<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
FORM 10-QSB
---------------
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE QUARTERLY PERIOD ENDED: APRIL 30, 1998
/ / 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.)
110 Cypress Station Drive, Suite 280
Houston, Texas 77090
(Address of principal executive offices, including zip code)
(281) 444-1088
(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 /X/ No / /
As of June 17, 1998, there were 21,012,502 shares of Common Stock outstanding.
<PAGE>
ARXA INTERNATIONAL ENERGY, INC. & SUBSIDIARY
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED APRIL 30, 1998
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets - April 30, 1998 (unaudited)
and October 31, 1997........................................................1
Consolidated Statements of Operations - For the Three months
Ended April 30, 1998 (unaudited) and April 30, 1997 (unaudited).............2
Consolidated Statements of Operations - For the Six months
Ended April 30, 1998 (unaudited) and April 30, 1997 (unaudited).............3
Consolidated Statement of Stockholders' Equity - For the Six months
Ended April 30, 1998 (unaudited)............................................4
Consolidated Statements of Cash Flows - For the Six months
Ended April 30, 1998 (unaudited) and April 30, 1997 (unaudited).............5
Notes to Unaudited Consolidated Financial Statements..........................6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.......................9
</TABLE>
<PAGE>
ARXA INTERNATIONAL ENERGY, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30, 1998 OCTOBER 31, 1997
----------------- ----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash, including interest-bearing balances of $17,142 $ 18,766 $ 152,883
and $80,351, respectively
Accounts receivable, no allowance for doubtful accounts 135,150 251,333
Income tax receivable 70,831 70,831
Oil and gas property held for sale - 466,343
Other current assets 31,540 342
--------------- -------------
Total current assets 256,287 941,732
PROPERTY AND EQUIPMENT, (full cost method for oil and gas properties), net
of accumulated depletion, depreciation,
amortization and provision for impairment 1,751,871 1,919,954
OTHER ASSETS 57,270 57,833
--------------- -------------
Total assets $ 2,065,428 $ 2,919,519
--------------- -------------
--------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to stockholders $ 291,082 $ 102,285
Accounts payable 182,479 16,054
Other current liabilities 93,432 210,675
--------------- -------------
Total current liabilities 566,993 329,014
LONG-TERM DEBT - 79,770
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value; 100,000,000 shares authorized;
20,437,502 and 20,377,000 shares issued and outstanding, respectively 20,437 20,377
Additional paid-in capital 4,024,516 3,937,075
Accumulated deficit (2,546,518) (1,446,717)
---------------- --------------
Total stockholders' equity 1,498,435 2,510,735
--------------- -------------
Total liabilities and stockholders' equity $ 2,065,428 $ 2,919,519
--------------- -------------
--------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO THESE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
1
<PAGE>
ARXA INTERNATIONAL ENERGY, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three months Ended
---------------------------------------------
April 30, 1998 April 30, 1997
-------------------- ---------------------
<S> <C> <C>
OIL AND GAS REVENUES $ 47,117 $ 149,547
COST AND EXPENSES:
Lease operating expenses 15,890 42,394
Severance taxes 1,010 3,735
Depletion, depreciation, amortization
and provision for impairment 447,634 83,855
General and administrative 292,614 216,840
---------------- ----------------
Total cost and expenses 757,148 346,824
---------------- ----------------
LOSS FROM OPERATIONS (710,031) (197,277)
OTHER INCOME (EXPENSE):
Interest income 270 5,109
Interest expense (1,611) (4,319)
Equity in loss of oil and gas venture (5,726) (135,739)
Other 33,083 (14,999)
---------------- -----------------
26,016 (149,948)
---------------- -----------------
LOSS BEFORE INCOME TAXES (684,015) (347,225)
INCOME TAX BENEFIT, net - 78,061
---------------- ----------------
NET LOSS $ (684,015) $ (269,164)
---------------- ----------------
---------------- ----------------
NET LOSS PER COMMON AND COMMON
EQUIVALENT SHARE $ (.033) $ (.035)
---------------- ----------------
---------------- ----------------
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES 20,437,502 7,650,079
---------------- ----------------
---------------- ----------------
</TABLE>
SEE ACCOMPANYING NOTES TO THESE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
2
<PAGE>
ARXA INTERNATIONAL ENERGY, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six months Ended
---------------------------------------------
April 30, 1998 April 30, 1997
-------------------- ---------------------
<S> <C> <C>
OIL AND GAS REVENUES $ 335,151 $ 377,304
COST AND EXPENSES:
Lease operating expenses 140,846 94,816
Severance taxes 5,090 11,299
Depletion, depreciation, amortization
and provision for impairment 545,456 164,009
General and administrative 695,606 320,627
---------------- ----------------
Total cost and expenses 1,386,998 590,751
---------------- ----------------
LOSS FROM OPERATIONS (1,051,847) (213,447)
OTHER INCOME (EXPENSE):
Interest income 1,162 7,289
Interest expense (6,408) (15,350)
Equity in loss of oil and gas venture (103,516) (140,739)
Other 60,808 (6,776)
---------------- -----------------
(47,954) (155,576)
----------------- -----------------
LOSS BEFORE INCOME TAXES (1,099,801) (369,023)
INCOME TAX BENEFIT, net - 82,960
---------------- ----------------
NET LOSS $ (1,099,801) $ (286,063)
---------------- ----------------
---------------- ----------------
NET LOSS PER COMMON AND COMMON
EQUIVALENT SHARE $ (.053) $ (.037)
---------------- ----------------
---------------- ----------------
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES 20,437,502 7,650,079
---------------- ----------------
---------------- ----------------
</TABLE>
SEE ACCOMPANYING NOTES TO THESE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
ARXA INTERNATIONAL ENERGY, INC. & SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED APRIL 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
---------------------------- PAID-IN ACCUMULATED STOCK-HOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCES, October 31, 1997 20,377,000 $ 20,377 $ 3,937,075 $ (1,446,717) $ 2,510,735
Net Cancellation of shares (164,692) (166) 166 0 0
Issuance of stock for compensation 250,000 250 87,250 0 87,500
J. Schofield agreement cancellation (25,000) (25) 25 0 0
Rounding 194 1 0 0 1
Net loss 0 0 0 (1,099,801) (1,099,801)
------------ ------------ ------------ ------------ ------------
BALANCES, April 30, 1998 20,437,502 $ 20,437 $ 4,024,516 $ (2,546,518) $ 1,498,435
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES TO THESE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
ARXA INTERNATIONAL ENERGY, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six months Ended
------------------------------------
April 30, 1998 April 30, 1997
----------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,099,801) $ (286,063)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depletion, depreciation, amortization and provision for
impairment 545,456 164,009
Deferred tax benefit - (69,716)
Equity in loss of oil and gas venture 103,516 140,739
Interest Expense converted into common stock 8,500
Changes in operating assets and liabilities:
Accounts receivable 116,183 122,169
Oil and gas property held for sale 466,343 (119,536)
Other current assets (31,198) 10,791
Accounts payable 166,425 73,683
Other current liabilities (117,243) -
------------------ -----------------
Net cash provided by operating activities 149,681 44,576
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of oil and gas property held for sale (5,777) -
Additions to office equipment (11,830) (77,350)
Purchase of oil and gas property (345,801) (204,376)
Purchase of investment in oil and gas venture (103,516) (140,739)
Proceeds from sale of oil and gas property, net 74,099 -
Purchase price adjustments on oil and gas property acquisition - 3,687
Purchase of other assets - (1,736)
----------------- ------------------
Net cash used in investing activities (392,825) (420,514)
------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stockholder notes 134,027 -
Payment of stockholder notes (25,000) (61,650)
Sales of common stock - 522,048
----------------- -----------------
Net cash provided by financing activities 109,027 460,398
----------------- -----------------
INCREASE IN CASH AND CASH EQUIVALENTS (134,117) 84,460
CASH AND CASH EQUIVALENTS, beginning of period 152,883 472,480
----------------- -----------------
CASH AND CASH EQUIVALENTS, end of period $ 18,766 $ 556,940
----------------- -----------------
----------------- -----------------
SUPPLEMENTAL CASH FLOW DISCLOSURES OF NONCASH TRANSACTIONS:
Conversion of stockholder notes and interest into common stock $ $ 85,000
----------------- -----------------
----------------- -----------------
</TABLE>
SEE ACCOMPANYING NOTES TO THESE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
ARXA INTERNATIONAL ENERGY, INC. & SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION -- ARXA International Energy, Inc. ("ARXA" or "the
Company"), was incorporated in Delaware and is engaged in oil and gas
exploration and development in Utah, Louisiana and Texas. ARXA USA,
Inc., a wholly owned subsidiary, was incorporated in Delaware. All
significant intercompany accounts and transactions have been eliminated
in consolidation. On October 27, 1997, the Company acquired
substantially all of the assets and liabilities of Phoenix Energy Group,
Inc. (Phoenix). To consummate the transaction, the Company exchanged
12,786,310 shares of the Company's common stock, representing
approximately 63% of the issued and outstanding shares, plus warrants to
purchase 3,297,000 shares at an exercise price of $2.00 per share. The
business combination was accounted for on the purchase method of
accounting. No goodwill arose from this transaction. As Phoenix obtained
a controlling interest in the Company, the transaction was accounted for
as a reverse acquisition. Therefore, for financial statement purposes,
Phoenix is considered the acquiror. The consolidated financial
statements reflect the historical operations and cost basis of Phoenix
since its inception; however, its stockholders' equity section has been
restated to reflect the capital structure of ARXA.
Phoenix Energy Group, Inc. was incorporated in Texas on March 14, 1996
and was engaged in oil and gas exploration and development in south
Texas. Phoenix was formed by issuing notes and common stock to certain
of the larger oil and gas interest owners formerly associated with
Prospector Petroleum Inc. (Prospector). Phoenix, through a private
placement, acquired approximately 93% of the available working interests
formerly associated with Prospector at various times during the months
of August 1996 through August 1997. Revenues and related costs
associated with these properties were recognized beginning on the
respective dates acquired. Phoenix issued 5,039,761 shares of common
stock during 1996 and 82,866 shares of common stock in 1997 to
effectuate the acquisition of these working interests.
UNAUDITED INTERIM INFORMATION -- The accompanying financial information
for the periods ended April 30, 1998 and 1997 has been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. The financial statements reflect all
adjustments, consisting of normal recurring accruals, which are, in the
opinion of management, necessary to fairly present such information in
accordance with generally accepted accounting principles.
6
<PAGE>
ARXA INTERNATIONAL ENERGY, INC. & SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
2. BUSINESS COMBINATION:
The Company acquired various oil and gas interests during 1996 and 1997
from certain oil and gas interest owners formerly associated with
Prospector. In addition on October 27, 1997, the Company acquired
substantially all of the assets and liabilities of Phoenix in exchange
for 12,786,310 shares of the Company's common stock, representing 63% of
the issued and outstanding shares, plus warrants to purchase 3,297,000
shares at an exercise price of $2.00 per share. The business combination
was accounted for under the purchase method of accounting. ARXA's oil
and gas revenues, net loss applicable to common stockholders, and net
loss per share on an unaudited pro forma basis, assuming the ARXA
transaction had occurred on November 1, 1996 and January 1, 1997,
respectively, and the oil and gas interests acquired during 1996 from
the interest owners formerly associated with Prospector had been
acquired on November 1, 1996, would be as follows:
<TABLE>
<CAPTION>
FOR THE THREE
MONTH PERIOD
ENDED APRIL 30,
1997
-------------------
(unaudited)
<S> <C>
Oil and Gas Revenues $ 125,913
Net Income (Loss) $ (225,651)
Net Income (Loss) per $ (.03)
Share
</TABLE>
These pro forma amounts were prepared using assumptions which are based
on estimates and are subject to revision. The pro forma combined results
are not necessarily indicative of actual results that would have been
achieved had the acquisition occurred on the dates indicated, or of
future results.
3. OTHER ASSETS:
The investment in an oil and gas venture at February 28, 1998 consisted
of cash advances of $370,929, reduced by losses of $370,929 ($5,726 for
the current quarter). The venture was formed in 1997 by officers of the
Company. The Company owned a 3% interest in the venture. The agreement
was terminated on March 1, 1998, by both parties.
7
<PAGE>
ARXA INTERNATIONAL ENERGY, INC. & SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
4. NOTES PAYABLE TO STOCKHOLDERS:
Notes payable to stockholders at October 31, 1997 includes an unsecured
note payable to a stockholder of $25,000, due December 30, 1997. The
note is non-interest bearing and interest is imputed at 8%. The note
provided for repayment in cash or common stock of the Company at a value
of $1.00 per share, upon the option of the lender. On December 29, 1997,
the Company paid the note off in full, in cash.
Notes payable to stockholders at April 30, 1998 and October 31, 1997
also includes an unsecured note payable to a stockholder and his
affiliates of $77,285. The note is non-interest bearing (imputed at 8%)
and is payable at 7% of net proceeds of future offerings received
through March 1999. If not repaid by March 1999, the note automatically
converts to the Company's common stock at the average market price for
the five days preceding March 13, 1999.
Notes payable to stockholders at April 30, 1998 additionally includes
unsecured notes payable to certain stockholders of $134,027. The terms
and conditions are currently being negotiated.
Notes payable to stockholders at April 30, 1998 and Long Term Debt at
October 31, 1997 includes unsecured notes payable of $79,770 to a
company affiliated with a stockholder of the Company. The note bears
interest at 8% and is payable in quarterly installments. To the extent
that the interest is paid at each quarter end, the due date is
automatically extended until March 12, 1999.
5. STOCK OPTION PLAN:
The Company has a stock option plan under which options to purchase a
maximum of 1,000,000 shares of common stock may be issued to employees,
consultants and non-employee directors of the Company. The stock option
plan provides both for the grant of options intended to qualify as
"incentive stock options" under the Internal Revenue Code of 1986, as
amended, as well as options that do not so qualify. As of April 30,
1998, no options have been granted under the Plan.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
A. RESULTS OF OPERATIONS
Oil and gas revenues for the six months ended April 30, 1998 were
$335,151, which is a $42,153 decrease from the $377,304 for the six
months ended April 30, 1997 and is primarily attributed to normal
production decline and lower product prices in 1998 versus 1997. Lease
operating expense, which includes workover costs, increased from $94,816
for the six months ended April 30, 1997 to $140,846 for the six months
ended April 30, 1998, an increase of $46,030. The increase is primarily
due to the Garcia #1 well, located in Brooks County, Texas, which was
re-worked so as to bring it back on production after having been shut-in
since December 1996.
General and administrative costs increased from $320,627 for the six
months ended April 30, 1997 to $695,606 for the six months ended April
30, 1998. The increase is solely attributable to the Company's efforts
to expand its capacity to evaluate numerous and larger oil and gas
acquisitions to present to equity and debt financing sources, so as to
grow the Company.
B. LIQUIDITY AND CAPITAL RESOURCES
Net cash flow provided by operating activities was $149,681 for the six
months ended April 30, 1998 as compared to net cash flow provided by
operating activities of $44,576 for the six months ended April 30, 1997.
The primary source of cash for the Company for the six months ended
April 30, 1998 was from the sale of the Company's Sayre Ranch Prospect
in Oklahoma to a third party for $468,700 plus a commission of $18,750.
The principle source of cash for the six months ended April 30, 1997 was
$522,048 from the sale of common stock.
Net cash was used in investing activities in the six months ended April
30, 1998 by 1) costs to drill and complete the Vesley #1 well for
$246,000, the Taylor #1 well for $68,850 and the Poole #4 well for
$25,325, 2) acquisition of the Naconiche Creek Prospect for $40,000, 3)
acquisition and project development costs in the Michigan Basin of
$63,000 and 4) continued funding of the IPX oil and gas venture for
$103,516, (the agreement has been terminated March 1, 1998). Net cash
was used in investing activities in the six months ended April 30, 1997
primarily on acquiring additional joint venture working interests
formerly associated with Prospector Petroleum for $204,376, initiating
the funding of IPX for $140,739 and in outfitting the Company's offices
and equipment for newly hired employees in the amount of $77,350.
The Company's cash flow from financing activities during the six months
ended April 30, 1998 included proceeds from notes from three
stockholders of $134,027 (see Note 4 in the "Notes to Unaudited
Consolidated Financial Statements").
At April 30, 1998, the Company's current assets of $256,287 are short of
its current liabilities of $566,993 by $310,706. In order to alleviate
the Company's deficit working capital position, management, has already
instituted personnel terminations, effective March 1, 1998, trimmed its
corporate overhead, eliminated non-essential oil and gas property
expenditures, terminated its agreement in an oil and gas venture with
IPX, effective March 1, 1998 and has made tentative arrangements to sell
its interest in the Flowella and Colson Fields.
The Company is currently seeking additional sources of both equity and
debt financing to fund current and future acquisitions. (See Part II,
Item 6-C, "Management's Discussion and Analysis of Financial Condition
and Plan of Action", in the Company's 10-KSB for the period ended
October 31, 1997, filed with the Securities and Exchange Commission on
March 12, 1998).
9
<PAGE>
C. MANAGEMENT'S RESPONSE AND PLAN OF OPERATIONS
ARXA was revitalized as an oil and gas exploitation and development
company on October 27, 1997, with the reverse acquisition of Phoenix
Energy Group, Inc. Phoenix increased the asset base of ARXA 384%,
provided significant cash flow from operations, and brought a complete,
heavily experienced management infrastructure. The company's 10-K and
first quarter 10-Q were filed in March, 1998. Now, as a fully reporting
company, ARXA is positioned to rapidly grow the asset base of the
company through merger, acquisition and reduced risk exploitation
opportunities.
The dramatic decline in crude oil and natural gas prices in 1998 has
caused considerable destabilization in the energy capital markets and
with exploration and production companies. The frenzy of reserve
acquisitions over the last two years drove purchase prices to what is
now being interpreted as "seriously inflated." The result is that many
1996-1997 acquirers of proved reserves are finding themselves forced to
divest assets at very favorable prices to few buyers. Because the
company was involved in negotiating the reverse acquisition of Phoenix
Energy Group, Inc., and subsequently with retaining an appropriate
investor relations firm to restore liquidity to the company's stock,
ARXA was not involved in competing for reserves at inflated prices. Now,
with significantly lower prices for crude oil and natural gas reserves,
good opportunities are beginning to surface and the company is
aggressively pursuing merger, acquisition and measured risk exploitation
opportunities.
Now, more than ever, because of destabilization in the energy capital
markets, financing new reserve acquisitions will require creative deal
structure, and ARXA's management team is demonstrating considerable
skill in this area. On May 20 and June 5, ARXA announced the execution
of binding letters of intent to acquire, at very favorable prices, the
producing assets of OPMI Operating Company/Todd C. Harwell, and Omega
Fuels respectively, with consideration in the form of stock and cash.
The deals further provide for ARXA to supply workover and development
capital for selected other projects, and once reserves have been
reclassified as producing, ARXA has the right but not the obligation to
acquire these newly developed reserves under the same pricing and
consideration terms as existing production. Finally, the company has
retained consultants to seek similar opportunities within the industry
using the same or enhanced pricing and consideration terms as the
OPMI/Harwell and Omega opportunities.
ARXA continues to aggressively pursue it's recapitalization plan as set
forth in the company's annual 10-K. Accordingly, ARXA has tendered to
sell its non performing and/or low yield assets and commit the proceeds
to an overall recapitalization plan which includes a new equity
infusion. The company has retained consultants to advise the company on
a broad range of capital formation strategies. The revitalization of the
company with the reverse acquisition of Phoenix Energy Group, Inc.,
along with the creative deal structure format and the significant
increase in the liquidity of the company's stock will provide the
foundation for achieving the company's short term capital needs.
Finally, this recapitalization plan, executed contemporaneously with the
many opportunities occurring in the market as a result of the
divestiture of reserves by so many other oil and gas companies, should
realize the dramatic growth in shareholder value which is achievable in
an environment which is perceived as pessimistic by many.
10
<PAGE>
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)
<TABLE>
<S> <C>
Date: 6-18-98 L. CRAIG FORD
/s/ L. Craig Ford
------------------------------
President
Date: 6-18-98 DENNIS P. McGRATH
/s/ Dennis P. McGrath
------------------------------
Vice President and Controller
</TABLE>
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM APRIL 30,
1998 FORM 10-Q FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> APR-30-1998
<CASH> 18,766
<SECURITIES> 0
<RECEIVABLES> 135,150
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 256,287
<PP&E> 2,608,759
<DEPRECIATION> (856,888)
<TOTAL-ASSETS> 2,065,428
<CURRENT-LIABILITIES> 566,993
<BONDS> 0
0
0
<COMMON> 20,437
<OTHER-SE> 1,477,998
<TOTAL-LIABILITY-AND-EQUITY> 2,065,428
<SALES> 335,151
<TOTAL-REVENUES> 335,151
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,386,998
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,408
<INCOME-PRETAX> (1,099,801)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,099,801)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,099,801)
<EPS-PRIMARY> (0.053)
<EPS-DILUTED> (0.053)
</TABLE>
