FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
COMMISSION FILE NUMBER 1-8322
VISA INDUSTRIES OF ARIZONA, INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ARIZONA 86-0510653
------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
9201 N. 7th Avenue Phoenix, AZ 85021
---------------------------------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(602) 870-0004
----------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Not Applicable
---------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED)
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, and
(2) has been subject to such filing requirements for 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.
CLASS OF COMMON STOCK MARCH 31, 1998
$.0001 PAR VALUE 2,219,742 SHARES
<PAGE>
CONSOLIDATED BALANCE SHEETS
(Unaudited)
The accompanying notes are an integral part of
these consolidated financial statements.
Visa Industries of AZ, Inc.
Balance Sheet Comparison
As of June 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, 1998 June 30,
1997
ASSETS
Current Assets
GENERAL CHECKING 258.29 2,883.40
Accounts Receivable 2,023.44 11,364.81
ALLOWANCE FOR Det (12,114.00) (12,114.00)
BOND INVESTMENT 17,932.00 17,932.00
NOTE, Montessori Day 32,255.30 8,247.26
Total Current Assets 40,355.03 28,313.47
Fixed Assets
Cost of Proven Reserves 337,769.55 337,769.55
Accumulated Depletion (304,402.12) (289,633.11)
Accumulated Depreciation(16,097.91) (15,718.50)
Furniture & Fix 16,288.48 16,288.48
Total Fixed Assets 33,558.00 48,706.42
Other Assets
Bookstore Investment 37,879.06 37,879.06
REPAYMENT OF Investment (10,614.95) (10,275.79)
Total Other Assets 27,264.11 27,603.27
TOTAL ASSETS 101,177.14 104,623.16
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable 14,973.47 13,419.26
Other Current Liabilities 7,634.20 7,397.08
Total Current Liabilities 22,607.67 20,816.34
Total Liabilities 22,607.67 20,816.34
Equity
Common Stock 2,219.92 2,219.92
Treasury Stock (8,549.50) (8,499.50)
Additional Paid In .. 596,994.08 596,994.08
Net Unrealized Loss (26,780.59 (26,780.59)
Retained Earnings (482,543.22) (485,985.73)
Net Income (2,771.22) 5,858.64
Total Equity 78,569.47 83,806.82
TOTAL LIABILITIES & EQUITY 101,177.14 104,623.16
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
The accompanying notes are an integral part of
these consolidated financial statements.
Visa Industries of AZ, Inc.
Profit and Loss YTD
January through March 1998
<TABLE>
<S> <C> <C>
March 1, March 1
To June 30 To June 30
Ordinary Income/Expense 1998 1997
Income
Sales
Oil Sales 6,364.93 23,563.13
GAS SALES 4,472.66 7,224.33
Total Sales 10,837.59 30,787.46
Stock Transfer 1,416.00 1,246.19
Total Income 12,253.59 32,033.65
Cost of Goods Sold
Cost of Goods Sold
Severance Tax 501.51 1,492.16
LOE 3,076.42 11,551.54
COGS 422.00 0
Total Cost of Goods Sold 3,999.93 13,043.70
Total COGS 3,999.93 13,043.70
Gross Profit 8,253.66 18,989.95
Expense
Bank Service Charges 57.74 65.62
Contributions 60.00 0
Depletion Expense 4,923.00 0
Depreciation Expense 189.70 189.72
Dues and Subscript... 245.54 178.84
Insurance 132.64 0
Interest Expense 0 90.09
Miscellaneous 340.22 294.90
Payroll Expense 2,387.00 5,784.26
Payroll Taxes 334.43 527.50
Postage and Delivery 0 317.05
Professional Fees 500.00 2,200.00
Rent 183.02
Taxes 160.76 0
Telephone 388.33 1,267.35
Travel & Ent 1,012.50 312.00
Total Expense 11,24.88 13,319.31
Net Ordinary Income (2,771.22) 5,670.64
</TABLE>
Notes to Financial Statements
June 30, 1998
1. Organization
The Company was incorporated in Arizona on November 29, 1984, for
the purpose of acquiring, through the issuance of stock, the
remaining assets of Visa Energy Corporation. Visa Energy
Corporation filed for protection from its creditors under Chapter
11 of the Bankruptcy Code on December 6, 1983. The merger of
Visa Energy Corporation into Visa Industries of Arizona, Inc. Was
effective April 10, 1985. Under the terms of the bankruptcy, the
stockholders of Visa Energy Corporation received one share of
Visa Industries of Arizona, Inc. common stock for each ten shares
of Visa Energy Corporation common stock.
The assets acquired in the merger consisted of interests in 23
oil and gas wells. The acquired oil and gas wells are located in
the states of Texas, Oklahoma, and New Mexico. Visa Industries
of Arizona, Inc. had no operations prior to the merger.
The merger is accounted for using the pooling of interests
method. Visa Energy Corporation's retained earnings was adjusted
to zero and oil and gas properties adjusted to their fair value
as a result of the reorganization in bankruptcy. This adjustment
was made because substantially all assets of the Company were
sold and because of the decline in the value of the properties.
Visa is primarily an oil and gas operating company, revenues from
its Stock Transfer Business amount to less than 10% of revenues.
2. Summary of significant accounting policies
A. Method of accounting
The Company's policy is to prepare its financial statements
on the accrual basis of accounting in accordance with generally
accepted accounting principles; consequently, revenues and gains
are recognized when earned and losses are recognized when
incurred.
B. Recording of oil and gas revenue
Revenue from oil and gas sales are recognized based upon
production date.
C. Oil and gas properties
Oil and gas properties are recorded at estimated net
realizable value. The estimated net realizable value is based
upon a reserve study done as of January 1, 1986 for ten of 23
wells in which the Company has an interest.
The reserve study done on proved developed/producing
properties represent approximately 90 percent of the value of the
properties of the Company. It was management's decision not to
have reserve studies done on the remaining properties because it
was not economically beneficial.
The Company has not undertaken any exploration or
development efforts in connection with its oil and gas
properties. At such time as these activities commence, they will
elect either full cost or successful efforts methods of
accounting.
D. Depletion expense
Depletion expense on oil and gas properties is recorded
using the units of production method over the estimated
productive life of all the reserves to recorded basis of the
properties.
E. Furniture and equipment
Furniture and equipment are recorded at cost and are being
depreciated using the straight-line method over an estimated
useful life of five years.
F. Net loss per share of common stock
Net loss per share has been computed based on the weighted
average number of common shares outstanding during the year.
5. Income taxes
The Company's tax basis in oil and gas properties is zero.
This is because Visa Energy Corporation offset its entire tax
basis in the properties with debt forgiveness income which it
elected not to recognize.
The Company files its income tax returns on a cash basis in
which revenues earned are not recognized until received and
expenses incurred are not recognized until paid. The Company has
a net operating loss carryforward available to offset future
taxable income of $17,000. The tax net operating loss expires in
the year 2000.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Visa Industries of Arizona is organized for the purpose of oil
and gas production and exploration; and operates a stock transfer
agency. Due to the Company's limited resources and the recent low
prices of energy, the company is not currently active in exploration
or development activities.
The Company's current business strategy is to find a merger
partner.
LIQUIDITY AND CAPITAL RESOURCES
The Company is basically self financing, through cash flow.
The Company occasionally borrows funds to alleviate short term cash
flow problems, but has no loans outstanding at this time. The
Company currently has sufficient cash flow to continue in business.
RESULTS OF OPERATIONS
FOR THE QUARTER ENDED JUNE 30, 1998, COMPARED TO THE
QUARTER ENDED JUNE 30, 1997
For the quarter ended June 30, 1998, the Company reported
a net loss of or $0.001 per share, as compared to
net income of or $0.07 per share, for the quarter
ended June 30, 1997.
Revenues are approximately one-third of what it was for the
year earlier quarter. Gas prices have dropped precipitously.
These price decreases have caused further curtailments in production
as production became uneconomic. The Company believes that it can
survive until prices recover, but there is no guarantee.
PART II: OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
PART II: OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
EX 27. Financial Data Schedule
b) Reports on Form 8-K
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.
Visa Industries of Arizona, Inc.
(Registrant)
Date: AUGUST 13, 1998 By: /s/ Mary Anne Ramirez
-------------------
Mary Anne Ramirez
Chairman of the Board and
Chief Executive Officer
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> JUN-30-1998 JUN-30-1997
<CASH> 1662 225
<SECURITIES> 5818 5818
<RECEIVABLES> 1778 13721
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 37777 37777
<PP&E> 354058 354058
<DEPRECIATION> 317943 317943
<TOTAL-ASSETS> 101326 100229
<CURRENT-LIABILITIES> 22112 22205
<BONDS> 0 0
0 0
0 0
<COMMON> 2219 2219
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 101326 100229
<SALES> 0 0
<TOTAL-REVENUES> 7644 7644
<CGS> 1650 1650
<TOTAL-COSTS> 1650 1650
<OTHER-EXPENSES> 6375 6375
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (380) (380)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (380) (380)
<EPS-PRIMARY> (0.00) (0.00)
<EPS-DILUTED> (0.00) (0.00)
</TABLE>
