SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For quarter ended: April 30, 1998 Commission file number: 000-18081
RAMEX SYNFUELS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
Nevada 87-0360039
(State or other jurisdiction (IRS Employer Ident. No.)
of incorporation or organization)
2204 W. Wellesley
Spokane, Washington 99205
(Address of principal executive offices) (Zip code)
(509) 328-9633
(Registrant's telephone number)
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|X| Yes, Registrant (1) has filed all reports required to be filed by Section 13
or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for
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.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common Stock, $0.01 Par Value
16,023,465 shares as of April 30, 1998
Total pages: 14
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC. Statement of Financial Position as of
(UNAUDITED) April 30, 1998 and January 31, 1998
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<TABLE>
<CAPTION>
ASSETS
(Unaudited)
April 30, January 31,
1998 1998
----------- -----------
<S> <C> <C>
CURRENT ASSET - Cash $ 13,679 $ 1,281
----------- -----------
TOTAL ASSETS $13,679 $ 1,281
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 64,363 $ 64,295
Due to officers and directors 109,452 105,654
----------- -----------
Total current liabilities 173,815 169,949
----------- -----------
STOCKHOLDERS' EQUITY
Common stock; $.01 par value; 125,000,000
shares authorized; 14,323,465 shares issued
and outstanding as of January 31, 1998;
16,023,465 shares issued and outstanding
as of April 30, 1998 160,234 143,234
Additional paid-in capital 4,577,237 4,577,237
Accumulated deficit (4,897,607) (4,889,139)
----------- -----------
Total stockholders' equity (160,136) (168,668)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 13,679 $ 1,281
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC. Statement of Operations For the Three Month
(UNAUDITED) Periods Ended April 30, 1998 and 1997
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April 30, April 30,
1998 1997
------- --------
REVENUE $ -0- $ -0-
------- --------
GENERAL AND ADMINISTRATIVE EXPENSES 8,468 8,031
------- -------
NET (LOSS) $(8,468) $(8,031)
======= =======
NET (LOSS) PER SHARE $ (NIL) $ (NIL)
======= ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
RAMEX SYNFUELS INTERNATIONAL, INC. Statement of Changes in Stockholders' Equity For the
(UNAUDITED) Three Month Periods Ended April 30, 1998 and 1997
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<CAPTION>
Common Stock Additional
---------------------------- Paid-In Accumulated
Shares Amount Capital Deficit Totals
---------------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balances as of
January 31, 1997 13,823,465 $ 138,234 $ 4,577,237 $(4,869,265) $ (153,794)
Common stock issued
for cash at $0.01
per share 500,000 5,000 5,000
Net (loss) (8,031) (8,031)
---------------------------- ----------- ----------- -----------
Balances as of
April 30, 1997 14,323,465 $ 143,234 $ 4,577,237 $(4,877,296) $ (156,825)
============================ =========== =========== ===========
Balances as of
January 31, 1998 14,323,465 $ 143,234 $ 4,577,237 $(4,889,139) $ (168,668)
Common stock issued
for cash at $0.01
per share 1,700,000 17,000 17,000
Net (loss) (8,468) (8,468)
---------------------------- ----------- ----------- -----------
Balances as of
April 30, 1998 16,023,465 $ 160,234 $ 4,577,237 $(4,897,607) $ (160,136)
============================ =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC. Statement of Cash Flows For the Three Month
(UNAUDITED) Periods Ended April 30, 1998 and 1997
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<TABLE>
<CAPTION>
April 30, April 30,
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (8,468) $ (8,031)
Increase in payables and due to officers 3,866 3,600
-------- --------
Net uses of cash from operating activities (4,602) (4,431)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 17,000 5,000
-------- --------
NET INCREASE IN CASH 12,398 569
CASH AT BEGINNING OF PERIOD 1,281 2,209
-------- --------
CASH AT END OF PERIOD $ 13,679 $ 2,778
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Ramex Synfuels International, Inc. Notes to Financial
(Unaudited) Statements at
April 30, 1998
NOTE 1 - MANAGEMENT OPINION:
The financial statements of Ramex Synfuels International, Inc.,
("Ramex") included herein have been prepared without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission. Although, certain information normally included in
financial statements prepared in accordance with generally accepted
accounting principles has been condensed or omitted, Ramex believes
that the disclosures are adequate to make the information presented
not misleading. The condensed financial statements should be read in
conjunction with the financial statements and notes thereto included
in Ramex's annual report on Form 10-K for the fiscal year ended
January 31, 1998.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
During the three month period ending April 30, 1998, the Company's only
activity was to assess the possibility of further laboratory testing and
research concerning the Ramex Oil Shale Gasification Process (the "Process").
The Company's Management continued to pursue financing entities for possible
financing of the Ramex Oil Shale Gasification Process and continued corporate
operations.
Pursuant to a Contractual Agreement with Southwest Research Institute,
Ramex paid for the first phase testing of the Ramex Process. The first phase is
intended to establish the recommended scope of work required to initiate the
multi-phase project as hereafter described, which may lead to a possible
pilot-scale phased field demonstration. The scope of work represents a plan,
which should match the technical, financial and time scheduling objectives of
Ramex for research and developing the Process.
In a report dated August 25, 1995, Southwest Research Institute reported
the following results concerning the first phase testing of the Ramex Process:
Phase I Studies
The technical efforts presented in this report represent Phase I of a
multiple-stage research program aimed at investigating and demonstrating the
Ramex Synfuels International oil shale gasification process. This report
presents the results of Phase I; Preliminary Laboratory Demonstration Tests
designed to: (1) investigate the gasification process on a small scale using
electric heaters in oil shale samples approximately 0.25 cu. ft. in volume; and
(2) sample internal temperatures to determine the effective thermal properties
over the temperature range in which the kerogen in the shale undergoes changes
from semisolid to liquid vapor or gas. The first of these objectives required
development and refinement of appropriate test apparatus to achieve a successful
testing methodology and procedure. The second objective successfully provided
experimental data needed to understand the shale gasification process and heat
transfer properties of the oil shale and to plan more thorough studies of the
high-temperature heat transfer process for follow-on phases of the research
program.
<PAGE>
The laboratory demonstration tests performed in Phase I revealed a basis
for interpreting and characterizing the in situ oil shale gasification process.
Interpretations listed below, as conclusions and recommendations for future
work, are summary highlights for Phase I.
Phase I Conclusions
(1) The experimental investigations of Phase I have successfully
demonstrated the basic shale gasification process described in Ramex Synfuels
International Patent No. 4,928,765 dated May 29, 1990. The small scale of these
experiments did not permit the shale gas energy production efficiency to be
determined. Instead, Phase I provided valuable data and insight into the thermal
properties of the oil shale materials and the testing procedures necessary for
more complete gasification similitude evaluation tests on larger oil shale
samples.
(2) Heating the oil shale samples in a manner representative of a
full-scale field setup was successful in producing both liquid shale oil and in
liberating shale gas. Shale oil and gas production was consistent with the
kerogen richness of the samples. In addition, the experimental arrangement
permitting cyclic liquid-vapor reflux processing yielded a proportionately
greater amount of shale gas. As a result, the origins of the shale gas must, at
present, be considered to be twofold; namely, liberation of methane and other
hydrocarbon gases originally trapped in the semi-solid kerogen and thermal
cracking of the kerogen vapors in the heated production and gas delivery zone of
the sample. The reflux process observed in the laboratory experiments appears to
be adaptable as a full-scale field system feature to utilize downhole waste heat
to enhance gas production. The residual shale oil liquids and vapors potentially
can be used as fuel for the downhole heater in the full-scale system. The net
shale gas product is then available for other external energy applications or
for pipeline transport.
(3) The heat transfer characteristics derived for the tested oil shale
samples are comparable with those of other oil shales reported in the literature
and provide adequate data for designing future laboratory experiments with the
objective of truly simulating the complete shale gasification process.
<PAGE>
(4) Important technical lessons learned in Phase I will be of particular
benefit in the planning and design of follow-on laboratory experiments in Phase
II. The sequence of experiments in Phase I have led to refined sample testing
configurations and now provide a database of
<PAGE>
heating power and shale heat transfer information on which to base new
experimental tests using larger size shale samples and increased heating power.
Electrical heating methods are preferred for these tests because of their
accurate heat control and heater durability. Shale oil vapor and gas collection
techniques are now well understood from the Phase I tests and can be used for
quantitative analysis and design of more advance laboratory experiments in Phase
II.
(5) Successful results from the preliminary demonstration tests performed
in Phase I indicate that the Ramex Process shows good promise for further study
and development. More advanced laboratory experiments are now recommended to
study the net energy recovery efficiency of the method and to develop the
necessary downhole heaters and associated system components required to begin
pilot field evaluation tests.
Recommendations for Future Work
(1) Additional laboratory tests are recommended to be performed on a wider
selection of oil shale samples to better characterize and understand the heat
transfer process in the shale. These tests should encompass a range of oil shale
richness and different types of shale rock matrix (Eastern and Western oil
shales). These tests will also be valuable in establishing a routine method for
evaluating future field sites for potential gasification.
(2) Larger scale laboratory demonstration experiments using larger heating
power are recommended to more accurately quantify the heat energy required for
gasification and to better evaluate the gas production process. Sample sizes
having a volume in the range of ten cubic feet or larger are recommended. Data
collected on the smaller samples tested to date can be used to accurately
specify the sample sizes needed for future testing.
(3) Field site geological reconnaissance and sampling is needed for
purposes of gathering appropriate oil shale samples for future laboratory tests.
These efforts could be broadened to include characterization of various field
sites for future pilot-scale field testing of the shale gasification process.
(4) Prototype downhole heater design and development is necessary for
testing shale gasification on a pilot scale in the field. Based on certain
downhole operational and design constraints emerging from the Phase I tests,
prototype gas-fired heater system designs are
<PAGE>
recommended to be developed, including the specification of any special
materials needed for long-term operational life. Prototype heater designs are
recommended to be tested in controlled and instrumented shallow limestone rock
locations prior to testing in oil shale settings.
(5) Numerical modeling of the oil shale gasification process is an
important aspect of predicting the performance of the method under the various
conditions that may be encountered in the field. The laboratory tests
recommended above will yield the thermal parameters needed for developing and
applying such models. Certain existing and commercially available computer
models for heat transfer applications are recommended to be adapted to the
special needs of this project, including the ability to handle kerogen
phase-change phenomena, the problem of heat transfer in a porous rock matrix,
and the nonconservative process of removing heated hydrocarbon mass from the
system. Properly developed, a computer simulation model will be particularly
valuable in characterizing and optimizing the full-scale field experiments and
in the selection of practical pilot-scale test sites.
(6) A pilot-scale oil shale gasification system is recommended to be
designed and specified for construction. This design should be specifically
oriented toward initiating operational tests at a field test site where
controlled performance testing and measurements are possible. A follow-on phase
of this project is recommended to be dedicated to the construction and field
operational testing of the pilot-scale system.
Ramex is attempting to obtain financing for the second, third and fourth
phases, while the first phase has been completed the following is a proposed
summary of the additional three phases of this project:
Phase II. Laboratory Studies and Analytical Modeling of Shale Gasification:
The experimental heat transfer testing techniques used in Phase I will be
refined and applied to additional samples of oil shale and samples of shale
boundary rock materials from several representative field sites. The effective
thermal conductivity and thermal diffusion constant of these materials,
incorporating combined rock matrix heat conduction and pore-space heat
radiation, will be determined to accurately characterize the thermal properties
of the oil shales and other geological boundary rock materials that are most
representative of typical oil shale gasification sites. In addition to this
work, a mathematical model of the in situ heat transfer characteristics of the
gasification process will be formulated to
<PAGE>
predict the full-scale performance of the technique in a layered oil shale
formation using the laboratory-derived shale and boundary rock thermal
parameters. Typical model cases will be evaluated to yield idealized estimates
of the heat transfer process. Numerical models will be evaluated to yield
idealized estimates of the heat transfer process. Numerical models will also be
computed to allow the effects of inhomogeneties in kerogen content and the
presence of fractures to be evaluated. The results of this phase of work will be
a comprehensive process parameter study from which a full-scale field test can
be designed and implemented in Phase III.
Phase III. Instrumented Field Experiment:
An appropriate shallow oil shale test site will be selected at which a
controlled and instrumented field evaluation experiment of the shale
gasification process can be performed. Experimental downhole heater equipment,
down hole temperature monitor probes, and a surface gas recovery system will be
designed and constructed for use in this experiment. The scope of this
experiment will be sufficient to demonstrate the gasification technique in situ
and to allow the reliability of the various experimental equipment components to
be determined. This field experiment will also provide important information on
the practical gas production efficiency, self-heating efficiency, and safety of
the process for the particular test site selected.
Phase IV. Pilot-Scale Shale Gasification Project:
A pilot-scale field demonstration shale gasification system will be
constructed and installed in a representative oil shale field for the purpose of
operational testing and performance evaluation. The goals of this phase of work
are to produce shale gas, convert it to commercially assessable energy, and
evaluate the operating performance and endurance/maintenance characteristics of
the overall installation.
Therefore, based on the above-described program, Ramex has an overall
plan/program, that may ultimately reach commercial production. On April 29,
1994, a Plan was submitted to the United States Department of Energy ("DOE")
seeking funding to allow the Ramex process to proceed. The plan was declined to
the lack of funds set-aside for oil shale projects, however it maybe resubmitted
at a later date.
The Company is currently seeking funding from private sources, the outcome
of this, is yet to be determined. The financing requested by this
<PAGE>
plan is crucial to the ongoing development of the process as well as the
corporate existence.
Liquidity and Capital Resources
As of April 30, 1998, the Company's assets consisted of $13,679 in cash.
Since there is no certainty of the success of the negotiations for funding for
the further research, laboratory testing and since the Registrant has no
significant source of income at this time, uncertainties do exist with respect
to the future levels of Liquidity and Capital which will be necessary to fund
the Company's operations and its ability to maintain adequate levels thereof.
(THIS SPACE INTENTIONALLY LEFT BLANK)
<PAGE>
PART II OTHER INFORMATION.
Item 1. Legal Proceedings.
The officers and directors of the Registrant certify that to the best of
their knowledge, neither the Registrant nor any of its officers or directors are
parties to any material legal proceedings or litigation other than those
referenced herein, if any, or others that were reported in prior reports on Form
10-Q. The officers and directors of the registrant do not know of any other
litigation being threatened or contemplated.
Item 2. Changes in Securities.
The Company privately placed 1,700,000 shares of common restricted stock,
which shares have not been registered under the Securities Act of 1933, and are
subject to the provisions and holding requirements of Rule 144 of the Securities
Act of 1933 as amended. Four individuals purchased these 1,700,000 shares. Mr.
Monty D. Moore acquired 1,000,000 shares of stock which after these shares have
been issued represent 6.241% of the total issued and outstanding shares; another
individual purchased 500,000 shares. The purchaser's paid $0.01 per share. This
private placement included two members of the Board of Directors, Mr. Maynard M.
Moe, the President and John F. Mayer; they acquired 100,000 shares each.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of the shareholders during the
quarter ending April 30, 1998.
Item 5. Other Information.
None.
Item 6 Exhibits and Reports on Form 8-K
(a) Not applicable.
(b) No reports were filed pursuant to Form 8-K.
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-Q
April 30, 1998
Signatures
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.
RAMEX SYNFUELS INTERNATIONAL, INC.
Dated: June 10, 1998 ________________________________________
Maynard M. Moe, President and
Chief Executive Officer
Dated: June 11, 1998 ________________________________________
Kerry L. Weger, Secretary-Treasurer and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1998
<PERIOD-END> APR-30-1998
<CASH> 13,679
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,679
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,679
<CURRENT-LIABILITIES> 173,815
<BONDS> 0
0
0
<COMMON> 160,234
<OTHER-SE> (334,049)
<TOTAL-LIABILITY-AND-EQUITY> 13,679
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,648
<LOSS-PROVISION> 0
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<NET-INCOME> (8,648)
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</TABLE>
