SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20449
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
---------------------------------------------
Commission File number No. 0-14905
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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
incorporation or organization) Identification No.)
444 MADISON AVENUE, SUITE 3203, NEW YORK, NEW YORK 10022
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(Address of principal executive offices) (Zip Code)
(212) 688-3333
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since
last report)
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
------------------ ------------------------
The number of shares outstanding of the registrant's common stock, $.08 par
value, as of May 12, 1997 is 37,359,872 shares.
<PAGE>
AMERICAN INTERNATIONAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------------- -----------------
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,107 $ 11,058
Cash - restricted 25,847 161,022
Marketable Securities 7,015,000 --
Accounts and notes receivable, net 1,566,819 1,073,140
Inventory -- 459,961
Prepaid expenses 312,078 838,104
------------ ------------
Total current assets 8,929,851 2,543,285
------------ ------------
Property, plant and equipment:
Unevaluated property 751,922 5,648,630
Oil and gas properties -- 32,506,656
Refinery property and equipment 17,796,451 17,235,183
Other 207,308 499,971
------------ ------------
18,755,681 55,890,440
Less - accumulated depreciation, depletion,
amortization and impairments (3,834,972) (23,959,191)
------------ ------------
Total property, plant and equipment 14,920,709 31,931,249
------------ ------------
Other long-term assets, net 2,201,027 17,897
------------ ------------
Total assets $ 26,051,587 $ 34,492,431
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ -- $ 237,162
Current portion of long-term debt 2,390,793 5,968,393
Accounts payable 1,216,807 3,636,765
Accrued liabilities 2,442,995 2,524,194
------------ ------------
Total current liabilities 6,050,595 12,366,514
Long-term debt 2,520,022 798,199
------------ ------------
Total liabilities 8,570,617 13,164,713
------------ ------------
Stockholders' equity:
Preferred stock, par value $0.01, 7,000,000 shares
authorized, none issued -- --
Common stock, par value $.08, 100,000,000 shares
authorized, 36,626,538 shares issued and outstanding
at March 31, 1997 and 34,458,921 shares at December 31, 1996 2,930,123 2,756,714
Additional paid-in capital 79,254,901 78,677,265
Stock purchase warrants 1,297,754 1,297,754
Accumulated deficit (66,001,808) (61,404,015)
------------ ------------
Total stockholders' equity 17,480,970 21,327,718
------------ ------------
Commitments and contingent liabilities (Note 10) -- --
------------ ------------
Total liabilities and stockholders' equity $ 26,051,587 $ 34,492,431
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
AMERICAN INTERNATIONAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------------- ------------
(RESTATED)
<S> <C> <C>
Revenues:
Oil and gas production and
pipeline fees $ 260,579 $ 304,192
Refinery lease fees 442,714 568,596
Other 35,250 50,818
------------ ------------
Total revenues 738,543 923,606
------------ ------------
Expenses:
Operating 98,765 112,098
General and administrative 1,648,538 598,505
Depreciation, depletion and
amortization 250,743 324,545
Interest 573,041 421,931
Unrealized loss on marketable securities 1,753,750 --
Provision for bad debts 447,832 --
Loss on sale of subsidiaries 563,667 --
------------ ------------
Total expenses 5,336,336 1,457,079
------------ ------------
Net loss $ (4,597,793) $ (533,473)
============ ============
Net loss per share of common stock $ (0.13) $ (0.02)
============ ============
Weighted-average number of shares
of common stock outstanding 36,281,693 25,961,481
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
AMERICAN INTERNATIONAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(4,597,793) $ (533,473)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation, depletion and amortization 586,247 563,447
Unrealized loss on marketable securities 1,753,750 --
Provision for bad debts 447,832 --
Loss on sale of subsidiaries 563,667 --
Changes in assets and liabilities:
Accounts and notes receivable (125,808) 246,956
Inventory 56,974 15,450
Prepaid and other 56,155 6,157
Accounts payable and accrued liabilities 99,665 (708,323)
----------- -----------
Net cash provided by (used in) operating activities (1,159,311) (409,786)
----------- -----------
Cash flows from investing activities:
Additions to oil and gas properties (331,349) (649,254)
Additions to refinery property and equipment (561,268) --
Other (101,098) (263,647)
----------- -----------
Net cash used in investing activities (993,715) (912,901)
----------- -----------
Cash flows from financing activities:
Cash - restricted, loan collateral 9,414 226,223
Net increase (decrease) in notes payable (237,162) (23,511)
Proceeds from long-term debt 1,746,820 1,350,000
Repayments of long-term debt (1,536,614) (740,607)
Proceeds from issuance of common stock and
warrants, net 439,770 779,089
Proceeds from exercise of stock warrants
and options 560 --
Proceeds from sale of subsidiaries 1,729,287 --
----------- -----------
Net cash provided by financing activities 2,152,075 1,591,194
----------- -----------
Net increase (decrease) in cash and
cash equivalents (951) 268,507
Cash and cash equivalents at beginning of year 11,058 162,218
----------- -----------
Cash and cash equivalents at end of year $ 10,107 $ 430,725
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
AMERICAN INTERNATIONAL PETROLEUM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Additional Stock
Common stock paid-in purchase Accumulated
Shares Amount capital warrants deficit Total
----------- ------------- -------------- ------------- ----------------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 34,458,921 $ 2,756,714 $ 78,677,265 $ 1,297,754 $(61,404,015) $ 21,327,718
Conversions of Debentures-REGULATION S 231,884 18,551 56,449 -- -- 75,000
Issuance of stock for interest in oil &
gas properties-REGULATION S 300,000 24,000 126,000 -- -- 150,000
Exercise of warrants 140 11 549 -- -- 560
Issuance of common stock-REGULATION S 1,635,593 130,847 308,923 -- -- 439,770
Imputed interest on debentures
convertible at a discount to market -- -- 85,715 -- -- 85,715
Net loss for the period -- -- -- -- (4,597,793) (4,597,793)
------------ ------------ ------------ ------------ ------------ ------------
Balance, March 31, 1997 36,626,538 $ 2,930,123 $ 79,254,901 $ 1,297,754 $(66,001,808) $ 17,480,970
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
5
<PAGE>
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
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 March 31,
1997, the results of operations for the three month periods ended March 31, 1997
and 1996 and cash flows for the three months ended March 31, 1997 and 1996.
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 1996 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
1996 Annual Report on Form 10-K.
2. MARKETABLE SECURITIES
Marketable Securities held by the Company are "available-for-sale securities"
and were valued by the Company in the MIP Transaction (See discussion
below)at a basis of $2.00 per share. They had a market value of $1.60 per share
at March 31, 1997, resulting in an unrealized loss of $1,754,000 for the period.
These securities were acquired with the intent to trade for short-term profit
(trading securities), accordingly, unrealized gains or losses are charged to
earnings as incurred.
3. OTHER LONG TERM ASSETS
Notes totaling $4,400,000 acquired by the Company have been discounted and
recorded as $3,600,000, less current portion of $1,500,000.
4. LONG-TERM DEBT
The effective interest rate as stated for each of the debt instruments below
does not necessarily reflect the actual cash cost to the Company
6
<PAGE>
for that specific debt instrument. the effective interest rate reflects presumed
incremental yield the holder of the debt instrument my derive from the
discounted conversion rate of such instrument issued by the Company. the
convertible debentures are convertible into the Company's stock based on
calculations ranging from the average closing bid price of the Company's common
stock for the five (5) business days immediately preceding the conversion dates,
to discounts of 35%. the presumed incremental yield (imputed interest expense)
for the three months ended march 31, 1997 amounted to approximately $205,000.
<TABLE>
MARCH 31,
1997
-------------------
<S> <C>
10% - $391,629 CONVERTIBLE DEBENTURES - DUE APRIL 1, 1998,
EFFECTIVE INTEREST RATE - 34.7% $352,355
12.5% - 426,000 CONVERTIBLE DEBENTURES - DUE JANUARY 2, 1998,
EFFECTIVE INTEREST RATE - 49.2% TO 51.7% $426,000
SENIOR CONVERTIBLE SUBORDINATED DEBENTURES - DUE FEBRUARY 1, 1997,
INTEREST RANGES FROM 8.5%-10.5% PER ANNUM, PAYABLE QUARTERLY,
CONVERTIBLE INTO COMMON SHARES AT $50.00 PER SHARE. $250,000
9% - $200,000 CONVERTIBLE DEBENTURE - DUE JANUARY 9, 2000,
EFFECTIVE INTEREST RATE - 51.86% $200,000
7% - $2,000,000 CONVERTIBLE DEBENTURE - DUE FEBRUARY 1, 1999,
EFFECTIVE INTEREST RATE - 29.74% $1,541,667
----------
10% - $32,400 SUBORDINATED DEBENTURE - DUE SEPTEMBER 24, 1997,
EFFECTIVE INTEREST RATE - 17.4% $ 32,400
------ -------
NOTE PAYABLE TO MG TRADE FINANCE CORPORATION $2,108,393
- -
---------------
$4,910,815
'LESS - CURRENT PORTION $2,390,793
---------------
LONG-TERM DEBT $2,520,022
===============
</TABLE>
During the first quarter of 1997, the Company received net proceeds of
$1,747,000 from the sale of Convertible Redeemable Subordinated Debentures,
issued in accordance with Regulation S as promulgated by the Securities and
Exchange Commission. (See Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
During the last three years, the Company has had difficulty generating
sufficient cash flow to fund its operations, capital expenditures and required
principal payments. As a result, the Company has from time to time operated with
limited liquidity or negative working capital. In order to continue operations
under such circumstances, the Company has historically relied on outside sources
of capital. However, on February 25, 1997, the Company sold all of the issued
and outstanding
7
<PAGE>
shares of common stock of two of its wholly-owned subsidiaries, American
International Petroleum Corporation of Colombia ("AIPCC") and Pan American
International Petroleum Corporation ("PAIPC") (the "Purchased Shares") in an
arms length transaction (the "MIP Transaction") to Mercantile International
Petroleum, Inc. ("MIP"), improving its working capital position from a net
working capital deficit of $9.8 million at December 31, 1996, to a positive
working capital of $2.9 million at March 31, 1997.
During the quarter ended March 31, 1997, the Company utilized $4,598,000 for
operations, which reflects approximately $3,351,000 in non-cash provisions,
including depreciation, depletion an amortization of $586,000, loss on
write-down of marketable securities acquired in the MIP Transaction of
$1,754,000, provision for bad debts of $448,000, and loss on sale of
subsidiaries of $564,000. Approximately $13,000 was used during the period to
increase current assets other than cash, and $100,000 was provided by an
increase in accounts payable and accrued liabilities. Cash for operations was
provided, in part, by the issuance of Common Stock and net increase in long-term
debt in an aggregate amount of $651,000, and from the sale of subsidiaries of
$1,729,000.
The assets of AIPCC and PAIPC consisted of oil and gas properties and equipment
in South America with an aggregate net book value of approximately $17.9
million. The total aggregate purchase price payable by MIP for the Purchased
Shares was valued, giving account to the contingent portion thereof, which was
not recorded by the Company pursuant to GAAP, at up to approximately $20.2
million, determined as follows:
(a) Cash payments of approximately $3.9 million, of which approximately
$2.2 million was paid simultaneously with the closing to retire the
Company's 12% Secured Debentures due December 3, 1997, which were
secured by the Company's shares of AIPCC.
(b) Assumption of AIPCC and PAIPC debt in an aggregate amount of $534,000.
(c) 4,384,375 shares of MIP Common Stock (the "MIP Shares") with a trading
price of approximately $2.00 on the date the parties agreed in
principle to the sale.
(d) A two-year $3 million 5% exchangeable subordinated debenture of AIPCC
(the "Exchangeable Debenture"), exchangeable into shares of common
stock of MIP on the basis of $3 principal amount of such debenture for
one share of MIP on or after February 25, 1998; or Registrant may
demand payment on that date of $1.5 million of the principal balance
thereof.
8
<PAGE>
(e) A $1.4 million "performance earn-out" from future production in
Colombia, plus interest at 8% per annum.
(f) Up to $2.5 million (reduced proportionately to the extent the Net
Operating Loss and Deferred Cost Deductions accrued by AIPCC through
December 31, 1996 ("Accrued Tax Benefit Deductions") is less than $50
million but more than $20 million) payable from 25% of AIPCC's future
tax savings related to Accrued Tax Benefit Deductions available to
AIPCC on future tax filings in Colombia.
As a result of the MIP Transaction, the Company owns approximately 11% of MIP's
outstanding share capital on a fully-diluted basis. MIP is traded in U.S.
dollars on the Toronto Stock Exchange under the symbol MPT.U.
Since the MIP Shares were restricted from sale by the Company for 40 days from
the date of closing of the MIP Transaction, they were not immediately
marginable. In addition, the lessee at the Company's Lake Charles, Louisiana
refinery (the "Refinery"), Gold Line Refining, Ltd. ("Gold Line"), did not make
any lease payments to the Company in 1997 and has been evicted from the
Refinery. Consequently, in order to redeem certain outstanding convertible
debentures prior to their conversion by the holders thereof into the Company's
common stock, and to continue the expansion of its Refinery, in April 1997, the
Company sold an aggregate of $750,000 of 8%, two-year Redeemable Convertible
Debentures pursuant to Regulation S (the "8% Debentures") to provide the
required cash flows the Company needs until it is able to margin or sell the MIP
Shares as required and to utilize the proceeds therefrom to redeem all or a
portion of the 8% Debentures, and certain other outstanding convertible
debentures of the Company as well, prior to their conversion into shares of the
Company's common stock. However, to the extent it can, the Company intends to
retain the MIP Shares until the Company's capital requirements dictate that they
be sold.
The Company's 12% Secured Debentures (the "Debentures"), which had a principal
and interest balance at December 31, 1996 of an aggregate of $3,720,000, were
paid in full during the first quarter of 1997, mostly from proceeds received
from the MIP Transaction.
The Company has borrowed funds from MG Trade Finance Corp. ("MGTF"). As part of
the MIP Transaction, the Company agreed to change the maturity date for payment
of the unpaid balance due to MGTF (currently $2,108,000) to September 30, 1997
from March 31, 1998. In addition, the Company pledged 1,000,000 shares of its
MIP common stock to further secure the Loan Agreement with MGTF. The Company
expects to pay the balance due on the Loan Agreement by the revised due date by
margining or selling some of its MIP shares, or with other conventional
financing.
9
<PAGE>
Because of non-payment of lease fees and other items of default under the terms
of its lease agreement with the Company, Gold Line was evicted from the Refinery
premises on March 20, 1997. The Company has filed suit against Gold Line to
recover unpaid lease fees and other items totaling approximately $1.8 million.
All past amounts due from Gold Line have been previously reserved, including a
charge to the reserve for bad debts during the first quarter of 1997 for
$443,000 representing the unpaid processing fees for that period. A trial has
been scheduled for May 15, 1997 to hear the case. The Company believes that it
will prevail in all, or substantially all, of its claims against Gold Line,
although no assurance of this can be given. However, even if the Company does
obtain a favorable judgment, no assurance can be given that the Company will be
able to collect on any such judgment.
The Company believes that it has sufficient capital, or access thereto, to
complete the expansion of the Refinery to enable the implementation of its
asphalt operations and to make any preliminary oil and gas related expenditures.
The asphalt and other operations at the Refinery are expected to provide the
Company with the future capital necessary to fund its oil and gas operations, or
place the Company in a position where it is able to access conventional
financing for such projects.
During the next twelve months, the Company plans to expand up to $2 million for
the Refinery expansion, which it expects to fund in part by internally-generated
cash flow from refinery operations, and/or by the margin or sale of the MIP
Shares and interest payments received from the Exchangeable Debenture. The
Company is also having discussions with other financing entities who have
expressed interest in financing further expansion of the Refinery and future
operations at the Refinery.
The Company is currently having discussions with various companies who have
expressed an interest in utilizing the Refinery's crude unit, previously leased
to Gold Line, on terms which could provide the Company with similar or better
operating income than that formerly provided by the lease with Gold Line. In
addition, the Company plans to implement terminalling operations whereby it will
charge a processing fee for providing its refinery facilities as a terminal to
store and process its customers' asphalt for distribution to local markets.
The phase one construction of the Refinery expansion, necessary to implement the
operations referred to above, should be completed this month. The Company hopes
to have contracts in place to begin asphalt terminalling operations sometime in
June or July 1997, although there is no assurance that it will obtain such
contracts.
The Company recently signed an agreement with a German-based company, MED
Shipping & Trading S.A. ("MED") for the purchase of a 70% working
10
<PAGE>
interest in a 4.7 million acre oil and gas concession (the "License") in the
Usturt Basin of Western Kazakhstan. The License is in the process of being
transferred to MED Shipping Usturt Petroleum Company Limited ("MSUP"), a joint
venture limited liability company, which has been formed to manage the License
operations. Although the Company is not aware of any potential problems with the
transfer of the License, no assurance can be given as to whether or when the
Kazakhstan government will approve the transfer of the License. The Company owns
70% of MSUP through its newly-formed and wholly-owned subsidiary American
International Petroleum Kazakhstan ("AIPK"), which will handle all of the
Company's operations in Kazakhstan.
Because of the confidential nature of the Agreement and the total consideration
the Company is paying for the purchase, public release of such information is
being deferred until the transfer of the License is completed.
The License area is located in western Kazakhstan approximately 125 miles
southeast of Chevron's multi-billion barrel Tengiz Oil Field and the Caspian
Sea. The area is bordered to the south by Elf Acquitain's license and to the
west by both Oryx/Exxon and Amoco licenses. Preliminary evaluation by the
Company's independent petroleum engineer indicates the presence of potential
recoverable reserves on six structures, located in the western half of the
License. Additional structures have been identified in the License area, but
have not been evaluated. Regional seismic data on the eastern half of the
License area indicates additional structures, the largest of which measures
approximately 50 kilometers in length. This structure, whose reserves are not
yet estimated, could provide the largest potential deposits in the License area.
The Company plans to continue its evaluation of the area and expects to expand
its evaluation program as additional data is released to the Company by the
government.
The Usturt area provides various commercial options for oil or gas production,
since there are several oil and gas pipelines which cross the area. The existing
infrastructure permits rapid development and marketing of production and
flexibility in securing acceptable markets for same. Production can be sold
north to Russia, Finland and the Atyrau Refinery, and/or south through the
Caspian Sea at Aktau for export abroad.
As previously reported, the Company paid $100,000 in cash and 300,000 shares of
its common stock, issued pursuant to Regulation S, to MED in return for the
option to acquire a 40% working interest in the License. Further negotiations
resulted in an increase in the working interest to 70%. MED will receive a
monthly consulting fee of $23,000 to be used to establish contracts for the
development and marketing of production, administrative and other activities
related to the enhancement of the License and for AIPK operations in Kazakhstan.
11
<PAGE>
The Company will be responsible for operating the License operations and to fund
all obligations therefor. The License requires aggregate minimum capital
expenditures of $14.75 million during the initial five year exploration period,
of which $6.3 million must be expended during the first three years for seismic
and drilling. The Company is currently having discussions with various major and
other oil companies, who have expressed a preliminary interest in joining the
Company to develop the areas included therein.
There is no assurance of success of any financing efforts the Company may pursue
or the timing or success of its Refinery/VDU projects and/or its other potential
projects. In the event that the Company is not able to fund its projects on its
own in a timely manner, management believes it will be able to obtain partners
for certain projects, however, such projects could be delayed or curtailed. As a
result of the sale of two of its subsidiaries and the eviction of Gold Line, the
Company has no current operating cash flows. Therefore, until the implementation
of new operations at its Refinery or elsewhere, and absent any new financing it
may obtain, the Company must rely on the potential margin or sale of the MIP
Shares to sustain its business operations.
12
<PAGE>
RESULTS OF OPERATIONS
For the Three Months Ended March 31, 1997 as compared
to the Three Months Ended March 31, 1996
The following table highlights the Company's results of operations for the three
months ended March 31, 1997 and 1996.
For The Three Months
Ended March 31,
1997 1996
------- ----------
Exploration and Production Activity:
Colombian Properties:(1)
- ----------------------------
Revenues - Oil Sales (OOO's) $ 261 $ 304
Lease Operating Expenses (OOO's) $ 99 $ 111
Production Volume - Bbls 18,625 36,766
Average Price per Bbl $ 14.01 $ 8.27
Production Cost per Bbl $ 5.31 $ 3.01
DD&A per Bbl $ 3.77 $ 3.77
Peru Properties: (2) (2)
- ----------------------------
Refinery Operations:(3)
Refinery Lease Fees (OOO's) $ 443 $ 569
Average Daily Throughput 9,838 12,635
Average Throughput $ 0.50 $ 0.50
- -------------------------------------------------------- -- --------------------
(1) Reflects oil and gas activity through February 25, 1997.
(2) Information for 1997 and 1996 is not available due to dispute with the
Company's former partner.
(3) Reflects refinery activities through March 20, 1997.
Oil and Gas Operations:
The results of operations for Colombia and Peru for 1997 reflect results for the
period through February 25, 1997, the date of the sale of the Colombia and Peru
subsidiaries, compared to three full months of operations reflected in 1996.
Refinery Operations:
The results of operations for the Refinery for 1997 reflect results for the
period through March 20, 1997, the date that the Company evicted its lessee,
compared to three full months of operations reflected in 1996.
13
<PAGE>
Other Revenue
Other Revenue decreased approximately $16,000 or 43%, during the current quarter
compared to the first quarter of 1996. The decrease is primarily due to a
decrease in other revenue from the sale of the Colombia operations as previously
discussed.
General and Administrative
General and Administrative ("G&A") expenses increased approximately $1,050,000
compared to the same period during 1996. A decrease of $186,000 in capitalized
and reimbursable G&A expenses during the current period compared to the same
period in 1996 was attributable to the Colombia operations. A decrease in these
areas resulted in more G&A expenses being absorbed by the Company. This decrease
was primarily due to a decrease in capital expenditures during the current
period and an adjustment to reflect a decrease in reimbursable G&A expenses from
Ecopetrol, the Colombia government oil company. Non-recurring legal fees of
approximately $125,000 incurred during the current period were attributable to
the sale of the Company's wholly owned subsidiaries at February 25, 1997, and to
the Company's legal proceedings against Gold Line, as previously discussed
above. A charge of $695,000 was incurred to partialy compensate key employees
whose salaries have remained unchanged for the past five years.
Depreciation, Depletion and Amortization
Depreciation, Depletion and Amortization decreased approximately $73,832 during
the current period compared to the same period last year due to the decrease in
oil production from Colombia during the current quarter.
Interest Expense
Interest expense increased approximately $151,000, during the first quarter of
1997 compared to the first quarter of 1996. An increase of approximately $66,000
is due primarily to imputed interest calculated on the Company's outstanding
convertible debt instruments. Additional interest expense of approximately
$100,000 in the Colombia operation was incurred to finance outstanding
payables.
Unrealized Loss on Marketable Securities
Marketable securities of MIP, (4,384,375 shares), held by the Company were
valued at $2.00 per share when acquired. At March 31, 1997 the current market
price was $1.60 per share, resulting in a net unrealized loss of $1,754,000.
Loss on Sale of Assets
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<PAGE>
The Company recorded an aggregate $564,000 to reflect the current discounted
fair value of the Exchangeable Debenture and the $1.4 million performance
earn-out received in the MIP Transaction.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
See Part I, Item 2, above.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
*(a) Exhibits
27.1 Financial Data Schedule.
* Submitted with the original Form 10Q filed on May 15, 1997.
- -------------------------------------------------------------
(b) Reports on Form 8-K.
1. A Form 8-K dated January 10, 1997 was filed in connection with the
sales of securities pursuant to Regulation S.
2. A Form 8-K dated January 28, 1997 was filed in connection with the
sales of securities pursuant to Regulation S.
3. A Form 8-K dated March 12, 1997 was filed in connection with the
sale of the Registrant's wholly-owned subsidiaries, American International
Petroleum Corporation of Colombia and Pan American International Petroleum
Corporation.
15
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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 19, 1997
AMERICAN INTERNATIONAL
PETROLEUM CORPORATION
By/s/ Denis J. Fitzpatrick
Denis J. Fitzpatrick
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
27.1 Financial Data Schedule.
17
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