<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
OMB Approval
OMB Number: xxxx-xxxx
Expires: Approval Pending
Estimated Average Burden Hours Per Response: 1.0
(Mark One)
[xx] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended: March 31, 1999
[ ] 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 (IRS Employer Identification No.)
Incorporation or 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
March 31, December 31,
ASSETS 1999 1998
------ --------- ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 18,008 56,729
Accounts receivable:
Trade 39,517 28,688
Other 9,497 9,497
---------- ---------
49,014 38,185
Inventory 20,774 16,685
Prepaid expenses 6,949 3,804
---------- ---------
Total current assets 94,745 115,403
---------- ---------
Property and equipment, at cost:
Land 7,000 7,000
Developed and undeveloped oil and gas properties-
successful efforts method 4,178,709 4,179,433
Trucks and other operating equipment 367,984 367,984
Furniture and fixtures 44,015 44,015
---------- ---------
4,597,708 4,598,432
Less accumulated depreciation, depletion and
amortization 4,532,445 4,530,195
---------- ---------
65,263 68,237
---------- ---------
Cash surrender value of life insurance, net --- ---
Other assets 1,107 1,107
---------- ---------
$ 161,115 184,747
========== =========
LIABILITIES AND STCOKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 58,163 37,242
Payable to interest owners 314,578 313,168
Payable to officer, net 601,686 562,682
Accrued expenses 108,502 106,770
---------- ---------
Total current liabilities 1,082,929 1,019,862
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 (1,081,534) (994,835)
---------- ---------
Total stockholders' deficit (921,814) (835,115)
---------- ---------
$ 116,115 184,747
========== =========
</TABLE>
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<TABLE>
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Operations
Three months ended March 31, 1999 and 1998
(unaudited)
1999 1998
---- ----
<S> <C> <C>
Revenues:
Oil and gas sales $ 78,471 137,024
Other operating income 3,670 6,630
--------- ---------
82,141 143,654
--------- ---------
Expenses:
Lease operating expense 88,681 148,616
General and administrative 70,426 86,787
Depreciation, depletion and amortization 2,250 1,800
--------- ---------
161,357 237,203
--------- ---------
Operating loss (79,216) (93,549)
Other income and (expense):
Loss-sale of assets --- (408)
Interest income 270 2,194
Interest expense (7,753) (8,898)
--------- ---------
(7,483) (7,112)
--------- ---------
Net loss $ (86,699) (100,661)
========= =========
Net loss per share (.05) (.06)
========= =========
Average common shares outstanding 1,597,196 1,597,196
========= =========
</TABLE>
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<TABLE>
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows
Three months ended March 31, 1999 and 1998
(unaudited)
1999 1998
---- ----
<S> <C> <C>
Operating activities:
Net loss $ (86,699) (100,661)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation, depletion and amortization 2,250 1,800
Loss on sale of assets --- 408
Losses on retirements of property and
equipment included in lease operating expenses 724 (616)
Changes in assets and liabilities:
Cash surrender value of life insurance --- (2,775)
Accounts receivable (10,829) 2,221
Inventory (4,089) 7,194
Prepaid expenses (3,145) (5,489)
Accounts payable and accrued expenses 22,653 7,612
Payable to officer, net 39,004 48,379
Payable to interest owners 1,410 3,152
--------- ---------
Net used by operating activities (38,721) (38,775)
Investing activities:
Capital expenditures --- (2,849)
--------- ---------
Net cash used by investing activities --- (2,849)
Decrease in cash and cash equivalents (38,721) (41,624)
Cash and cash equivalents at beginning of period 56,729 174,809
--------- ---------
Cash and cash equivalents at end of period $ 18,008 133,185
========= =========
</TABLE>
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<TABLE>
PETROL INDUSTRIES, INC. & SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Deficit
Three months ended March 31, 1999 and 1998
(unaudited)
1999 1998
---- ----
<S> <C> <C>
Stockholders' deficit at January 1 $ (835,115) (451,125)
Net loss for the three-month period (86,699) (100,661)
--------- ---------
Stockholders' deficit at March 31 $ (921,814) (551,786)
========= =========
</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 1998 Annual Report on Form 10-KSB.
2. The consolidated financial statements included herein are consolidated
with the accounts of Petrolind Drilling Funds, Inc. and Realco, Inc., both
wholly owned subsidiaries of the Registrant, neither of which was active
during 1999 or 1998.
3. Net income per share of common stock is computed on the weighted average
number of shares outstanding during the three months ended March 31. 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
1999 1998
---- ----
January 31 1,597,196 1,597,196
February 28 1,597,196 1,597,196
March 31 1,597,196 1,597,196
4. The expected tax benefit resulting from operating losses for the first
three months of 1999 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 March 31, 1999.
<PAGE> 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
With a decrease of approximately 34.4% in production, oil and gas sales
revenues were significantly lower during the first quarter of 1999, caused
principally by adverse weather conditions as compared to the 1998 period. The
Company's net loss decreased to $86,699, or ($.06) per share, compared to a
net loss of $100,661, or ($.06) per share in the 1998 period.
The Company sustained an operating loss of $79,216 in the first quarter
of 1999, compared to an operating loss of $93,549 in the first quarter of
1998. Oil prices averaged $10.51 per barrel during the first quarter of 1999,
compared to an average of $13.66 per barrel in the 1998 period.
The Company had cash and cash equivalents at March 31, 1999, of $18,008,
compared to $56,729 at the end of the 1998 fiscal year. Management estimates
that it owes $314,578 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: May 14, 1999
PETROL INDUSTRIES, INC.
Joseph M. Rodano
By:_______________________________
Joseph M. Rodano
President and Treasurer
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EXHIBIT INDEX
Exhibit
No. Description
------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 18,008
<SECURITIES> 0
<RECEIVABLES> 49,014
<ALLOWANCES> 0
<INVENTORY> 20,774
<CURRENT-ASSETS> 94,745
<PP&E> 4,597,708
<DEPRECIATION> 4,532,445
<TOTAL-ASSETS> 161,115
<CURRENT-LIABILITIES> 1,082,929
<BONDS> 0
<COMMON> 159,720
0
0
<OTHER-SE> (1,081,534)
<TOTAL-LIABILITY-AND-EQUITY> 116,115
<SALES> 78,471
<TOTAL-REVENUES> 82,141
<CGS> 88,681
<TOTAL-COSTS> 88,681
<OTHER-EXPENSES> 72,676
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,753
<INCOME-PRETAX> (86,699)
<INCOME-TAX> 0
<INCOME-CONTINUING> (86,699)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (86,699)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
