<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20449
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
Commission File Number 0-14905
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 13-3130236
(State or other jurisdiction of (I.R.S. Employer
incorporated or organization) Identification No.)
444 MADISON AVENUE, SUITE 3203, NEW YORK, N.Y. 10022
(Address of principal executive offices) (Zip Code)
(212) 688-3333
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 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:
The number of shares outstanding of the registrant's common stock $.08
par value, as of August 11, 1995, the latest practicable date, is 22,137,266
shares.
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------------ -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 339,551 $ 943,371
Cash - restricted 220,822 214,630
Accounts receivable 1,137,277 1,031,206
Inventory 728,435 951,472
Prepaid expenses 615,797 484,525
------------ -------------
Total current assets 3,041,882 3,625,204
------------ -------------
Property, plant and equipment:
Unevaluated property not subject
to amortization 5,407,627 4,467,147
Oil and gas properties pursuant
to the full cost method 29,087,282 28,903,520
Refinery property and equipment 15,536,279 15,536,279
Other 536,400 540,753
------------ -------------
50,567,588 49,447,699
Less: Accumulated depreciation,
depletion and amortization (21,795,566) (21,167,110)
------------ -------------
Total property, plant and equipment 28,772,022 28,280,589
------------ -------------
Other long-term assets, net 302,859 323,920
------------ -------------
TOTAL ASSETS $ 32,116,763 $ 32,229,713
============ =============
</TABLE>
See notes to consolidated financial statements
-2-
<PAGE> 3
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------------ -------------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term debt 701,250 1,168,750
Accounts payable 1,789,576 1,383,082
Accrued expenses and other liabilities 869,627 1,101,834
------------ ------------
Total current liabilities 3,360,453 3,653,666
Long term debt 6,601,421 6,601,421
------------ ------------
TOTAL LIABILITIES 9,961,874 10,255,087
Commitments and Contingencies (Note 2)
STOCKHOLDERS' EQUITY:
Preferred stock, par value $3.00,
authorized 7,000,000 shares, none issued - -
Common stock, par value $.08, 50,000,000
shares authorized, 22,137,266 shares issued
and outstanding in 1995 and 19,099,048
shares in 1994 1,770,981 1,527,924
Additional paid-in capital 73,527,903 71,562,434
Stock purchase warrants 1,297,754 1,297,754
Accumulated Deficit (54,441,749) (52,413,486) -2028263
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 22,154,889 21,974,626
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 32,116,763 $ 32,229,713
============ ============
</TABLE>
See notes to consolidated financial statements
-3-
<PAGE> 4
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30,
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
REVENUES:
Oil and gas sales $ 319,644 $ 241,762
Refinery lease fees 360,863 602,452
Interest Income 23,261 30,305
Other 25,561 47,937
---------- ----------
TOTAL REVENUES 729,329 922,456
---------- ----------
EXPENSES:
Operating 117,232 79,472
General and Aministrative 847,900 936,830
Depreciation, depletion and
amortization 274,763 426,339
Interest 243,761 288,538
---------- ----------
TOTAL EXPENSES $1,483,656 $1,731,179
---------- ----------
NET LOSS $ (754,327) $ (808,723)
========== ==========
Loss per share of common stock $ (0.04) $ (0.04)
========== ==========
Weighted average number of shares
outstanding 20,896,521 19,099,013
========== ==========
</TABLE>
See notes to consolidated financial statements
-4-
<PAGE> 5
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30,
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
REVENUES:
Oil and gas sales $ 624,929 $ 583,576
Refinery lease fees 379,927 981,751
Interest income 36,202 50,278
Other 35,972 71,368
----------- -----------
TOTAL REVENUES 1,077,030 1,686,973
----------- -----------
EXPENSES:
Lease operating 208,021 352,409
General and Aministrative 1,748,372 2,018,536
Depreciation, depletion and
amortization 628,453 716,286
Interest 520,447 741,864
----------- -----------
TOTAL EXPENSES $ 3,105,293 $ 3,829,095
----------- -----------
NET LOSS $(2,028,263) $(2,142,122)
=========== ===========
Loss per share of common stock $ (0.10) $ (0.13)
=========== ===========
Weighted average number of shares
outstanding 20,896,521 16,468,543
=========== ===========
</TABLE>
See notes to consolidated financial statements
-5-
<PAGE> 6
AMERICAN INTERNATIONAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,028,263) $(2,142,122)
----------- -----------
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and depletion 628,453 716,286
Amortization of bond/loan costs 62,408 126,606
Provision for issuance of warrants - 210,588
Changes in current assets & liabilities:
(Increase) decrease in accounts receivable (106,071) 421,286
Decrease in inventory 223,037 148,474
(Increase) decrease in prepaid expenses (150,072) 82,661
Increase (decrease) in accounts payable
and accrued expense 174,288 (4,199,212)
----------- -----------
Total adjustments 832,043 (2,493,311)
----------- -----------
NET CASH USED BY OPERATING ACTIVITIES (1,196,220) (4,635,433)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (1,124,242) (2,711,552)
Additions to refinery property and equipment - (8,535)
(Additions) retirements to other fixed assets (18,192) 22,444
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (1,142,434) (2,697,643)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash - restricted (6,192) (325,000)
Decrease in notes payable - (585,078)
Payments on long-term debt (467,500) (2,655,525)
Proceeds from sale of marketable securities - 288,701
Proceeds from issuance of common stock, net of
stock registration costs, subscriptions
receivable and commissions 2,208,494 15,149,781
Proceeds from exercise of stock warrants 32 -
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,734,834 11,872,879
----------- -----------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (603,820) 4,539,803
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 943,371 53,137
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 339,551 $ 4,592,940
=========== ===========
</TABLE>
See notes to consolidated financial statements
-6-
<PAGE> 7
AMERICAN INTERNATIONAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Notes
Additional Stock receivable
Common Stock paid-in purchase for issuance
Shares Amount capital warrants of stock Deficit Total
---------- ---------- ----------- ---------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994 19,099,048 $1,527,924 $71,595,370 $1,297,754 ($32,936) ($52,413,486) $21,974,626
Warrants Exercised 8 1 31 - - - 32
Sale of common stock - net 3,038,210 243,056 1,965,438 - - - 2,208,494
Net loss for the period - - - - - (2,028,263) (2,028,263)
---------- ---------- ----------- ---------- -------- ------------ -----------
BALANCE, JUNE 30, 1995 22,137,266 $1,770,981 $73,560,839 $1,297,754 ($32,936) ($54,441,749) $22,154,889
========== ========== =========== ========== ======== ============ ===========
</TABLE>
See notes to consolidated financial statements
7
<PAGE> 8
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
1. STATEMENT OF INFORMATION FURNISHED
The accompanying unaudited consolidated financial statements of American
International Petroleum Corporation and Subsidiaries (the "Company") have been
prepared in accordance with Form 10-Q instructions and in the opinion of
management contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of June 30,
1995 and the results of operations and the cash flows for the three months and
six months ended June 30, 1995 and 1994. These results have been determined on
the basis of generally accepted accounting principles and practices applied
consistently with those used in the preparation of the Company's 1994 Annual
Report on Form 10-K.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that the
accompanying unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes
thereto included in the Company's 1994 Annual Report on Form 10-K.
2. CONTINGENCIES
IRS Excise Tax Claim
In May 1992 an AIPC subsidiary, American International Refinery, Inc. ("AIRI"),
was notified by the Internal Revenue Service ("IRS") that excise taxes,
penalties and interest of approximately $3,500,000 were owed from the sale of
fuel products during 1989. The IRS claims that AIRI failed to comply with an
administrative procedure that required sellers, and buyers in tax-free
transactions, to obtain certification from the IRS. The Company believes that
AIRI complied with the substance of the existing requirements, and such sales
were either tax-free or such excise taxes were paid by the end-users of such
products. The Company has submitted a formal response, and discussions with
the IRS' National Office are continuing. At this time the Company is unable to
determine what liability may arise from this assessment, although the IRS has
informed the Company that they are nullifying approximately $650,000 of the
penalties included in the $3.5 million mentioned above.
Legal Proceedings
The Company and its subsidiaries are party to various legal proceedings,
including an environmental matter. Although the ultimate disposition of these
proceedings is not presently determinable, in the opinion of the Company, any
liability that might ensue would not be material in relation to the
consolidated financial position or results of operations of the Company.
-8-
<PAGE> 9
3. PROPERTY, PLANT AND EQUIPMENT
On March 31, 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of". SAFS No.
121 addresses the accounting for the impairment of long-lived assets,
identified intangibles and goodwill related to those assets and requires that
the carrying amount of impaired assets be reduced to fair value. SFAS No. 121
must be adopted by the Company in its financial statements for the year ending
no later than December 31, 1996 although earlier adoption is encouraged. The
Company has not yet determined the effect, which could be material, of the
adoption of SFAS No. 121 on the financial statements or the date of adoption.
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
During the quarter ended March 31, 1995, the Company sold 3,038,210 shares of
its common stock for net cash proceeds of $2,259,168. The Company's working
capital deficit as of June 30, 1995 was approximately $319,000 compared to a
deficit of approximately $28,000 at December 31, 1994. During this period,
approximately $1,142,000 of the proceeds from the stock sale was utilized by
the Company in investing activities, primarily for oil and gas exploration in
Peru, and $750,000 was utilized to pay current portions of debt and related
interest.
During the six month period ending June 30, 1995, the Company utilized
approximately $1,196,000 for operations. Net loss for the period totalled
$2,028,263, including non-cash provisions for depreciation, depletion, and
amortization of $690,861. Current assets other than cash increased
approximately $33,000, and approximately $174,000 was provided by an increase
in accounts payable.
The Company's work obligations in Peru and Colombia during the next twelve
months totals approximately $1,000,000. The Company expects to finance these
obligations with borrowed funds, primarily from local banks in South America.
However, the number of wells the Company may drill in these areas, in addition
to its obligations, will depend upon the level of success of its drilling
efforts and available capital.
The Company's 12% Secured Debentures (the "Debentures") require certain
principal payments, which began December 31, 1994, and contain certain
restrictive covenants and conditions with which the Company must comply. In
January 1995, the Company made principal and interest payments on the
Debentures of $468,000 and $281,000, respectively. In June 1995, the Company
reached an agreement with MG Trade Finance Corp. ("MGTF") to defer interest on
the Debentures of $216,000 due on June 30, 1995 until September 30, 1995. In
July 1995, the Company made an aggregate payment of $36,450 to all the other
holders of the Debentures. MGTF also agreed to waive certain restrictive
covenants related to the Company's ability to borrow
-9-
<PAGE> 10
funds from entities other than MGTF and released all of its existing Company
Warrants (to purchase 436,667 shares of the Company's Common Stock at an
average price of $16.32 per share) back to the Company in return for the
Company issuing new warrants to MGTF to purchase 150,000 shares of the
Company's Common Stock at $2.00 per share. During the next six months,
approximately $701,000 and $468,000 in principal and interest, respectively,
are due for payment, of which all of the principal is payable December 31,
1995, $216,000 of interest is due September 30, 1995 and the remaining $252,000
of interest is due December 31, 1995. The Company is currently in compliance
with all covenants and conditions related to the 12% Secured Debentures. In
the event the Company is unable to meet its obligations pursuant to the 12%
Secured Debentures in a timely manner and is unsuccessful in negotiating new
payment terms satisfactory to the lenders, the Company's oil and gas reserves
and financial condition could be adversely affected.
As of March 22, 1995, the balance of the loan from MGTF on AIRI's Lake Charles,
Louisiana oil refinery (the "Refinery") was approximately $2,845,000. On this
date, the Company amended certain terms of its loan agreement with MGTF ("Loan
Agreement"), extending the due date for the unpaid balance from May 31, 1995 to
March 31, 1998. Also, payments on the loan were reduced from 100% to 50% of
the monthly lease fee proceeds the Company receives from its Lessee of the
Refinery, Gold Line Refining Ltd., ("Gold Line"), which is expected to provide
approximately $600,000 in additional working capital to the Company in 1995, as
compared to previous years, and approximately $1.5 million annually in
additional working capital thereafter. In addition, approximately $756,000 in
annual cash flow is expected to be received from Gold Line until their note
payable to the Company of $1.8 million is repaid. If lease fees are not
sufficient to satisfy all accrued interest and principal when due, the Company
is obligated to satisfy any shortfall. The Company may be required to provide
to AIRI funds for future working capital requirements that may arise from
Refinery operations, including any environmental or other liabilities.
The Company is currently having discussions with various parties who have
expressed an interest in purchasing the Refinery. Proceeds received from the
sale would be used by the Company to repay debt, fund acquisitions of producing
oil and gas reserves, and to supplement the Company's working capital
requirements. However, there can be no assurance that any Agreement will be
reached.
The Company intends to meet its capital and operating funds requirements in the
near term from revenues generated from operations, from additional debt and/or
equity financing as necessary and/or from proceeds from the sale of the
Refinery. However, there is no assurance of the success of any financing
effort the Company may pursue or the timing or success of the sale
-10-
<PAGE> 11
of the Refinery. In the event the Company is not able to meet its future
exploration commitments in Colombia and Peru in a timely manner, Management
believes it will be able to extend certain commitments and may seek financial
partners for certain of its commitments. However, in the event the Company
cannot meet its exploration obligations by any of the means described above,
certain prospects in Colombia and Peru may be relinquished.
RESULTS OF OPERATIONS
For the Three Months Ended June 30, 1995 as compared
to the Three Months Ended June 30, 1994
The following table highlights the Company's results of operations for the
three months ended June 30, 1995 and 1994.
<TABLE>
<CAPTION>
For The Three Months
Ended June 30,
1995 1994
---- ----
<S> <C> <C>
Exploration and Production Activity:
Colombia Properties:
--------------------
Revenues - Oil Sales (000's) $282 $242
Lease Operating Expenses (000's) $77 $79
Production Volume - Bbls 35,248 30,952
Average Price per Bbl $7.99 $7.81
Production Cost per Bbl $2.18 $2.52
DD&A per Bbl $3.86 $4.28
Peru Properties:
----------------
Revenues - Oil Sales (000's) $38 -
Lease Operating Expenses (000's) $39 -
Production Volume - Bbls 5,118 -
Average Price per Bbl $7.43 -
Production Cost per Bbl $7.68(1) -
DD&A per Bbl (2) - -
Refinery Operations:
Refinery Lease Fees (000's) $361 $602
Average Daily Throughput(Bbls) 10,024 16,733
Average Throughput Fee per Bbl $0.40 $0.38
- ----------------------------------------------------------------------
</TABLE>
(1) Reflects approximately $3.93 per barrel in workover and evaluative costs
during the period. Actual production cost per barrel without these costs
was approximately $3.75/barrel.
(2) Excludes DD&A for Peruvian activity since all related properties are
currently considered "unevaluated".
-11-
<PAGE> 12
Oil and Gas Operations:
Colombia
Oil and gas sales reflect an increase of approximately 14% compared to the same
period in the prior year, which resulted primarily because the Company has
taken an excess of its working interest share of produced oil, relative to its
partner, Ecopetrol, of approximately 6,200 barrels of oil during the second
quarter of 1995. Ecopetrol may make up this deficiency over time by taking up
to 10% more than its working interest share of production until the imbalance
is cured. Actual gross production and sales of the Company's shareable oil
were down approximately 16% and 18%, respectively, in the current quarter
compared to the same period last year, due primarily to normal field production
decline and a decrease in the Company's workover projects during the current
period compared to the same period last year. Additional decreases in sales
revenues compared to the same period last year are attributable to the Company
selling its oil under a new crude sales contract whereby the crude oil was sold
directly to an end user at the well head, thereby receiving a price for the oil
that excluded transportation costs, which costs were included in the sales
price during the first month of the second quarter of last year. The new crude
oil contract was effective May 1, 1994.
Peru
Peru operations started in July, 1994, and therefore there are no comparative
numbers presented. All related properties are currently considered
"unevaluated".
Refinery Operations:
Refinery lease fees decreased 40% in the current quarter compared to the second
quarter 1994. The decrease occurred because Gold Line was not fully
operational during the second quarter of 1995. During this quarter, Gold Line
was negotiating feedstock contracts and performing start-up maintenance.
However, during the last week of July 1995, Gold Line was processing
approximately 16,000 barrels of feedstock per day. The throughput fees
increased 14%, from $0.35 a barrel to $0.40 a barrel over the same period last
year. The fees increase to $0.50 per barrel starting January 1, 1996.
Other Revenue:
Other revenues decreased approximately $22,000 during the current quarter due
primarily to the decrease in foreign exchange rates in this period compared to
the same quarter of 1994.
-12-
<PAGE> 13
General and Administrative:
General and Administrative expenses decreased approximately $89,000, or 9%,
compared to the same period during 1994. Other increases/decreases realized in
this period compared to the same period last year were: payroll and payroll
related expenses decreased approximately $100,000, travel expenses decreased
$32,000, investor relations decreased approximately $34,000. Legal fees
increased in the current period compared to the first quarter 1994 by
approximately $32,000, primarily due to increased activity related to an excise
tax dispute with the IRS. Interest expense decreased $45,000, or 16%, due to
the decrease in the balance of 12% Secured Debentures outstanding as of March
31, 1995 compared to March 31, 1994, and the reduction of debt payable to MGTF
from $4,196,000 as of March 31, 1994 to $2,845,000 on March 31, 1995. Under
the Loan Agreement, effective March 22, 1995, the MGTF loan bears interest at
prime plus 1%.
Depreciation, Depletion, and Amortization decreased approximately $152,000, or
36%, for the current period compared to the same period last year. This
decrease resulted primarily from a charge, during the second quarter of 1994,
recording depreciation expense for a twelve month period on refinery assets not
previously placed into service and not depreciated prior to the second quarter
of 1994. It was subsequently determined that these assets should be
depreciated. In addition, the depletion rate of $3.86 per barrel calculated
for 1995 is a 10% decrease from the $4.28 per barrel used in the same period
last year.
-13-
<PAGE> 14
RESULTS OF OPERATIONS
For the Six Months Ended June 30, 1995 as compared to the Six Months Ended
June 30, 1994
The following table highlights the Company's results of operations for the six
months ended June 30, 1995 and 1994.
<TABLE>
<CAPTION>
For The Six Months
Ended June 30,
1995 1994
---- ----
<S> <C> <C>
Exploration and Production Activity:
Colombia Properties:
--------------------
Revenues - Oil Sales (000's) $541 $584
Lease Operating Expenses (000's) $143 $352
Production Volume - Bbls 67,166 61,825
Average Price per Bbl $8.05 $9.44
Production Cost per Bbl $2.12 $5.70
DD&A per Bbl $3.86 $4.28
Peru Properties:
----------------
Revenues - Oil Sales (000's) $84 -
Lease Operating Expenses (000's) $63 -
Production Volume - Bbls 11,549 -
Average Price per Bbl $7.28 -
Production Cost per Bbl $5.49(l) -
DD&A per Bbl (2) - -
Refinery Operations:
Refinery Lease Fees (000's) $380 $982
Average Daily Throughput(Bbls) 9,998 14,400
Average Throughput Fee per Bbl $0.40 $0.38
- ----------------------------------------------------------------------
</TABLE>
(1) Reflects approximately $1.74 per barrel in workover and evaluative costs.
Actual production cost during the period without these costs was
approximately $3.75 per barrel.
(2) Excludes DD&A for Peruvian activity since all related properties are
currently considered "unevaluated".
-14-
<PAGE> 15
Oil and Gas Operations:
Colombia
Colombian oil and gas sales reflect a decrease of approximately 7% compared to
the same period in the prior year. The decrease was limited to this amount
primarily because the Company has taken an excess of its working interest share
of produced oil, relative to its partner, Ecopetrol, of approximately 16,610
barrels of oil during the first six months of 1995. Ecopetrol may make up this
deficiency by taking up to 10% more than its working interest share of
production until the imbalance is cured. Actual gross production and sales of
the Company's shareable oil were down approximately 16% and 30%, respectively,
for the current period compared to the same period last year, due primarily to
normal field production decline and a decrease in the Company's workover
projects during the current period compared to the same period last year.
Additional decreases in sales revenues compared to the same period last year
are attributable to the Company selling its oil under a new crude sales
contract whereby the crude oil was sold directly to an end user at the well
head thereby receiving a price for the oil that excluded transportation costs,
which costs were included in the sales price during part of this same period
last year but not in the current period. The new crude oil contract was
effective May 1, 1994.
Peru
Peru operations started in July, 1994, and therefore there are no comparative
numbers presented. All related properties are currently considered
"unevaluated".
Refinery Operations:
Refinery lease fees decreased 61% in the current period compared to the same
period last year because Gold Line was not operational at all during the first
quarter of 1995 and only partially operational during the second quarter of
1995. During the first quarter of this year, Gold Line was in the process of
obtaining additional financing and, during the second quarter, has been
negotiating feedstock contracts and performing start-up maintenance. However,
during the last week of July, Gold Line was processing approximately 16,000
barrels of feedstock per day. The throughput fees increased 14%, from $0.35 a
barrel to $0.40 a barrel over the same period last year. The fees increase to
$0.50 per barrel starting January 1, 1996.
-15-
<PAGE> 16
Other Revenue:
Other revenues decreased approximately $35,000 during the current period due
primarily to the decrease in foreign exchange gains in this period compared to
the same period in 1994.
General and Administrative:
General and Administrative expenses decreased approximately $270,000, or 13%,
compared to the same period during 1994. The non-cash charge adjusting the
exercise price of certain outstanding warrants in the first quarter of 1994 was
approximately $210,000 of this decrease. Other increases/decreases realized in
this period compared to the same period last year were as follows: payroll and
payroll related expenses decreased approximately $185,000, travel expenses
decreased $34,000, investor relations expenses decreased by $33,000. Legal
fees increased by approximately $120,000, primarily due to increase activity
related to an outstanding excise tax dispute with the IRS. Insurance expense
increased approximately $28,000 due to the rising cost of Directors and
Officers insurance and increased coverage of Peruvian operations. Interest
expense decreased $221,000, or 30%, due to the decrease in the balance of 12%
Secured Debentures outstanding as of March 31, 1995 compared to March 31, 1994
and the reduction of debt payable to MGTF from $4,196,000 as of March 31, 1994
to $2,845,000 on March 31, 1995. Under the Loan Agreement, the MGTF loan bears
interest at prime plus 1%, effective March 22, 1995, as previously discussed.
Depreciation, Depletion, and Amortization decreased approximately $88,000, or
13%, for the current period compared to the same period last year. This
decrease resulted primarily from a charge, during the second quarter 1994,
recording depreciation expense for a twelve month period on refinery assets not
previously placed into service and not depreciated prior to the second quarter
of 1994. It was subsequently determined that these assets should be
depreciated. In addition, the depletion rate of $3.86 per barrel calculated
for 1995 is a 10% decrease from the $4.28 per barrel used in the same period
last year.
-16-
<PAGE> 17
PART II: OTHER INFORMATION
ITEM 4. Submission of Matters to a vote of Security Holders
An Annual Meeting of Shareholders was held on June 26, 1995.
The following Directors, consituting all of the Directors of the Company, were
elected at the meeting to serve as Directors until the next Annual Meeting of
Shareholders and until their successors have been duly elected and received the
number of votes for their election set forth opposite their respetive numbers:
<TABLE>
<CAPTION>
Votes Cast
--------------
For Against Withheld
Nominees Election Election Authority/Abstain
- ---------------- ---------- --------- -----------------
<S> <C> <C> <C>
George Faris 16,109,870 1,341,953 -0-
Kenneth Durham 16,512,907 938,916 -0-
Daniel Y. Kim 16,345,929 1,105,894 -0-
Donald G. Rynne 16,362,521 1,089,302 -0-
William R. Smart 16,531,709 920,114 -0-
</TABLE>
Also at the Annual Meeting, the Shareholders ratified, by the
following number of votes, the Company's appointment of Price Waterhouse LLP as
the independent public accountants of the Company for the fiscal year ending
December 31, 1995:
<TABLE>
<CAPTION>
Votes Cast
--------------
For Ratification Against Ratification Abstain
- ---------------- -------------------- -------
<S> <C> <C>
17,126,807 256,600 68,416
</TABLE>
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. None.
(b) Reports on Form 8-K. None
-17-
<PAGE> 18
SIGNATURE
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.
Dated: August 11, 1995
AMERICAN INTERNATIONAL
PETROLEUM CORPORATION
By: /s/ Denis J. Fitzpatrick
------------------------
Denis J. Fitzpatrick
Chief Financial Officer
By: /s/ William L. Tracy
------------------------
William L. Tracy
Treasurer/Controller
-18-
<PAGE> 19
Exhibit Index
Exhibit Number Description
- -------------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 560,373
<SECURITIES> 0
<RECEIVABLES> 1,137,277
<ALLOWANCES> 0
<INVENTORY> 728,435
<CURRENT-ASSETS> 3,041,882
<PP&E> 50,567,588
<DEPRECIATION> 21,795,566
<TOTAL-ASSETS> 32,116,763
<CURRENT-LIABILITIES> 3,360,452
<BONDS> 6,601,421
<COMMON> 1,770,981
0
0
<OTHER-SE> 20,383,909
<TOTAL-LIABILITY-AND-EQUITY> 32,116,763
<SALES> 680,507
<TOTAL-REVENUES> 729,329
<CGS> 117,232
<TOTAL-COSTS> 1,239,895
<OTHER-EXPENSES> 1,366,424
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 243,761
<INCOME-PRETAX> (754,327)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (754,327)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> 0
</TABLE>
