<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
Commission File No. 0-08507
BLACK GIANT OIL COMPANY
(Exact Name of Small Business Issuer as Specified in its Charter)
Nevada 75-1441442
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
1301 Avenue M (P.O. Box 31)
Cisco, Texas 76437
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (254) 442 3968
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act 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 the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of November 1, 1999 had outstanding 27,894,977 shares of its common stock,
par value $0.0125 per share.
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PART 1
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial statements included herein have been prepared by Black Giant Oil
Company without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. However, in the opinion of
management, all adjustments (which include only normal recurring accruals)
necessary to present fairly the financial position and results of operations for
the periods presented have been made. The financial statements should be read in
conjunction with the financial statements and notes thereto included in Black
Giant's SEC Form 10-KSB for the period ended March 31, 1999.
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BLACK GIANT OIL COMPANY
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, March 31,
1999 1999
------------ ------------
(Audited)
<S> <C> <C>
Current assets:
Cash $ 653 $ 119
Prepaids -- 5,000
------------ ------------
Total current assets 653 5,119
Other assets:
Net assets of discontinued operations 157,593 157,593
------------ ------------
$ 158,246 $ 162,712
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 23,160 $ 18,860
Advances from officer 13,175 13,325
------------ ------------
Total liabilities 36,335 32,185
------------ ------------
Convertible debt (Note 2) 100,010 100,010
Commitments and contingencies (Note 5) -- --
Stockholders' equity:
Preferred stock, $.10 par value, 10,000,000 shares
authorized; none issued and outstanding -- --
Common stock, $.0125 par value, 100,000,000 shares
authorized; 24,262,477 and 22,262,477
shares issued and outstanding 303,532 278,532
Additional paid-in capital 1,330,747 1,314,497
Stock to be issued -- 16,250
Accumulated deficit (1,570,978) (1,537,362)
------------ ------------
63,301 71,917
Less treasury stock (20,070 shares, at cost) (41,400) (41,400)
------------ ------------
Total stockholders' equity 21,901 30,517
------------ ------------
$ 158,246 $ 162,712
============ ============
</TABLE>
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BLACK GIANT OIL COMPANY
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Miscellaneous income $ 40 $ 522 $ 170 $ 522
------------ ------------ ------------ ------------
Total revenues 40 522 170 522
------------ ------------ ------------ ------------
Operating expenses:
General and administrative 26,789 8,645 28,256 17,278
------------ ------------ ------------ ------------
26,789 8,645 28,256 17,278
------------ ------------ ------------ ------------
Loss from operations: (26,749) (8,123) (28,086) (16,756)
Other income (expense):
Interest expense (3,400) (3,400) (6,800) (6,800)
------------ ------------ ------------ ------------
Loss from continuing operations (30,149) (11,523) (34,886) (23,556)
Discontinued operations (545) 4,251 1,270 9,445
------------ ------------ ------------ ------------
Net loss $ (30,694) $ (7,272) $ (33,616) $ (14,111)
============ ============ ============ ============
Loss per common share:
From continuing operations $ (0.00) $ (0.00) $ (0.00) $ (0.00)
============ ============ ============ ============
Net loss $ (0.00) $ (0.00) $ (0.00) $ (0.00)
============ ============ ============ ============
Weighted average common shares outstanding 24,423,477 14,350,227 25,423,477 14,350,227
============ ============ ============ ============
</TABLE>
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BLACK GIANT OIL COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
September 30,
------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (33,616) $ (14,111)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Changes in operating assets and liabilities:
Prepaid expenses 5,000 --
Accounts payable and accrued liabilities 4,300 6,463
--------- ---------
Net cash provided by (used in) operating activities (24,316) (7,648)
--------- ---------
Cash flows from financing activities:
Sale of common stock 25,000 --
Advances from officer (150) 7,750
--------- ---------
Net cash provided from financing activities 24,850 7,750
--------- ---------
Net increase (decrease) in cash and cash equivalents 534 102
Cash at beginning of year 119 179
--------- ---------
Cash at end of year $ 653 $ 281
========= =========
Supplemental disclosure:
Total interest paid $ -- $ 3,000
========= =========
</TABLE>
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
CAUTION RESPECTING FORWARD-LOOKING INFORMATION
This Form 10-QSB 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-QSB 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-QSB,
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.
OVERVIEW
This discussion should be read in conjunction with Management's Discussion and
Analysis of Financial Conditions and Results of Operations in Black Giant's
annual report on Form 10-KSB for the year ended March 31, 1999.
Management continued to review and investigate merger candidate possibilities
during the quarter ended September 30, 1999, and as of September 30, 1999 no
agreements or contracts were formalized or executed.
MATERIAL SUBSEQUENT EVENTS
Subsequent to the end of the quarter the Company entered into an Agreement in
Principle and Letter of Understanding with BroadCom Wireless Communications
Corporation of Oklahoma City, Oklahoma. The following is a summary of the
agreement entered into with BroadCom on November 1, 1999:
BROADCOM, or its parent, has previously acquired and been issued from
BGOC Two Million (2,000,000) shares of the common stock fully paid of
Black Giant Oil Company. BROADCOM also agreed to acquire from BGOC Four
Million Four Hundred Thousand (4,400,000) shares of BGOC common stock
for $55,000. On November 17, 1999 the Company received $30,000 and a
promissory note for $25,000 to be paid on or before November 27, 1999.
The 4,400,000 shares will not be released to BROADCOM until fully paid.
BROADCOM has a Letter of Intent with Getmore Wireless, Ron Baker &
Associates, etal, which is a licensed authorized dealer for VoiceStream
Wireless Cell Phones & Pagers with at least Three (3) retail locations
in Oklahoma. The letter of intent provides BROADCOM to acquire Forty
Percent (40%) of the common stock of Getmore Wireless. BGOC will cause
the issuance (to be held in escrow) of Ten Million (10,000,000) shares
of its common stock from its unissued but authorized shares to BROADCOM
for the stock ownership previously described immediately upon receipt
of a fully executed and binding formal contract being fully paid for
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the acquisition of Forty Percent (40%) undivided ownership in Getmore
Wireless. The contract must include a provision for the escrow of a
percentage of the gross revenues for a dividend distribution to be paid
with Forty Percent (40%) of the dividends paid by Getmore Wireless paid
to BGOC.
BROADCOM has a Letter of Intent with Getmore Wireless, Ron Baker &
Associates, etal, which is newly formed entity with a plan to initiate
Wireless Internet Services throughout the Continental United States.
The letter of intent provides BROADCOM to acquire Fifty Percent (50%)
of the common stock of Getmore Communications for providing certain
funding for transmitting towers. BGOC will cause the issuance (to be
held in escrow) of Ten Million (10,000,000) shares of its common stock
from its unissued but authorized shares to BROADCOM for the interest
previously described upon receipt of a fully executed and binding
formal contract being fully paid for the acquisition of Fifty Percent
(50%) undivided ownership in Getmore Communications, subject to funding
requirements ($300,000 to 500,000 per site) being met pursuant to that
contract with 625,000 shares being allocated per site funded. After the
initial Sixteen (16) sites have been funded (up to $8,000,000). BGOC
further agrees to issue to BROADCOM an additional 625,000 shares per
site funded.
BROADCOM has a Two (2) year contract for long distance service to a
Mexican carrier for a revenue source of not less than $140,000 per
month by providing Two (2) Harris Switches. BGOC will cause the
issuance (to be held in escrow) of Ten Million (10,000,000) shares of
its common stock from its unissued but authorized shares to BROADCOM
for the fully executed and binding formal contract with Global Access
for providing two Harris switches to Global Access's Mexican Long
Distance Service contract. The shares shall be released upon
verification and due diligence as to the contracts and switches.
BROADCOM agreed to convey Fifty Percent of One Hundred Percent (50% of
100%) of leasehold interest(s) in mineral leases totaling approximately
Four Thousand Three Hundred (4,300) acres in the Larue County in the
State of Kentucky upon which Nine (9) recently drilled, but not
completed, gas wells now exist. BGOC will cause the issuance (to be
held in escrow) of Five Million (5,000,000) shares of its common stock
from its unissued but authorized shares to BROADCOM for the interest in
the previously described properties upon receipt of valid title to the
leases comprising approximately 4,300 acres and an attorney's title
opinion covering said leases. All leases must be valid with full
compliance with the terms of the lease(s) and all regulatory agencies,
all taxes and any other lease expenses are fully paid, and the leases
are free and clear of all liens and encumbrances whatsoever.
BGOC further agreed to issue and hold in escrow 13,000,000 additional
shares for the Kentucky Gas Project pending a sufficient number of
wells being completed and put on line for production and generating a
positive cash flow net to BGOC's interest in order to substantiate a
minimum value of $2,000,000, or more, to BGOC's interest. After these
wells have reached stabilized production for a period of at least 90
days, BGOC agrees to release up to 13,000,000 shares to BROADCOM based
upon the profitability of the project per SEC accounting standards and
practices for oil and gas properties (Ceiling Tests). Additionally,
BGOC agrees to waive the aforementioned production and revenue criteria
if a sale of the property generates to BGOC's interest net proceeds of
at least $2,000,000.
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The Company has conducted an initial review of geological data pertaining to the
Kentucky Gas properties and has plans to examine the commercial potential in
greater detail. In addition, the Company is currently evaluating a title opinion
pertaining to the mineral leases and a full examination may result in some
delay.
All presently existing assets of BGOC will be transferred to a BGOC subsidiary
that will then be spun off to the pre-merger BGOC shareholders. All the
necessary legal opinions and expenses will be paid by BGOC to properly effect
the spin-off.
Black Giant Oil Company is currently suffering from shortages of working
capital, indebtedness and due or past due current liabilities. The Company is in
need of additional investment capital, strategic alliances, or a sale, or
merger/acquisition. The previously mentioned agreement with BroadCom Wireless
Communications Corporation may or may not be able to provide the necessary
working capital to build a viable telecommunications business. However, the
Company has received $25,000 from an affiliate of BroadCom for 2,000,000 shares
of its restricted common stock, from which funds allowed the Company to become
current in its filings with the SEC and maintain its listing on the Electronic
Bulletin Board of the Nasdaq system. Management also believes BroadCom will be
able to eliminate the current debts of the company and provide working capital
to the Company. However, no assurance can be made or understood that BroadCom
will be able to raise adequate working capital to fund the transition of the
Company from an energy/resource company to a telecommunications company.
LIQUIDITY AND CAPITAL RESOURCES
As discussed in the Overview above and as outlined in the Form 10-KSB for fiscal
year March 31, 1999 including its financial statements, the Company's operating
losses and its working capital deficit raise doubt about its ability to continue
as a going concern. The agreement entered into with BroadCom subsequent to the
end of the quarter is however, designed to revive the Company into a viable
Company.
During the year ended March 31, 1998, the Company began acquiring oil and gas
properties with the intention of developing the properties and becoming an oil
and gas producer. However, with the drop in oil prices during that period, the
Company decided to discontinue those operations and pursue other forms of
business. Accordingly, the oil and gas operations are reported as discontinued
in the accompanying statement of operations and the net oil and gas assets are
reported in the accompanying balance sheet as net assets of discontinued
operations. The Company's assets as of March 31, 1999 were $162,712, and its
total liabilities were $132,185 of which $100,000 is a convertible debt. On June
30, 1999 the Company's assets were $160,540 and its total liabilities were
$132,945 and on September 30, 1999 total assets were $158,246 and total
liabilities were $136,335.
RESULTS OF OPERATIONS
The Company continues with net losses from operations for the quarter ended
September 30, 1999. The Company is dependant on a merger partner or raising
additional funds in order to provide capital for the Company to continue as a
going concern. The Company has had nominal revenues from oil and gas activities
for the three months ended September 30, 1999 of $1,815 and $4,483 for the same
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period in 1998. The decline in revenues was attributable to certain properties
being sold and also a decline in oil prices. These oil and gas operations are
reported as discontinued in the accompanying statement of operations and the net
oil and gas assets are reported in the accompanying balance sheet as net assets
of discontinued operations.
Operating expenses were also nominal during the two periods ending September 30,
1999 and 1998 except for the cost of putting the company back into full
compliance with the SEC. The current period only had expenditures of $26,789 and
the same period of 1998 had expenditures of $8,645. The cost of bringing the
Company back into full compliance was approximately $25,000. These funds were
raised through the placement of 2,000,000 shares of the Company's common stock
for $25,000. These shares were sold to an affiliate company of BroadCom Wireless
Communications Corporation.
IMPACT OF THE YEAR 2000 ISSUE
The year 2000 poses certain issues for business and consumer computing,
particularly the functionality of software for two-digit storage of dates and
special meanings for certain dates such as 9/9/99. The year 2000 is also a leap
year, which may lead to incorrect calculations, functions or system failure. The
widespread use of computer programs that rely on these two-digit date programs
to perform computations and decision-making functions may cause information
technology systems to malfunction in and around the year 2000. Such malfunctions
may lead to significant business delays in the U.S. and internationally. The
problem exists for many kinds of software, including software for mainframes,
PCs and embedded systems. Many normal business activities will potentially be
impacted because information necessary to monitor and control various operations
is controlled by computers.
The Company has studied and tested its technologies systems impacted by the Year
2000 transition. The Company believes that its systems are Year 2000 compliant.
However, variability of hardware and software combinations may lead to
unforeseen problems. The Company does not believe that any problems that arise
with internal systems will be material or will require more than minimal costs
to overcome.
The Company's vendors are various and diverse and the bulk of the items
purchased by the Company are widely available. There are no problems which are
expected to arise due to vendors' failure to be Year 2000 compliant because
auxiliary channels should be available to the Company to acquire its supplies,
parts and other needs from other vendors should any particular vendor have a
problem due to noncompliance.
Due to the nature of the Company's business and its information and accounting
systems, costs to bring its systems into compliance have been immaterial.
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PART II. - OTHER INFORMATION
NONE
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.
BLACK GIANT OIL COMPANY
(Registrant)
Date: November 17, 1999 /s/ Ivan Webb
---------------------------------------
By: Ivan Webb, President, Chief
Executive Officer, Principal Accounting
Officer, Principal Financial Officer
10
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 344,285
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 344,285
<PP&E> 28,300
<DEPRECIATION> 9,823
<TOTAL-ASSETS> 362,762
<CURRENT-LIABILITIES> 87,294
<BONDS> 0
0
0
<COMMON> 4,485,663
<OTHER-SE> (4,210,215)
<TOTAL-LIABILITY-AND-EQUITY> 362,762
<SALES> 15,309
<TOTAL-REVENUES> 19,310
<CGS> 102,572
<TOTAL-COSTS> 102,572
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (83,262)
<INCOME-TAX> 0
<INCOME-CONTINUING> (83,262)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (83,262)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
