SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
Commission file number: 0-12633
TEXOIL, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 88-0177083
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1600 SMITH STREET
SUITE 4000
HOUSTON, TEXAS 77002
(Address of principal executive offices)
(713) 652-5741
(Issuer's telephone number)
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 [_]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 4,199,923 shares of common stock,
$.01 par value, issued and outstanding at April 26, 1997.
Transitional Small Business Disclosure Format (check one):
YES [_] NO [X]
<PAGE>
TEXOIL, INC.
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheet as of March 31, 1997.............................3
Consolidated Statement of Income (Loss) and Retained Earnings
(Deficit) for the three months ended March 31, 1997 and 1996............4
Consolidated Statement of Cash Flows for the three months
ended March 31, 1997 and 1996...........................................5
Notes to Consolidated Financial Statements..................................6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.......................................8
PART II. OTHER INFORMATION.................................................12
<PAGE>
TEXOIL, INC.
CONSOLIDATED BALANCE SHEET
(unaudited)
MARCH 31, 1997
------------
ASSETS
Current assets:
Cash and cash equivalents .................................. $ 172,168
Accounts receivable ........................................ 370,751
Other current assets ....................................... 47,631
------------
Total current assets ................................... 590,550
------------
Property and equipment, at cost:
Oil and gas properties, net (on the basis
of full cost accounting) .................................. 4,898,008
Other equipment, net ....................................... 2,480
Other Assets ................................................. 50,222
------------
$ 5,541,260
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities ................... $ 907,366
Current Portion - notes payable ............................ 1,641,594
------------
Total current liabilities .............................. 2,548,960
Notes Payable ................................................ 1,950,000
Other long-term liabilities .................................. 203,476
Stockholders' equity:
Series A preferred stock, $.01 par; redeemable
and convertible with liquidation preference of
$100 per share 10,000,000 shares authorized;
23,000 shares issued and outstanding ..................... 2,300,000
Common stock, $.01 par; 50,000,000 shares
authorized; 4,199,923 shares issued and
outstanding .............................................. 42,000
Additional paid-in capital ................................. 6,816,353
Deficit .................................................... (8,319,529)
------------
838,824
------------
$ 5,541,260
============
<PAGE>
TEXOIL, INC.
CONSOLIDATED STATEMENT OF INCOME (LOSS) AND RETAINED EARNINGS (DEFICIT)
(unaudited)
For The Three Months
Ended March 31,
-----------------------------
1996 1997
------------ ------------
Revenues:
Oil and gas sales .......................... $ 274,496 $ 274,954
------------ ------------
Costs and expenses:
Lease operating expenses ................... 46,770 49,459
Depreciation, depletion and
amortization ............................. 141,019 134,253
Production taxes ........................... 25,180 22,312
General and administrative
expenses, net ............................ 152,963 130,001
Other (income) expenses:
Interest expense ........................... 39,832 61,238
Non-cash interest expense .................. 0 460,763
Interest income and other .................. (384) 0
------------ ------------
405,380 858,026
------------ ------------
Loss before income taxes ..................... (130,884) (583,072)
Provision for income taxes ................... -- --
------------ ------------
Net loss ..................................... (130,884) (583,072)
Dividends on preferred stock ................. (69,000) 0
------------ ------------
Net loss applicable to common stock .......... (199,884) (583,072)
Retained earnings (deficit),
beginning of period ........................ (5,269,609) $ (7,736,457)
------------ ------------
Retained earnings (deficit),
end of period .............................. $ (5,469,493) $ (8,319,529)
============ ============
Net loss per share of common stock ........... $ (0.05) $ (0.14)
============ ============
Average number of shares outstanding ......... 4,146,475 4,199,923
============ ============
<PAGE>
TEXOIL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For The Three Months Ended March 31 ,
---------------------
1996 1997
--------- ---------
<S> <C> <C>
Operating activities:
Net loss ................................................. $(130,884) $(583,071)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation, depletion and amortization ................. 141,019 134,253
Non-cash compensation expense ............................ 28,860 2,550
Non-cash & additional paid-in capital .................... 0 460,763
Decrease (increase) in accounts receivable ............... (84,456) 101,406
Decrease (increase) in other current assets .............. 10,454 10,827
Increase (decrease) in accounts payable .................. 352,103 (8,424)
Increase (decrease) in other long-term liabilities .......... (2,962) (2,885)
--------- ---------
Net cash provided by (used in) operating activities ...... $ 314,134 $ 115,419
--------- ---------
Investing activities:
Capital expenditures ........................................... (232,750) (391,863)
Proceeds from sales of prospects ............................... 0 0
--------- ---------
Net cash used in investing activities .................... $(232,750) $(391,863)
Financing activities:
Proceeds from borrowings ....................................... 100,000 446,800
Payments on borrowings ......................................... (62,000) 0
Preferred stock dividends paid ................................. (69,000) 0
--------- ---------
Net cash provided by (used in) financing activities ...... $ (31,000) $ 446,800
--------- ---------
Net increase (decrease) in cash and cash equivalents ................. 50,384 170,356
--------- ---------
Cash and cash equivalents at beginning of period ..................... 2,414 1,812
--------- ---------
Cash and cash equivalents at end of period ........................... $ 52,798 $ 172,168
========= =========
</TABLE>
<PAGE>
TEXOIL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - ACCOUNTING POLICIES:
Texoil, Inc., (the "Company") and its wholly owned subsidiary, Texoil
Company ("Texoil"), are engaged in the exploration for, and the production of,
oil and natural gas, primarily in South Louisiana, and to a lesser extent in
Texas. The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to interim financial reporting as
prescribed by the Securities and Exchange Commission. All adjustments, which, in
the opinion of management, are necessary for a fair presentation of the results
for the interim periods, have been reflected in the accompanying unaudited
financial statements. For further information regarding accounting policies,
refer to the Company's audited financial statements for the years ended December
31, 1995 and 1996 included in its 1996 Annual Report on Form 10-KSB. The average
number of shares outstanding, reflected in the net loss per share of common
stock for the three months ended March 31, 1997, gives effect to the 1995 and
1996 Stock Compensation Plans (the "1995 & 1996 Plans"), which provided for the
issuance of shares of common stock to certain employees and consultants whose
cash compensation was reduced by 30% effective April 1, 1995.
NOTE 2 - GOING CONCERN UNCERTAINTY AND MANAGEMENT PLANS:
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has
suffered recurring operating losses and has a working capital deficit that raise
substantial doubt about its ability to meet future expenditure obligations
necessary to fully evaluate and develop its oil and gas properties and to
continue as a going concern. The consolidated financial statements do not
reflect any adjustments that might result from the outcome of these
uncertainties. In this regard the Company entered into the financing
arrangements (as described in Note 3) in order to meet its working capital
requirements and to pursue its exploration opportunities. Despite the Company's
successful efforts to obtain initial financing for its 1997 exploratory drilling
program there can be no assurance that such financing will be sufficient to
fully fund the drilling program or that the results of drilling operations will
be successful. Accordingly, the Company will continue to seek additional sources
of financing as may be necessary.
NOTE 3 - NOTES PAYABLE:
EXCHANGEABLE AND CONVERTIBLE NOTES
In September 1996, Texoil entered into a financing agreement with four
limited partnerships, of which Resource Investors Management Company Limited
Partnership ("RIMCO") is the controlling partner, (the "RIMCO Financing") to
provide up to $8,000,000 in two separate financings. Under the first financing,
Texoil may issue up to $3,000,000 in exchangeable notes through September 1,
1997. Any indebtedness under the exchangeable notes is exchangeable for the
Company's common stock at $.80 per share. As of March 31, 1997 Texoil has
borrowed a total of $1,641,594 from RIMCO. Some $446,800 of this total amount
was borrowed during the three months ended March 31, 1997. Under the second
financing, which may occur after advances of $2,800,000 have been made on the
exchangeable notes, Texoil may issue up to $5,000,000 in senior notes through
September 1, 1999, contingent upon Texoil maintaining an agreed upon borrowing
base. Texoil's ability to maintain the agreed upon borrowing base is directly
dependent on the results of its exploratory drilling program, therefore it can
give no assurance that it will be able to maintain the necessary borrowing base.
Advances under the senior notes will bear interest at 10% with interest and
principal payable monthly through
<PAGE>
September 2002 and will be collateralized by substantially all of Texoil's
assets. At March 31, 1997, no advances had been made under the senior notes.
In conjunction with the RIMCO Financing, the Company replaced previously
existing convertible notes held by three of its directors with replacement
convertible notes (the "Replacement Notes") in the aggregate amount of $900,000.
Any indebtedness under the Replacement Notes is convertible for the Company's
common stock at $0.80 per share.
The Company can require exchange or conversion of the exchangeable notes
issued under the RIMCO Financing or the Replacement Notes if funding of at least
$2,800,000 has occurred from the exchangeable notes, under the RIMCO Financing,
and the average common stock price for any consecutive 20-day trading period is
$3.00 or more. The Company has granted registration rights for any shares to be
issued under these exchange or conversion privileges.
At December 31, 1996, the Company was in default of one of the RIMCO
Financing loan covenants. The Company requested and obtained a waiver of this
violation from RIMCO effective through June 30, 1997. Accordingly, the debt has
been classified as current at March 31, 1997 in the accompanying consolidated
balance sheet.
OTHER AFFILIATE NOTES
The Company has two subordinated notes from a Company director and his
affiliate in the aggregate amount of $1,050,000. There are $1,000,000 in loans
from Mr. T.W. Hoehn, Jr. evidenced by a promissory note which matures upon the
earlier to occur of October 1, 2002, and 30 days after the RIMCO debt has been
paid in full in cash or by exchange for common stock. The note accrues interest
at a variable rate equal to 2% plus the prime rate announced by Wells Fargo Bank
(Texas), N.A., is payable to the T.W. Hoehn, Jr. and Betty Jo Hoehn Revocable
Trust, and is subordinate to the RIMCO financing. Monthly interest payments are
due on the 10th day of each month and scheduled quarterly principal payments may
be made if certain liquidity conditions are satisfied and after the first
$2,800,000 of the RIMCO loans have been funded. Unpaid quarterly principal
payments are cumulative and amounts in excess of the scheduled quarterly
payments may be paid if the liquidity conditions are satisfied. A $50,000 loan
from Opal Air, Inc., a company owned by T. W. Hoehn, Jr., is evidenced by a
promissory note from the Company to Opal Air, Inc.; said note matures on the
same date and is otherwise subject to substantially the same terms as the
Company's $1,000,000 note to the T. W. Hoehn, Jr. and Betty Jo Hoehn Revocable
Trust.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company uses the full cost method of accounting for its investment in oil
and gas properties. Under the full cost method, all costs of acquisition,
exploration and development of oil and natural gas reserves are capitalized into
a "full cost pool" for each cost center (generally defined as a country). Oil
and gas properties in the pool are depleted and charged to operations using the
unit of production method based on the ratio of current production to total
proved recoverable oil and natural gas reserves. Under the full cost method, to
the extent that capitalized costs (net of depreciation, depletion and
amortization) exceed the future net revenues of estimated proved oil and natural
gas reserves on an after-tax basis, such excess costs are charged to operations
as additional depreciation, depletion and amortization expense. Certain costs
associated with the acquisition and evaluation of unproved properties may,
however, be excluded from amortization until it is determined whether or not
proved reserves can be assigned to the properties.
At March 31, 1997, the Company's estimated discounted future net revenues from
estimated proved reserves on an after-tax basis approximate the net capitalized
costs in the Company's full cost pool. So long as this condition continues, any
excess of the company's full cost pool over the discounted future net revenues
from proved reserves on an after-tax basis may result in charges to the
Company's operations. Such excesses could result from writedowns of proved
reserve quantities or declines in oil and gas prices. Certain events and
conditions that may cause such charges cannot be reasonably predicted by the
Company. Once incurred, a writedown of oil and gas properties cannot be reversed
at a later date even if reserve quantities are subsequently increased or oil and
gas prices subsequently rise.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED
TO THREE MONTHS ENDED MARCH 31, 1997
The Company recorded net losses of $130,884 and $583,072 in the three months
ended March 31, 1996 and 1997, respectively. The $452,188 increase in the
Company's comparative net losses resulted primarily from the following factors:
DECREASE (INCREASE) IN NET LOSS
Three months ended March 31, 1997
Increase in non-cash interest expense ......... $(460,763)
Decrease in net general and ................... 22,963
administrative expenses
Increase in interest expense .................. (21,406)
Aggregate of all others ....................... 7,018
---------
$(452,188)
=========
The increase in non-cash interest expense comes as a result of the Securities
and Exchange Commission staff's recently adopted new position on accounting for
convertible debt instruments, which are convertible at a discount to the market
price. This new SEC position was expressed after the closing date of the RIMCO
Financing and the Replacement Notes with the three directors discussed in Note
3. Pursuant to this new position, the excess of the fair value of the Company's
common stock over the conversion prices stipulated in the debt instruments is
considered an additional return on those debt instruments. In this case the
stipulated conversion price of the Company's common stock was below the closing
price of the Company's common stock, as listed by NASDAQ, on the date the debt
instruments closed.. Accordingly, the Company has recorded the excess amount of
$460,763 as a non cash, non recurring interest expense, and as additional paid
in capital in 1997. This non recurring interest expense contributed a
significant portion toward the reported net loss per share of $0.14.
The decrease in net general and administration expenses is comprised
primarily of salary reductions due to the reduction in number of employees
subsequent to March 31, 1996.
The increase in interest expenses is primarily due to interest expense in
connection with borrowings from the RIMCO financing.
The aggregate of all other factors was not materially different for the
three months ended March 31, 1997 compared to the first three months ended March
31, 1996. Oil and gas production revenues were essentially the same during these
two periods because the normal decline of approximately 13% in production
volumes was offset by an increase in oil and gas prices of approximately 15%.
LIQUIDITY AND CAPITAL RESOURCES
GOING CONCERN UNCERTAINTY AND MANAGEMENT'S PLANS. The accompanying consolidated
financial statements have been prepared assuming that the Company will continue
as a going concern. The Company has suffered recurring operating losses and has
a working capital deficit that raise substantial doubt about its ability to meet
future expenditure obligations necessary to fully evaluate and develop its oil
and gas properties and to continue as a going concern. The consolidated
financial statements do not reflect any adjustments that might result from the
outcome of these uncertainties. In this regard the Company entered into the
financing arrangements (as described in Note 3) in order to meet its working
capital requirements and to pursue its exploration opportunities. Despite the
Company's successful efforts to obtain initial financing for its 1997
exploratory drilling program there can be no assurance that such financing will
be sufficient to fully fund the drilling program or that the results of drilling
operations will be successful. Accordingly, the Company will continue to seek
additional sources of financing as may be necessary.
CASH FLOW FROM OPERATIONS. The Company's net cash flow from operations produced
a cash surplus of $52,798 and $172,168 for the three month periods ended March
31, 1996, and 1997, respectively. This $119,370 comparative increase win the
Company's net cash flow is attributable to the Company not having to pay
principal on borrowings subsequent to the RIMCO Financing and being restricted
from paying preferred stock dividend payments by the RIMCO Financing.
CASH FLOW FROM FINANCING
EXCHANGEABLE AND CONVERTIBLE NOTES
In September 1996, Texoil entered into the RIMCO Financing to provide up
to $8,000,000 in two separate financings. Under the first financing, Texoil may
issue up to $3,000,000 in exchangeable notes through September 1, 1997. Any
indebtedness under the exchangeable notes is exchangeable for the Company's
common stock at $.80 per share. As of March 31, 1997 Texoil has borrowed a total
of $1,641,594 from RIMCO. Some $446,800 of this total amount was borrowed during
the three months ended March 31, 1997. Under the second financing, which may
occur after advances of $2,800,000 have been made on the exchangeable notes,
Texoil may issue up to $5,000,000 in senior notes through September 1, 1999,
contingent upon Texoil maintaining an agreed upon borrowing base. Texoil's
ability to maintain the agreed upon borrowing base is directly dependent on the
results of its exploratory drilling program, therefore it can give no assurance
that it will be able to maintain the necessary borrowing base. Advances under
the senior notes will bear interest at 10% with interest and principal payable
monthly through September 2002 and will be collateralized by substantially all
of Texoil's assets. At March 31, 1997, no advances had been made under the
senior notes.
In conjunction with the RIMCO Financing, the Company replaced previously
existing convertible notes held by three of its directors with Replacement Notes
in the aggregate amount of $900,000. Any indebtedness under the Replacement
Notes is convertible for the Company's common stock at $0.80 per share.
The Company can require exchange or conversion of the exchangeable notes
issued under the RIMCO Financing or the Replacement Notes if funding of at least
$2,800,000 has occurred from the exchangeable notes under the RIMCO Financing
and the average common stock price for any consecutive 20-day trading period is
$3.00 or more. The Company has granted registration rights for any shares to be
issued under these exchange or conversion privileges.
At December 31, 1996, the Company was in default of one of the RIMCO
Financing loan covenants regarding the current assets to current liabilities
ratio. The Company requested and obtained a waiver of this violation from RIMCO
effective through June 30, 1997. Accordingly, the debt has been classified as
current at March 31, 1997 in the accompanying consolidated balance sheet. The
Company's ability to satisfy the requirements of the RIMCO Financing covenant(s)
is dependent on results of its exploratory drilling program. If the Company is
unable to meet the requirements of the RIMCO Financing covenant(s) it will again
seek a waiver from RIMCO. The Company can give no assurance that successful
drilling results will be achieved or that a request for waiver will be granted.
OTHER AFFILIATE NOTES
The Company has two subordinated notes from a Company director and his
affiliate in the aggregate amount of $1,050,000. There are $1,000,000 in loans
from Mr. T.W. Hoehn, Jr. evidenced by a promissory note which matures upon the
earlier to occur of October 1, 2002, and 30 days after the RIMCO debt has been
paid in full in cash or by exchange for common stock. The note accrues interest
at a variable rate equal to 2% plus the prime rate announced by Wells Fargo Bank
(Texas), N.A., is payable to the T.W. Hoehn, Jr. and Betty Jo Hoehn Revocable
Trust, and is subordinate to the RIMCO financing. Monthly interest payments are
due on the 10th day of each month and scheduled quarterly principal payments may
be made if certain liquidity conditions are satisfied and after the first
$2,800,000 of the RIMCO loans have been funded. Unpaid quarterly principal
payments are cumulative and amounts in excess of the scheduled quarterly
payments may be paid if the liquidity conditions are satisfied. A $50,000 loan
from Opal Air, Inc., a company owned by T. W. Hoehn, Jr., is evidenced by a
promissory note from the Company to Opal Air, Inc.; said note matures on the
same date and is otherwise subject to substantially the same terms as the
Company's $1,000,000 note to the T. W. Hoehn, Jr. and Betty Jo Hoehn Revocable
Trust.
CAPITAL EXPENDITURES. Texoil's net capital expenditures totaled $232,750
and $391,863 in the three month periods ended March 31, 1996 and 1997,
respectively. The latter amount is comprised primarily of leasehold and seismic
acquisition costs totaling $310,132, on the Company's operated Raceland 3-D
seismic exploration project in Lafourche Parish, Louisiana and $1,256 on the
Greens Lake 3-D seismic exploration project in Galveston County, Texas operated
by Burlington Resources. The remaining $80,475 is in capitalized general and
administrative costs and capitalized workover costs at the Company's Main Pass
Block 3 field.
FUTURE CAPITAL REQUIREMENTS. The Company anticipates making additional
capital expenditures to drill the initial wells on the Greens Lake and Raceland
Prospects in Galveston County, Texas, and Lafourche Parish, Louisiana,
respectively. A drilling rig is presently enroute to commence drilling
operations in May 1997 on the Greens Lake Prospect test well which is operated
by Burlington Resources. Drilling operations are expected to commence later in
June 1997 on the Raceland Prospect test well which is operated by the Company.
Together these additional capital costs are estimated to total approximately
$2,600,000 in 1997.
The Company also expects to make capital expenditures in 1997 related to
the Laurel Grove Prospect operated by Phillips Petroleum in Lafourche Parish,
Louisiana. It also expects to make capital expenditures with respect to certain
exploratory prospects currently in its inventory and possible new prospect to be
evaluated. These capital expenditures are expected to include costs for further
geological and geophysical evaluation of the prospects, including 3-D seismic
surveys where warranted and leasehold acquisition and other costs necessary for
the Company to obtain working interest participants in the prospects. The
Company will continue to evaluate acquiring or generating new prospects and its
participation rights related to the prospects it sold to Texas Meridian
Resources Corporation in an agreement dated December 31, 1992.
In connection with future capital requirements the Company will continue
to seek additional debt or equity financing as may be necessary. There can be no
assurance that the Company's drilling program or efforts to obtain future
financing, as may be necessary, will be successful. The extent to which the
Company may make other expected capital expenditures will depend on the results
of these efforts.
SUBSEQUENT EVENTS
Texoil entered into a letter of commitment in April 1997 for up to
$1,500,000 in exchangeable debt financing from RIMCO. This additional financing
is in the form of Senior Secured Exchangeable General Obligation Notes issued by
Texoil in the maximum amount of $1,500,000 ("Exchangeable Notes"). The
Exchangeable Notes are intended to fund Raceland and Greens Lake Prospect
drilling and completion costs in excess of funds available from Texoil's
existing $3,000,000 exchangeable notes if Texoil is unable to maintain the
agreed upon borrowing base stipulated in its existing $5,000,000 senior notes
facility. As of March 31, 1997 Texoil had borrowed $1,641,594 under the
$3,000,000 facility.
The Exchangeable Notes commitment provides for a six month availability
period with a maturity date of September 1, 1999. Amounts advanced under the
Exchangeable Notes will accrue interest at a fixed, annual rate of 10%, with
interest payable monthly and all outstanding principal plus all accrued and
unpaid interest due and payable at maturity. Indebtedness outstanding under the
Exchangeable Notes will be exchangeable, in whole or in part, for the Company's
common stock at an initial per share price equal to $1.50, subject to
anti-dilution adjustments. The Company will be able to require the RIMCO lenders
to make such an exchange if the average trading price of the common stock for
any consecutive twenty day trading period is $3.00 or more. The Company will
grant the RIMCO lenders certain registration rights in respect to the shares of
the Company's common stock issuable upon exchange of debt under the Exchangeable
Notes. Obligations under the Exchangeable Notes will be secured by all of the
existing and future oil and gas assets of the Texoil and the Company will
guarantee Texoil's obligations thereunder.
FORWARD-LOOKING INFORMATION
This quarterly report on Form 10-QSB contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical facts included in this report including,
without limitation, statements regarding the Company's business strategy, plans,
objectives and beliefs of management for future operations are forward looking
statements. Although the Company believes the expectations and beliefs reflected
in such forward-looking statements are reasonable, it can give no assurance that
such expectation will prove to have been correct. Important factors that could
cause actual results to differ materially from the Company's expectations
("Cautionary Statements") are discussed in this report.
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings - None
Item 2 - Changes in Securities - See Item 5 below
Item 3 - Defaults upon Senior Securities - None
Item 4 - Submission of Matters to a Vote of Security Holders - None
Item 5 - Other Information
(a) Debt Conversion
Two Texoil, Inc. directors have elected to convert $300,000 of
debt into 375,000 shares of Texoil, Inc. common stock effective
April 22, 1997. The $300,000 converted amount is a part of the
aggregate $900,000 of convertible debt issued by Texoil, Inc. in
the form of Replacement 12% Convertible Notes dated September 6,
1996 ("Replacement Notes"). All or any part of the Replacement
Notes may be converted at any time into shares of Texoil, Inc.
common stock at a conversion price of $0.80 per share. Mr. T.W.
Hoehn, Jr., holder of $550,000 in Replacement Notes, converted
$260,000 of debt into 325,000 shares of common stock. Mr. T.W.
Hoehn, III, holder of $300,000 in Replacement Notes converted
$40,000 of debt into 75,000 shares of common stock. Giving effect
to the $300,000 debt conversion, the Replacement Notes aggregate
balance of $600,000 is now held by Mr. T.W. Hoehn, Jr. in the sum
of $290,000, Mr. T.W. Hoehn, III in the sum of $260,000 and Mr.
William F. Seagle in the sum of $50,000
These securities issuances were made pursuant to negotiated
transactions with sophisticated persons in accordance with the
exemption from the registration requirements under the Securities and
Exchange act of 1933 provided by Section 4(2) thereof for transactions
not involving any public offering.
(b) Pro Forma Financial Information (Unaudited)
The following unaudited pro forma condensed consolidated balance
sheet as of March 31, 1997 gives effect to the conversion of $300,000
of debt into 375,000 shares of Texoil, Inc. common stock. The $300,000
converted amount is a part of the aggregate $900,000 of convertible
debt securities issued by Texoil, Inc. in the form of Replacement
Notes. All or any part of the Replacement Notes may be converted at
any time into shares of Texoil, Inc. common stock at a conversion
price of $0.80 per share.
The pro forma information is based on the accompanying historical
consolidated financial statements of the Registrant. The pro forma
adjustments required are to reduce the notes payable liabilities by
$300,000 and to reflect the corresponding increase in stockholders'
equity resulting from the issuance of 375,000 shares of Texoil, Inc.
common stock.
TEXOIL, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
PRO PRO
FORMA FORMA
HISTORICAL ADJUSTMENTS CONSOLIDATED
----------- ----------- -----------
ASSETS
<S> <C> <C> <C>
Current:
Cash ........................................................ $ 172,168 $ 0 $ 172,168
Accounts receivable ......................................... 370,751 0 370,751
Other ....................................................... 47,631 0 47,631
----------- ----------- -----------
Total current assets ................................. $ 590,550 $ 0 590,550
----------- ----------- -----------
Oil and gas properties, net (on ................................ 0
the basis of full cost ........................................ 4,898,008 4,898,008
accounting)
Other equipment, net ........................................... 2,480 0 2,480
Other Assets ................................................... 50,222 0 50,222
----------- ----------- -----------
$ 5,541,260 $ 0 $ 5,541,260
----------- ----------- -----------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities .................... $ 907,366 $ 0 $ 907,366
Current portion - notes payable ............................. 1,641,594 0 1,641,594
----------- ----------- -----------
Total current liabilities ...................................... $ 2,548,960 $ 0 $ 2,548,960
----------- ----------- -----------
Notes payable .................................................. $ 1,950,000 $ (300,000(1) $ 1,650,000
Other long-term liabilities .................................... 203,476 0 203,476
Commitments and Contingency
Stockholders' equity ........................................... -- 0 --
Series A preferred stock, $.01
par; redeemable and convertible
with liquidation preference of
$100 per share; 10,000,000
shares authorized; 23,000
shares issued and outstanding ................................. 2,300,000 -- 2,300,000
Common stock, $.01 par;
50,000,000 shares authorized;
4,199,923 shares issued and ................................... 42,000 3,750(1) 45,750
outstanding at March 31, 1997
Additional paid-in capital ..................................... 6,816,353 296,250(1) 7,112,603
Deficit ........................................................ (8,319,529) 0 (8,319,529)
----------- ----------- -----------
$ 838,820 $ 300,000(1) $ 1,138,824
----------- ----------- -----------
$ 5,541,260 $ 0 $ 5,541,260
----------- ----------- -----------
</TABLE>
Footnote (1) : 375,000 shares of Texoil, Inc. common stock issued upon
conversion of $300,000 of debt convertible at $0.80 per share.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
Report on Form 8-K, dated April 18, 1997, reporting the RIMCO
financing commitment for $1,500,000 and conversion of $300,000 of debt
into common stock.
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.
TEXOIL, INC.
Date: MAY 15, 1997 By: /S/ RUBEN MEDRANO
Ruben Medrano
President and CEO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 172
<SECURITIES> 0
<RECEIVABLES> 371
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 591
<PP&E> 19,888
<DEPRECIATION> (14,987)
<TOTAL-ASSETS> 5,541
<CURRENT-LIABILITIES> 2,549
<BONDS> 0
0
2,300
<COMMON> 6,816
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,541
<SALES> 275
<TOTAL-REVENUES> 275
<CGS> 336
<TOTAL-COSTS> 336
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 522
<INCOME-PRETAX> (583)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (583)
<EPS-PRIMARY> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>
