<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
OMB Approval
OMB Number: xxxx-xxxx
Expires: Approval Pending
Estimated Average Burden Hours Per Response: 1.0
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended: September 30, 1998
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from __________ to __________
Commission File Number: 0-3912
PETROL INDUSTRIES, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
NEVADA 75-1282449
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation of Organization)
202 N. THOMAS, SUITE 4 SHREVEPORT, LA 71107-6539
(Address of Principal Executive Offices)
(318) 424-6396
(Issuer's Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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 [XX] NO [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.
YES [ ] 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: 1,597,196
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<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Balance Sheets
September 30, December 31,
ASSETS 1998 1997
------ ------------- ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 55,048 174,809
Accounts receivable:
Trade 31,288 56,499
Other 9,497 9,817
--------- ---------
40,785 66,316
Inventory 24,753 43,643
Prepaid expenses 4,867 2,468
--------- ---------
Total current assets 125,453 287,236
--------- ---------
Property and equipment, at cost:
Land 7,000 7,000
Developed and undeveloped oil and gas properties-
successful efforts method 4,187,172 4,180,055
Trucks and other operating equipment 360,074 349,911
Furniture and fixtures 44,015 44,015
--------- ---------
4,598,261 4,580,981
Less accumulated depreciation, depletion and
amortization 4,524,109 4,521,200
--------- ---------
74,152 59,781
--------- ---------
Cash surrender value of life insurance, net 65,071 56,746
Other assets 1,107 1,107
--------- ---------
$ 265,783 404,870
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 31,624 47,611
Payable to interest owners 311,445 303,692
Payable to officer, net 524,132 391,701
Accrued expenses 149,229 112,991
--------- ---------
Total current liabilities 1,016,430 855,995
--------- ---------
Stockholders' deficit:
Preferred stock-no par value. Authorized 1,000,000
shares; no shares issued or outstanding --- ---
Common stock-$.10 par value. Authorized 10,000,000
shares; issued and outstanding 1,597,196
shares in 1998 and 1997 159,720 159,720
Accumulated deficit (910,367) (610,845)
--------- ---------
Total stockholders' deficit (750,647) (451,125)
--------- ---------
$ 265,783 404,870
========= =========
</TABLE>
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<TABLE>
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales $ 93,012 204,830 344,434 598,554
Other operating income 7,231 3,681 21,725 11,702
--------- --------- --------- ---------
100,243 208,511 366,159 610,256
--------- --------- --------- ---------
Expenses:
Lease operating expense 120,514 162,720 401,424 505,585
General and administrative 69,542 81,770 234,009 248,313
Depreciation, depletion and
amortization 2,700 915 6,900 3,345
--------- --------- --------- ---------
192,756 245,405 642,333 757,243
--------- --------- --------- ---------
Operating loss (92,513) (36,894) (276,174) (146,987)
--------- --------- --------- ---------
Other income and (expense):
Gain/(loss) on sale of assets --- 7,500 (408) 7,500
Interest income 1,536 2,980 5,579 8,649
Interest expense (10,118) (8,070) (28,519) (22,442)
--------- --------- --------- ---------
(8,582) 2,410 (23,348) (6,293)
--------- --------- --------- ---------
Net loss $ (101,095) (34,484) (299,522) (153,280)
========= ========= ========= =========
Net loss per share $ (.06) (.02) (.19) (.10)
========= ========= ========= =========
Average common shares
outstanding 1,597,196 1,597,196 1,597,196 1,597,196
========= ========= ========= =========
</TABLE>
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<TABLE>
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows
Nine months ended September 30, 1998 and 1997
(unaudited)
1998 1997
---- ----
<S> <C> <C>
Operating activities:
Net loss $ (299,522) (153,280)
Adjustments to reconcile net loss to net cash
(used) provided by operating activities:
Depreciation, depletion and amortization 6,900 3,345
Loss/(gain) on sale of assets 408 (7,500)
Losses on retirements of property and equipment
included in lease operating expenses 1,511 2,061
Changes in assets and liabilities:
Cash surrender value of life insurance (8,325) (8,325)
Accounts receivable 25,531 8,926
Inventory 18,890 8,583
Prepaid expenses (2,399) 1,132
Accounts payable and accrued expenses 20,251 25,870
Payable to officer, net 132,431 114,471
Payable to interest owners 7,753 23,145
--------- ---------
Net cash provided by operating activities (96,571) 18,428
Investing activities:
Capital expenditures (23,190) (14,112)
Proceeds from sale of property and equipment --- 7,500
--------- ---------
Net cash (used) provided by investing
activities (23,190) (6,612)
(Decrease)/increase in cash and cash equivalents (119,761) 11,816
Cash and cash equivalents at beginning of period 174,809 218,355
--------- ---------
Cash and cash equivalents at end of period $ 55,048 230,171
========= =========
</TABLE>
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<TABLE>
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Deficit
Nine months ended September 30, 1998 and 1997
(unaudited)
1998 1997
---- ----
<S> <C> <C>
Stockholders' deficit at January 1 $ (451,125) (214,929)
Net loss for the nine-month period (299,522) (153,280)
--------- ---------
Stockholders' deficit at September 30 $ (750,647) (368,209)
========= =========
</TABLE>
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PETROL INDUSTRIES, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
(unaudited)
1. The accompanying unaudited consolidated financial statements have
been prepared by the Registrant in accordance with generally accepted
accounting principles, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements have been condensed or omitted
pursuant to such rules and regulations, although management believes that the
disclosures are adequate to make the information presented not misleading. In
the opinion of management, the accompanying financial statements contain all
adjustments necessary for a fair statement of the results for the interim
periods presented. It is suggested that these consolidated financial
statements be used in conjunction with the consolidated financial statements
and the notes thereto included in the Registrant's 1997 Annual Report on Form
10-KSB.
2. The consolidated financial statements included herein are consol
idated with the accounts of Petrolind Drilling Funds, Inc. and Realco, Inc.,
both wholly owned subsidiaries of the Registrant, neither of which was active
during 1998 or 1997.
3. Net income per share of common stock is computed on the weighted
average number of shares outstanding during the nine months ended September
30. The weighted average number of shares outstanding was determined by
totaling the number of shares outstanding at the end of each month and
dividing that total by the number of months.
Total Number of
Shares Outstanding
1998 1997
---- ----
January 31 1,597,196 1,597,196
February 28 1,597,196 1,597,196
March 31 1,597,196 1,597,196
April 30 1,597,196 1,597,196
May 31 1,597,196 1,597,196
June 30 1,597,196 1,597,196
July 31 1,597,196 1,597,196
August 31 1,597,196 1,597,196
September 30 1,597,196 1,597,196
4. The expected tax benefit resulting from operating losses for the
first nine months of 1998 has not been recorded because it is not expected to
be realizable. Additionally, there were no significant changes in the
temporary differences that give rise to significant portions of the deferred
tax assets and deferred tax liabilities at September 30, 1998.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Oil and gas sales revenues decreased approximately 54.6% in the third
quarter of 1998, compared to the third quarter of 1997, the result being a
decrease in average oil prices of approximately $6.15 per barrel and an
approximate 31.3% decline in production. The Company's net loss for the
period decreased to $101,095, or ($.06) per share, compared to $34,4484 or
($.02) per share in the 1997 period.
The Company sustained an operating loss of $92,513 in the third quarter
of 1998, compared to an operating loss of $36,894 in the third quarter of
1997. For the nine month period ended September 30, 1998, the Company's net
loss increased approximately 95.4% to $299,522 from the $153,280 net loss in
the prior year's period. Operating losses in the 1998 period also increased
approximately 87.9% compared to the 1997 period.
Oil prices averaged $11.38 per barrel during the third quarter of 1998,
compared to an average of $17.53 per barrel in the 1997 period. For the nine
month period, oil prices averaged $12.51 in 1998 compared to $18.67 in 1997.
The Company had cash and cash equivalents at September 30, 1998, of
$55,048 compared to $174,809 at the end of the 1997 fiscal year. Management
estimates that it owes $311,445 from the settlement of the Horne Lease dispute
with Oryx to owners of other interests in the Horne Lease.
The Company is working to resolve the potential impact of the year 2000
on the ability of the Company's computerized information systems to accurately
process information that may be date-sensitive. Any of the Company's programs
that recognize a date using "00" as the year 1900 rather than the year 2000
could result in errors or system failures. The Company utilizes a limited
number of computer programs across its entire operation. The Company has not
completed its assessment, but currently believes that costs of addressing this
issue will not have a material adverse impact on the Company's financial
position, as its computer programs will be updated by third party vendors.
However, if the Company and third parties upon which it relies are unable to
address this issue in a timely manner, it could result in a material financial
risk to the Company. In order to assure that this does not occur, the Company
plans to devote all resources required to resolve any significant year 2000
issues in a timely manner.
PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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SIGNATURE
---------
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 13, 1998
PETROL INDUSTRIES, INC.
By: Joseph M. Rodano
-----------------------
Joseph M. Rodano
President and Treasurer
<PAGE> 9
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 55,048
<SECURITIES> 0
<RECEIVABLES> 40,785
<ALLOWANCES> 0
<INVENTORY> 24,753
<CURRENT-ASSETS> 125,453
<PP&E> 4,598,261
<DEPRECIATION> 4,524,109
<TOTAL-ASSETS> 265,783
<CURRENT-LIABILITIES> 1,016,430
<BONDS> 0
<COMMON> 159,720
0
0
<OTHER-SE> (910,367)
<TOTAL-LIABILITY-AND-EQUITY> 265,783
<SALES> 366,159
<TOTAL-REVENUES> 371,738
<CGS> 401,424
<TOTAL-COSTS> 401,424
<OTHER-EXPENSES> 240,909
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,519
<INCOME-PRETAX> (299,522)
<INCOME-TAX> 0
<INCOME-CONTINUING> (299,522)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (299,522)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> (.19)
</TABLE>
