U.S. Securities And Exchange Commission
Washington, D.C. 20549
Form 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________________________
to ___________________________________
Commission file number 0-20760
HORIZONTAL VENTURES, INC.
(Exact name of small business issuer as specified in its
charter)
COLORADO 84-1091986
(State or other jurisdiction (I.R.S. Employer
of incorporation of organization) Identification No.)
630 Fifth Avenue, Suite 1501, New York, NY 10111
(Address of principal executive office)
Issuer's telephone number: (212) 218-4680
Petro Union, Inc. d/b/a Horizontal Ventures, Inc.
575 Madison Avenue, Suite 1006
New York, NY 10022
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) 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 (2) has been subject to
such filing requirements for the past 90 days.
Yes X 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 court. Yes X 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:
Common Stock, no par value, outstanding at August 14, 1998:
1,570,981 shares
Transitional Small Business Disclosure Format (check one):
Yes No X
Explanation of Amendment to June 30, 1998 Form 10-QSB:
The original Quarterly Report on Form 10-QSB for the quarter
ended June 30, 1998 is amended hereby solely to correct a
typographical error with respect to the net loss per common share
for the six months ended June 30, 1997 reported in the original
Form 10-QSB's Consolidated Statements of Operations for the Three
Months and Six Months Ended June 30, 1998 and 1997 (Unaudited).
Net loss per common share for the six months ended June 30, 1997
as presented in this amended Form 10-QSB was $(0.25), and not
$(.025) as indicated in the original Form 10-QSB.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of June 30, 1998
(Unaudited)
Consolidated Statements of Operations for the
Three Months and Six Months Ended June 30, 1998
and 1997 (Unaudited)
Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 1998 and 1997 (Unaudited)
Notes to Unaudited Consolidated Financial Statements,
June 30, 1998 and 1997 (Unaudited)
Item 2. Management's Discussion and Analysis
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
HORIZONTAL VENTURES, INC.
CONSOLIDATED BALANCE SHEET
June 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $1,415,388
ACCOUNTS RECEIVABLE:
TRADE, NET OF ALLOWANCE FOR
DOUBTFUL ACCOUNTS OF $74,092 14,009
_______________
TOTAL CURRENT ASSETS 1,429,397
_______________
PROPERTIES AND EQUIPMENT,
AT COST, NET OF ACCUMULATED DEPRECIATION
AND DEPLETION OF $707,292 7,733,361
_______________
OTHER ASSETS:
DEPOSITS, PREPAYMENTS, AND
DEFERRED CHARGES 300,764
_______________
TOTAL ASSETS $9,463,522
================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES:
CURRENT LIABILITIES:
CURRENT MATURITIES OF LONG TERM NOTES $ 15,771
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 115,168
OTHER CURRENT LIABILITIES 8,834
________________
TOTAL CURRENT LIABILITIES 139,773
________________
NONCURRENT LIABILITIES:
LONG TERM NOTES PAYABLE, NET
OF CURRENT MATURITIES 58,318
________________
TOTAL LIABILITIES 198,091
_________________
COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' EQUITY (DEFICIT):
COMMON STOCK, NO PAR VALUE,
50,000,000 SHARES AUTHORIZED,
1,570,981 SHARES ISSUED AND
OUTSTANDING 11,672,519
ACCUMULATED DEFICIT (2,407,088)
________________
TOTAL STOCKHOLDERS' EQUITY 9,265,431
_________________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $9,463,522
==================
</TABLE>
The accompanying notes are an integral part of these statements.
HORIZONTAL VENTURES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
REVENUE $86,970 $25,847 $121,659 $129,165
COST OF REVENUE 30,381 37,964 64,553 113,864
GROSS PROFIT 56,590 (12,117) 57,106 15,301
GENERAL AND
ADMINISTRATIVE
EXPENSES 436,482 58,997 829,897 172,086
INCOME (LOSS)
FROM OPERATIONS (379,892) (71,114) (772,791) (156,785)
OTHER INCOME
(EXPENSES) 15,009 (44,209) 49,603 (36,365)
INCOME (LOSS)
BEFORE TAXES
ON INCOME (364,884) (115,323) (723,188) (193,150)
PROVISION FOR
INCOME TAXES - - - -
NET INCOME
(LOSS) $(364,884) $(115,323) $(723,188) $(193,150)
NET EARNINGS
(LOSS) PER
COMMON SHARE $(0.23) $(0.15) $(0.46) $(0.25)
AVERAGE SHARES
OUTSTANDING USED
FOR COMPUTATION
OF EARNINGS
(LOSS) PER
SHARE 1,570,981 759,460 1,570,981 759,460
</TABLE>
The accompanying notes are an integral part of these statements.
HORIZONTAL VENTURES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
NET (LOSS) $(723,188) $(193,150)
ADJUSTMENTS TO RECONCILE
NET LOSS TO CASH PROVIDED
(USED) BY OPERATIONS:
DEPRECIATION, DEPLETION
AND AMORTIZATION 109,366 93,324
(GAIN) LOSS ON SALE OF ASSETS - 21,062
STOCK AND PARTNERS' CAPITAL
INTEREST ISSUED FOR SERVICES - 300
CHANGE IN ACCOUNTS RECEIVABLE 3,173 45,740
CHANGE IN INTERESTS RECEIVABLE 3,433 -
CHANGE IN PAYMENT IN ADVANCE (8,669) 6,668
CHANGE IN ACCOUNTS PAYABLE (150,579) (28,898)
CHANGE IN OTHER LIABILITIES (681,011) -
NET CASH (USED) BY OPERATING
ACTIVITIES (1,447,476) (54,954)
CASH FLOWS FROM INVESTING
ACTIVITIES:
(INCREASE) IN PROPERTY
AND EQUIPMENT (1,033,692) (82,980)
INCREASE IN DEPOSITS (101,771) -
INCREASE IN ACCOUNTS RECEIVABLE,
PETRO UNION, INC. - (9,170)
PROCEEDS FROM SALE OF PROPERTY
AND EQUIPMENT - 55,181
NET CASH (USED) BY INVESTING
ACTIVITIES (1,135,463) (36,969)
CASH FLOWS FROM FINANCING
ACTIVITIES:
PROCEEDS FROM COMMON STOCK - NET 84,446 154,858
PROCEEDS FROM PREFERRED STOCK-NET - 30,000
INCREASE IN DUE TO RELATED PARTIES - 60,478
CHANGE IN CUSTOMER PAYMENTS
RECEIVED IN ADVANCE - (30,000)
REPAYMENT OF NOTES PAYABLE (18,768) (119,346)
NET CASH PROVIDED BY FINANCING
ACTIVITIES 65,678 95,990
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (2,517,260) 4,067
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 3,932,647 6,458
END OF PERIOD 1,415,388 10,525
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS $(2,517,260) $4,067
The accompanying notes are an integral part of these statements.
</TABLE>
HORIZONTAL VENTURES, INC.
Notes to Unaudited Consolidated Financial Statements
June 30, 1998 and 1997
(Unaudited)
NOTE 1 - THE COMPANY:
Horizontal Ventures, Inc., a Colorado corporation (the "Company"),
is engaged in the development of oil and gas properties for its own
account and the contract drilling of oil and gas wells. On July
13, 1998, the Company amended its Articles of Incorporation to
change its name from Petro Union, Inc. d/b/a Horizontal Ventures,
Inc. to Horizontal Ventures, Inc.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
Basis of presentation - The consolidated financial statements
include the accounts of the Company and its wholly owned
subsidiaries, HVI Cat Canyon, Inc., a Colorado corporation, and
Calox, Inc. All significant intercompany accounts and transactions
have been eliminated.
The results for the interim periods presented herein are not
necessarily indicative of the results of operations that may be
expected for the upcoming quarters. In the opinion of management,
the information furnished reflects all adjustments necessary (which
all are of a normal recurring nature) for a fair presentation of
the Company's financial position as of June 30, 1998, and the
results of its operations and cash flows for the interim periods
ended June 30, 1998 and 1997.
The financial statements for the interim periods have been prepared
pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations. The financial
statements presented herein should be read in conjunction with the
financial statements for the year ended December 31, 1997 included
in the Company's 1997 Annual Report on Form 10-KSB.
The Company, then named Petro Union, Inc. ("PUI"), was a debtor in
possession under Chapter 11 of the U.S. Bankruptcy Code until
August 28, 1997, at which time the Bankruptcy Court approved its
plan of reorganization. As a part of its plan of reorganization,
PUI agreed to acquire all the outstanding stock of Horizontal
Ventures, Inc., an Oklahoma corporation ("HVI-Oklahoma"). The
acquisition of HVI-Oklahoma was completed on September 9, 1997, and
after the acquisition, HVI-Oklahoma shareholders owned more than
50% of the outstanding shares of PUI. Pursuant to the rules of the
Securities and Exchange Commission, the transaction was accounted
for as a "reverse merger." Accordingly, the accompanying
consolidated statements of operations and consolidated statements
of cash flows reflect the historical operations and cash flows of
HVI-Oklahoma (including those of PUI after September 9, 1997, the
effective date of the merger), whereas quarterly reports filed by
the Company prior to September 9, 1997 reflected operations and
cash flows of PUI. Subsequently, HVI-Oklahoma was merged with and
into the Company.
Certain reclassifications have been made to the 1997 amounts to
conform to the 1998 presentation.
Earnings per share - Earnings per share for the three months and
six months ended June 30, 1998 and 1997 have been calculated based
on the average number of shares outstanding during such periods.
NOTE 3 - CONTINGENCIES:
At June 30, 1998, the Company was the plaintiff in a lawsuit
against David J. LaPrade, a shareholder, former officer and
director, and an organizer of HVI-Oklahoma, and Mr. LaPrade's
current employer. The Company seeks to recover losses from the
alleged breach of fiduciary duty, misappropriating confidential
information and property of the Company, using it in unfair
competition with the Company, interfering with the Company's
existing and prospective relationships with its customers,
interfering with the Company's relationships with its employees,
and conversion of Company property. Mr. LaPrade has made
counterclaims against the Company for breach of his employment
agreement, libel and slander, and intentional infliction of
emotional distress; he seeks actual damages in excess of $10,000
and punitive damages in an unspecified amount. Management
believes that its claims against Mr. LaPrade will be successful
and that it will recover damages; moreover, management believes
that the ultimate outcome of Mr. LaPrade's counterclaim will not
have a material adverse effect on the Company's financial
condition, results of operations or cash flows. The accompanying
financial statements do not include a provision for any loss which
might result from Mr. LaPrade's counterclaim, nor do they include
any asset that might result from the Company's claims against Mr.
LaPrade.
NOTE 4 - SUBSEQUENT EVENTS:
On July 13, 1998, the Company amended its Articles of Incorporation
to among other things authorize the issuance of 50,000,000 shares
of no par value preferred stock with rights and preferences as the
Company's Board of Directors may determine.
<PAGE>
PART I (CONTINUED)
Item 2. Management's Discussion and Analysis
Overview
The Company's final accounting of the bankruptcy case was
accepted and the case was closed by the Bankruptcy Court for the
Southern District of Indiana on March 26, 1998. This marked the
end of almost a year of re-structuring by the Company. Management
spent a considerable amount of its time in this process and
intends to now focus on implementing its business strategy
hereon.
The results of the second quarter ended June 30, 1998, as
planned, relate to the Company's internal drilling program in
California and thus reflect the investment phase. In the view of
management, the current financials statements are not indicative
of the Company's potential and business plan. Over the last
year, the Company has re-structured both corporately and
internally and successfully implemented its horizontal technology
in the reservoirs in California and thus been in an investment
phase. This investment into its pilot program in California has
proven the technical and financial benefits of the Company's
technology in those reservoirs. Management expects this
investment to be rewarded as a result of an acquisition or joint
venture whereby this pilot program is implemented on a
significantly larger scale. The Company's current cost structure
can support three operative drilling crews in the field without
any additional capital. Thus management is focused on deploying
its crews to the field on either its own properties through an
acquisition or under a joint venture program.
In the first half of 1998, the Company drilled three horizontal
wells namely, UCB-09, UCB-38 and UCB-28. Each well was drilled
successfully utilizing the Company's Short radius technology and
resulted in a 47 ft radius with a 435 ft lateral on UCB-09, a
60ft radius with a 414 ft lateral on UCB-38 and a 50ft radius
with a 252 ft lateral on UCB-28. In view of the Company's long-
term strategy and the known sand problem in the Cat Canyon basin,
the Company completed each well with a different technique to
establish the standard. UCB-09 was completed with a standard Ace
down-hole pump and a KD system; UCB-38 with a KUDU pump while
UCB-28 was completed with a Ace Teflon-Luber Plunger down-hole
pump. The kick-off point (KOP) for each well was at a depth of
2,940-3,000 ft.
The variances in the completions proved to be extremely
successful as the Company attained direct experience on the
production capability from each of the techniques. UCB-09
production stabilized at 20 BOPD, UCB-38 got sanded up following
a few weeks of production while UCB-28 produces a net of 65 BOPD.
Each of these wells were re-entries into an abandoned well bore
in the Sisquoc formation which is one of the two pay zones within
the Company's lease in the Cat Canyon basin. Following this
successful drilling operation and completion technique
definition, the Company intends to resume its drilling program
early in the fourth quarter of 1998 to achieve its 500 BOPD
objective by year-end.
This Quarterly Report on Form 10-QSB includes certain statements
that may be deemed to be "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical
facts, included in this Form 10-QSB that address activities,
events or developments that the Company expects, believes or
anticipates will or may occur in the future, including such
matters as future capital, development and exploration
expenditures (including the amount and nature thereof), drilling
of wells, reserve estimates (including estimates of future net
revenues associated with such reserves and the present value of
such future net revenues), future production of oil and gas,
repayment of debt, business strategies, expansion and growth of
the Company's operations and other such matters are forward-
looking statements. These statements are based on certain
assumptions and analyses made by the Company in light of its
experience and its perception of historical trends, current
conditions, expected future developments and other factors it
believes are appropriate in the circumstances. Such statements
are subject to a number of assumptions, risks and uncertainties,
general economic and business conditions, the business
opportunities (or lack thereof) that may be presented to and
pursued by the Company, changes in laws or regulations and other
factors, many of which are beyond the control of the Company.
Readers are cautioned that any such statements are not guarantees
of future performance and that actual results or developments may
differ materially from those projected in the forward-looking
statements.
The sharp decline (over 50%) in the oil prices during the first
half of 1998 had a negative effect on the Company's revenues. As
the Company has successfully stabilized its lifting costs to
under $4 per barrel from over $6 per barrel, the Cat Canyon
operation continues to be profitable.
The Company re-organized its management team at the end of March
1998 to better poise itself in implementing its two-prong
(exploitation and contract drilling) business strategy. The
Evansville offices were closed in late April and all operations
are now based in Tulsa in an effort to reduce G&A expenses and
consolidate operations.
As per the Company's business strategy, management is actively
pursuing acquisitions and currently is involved in due diligence
on one. Management expects to complete its first acquisition in
the third quarter. The acquisition, if completed, will add
production, drilling sites and cash flow to the Company and is
expected to positively affect liquidity.
The down turn in oil prices in the first half of 1998 has
deferred the drilling programs of some of the Company's
prospective contract drilling clients. Clients that had planned
to start drilling late second/early third quarter have now
indicated a desire to defer such programs into the fourth quarter
to observe the oil prices closer.
In view of the vast differences between the Company's structure
in the three months and six months ended June 30, 1997 and that
in the comparable periods ended June 30, 1998, the results of
operations comparisons are considered by management to be not
representative of the Company's potential. The liquidity
comparisons reflect the successful re-structuring process
accomplished by the management over the last nine months. The
management does not foresee any additional capital requirements
to continue its on-going operations through next year.
Results of Operations
Comparison of Three-Month Periods Ended June 30, 1998 and 1997
Revenues increased from $25,847 in the second quarter of 1997 to
$86,970 in the second quarter of 1998. Second quarter 1998
revenues were from oil production at the recently acquired field
in California and timber sales from its Indiana properties. The
Company commenced its contract drilling sales activities in the
second quarter of 1998 following over a year of not promoting its
services during the corporate restructuring process.
Cost of Revenue decreased from $37,964 in the second quarter of
1997 to $30,381 in the second quarter of 1998. Planned drilling
operations in California account for most of the expenses, and
the decrease as compared to the increase in revenues was
primarily attributable to the timber sales.
General and Administration expenses increased from $58,997 in the
second quarter of 1997 to $436,482 in the second quarter of 1998.
Considerable re-structuring with the closing of the Evansville
offices reduced the General and Administration expenses from the
first quarter as the offices were closed in April. The benefit
of this reduction is expected to be positively reflected in the
upcoming quarters.
Comparison of Six Month Periods Ended June 30, 1998 and 1997
Revenues decreased from $129,165 in the first half of 1997 to
$121,659 in the first half of 1998. First half 1998 revenues were
from oil production at the recently acquired field in California.
The decline in oil prices of over 50% coupled with the El Nino
storms that essentially shut the field down during February 1998
caused the revenues to be lower than initially projected.
Furthermore, two of the three horizontal wells drilled by the
Company attributed to a small percentage of the total production
as they were put on production late in the first quarter of 1998.
The Company commenced its contract drilling activities in the
second quarter of 1998 following over a year of not promoting its
services during the corporate restructuring process.
Cost of Revenue decreased from $113,864 in the first half of 1997
to $64,553 in the first half of 1998. Planned drilling operations
in California account for most of the expenses and are not
proportional to the revenues, as the three horizontal wells
drilled were not in production during the entire first half of
1998. Additionally, there was considerable El Nino-created
remedial repair expenses incurred during the month of February
1998.
General and Administration expenses increased from $172,086 in
the first half of 1997 to $829,897 in the first half of 1998. 33%
of the expenses were related to payroll. 25% of the expenses were
related to legal, accounting and consultant fees primarily
involved with year-end reporting and filing requirements. General
and Administration expenses are expected to remain relatively
consistent with the start-up of the contract drilling operations
in the upcoming quarters.
Liquidity and Capital Resources
At the end of the second quarter, the Company's liquid assets
consisting of cash and cash equivalents were $1,415,388 while
current liabilities were $139,773. The $1,857,319 decrease in
working capital from December 31, 1997 to June 30, 1998 was
primarily attributable to the Company's drilling program in its
Cat Canyon field in California and the final payment on the Cat
Canyon field. Additionally, in the first quarter of 1998 the
Company settled the previously-reported Gwartney litigation for
$25,000. Long-term liabilities as of June 30, 1998 were $58,318.
The Company expects the current liquidity to be sufficient to
support the on-going operations through next year without any
additional funding requirements.
Inflation
The Company does not believe that inflation will have a material
impact on the Company's future operations.
Year 2000 Issue
The Company does not utilize any proprietary computer software.
Instead, it uses commercially available software programs from
vendors such as Microsoft Corporation and Peachtree. The Company
has been advised that the software it uses is Year 2000
compliant. Accordingly, the Company does not expect to incur
significant expense in converting software to be Year 2000
compliant.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
As previously reported in the Company's 1997 Annual Report on
Form 10-KSB, on March 11, 1997 HVI-Oklahoma commenced a lawsuit
in the District Court for Tulsa County, Oklahoma against David J.
LaPrade, a shareholder, former officer and director, and an
organizer of the HVI-Oklahoma, and Mr. LaPrade's current
employer. The Company seeks to recover losses from alleged breach
of fiduciary duty, misappropriating confidential information and
property of the Company, using it in unfair competition with the
Company, interfering with the Company's existing and prospective
relationships with its customers, interfering with the Company's
relationships with its employees, and conversion of the Company
property. Mr. LaPrade has made counterclaims against the Company
for breach of his employment agreement, libel and slander, and
intentional infliction of emotional distress; he seeks actual
damages in excess of $10,000 and punitive damages in an
unspecified amount. As of June 30, 1998, the lawsuit was still
pending. The Company believes that the ultimate outcome of this
litigation will not have a material adverse effect on the
Company's financial condition, results of operations or cash
flows.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
On July 2, 1998, the Company held its annual meeting of
shareholders. At that meeting the following matters were voted
upon as indicated below:
1. Election of the following directors to serve
during the ensuing year or if the staggered terms proposal
passes, until their successors are elected and qualified.
For Withheld
Randeep S. Grewal 1,168,203 634
Dr. Jan F. Holtrop 1,168,170 667
George C. Andrews 1,168,203 634
Dirk Van Keulen 1,168,171 666
Donald A. Christensen 1,168,204 633
2. Adoption of the Company's Amended and Restated
Articles of Incorporation containing the following provisions:
(i) Changing the name of the Company to Horizontal Ventures,
Inc.; (ii) Providing for the number of Directors to be
established by the Bylaws and further providing for staggered
terms for the Company's Directors; (iii) Authorizing the issuance
of 50,000,000 shares of no par value preferred stock with rights
and preferences as the Board of Directors may determine; (iv)
Changing voting requirements to: (a) reduce the voting
requirement for shareholder actions initiated by the Board of
Directors; and (b) increase the voting requirement for
shareholder actions not initiated by the Board of Directors; and
(v) reducing the quorum requirement from shares representing a
majority of the outstanding voting rights to shares representing
one-third of the outstanding voting rights.
For: 914,430
Against: 4,285
Abstain: 146
Broker non-votes: 249,976
3. Approval of the Horizontal Ventures, Inc. Non
Qualified Stock Option Plan.
For: 911,322
Against: 2,455
Abstain: 5,084
Broker non-votes: 249,976
4. Authorization of the Board of Directors to issue
up to 1,000,000 shares of the Company's no par value common or
preferred stock for equity offerings both private and public and
for the acquisition of assets or businesses.
For: 915,717
Against: 3,048
Abstain: 96
Broker non-votes: 249,976
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
3A Restated Articles of Incorporation
27 Financial Data Schedule
(b) Reports on Form 8-K
During the quarter for which this report is filed, the
Company did not file any Reports on Form 8-K.
SIGNATURE
In accordance with requirements of the Exchange Act, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
HORIZONTAL VENTURES, INC.
Date: August 18, 1998 by: /S/ RANDEEP S. GREWAL
Randeep S. Grewal, Chief
Executive Officer
