SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission File
No.O-18322
VISA INDUSTRIES OF ARIZONA, INC.
(Name of small business issuer in its charter)
STATE OF ARIZONA 86-0510653
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
9201 N. 7th Avenue, Phoenix, AZ, 85021
(Address of principal executive offices)
Issuer's telephone number, including area code: 602 870-0004
Securities registered under Section 12(b) of the Exchange Act:
NONE
Securities registered under Section 12(g) of the Exchange Act:
Common stock, $.0001 par value
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
X No
Check if disclosure of delinquent filers in response to Item 405 of
Regulation SB is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements Incorporated by reference in Part III of this Form
10KSBor any amendment to this Form 10KSB. (X)
Issuer's revenues for its most recent fiscal year: $24,921.63
The aggregate market value of voting stock held by non-affiliates of the
registrant was approximately $1,109 as of December 31, 1999.
The registrant had 2,799,742 shares outstanding at December 31, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
Transitional Small Business Disclosure Format (check one)
Yes... NoXX
PART I
Item 1: DESCRIPTION OF BUSINESS
General
Visa Industries of Arizona was incorporated in the state of Arizona on
November 29, 1984, as a successor to Visa Energy Corporation under Visa
Energy Corporation's Bankruptcy Plan of Reorganization. Visa Energy
Corporation ("Energy") filed for protection under Chapter 11 of the
Bankruptcy Code on December 6, 1983. Pursuant to the Plan of
Reorganization under the bankruptcy Code, Energy was merged into the Company
effective April 10, 1985.
Visa Industries of Arizona, Inc. is a company with interests in 20 oil
and gas wells, and a stock transfer agency. The Company is headquartered in
Phoenix, Arizona.
Oil and Gas Operations
Principal Products and Markets Visa engages in oil and gas exploration and
production. It produces crude oil natural gas and condensate. Visa is not
involved in the transportation, refining or marketing of refined products.
While the Oil and gas business accounts for the bulk of Visa's assets,
revenues from oil and gas operations after Lease Operating Expense and
Severance tax were only $14,583.40 last year. Because of this limited
income, Visa determined not to engage engineers to evaluate its petroleum
reserves.
Because of Visa's limited resources, Visa has not voluntarily
participated in active exploration or development of its properties in the
last three years. Visa farmed out certain properties, that is, transferred
properties to third parties in consideration of the third party
drilling a well with Visa retaining a small override and a reversionary
interest. Some wells were drilled on properties held by Visa without Visa's
consent, and Visa will gain an interest in those wells only when and if the
participants in the well recover their costs plus a penalty.
The principal purchasers of crude oil and condensate produced by the
Company are refiners and other companies which have gathering facilities near
the Company's oil producing properties. The principal customers for gas
production are companies having pipelines located near the Company's gas
producing properties.
The availability of a ready market for the Company's oil and gas
production is dependent upon numerous factors beyond the control of the
Company, including the extent of domestic production and importation of oil
and gas, the proximity of the Company's producing properties to pipelines
and other gathering facilities and the capacity of such facilities, the
marketing of other competitive fuels, fluctuations in seasonal demand and
governmental regulation of production, refining, transportation, pricing and
allocation of oil and natural gas and their substitute fuels.
Distribution of Products
Visa sells its oil production under short-term contracts at field prices
quoted by purchasers in the area of the producing property. A portion of the
Company's production comes from "stripper wells" (i.e., wells with low
production and relatively high operating costs). Because this production is
low margin, stripper wells are particularly vulnerable to declines in oil
prices. The Company's natural gas production is generally sold pursuant to
long term contracts.
Competition
The Company competes with numerous other companies and individuals in the
production and marketing of oil and gas. The Company's competitors.
include major and independent oil companies, all of which have financial
resources and facilities substantially greater than those of the Company.
Dependence on a few major customers
During 1998, there were three customers which individually accounted for
ten percent or more of the Company's revenue from oil and gas sales. These
customers were Duke Energy (42%), BTA Oil Producers (15%), Arbuckle Oil (11%)
and Brock Oil (11%). In view of the demand for domestic oil at market prices,
the Company does not believe that the loss of any oil purchasers would adversely
affect its operations. Loss of a gas purchaser, however could cause the Company
significant revenue loss.
Environmental Regulation
The Company is subject to a variety of federal, state and local environmental
laws and regulations relating to site rehabilitation, spillages, noise,
air quality and waste disposal arising from its operations. To date, the cost
of complying with these environmental laws and regulations has not been
material. Whether such compliance in the future will necessitate material
capital expenditures is not known.
Government Regulation
The Company is subject to extensive federal and state regulations governing
its oil and gas activities. The Company owns leasehold interests in federal
and state acreage that entail numerous reporting requirements. Federal and
state regulations affect well spacing and drilling permits.
Employees
At December 31, 1999, the Company had no full time employees, and one part
time employee engaged in oil an gas operations.
STOCK Transfer Agency
The Company acts as a stock transfer agency for itself and one other public
Company.
Item 2. Description of Properties
Oil and gas Properties The Company's interests in its properties are in the
form of direct interests in oil and gas leases. The Company believes it has
satisfactory title to its properties based upon generally accepted industry
standards. As is customary in the industry, only a perfunctory title
examination is conducted at the time property is acquired by the Company.
Prior to the commencement of drilling, however, a thorough examination is
conducted and material defects, if any, are corrected before proceeding with
operations
A portion of the oil and gas properties owned by the Company are leases
requiring annual payment of a delay rental to retain the Company's interest
in the lease. The current annual delay rental on most of the Company's leases
is $1.00 per acre.
Current Drilling Operations
The Company has not conducted any drilling operations since January 1,
1995.
Oil and Gas Interests in Leasehold Acreage
The areas in which the Company holds oil and gas interests in acreage as
of December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Acreage Position
Location Developed Acreage
<C> <C>
Arkansas 54
New Mexico 623.2
Oklahoma 480
Texas 419.44
West Virginia 1088
Total 2664.64
</TABLE>
Oil and Gas Wells
The following table summarizes the Company's gross and net interests in
oil and gas wells as of December 31, 1999. All net well amounts are based on the
working interests currently in effect and include the Company's net interest in
its wells and partnership wells.
<TABLE>
<CAPTION>
Oil and Gas Wells
Oil Gas
Location Gross Net Gross Net
Arkansas .10000 .07925 .10000 .07925
New Mexico .041268 .03668 .041268 .03668
Oklahoma .5314618 .4201368 .5314618 .4206496
Texas .094575 .102268 .094575 .102268
West Virginia 0 0 .20000 .175000
Totals .7673048 .6383348 .9673048 .8138476
There was no drilling activity for the year ended December 31, 1999 and
one (1) salt water disposal well was drilled in 1995.
Selected Production, Price and Cost Data
The following table sets forth annual net production, and the average
sales price and average production (lifting) costs per unit of oil and gas
produced by the Company for the years ended December 31, 1999 and 1998.
Average production costs are converted to equivalent units of oil due to the
dominance of oil sales during the periods.
Oil and Gas Production
Oil (Bbl) Gas (Mcf) Lifting Costs
Year Production Price Production Price (per Bbl)
1999 525.23 16.41 8007.00 1.92
1998 1044.40 9.02 7506.00 1.78 14.775
Exploration and Development Activity
During the calendar year 1995, the Company drilled one exploratory well
and no development wells. The well was dry. In 1996, the Company transferred
one 40 acre tract to another company for the drilling of a well, retaining
a small royalty convertible to a working interest at payout. The well
was completed, and has paid out, but is still shut in waiting on a market.
Item 3. Legal Proceedings
The Company is not subject to any legal proceedings.
Item 4. Submission of Matters to a vote of security Holders
No matter has been was submitted to a vote of security holders during
the past 10 years. The Company does not have sufficient income to call a
shareholder's meeting.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The common stock of Visa is traded on the NASD Bulletin Board under the
symbol VIIS.U. Such trading has been sporadic, and should not be taken to
indicate an established trading market in the Company's Stock. The high
and low bid prices for 1999 and 1998 were as follows:
STOCK PRICE
1999 High Low
1st quarter 0 0
2nd quarter 0 0
3rd quarter 0 0
4th quarter 0 0
1998
1st quarter 0 0
2nd quarter 0 0
3rd quarter 0 0
4th quarter 0 0
The approximate number of holders of the Company's Common Stock was 2,730
record holders as of December 31, 1999 The Company mailed approximately
5,400 proxy statements for its most recent annual meeting, and believes that
this 5,400 number is more accurate as an estimate of the total number of
shareholders, including those shareholders holding in street name.
The Company has not declared any dividends on its Common Stock and does
not expect to pay dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Given the existing state of its finances, the Company does not anticipate
utilizing any material amount of its limited funds to conduct drilling
activities. The Company will continue efforts to farmout high risk prospects
to other oil and gas companies thereby avoiding the risk and the potential
depletion of cash from drilling activities.
The Company Makes it's current expenses with little remaining for capital
expenses. While the company is sufficiently liquid to pay its current
obligations, it does not have sufficient liquidity to make a significant
capital investment.
Recent higher prices for both oil and gas have allowed the Company to pay down
a portion of its accounts payable.
The company is seeking a merger partner.
Item 7. Financial Statements
The Company does not have sufficient resources to have its financial
statements audited. While the statements are unaudited, Management believes
that the statements accurately express the financial condition of the Company.
Visa Industries of AZ, Inc.
Unaudited Balance Sheet
As of December 31, 1999 & 1998
January 1 to January 1 to
December 31, 1999 December 31, 1998
ASSETS
Current Assets
Cash 2259.59 202.15
Accounts Receivable 6259.27 6176.67
Notes Receivable 29992.18 27061.30
Bond
Bond Investment 17932.00 17932.00
Allowance for Decline (12114.00) (12114.00)
Total Bond Investment 5818.00 5818.00
Montessori Day Schools 38629.67 34151.43
__________ __________
Total Current Assets 82958.71 73409.55
Fixed Assets
Oil & Gas Properties
Proven 337769.55 337769.55
Accumulated Depletion (319171.12) (309479.12)
Total Oil & Gas Properties 18598.43 28444.43
Furniture and Fixtures 16308.48 16288.48
Accumulated Depreciation (16374.02) (16287.61)
Total Furniture & Fixtures 65.54 .87
____________ __________
Total Fixed Assets 18598.43. 28445.30
TOTAL ASSETS $101622.68 $101854.85
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable 3716.51 14366.89
Other Current Liabiliti 6594.17 7415.40
Total Current Liabiliti 10310.68 21782.29
Total Liabilities 10310.68 21782.29
Equity
Common Stock 2219.92 2799.74
Treasury Stock (8999.50) (8499.50)
Additional Paid In Capital 596994.08 596414.26
Net Unrealized Loss on Investments (26780.59) (26780.59)
Retained Earnings (471443.51) (481492.80)
Net Income ( 678.40) (1946.58)
____________ ___________
Total Equity 91312.00 80072.56
TOTAL LIABILITIES & EQUITY $101622.68 101854.85
Visa Industries of AZ, Inc.
Profit and Loss
January 1 through December 31, 1999 & 1998
Jan Dec '99 Jan-Dec '98
INCOME
Oil and Gas Sales 8657.16 25880.52
Stock Transfer Fees 16264.47 2572.00
__________ ___________
Total Income 24921.63 28452.52
Cost of Goods Sold
Severance Tax 1675.84 1406.61
Lease Operating Expense 8662.39 8744.31
Total Cost of Goods Sold 10338.23 10150.92
_________ __________
Gross Profit 14583.40 18301.60
General and Administrative Expense 5415.80 10602.10
Depletion Expense 9,846.00 9846.00
NET INCOME before Extraordinary Item (678.50) (2146.50)
Extraordinary Item Gain on Sale of 0 (199.92)
INCOME (678.40) (1946.58)
Net income per share of common stock (.00024) ( .00069)
Weighted average number of shares outstanding 2,799,742 2,219,742
Notes to Financial Statements
December 31, 1999
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 carry forward
available to offset future taxable income of $17,000. The tax net operating
loss expires in the year 2000.
6.Notes and Accounts.
The notes receivable is a note from Bookmar, Inc., entered into on December
18, 1996, for the purchase of the used book business of the Company. Bookmar,
Inc., is owned and controlled by the President of the Company.
The Asset listed as Montessori Day Schools, Inc., is an open account with
Montessori Day Schools, Inc., Montessori Day Schools, Inc. Is under the
control of Edgar J. Huffman, a director of the company.
Item 8.
Item 8. is not applicable, since the company has no auditor.
Part III.
Item 9. Directors, Executive Officers, Promoters, and Control Persons, Compliance with Section 16 (a) or
Exchange Act.
Following is list of the Directors and officers of the Company:
Officers And Directors
Name Age Position
Marianne Ramirez 35 President, Chief Executive Officer,
Director
Edgar J. Huffman 61 Vice President, Secretary, Director
Edgar. J. Huffman. Mr. Huffman, a resident of Phoenix, Arizona, was
elected a Director on the 29th of November, 1984 on the formation of the
Company. Since 1981, Mr. Huffman has been Chairman of
the Board of Montessori Day Schools, Inc., an owner and operator of
Montessori private schools in the Phoenix, Arizona area. He is a
director of Basic Earth Science Systems, Inc., A public company.
Marianne Ramirez, a resident of Phoenix, Arizona, was elected President and
Director in 1997. For the last three years she has been owner and operator of
Bookmar, Inc., a bookstore specializing in new and used books and related
material. For the last fifteen years, she has served as bookkeeper for The
Company, and Montessori Day Schools, Inc., an Arizona Corporation.
Mr. Huffman is the father of Ms. Ramirez.
Item 10. Executive Compensation
Summary Compensation Table
(a) (b) (c)
Name and Principal Year Salary
Position
Maryanne
Ramirez
<S> <C> <C>
CEO 1999 4,268
1998 5,267
1997 7,459
Security Ownership of Certain Beneficial Owners
The following table shows the number and percentage of shares held as of
December 31, 1999,1996 by each person who, to the knowledge Mamagement, owns
more than 5% of any class of stock. Except as otherwise indicated, each
shareholder has sole investment and voting power over the shares listed.
</TABLE>
<TABLE>
<CAPTION>
Security ownership of Certain Beneficial Owners
<S> <C> <C> <C>
(1) (2) (3) (4)
Title of Name and Address Amount and Nature Percent of Class
Class Name of Beneficial Owner of Beneficial
and address of beneficial Owner Ownership
Common Edgar J. Huffman 265,000 shares 9.5%
Stock, 9215 N. 14th Street direct
0.0001 Phoenix, AZ 85020
par value
Common Barry Blank 265,000 shares direct 9.5%
Stock, 5353 N. 16tH St.
0.0001 Suite 1980
par value Phoenix, Az 85016
</TABLE>
The following table shows the number and percentage of shares held as of
December 31, 1999 by each Officer or Director of the Company and all Officers
and Directors as a group. Except as otherwise indicated, each shareholder
has sole investment and voting power over the shares listed.
<TABLE>
<CAPTION>
Security ownership of Management
(1) (2) (3) (4)
Title of Class Name and address of beneficial Owner Amount and Nature of Percent of Class
beneficial ownership Percent
<S> <C> <C> <C>
Common Edgar J. Huffman 265,000 shares direct 9.5%
Stock 9215 N. 14th Street
Phoenix, Az 85020
Common Maryanne Ramirez 25,000 shares direct 0.9%
Stock 9215 N. 14th Street
Phoenix, Az 85020
Common All Directors and 290,000 shares direct 10.4%
Stock officers as a
Group
</TABLE>
Item 12. Certain relationships and Related Transactions.
See note 6 to the financial statements for information concerning certain
notes and accounts from the company to entities controlled by the directors.
SIGNATURES
In accordance with the requirements of the exchange act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: March 23, 2000
Visa Industries of Arizona, Inc.
(Registrant)
By: /s/ Edgar J. Huffman
Edgar J. Huffman
Vice President, Chief Executive Officer
Director
By: Mary Anne Ramirez
Mary Anne Ramirez
Chief Financial Officer,
President, Director
