SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB/A
AMENDMENT No. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE QUARTERLY PERIOD ENDED: APRIL 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
COMMISSION FILE NUMBER: 2-99565
ARXA INTERNATIONAL ENERGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3784149
(State or other jurisdiction) (IRS Employer
of incorporation or organization Identification No.)
1331 Lamar, Suite 1375
Houston, Texas 77010
(Address of principal executive offices, including zip code)
(713) 652-2792
(Registrant's telephone number, including area code)
-------------
Securities registered under Section 12(b) of the Exchange Act:
Name of Each Exchange
Title of Each Class on which registered
------------------- ---------------------
Common Stock, $.001 par value OTC / ELECTRONIC BULLETIN BOARD
Indicate by check mark whether the registrant (I) has 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 (ii) has been subject to such filing requirements for the
past 90 days. Yes [ ] No [X]
As of April 30, 1996, there were 6,333,560 shares of Common Stock
outstanding.
Page 1 of 9
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ARXA INTERNATIONAL ENERGY, INC.
INDEX
PAGE
PART 1-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS(UNAUDITED)
BALANCE SHEETS AT APRIL 30, 1996 AND 1995 3
STATEMENTS OF LOSS AND RETAINED DEFICIT
FOR THE THREE MONTHS ENDED APRIL 30, 1996
AND 1995 4
STATEMENTS OF CASH FLOWS FOR THE THREE
MONTHS ENDED APRIL 30, 1996 AND 1995 5
NOTES TO FINANCIAL STATEMENTS 6-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS. 9
SIGNATURES
Page 2
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ARXA INTERNATIONAL ENERGY, INC.
BALANCE SHEETS-APRIL 30, 1996 AND 1995
ASSETS
(UNAUDITED)
1996 1995
----------- ---------
Current assets:
Cash and cash equivalents $ 333,994 $ --
----------- ---------
333,994 --
----------- ---------
Property and equipment:
Oil and gas properties 390,893 --
Furniture and equipment 5,812 --
----------- ---------
396,704 --
Less accumulated depreciation 133 --
----------- ---------
396,571 --
----------- ---------
Other assets:
Organization costs, net 817 --
Covenant not to compete, net 149,787 --
Deferred taxes -- --
----------- ---------
150,604
$ 881,170 $ --
=========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 30,229 $ --
Accrued expenses 44,300 --
Notes payable, shareholders 187,285 --
----------- ---------
261,814 --
----------- ---------
Shareholders' equity:
Preferred stock 426,944
Common stock 6,334 307
Additional paid in capital 1,653,561 976,732
Retained deficit (1,467,484) (977,039)
----------- ---------
619,355 --
----------- ---------
$ 881,170 $ --
=========== =========
See accompanying notes to financial statements.
Page 3
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ARXA INTERNATIONAL ENERGY, INC.
STATEMENTS OF LOSS AND RETAINED DEFICITS
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(UNAUDITED-1ST QUARTER)
1996 1995
----------- -----------
Revenues, interest income $ 1,316 $ --
----------- -----------
Costs and expenses:
General and administrative 92,634 --
Depreciation and amortization 30,074 --
Interest 25,421 --
----------- -----------
148,129 --
----------- -----------
Income taxes -- --
----------- -----------
Net loss (146,813) --
Retained deficit, beginning (1,320,671) (977,039)
----------- -----------
Retained deficit, ending $(1,467,484) $ (977,039)
=========== ===========
Net loss per share $ (.02) $ (Nil)
=========== ===========
Weighted average number of
shares outstanding 6,333,560 3,078,900
=========== ===========
See accompanying notes to financial statements.
Page 4
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ARXA INTERNATIONAL ENERGY, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(UNAUDITED-1ST QUARTER)
1996 1995
Increases(decreases) in cash and temporary
investments:
Cash flows from operating activities:
Cash received from interest $ 1,316 $ -
Cash paid to suppliers and employees (131,660) -
Interest paid (25,420) -
----------- -------
Net cash used by operating activities (155,764) -
----------- -------
Cash flows used in investing activities:
Payment of syndication costs 13,500 -
Purchase of property and equipment, net (19,644) -
Net cash used in investing activities (33,144) -
------------ -------
Cash flows from financing activities:
Sale of common stock 488,500 -
------------ -------
Net cash provided by financing activities 488,500 -
------------ -------
Net increase in cash 299,592 -
------------ -------
Cash, beginning 34,402 -
------------ -------
Cash, ending $ 333,994 $ -
============ =======
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED USED IN OPERATIONS:
Net loss $ (146,813) $ -
Adjustments to reconcile net loss
to net cash used in operations:
Depreciation and amortization 30,074 -
(Increase) decrease in:
Accounts payable 15,528 -
Accrued expenses 23,497 -
----------- -------
Net cash used in operations $ (155,764) $ -
=========== =======
See accompanying notes to financial statements.
Page 5
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ARXA INTERNATIONAL ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(UNAUDITED-1ST QUARTER)
1. SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND OPERATIONS
ARXA International Energy, Inc.(the Company) is engaged in crude oil and natural
gas exploration, development, and production. The Company was inactive prior to
August 8, 1995.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Companies consider all
short-term securities purchased with a maturity of three months or less to be
cash equivalents.
ORGANIZATION COSTS
Organization costs are amortized on a straight line basis over sixty months for
both financial and income tax reporting purposes.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed by the
straight-line methods for financial and federal income tax reporting over their
useful lives which are generally five to seven years.
COVENANTS NOT TO COMPETE
Covenants not to compete are amortized on a straight line basis over two years
for financial reporting purposes and fifteen years for income tax reporting
purposes.
INCOME TAXES
Deferred income taxes are provided for temporary differences between financial
statement and income tax reporting, principally from the recognition of tax loss
carry forwards as a deferred tax asset. Because the utilization of the net
operating loss carry forward cannot be determined at this time, the Company has
provided a valuation allowance for the entire deferred tax asset in accordance
with the provisions of Financial Accounting Standards Board No. 109 "Accounting
for Income Taxes".
Page 6
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ARXA INTERNATIONAL ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(UNAUDITED-1ST QUARTER)
1. SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
OIL AND GAS PROPERTIES
The Company accounts for its exploration and production activities under the
successful efforts method of accounting. Under this method, oil and gas lease
acquisitions costs are capitalized when incurred. Unproved properties are
assessed on a property-by-property basis and any impairment in value is
recognized. If the unproved properties are determined to be productive, the
appropriate related costs are transferred to proved oil and gas properties.
Lease rentals are expensed as incurred.
Oil and gas exploration costs, other than the costs of drilling exploratory
wells, are charged to expense as incurred. The costs of drilling exploratory
wells are capitalized pending determination of whether proved reserves are
discovered. If proved reserves are not discovered, such drilling costs are
expensed. The costs of all development well and related equipment used in the
production of crude oil and natural gas are capitalized.
The Company amortizes capitalized costs, including gas gathering systems, using
a unit-of-production method based on proved oil and gas reserves as estimated by
independent petroleum engineers. Depreciation of other property, plant and
equipment is computed using principally the straight-line method over estimated
useful lives of three to thirty years.
NET LOSS PER COMMON SHARE
Net loss per common share is determined by dividing the weighted average number
of common shares outstanding during the period into net loss. Common share
equivalents in the form of warrants are excluded from the calculation since they
have a anti-dilutive effect on per share calculation.
2. NOTES PAYABLE, SHAREHOLDERS
The Company entered into various oil and gas lease arrangements which were
primarily funded through cash and issuance of notes to shareholders. These notes
total $187,285, bear interest at eight percent and are due July, 1996. Theses
notes are collateralized by all oil and gas leases.
Page 7
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ARXA INTERNATIONAL ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(UNAUDITED-1ST QUARTER)
3. COMMITMENTS AND CONTINGENCIES
The Companies leases corporate office space under a month to month agreement.
Rent expense for the three months ended April, 1996 was $9,000.
4. SHAREHOLDERS' EQUITY
The Company has authorized 100,000,000 shares of common stock, par value $.001.
During the three months ended April 30, 1996, the Company sold an additional
489,000 shares of common stock under the terms of a private placement. At April
30, 1996, the total outstanding shares of common stock totaled 6,333,560.
The Company has authorized 2,000,000 shares of preferred stock, $1 par value, 5%
cumulative, convertible into $1 per common share; redeemable at $2 per share,
plus arrears. At April 30, 1996, the total outstanding shares of preferred stock
totaled 426,943.
Page 8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
For the three month period ended April 30, 1996, the Company commenced oil and
gas operations as well as continuing to sell its common stock under the terms of
a private placement memorandum. The principal revenue generated was interest
income. The Company is in the process of negociating a drilling contract for
exploration of its Michigan prospects.
Page 9
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ARXA INTERNATIONAL ENERGY, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to signed on its behalf by the
undersigned thereunto duly authorized.
ARXA INTERNATIONAL ENERGY, INC.
(Registrant)
Date: 10-10-96 By:/s/ WILLIAM J. BIPPUS
William J. Bippus
President
Date: 10-10-96 By:/s/ RICHARD R. ROYALL
Richard R. Royall
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM ARXA INTERNATIONAL ENERGY, INC. FORM 10QSB FOR APRIL 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> APR-30-1996
<CASH> 333,994
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 333,994
<PP&E> 396,704
<DEPRECIATION> 133
<TOTAL-ASSETS> 881,170
<CURRENT-LIABILITIES> 261,814
<BONDS> 0
0
426,944
<COMMON> 6,334
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 881,170
<SALES> 0
<TOTAL-REVENUES> 1,316
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 122,708
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,421
<INCOME-PRETAX> (146,813)
<INCOME-TAX> 0
<INCOME-CONTINUING> (146,813)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (146,813)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
