 0 0
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<NET-INCOME> 53 8048 1198
<EPS-PRIMARY> 0 0 0
<EPS-DILUTED> 0 0 0
