-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OTxy2zfmV1Dx9PJGm7c5YYKyBA87MNpI4C9eUliR5Tnumd7CzypQQv+2oCtxNWhg TpCoDycJOVWaBrXHpPx99w== 0001013762-06-000113.txt : 20060123 0001013762-06-000113.hdr.sgml : 20060123 20060123130847 ACCESSION NUMBER: 0001013762-06-000113 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20060123 DATE AS OF CHANGE: 20060123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PETROL INDUSTRIES INC CENTRAL INDEX KEY: 0000077864 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 751282449 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-03912 FILM NUMBER: 06542853 BUSINESS ADDRESS: STREET 1: 2 N THOMAS SUITE 4 CITY: SHREVEPORT STATE: LA ZIP: 71107-6596 BUSINESS PHONE: 3814246396 MAIL ADDRESS: STREET 1: P.O. BOX 7941 CITY: SHREVEPORT STATE: LA ZIP: 71137-7941 10QSB/A 1 sept30200510qsba.txt U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB/A xx Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended: September 30, 2005 Transition report under Section 13 or 15(d) of the Exchange Act For the transition period from ___________ to __________ Commission File number: 0-3912 Petrol Industries, Inc. ----------------------- (Exact Name of Small Business Issuer as Specified in its Charter) Nevada 75-1282449 -------- ------------ (State or Other Jurisdiction of (IRS Employer Identification Number) Incorporation of Organization) 202 N. Thomas, Suite 4 Shreveport, LA 71107-6539 ------------------------------------------------------- (Address of Principal Executive Offices) (318) 424-6396 ---------------- (Issuer's Telephone Number, Including Area Code) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes xx No____ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ____ No ____ APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 9,897,608 as of December 9, 2005 Transitional Small Business Disclosure Format: Yes ____ No xx__
PART I - FINANCIAL INFORMATION Item 1. Financial Statements. PETROL INDUSTRIES, INC. & SUBSIDIARIES Consolidated Balance Sheets September 30, December 31, 2005 2004 -------------- ------------- Assets Current assets: Cash and cash equivalents $ 84,865 $ 89,762 Accounts receivable: Trade 453,083 27,470 Other 2,799 9,498 Deposit on Equipment 100,000 - 0 - -------------- ------------- 640,747 36,968 Inventory 133,909 33,357 Prepaid expenses 5,263 2,849 -------------- ------------- Total current assets 779,919 162,936 -------------- ------------- Property and equipment, at cost: Land 7,000 7,000 Developed and undeveloped oil and gas properties-successful efforts method 3,059,099 3,138,401 Trucks and other operating equipment 452,915 363,215 Furniture and fixtures 36,412 36,306 -------------- ------------- 3,555,426 3,544,922 Less accumulated depreciation, depletion and amortization 3,388,906 3,458,877 -------------- ------------- 166,520 86,045 -------------- ------------- Other assets 1,107 1,107 -------------- ------------- $ 947,546 $ 250,088 Liabilities and Stockholders' Deficit ============== ============= Current liabilities: Accounts payable $ 179,220 $ 43,460 Payable to interest owners - 0 - 324,871 Note payable 578,765 1,057,225 Notes payable - 0 - 189,756 Accrued expenses 24,256 96,160 -------------- ------------- Total current liabilities 782,241 1,711,472 -------------- ------------- Reserve for past interest owners 200,000 - 0 - -------------- ------------- Total Liabilities 982,241 1,711,472 -------------- ------------- Stockholders' equity (deficit): Preferred stock-no par value. Authorized 1,000,000 shares; no shares issued or outstanding --- --- Common stock-$.10 par value. Authorized 10,000,000 shares; issued and outstanding 9,697,608 shares in 2005 and 1,597,196 shares in 2004 969,761 159,720 Additional paid in capital 558,164 --- Accumulated deficit (1,562,620) (1,621,104) -------------- ------------- Total stockholders' equity (deficit) (34,695) (1,461,384) -------------- ------------- $ 947,546 $ 250,088 ============== =============
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PETROL INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Quarter Ended Nine Months Ended September 30, September30, 2005 2004 2005 2004 -------------------------------- -------------------------------- Revenues: Oil and gas sales $ 179,900 $ 210,254 $ 445,758 $ 622,729 Other operating income 455,277 5,927 587,201 8,488 --------------- -------------- -------------- -------------- 635,177 216,181 1,032,959 631,177 --------------- -------------- -------------- -------------- Expenses: Lease operating expense 326,563 178,144 596,741 500,429 General and administrative 189,885 46,292 340,169 141,807 Depreciation, depletion and amortization 1,910 2,865 7,640 8,595 --------------- -------------- -------------- -------------- 518,358 227,301 944,550 650,831 --------------- -------------- -------------- -------------- Operating Profit (loss) 116,819 (11,120) 88,409 (19,654) --------------- -------------- -------------- -------------- Other income and (expense): Gain on sale of assets 192,515 ---- 192,515 148,144 Interest income 367 65 2,077 696 Interest expense --- (15,436) (14,517) (47,774) Bonus expense --- --- (210,000) --- --------------- -------------- -------------- -------------- 192,882 (15,371) (29,925) 101,066 --------------- -------------- -------------- -------------- Net income/(loss) $ 309,701 $ (26,491) 58,484 81,412 =============== ============== ============== ============== Net income/(loss) per share $ 0.05 $ (0.02) $ 0.01 $ 0.05 =============== ============== ============== ============== Average common shares outstanding 5,711,008 1,597,196 3,256,448 1,597,196 =============== ============== ============== ==============
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PETROL INDUSTRIES, INC. Consolidated Statements of Cash Flows Nine months ended September 30, 2005 and 2004 (unaudited) 2005 2004 -------------- ------------- Operating activities: Net income/(loss) $ 58,484 $ 81,412 Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation, depletion and amortization 7,640 8,595 Gain on sale of assets (192,515) (148,144) Changes in assets and liabilities: Accounts receivable, (418,914) 12,739 Inventory (100,552) 1,787 Prepaid expenses (2,414) (3,805) Accounts payable and accrued expenses (63,856) (16,116) Accrued director fees ---- 12,400 Payable to interest owners (324,871) 13,326 Deposits (100,000) --- -------------- ------------- Net cash used by operating activities (1,009,286) (23,936) Investing activities: Capital expenditures (121,510) (4,312) Proceeds from sale of property and equipment 425,910 155,500 -------------- ------------- Net cash provided (used) by investing activities 304,400 151,184 Financing activities: Issuance of common stock 810,041 --- Proceeds from notes payable 79,704 42,912 Repayments of gross borrowings (189,756) (84,500) -------------- ------------- Net cash provided by financing activities 699,989 (84,500) Increase (decrease) in cash and cash equivalents (4,897) 42,722 Cash and cash equivalents at beginning of period 89,762 25,074 -------------- ------------- Cash and cash equivalents at end of period $ 84,865 $ 67,796 ============== ============= Non-cash transactions: Settlement of debt for stock $ 558,164 $ ---
4 Notes to Consolidated Financial Statements (unaudited) NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION NATURE OF OPERATIONS Petrol Industries, Inc. ("Petrol" or the "Company") is an independent energy company engaged primarily in the acquisition, exploration, development, production and sale of oil, gas and natural gas liquids. Petrol's production activities are located in the United States of America. Petrol operations primarily consist of one segment of business, oil and gas production. Petrol was incorporated in 1968 under the laws of the State of Nevada. Petrol's future financial condition and results of operations will depend upon prices received for its oil and natural gas and the costs of finding, acquiring, development and producing reserves. Prices for oil and natural gas are subject to fluctuations in response to changes in supply, market uncertainty and a variety of other factors beyond Petrol's control. These factors include worldwide political instability, the foreign supply of oil and natural gas, the price of foreign imports, the level of consumer product demand and the price and availability of alternate fuels. BASIS OF PRESENTATION The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in Petrol's Annual Report filed with the SEC on Form 10-KSB. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial; statements for fiscal 2004 as reported in the Form 10-KSB have been omitted. NOTE 2. MAJOR CUSTOMERS Two customers accounted for approximately 98% of Petrol's net sales for the nine months ended September 30, 2005. NOTE 3. NOTES PAYABLE During the nine months ended September 30, 2005, Petrol retired a total of $558,164 of notes payable through the issuance of 5,581,640 shares of common stock. NOTE 4. COMMON STOCK On March 30, 2005, Petrol reached an agreement with SHWJ Oil & Gas, Inc., a Texas corporation to sell 1,240,612 shares of Petrol's authorized common stock to SHWJ in a private placement at $.40/share, for a total purchase price of $496,244.80. The stock was issued in two phases: 678,612 shares on April 28, 2005, and 562,000 shares on June 20, 2005. These shares were issued by Petrol in a transaction not registered under the Securities Act of 1933, in reliance upon the exemption provided in Section 4(2) of the Securities Act of 1933. 5 Concurrently with its acquisition of common stock from Petrol, SHWJ also acquired 575,000 shares of stock owned by Joseph M. Rodano, past President and Chairman of the Board. On August 04, 2005 Petrol issued 345,000 common shares reducing notes payable by $69,000. On August 08, 2005 Petrol issued 345,000 common shares reducing notes payable by $69,000. On August 11, 2005 Petrol issued 310,000 common shares reducing the notes payable by $62,000. On August 19, 2005 Petrol issued 509,800 common shares reducing the accounts payable by $101,960. On August 23, 2005 Petrol issued 100,000 common shares of which 50,000 were canceled on September 13,2005 for services rendered in the net amount of $10,000. On August 25, 2005 Petrol issued 250,000 common shares for services rendered in the amount of $50,000. On September 20, 2005 500,000 common shares were issued for a deposit on equipment of $50,000. On September 22, 2005 500,000 common shares were issued for a deposit on equipment $50,000. On September 29, 2005, 4,000,000 common shares were issued reducing the notes payable by $400,000. NOTE 5. SUBSEQUENT EVENTS On November 1, 2005, Petrol completed a disposition of certain assets pursuant to an Agreement to Exchange Oil and Gas Working Interests for Corporate Stock dated as of October 31, 2005 (the "Agreement") with Black Dragon Resources Companies, Inc. ("BDRC") under the terms of which Petrol agreed to assign all its right, title and interest in the majority of its oil and gas properties, including working interests in individual wells and leases, in properties located in Caddo Parish, Louisiana to BDRC in exchange for a $300,000 principal amount promissory note of BDRC and an aggregate of 700,000 shares of BDRC Series D Convertible Preferred Stock at a face value of $4.50 per share. The stock is convertible at the option of Petrol into shares of BDRC common stock. The preferred stock has a dividend rate of 2-1/2% per annum payable by cash or stock at the election of Petrol. The promissory note issued to Petrol pays interest at 6% per annum and matures on October 6, 2008. BDRC has the option to prepay all of a portion of the indebtedness evidence by the note, in whole or in part, upon 10 days prior written notice to Petrol. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that include, among others, statements concerning: expectations, anticipations, beliefs, estimations, projections, and other similar matters that are not historical facts, 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, and expansion and growth of business operations. These statements are based on certain assumptions and analyses made by the management of Petrol in light of past experience and perception of: historical trends, current conditions, expected future developments, and other factors that the management of Petrol believes are appropriate under the circumstances. Petrol cautions the reader that these forward-looking statements are subject to risks and uncertainties, including those associated with: the financial environment, the regulatory environment, and trend projections, that cause actual events or results to differ materially from those expressed or implied by the statements. Such risks and uncertainties include those risks and uncertainties identified below. Significant factors that could prevent Petrol from achieving its stated goals include: declines in the market prices for oil and gas, adverse changes in the regulatory environment affecting Petrol, the inability to dispose of real property at prices sufficient enough to liquidate associated indebtedness, the inherent risks involved in the evaluation of properties targeted for acquisition, Petrol's dependence on key personnel, the availability of capital resources at terms acceptable to Petrol, the uncertainty of estimates of proved reserves and future net cash flows, the risk and related cost of replacing produced reserves, the high risk in exploratory drilling and competition. Petrol or persons acting on its or their behalf should consider the cautionary statements contained or referred to in this report in connection with any subsequent written or oral forward-looking statements that may be issued. Petrol undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. RESULTS OF OPERATIONS Petrol's revenues from oil and gas activities decreased approximately 21% in the third quarter of 2005, as compared to the third quarter of 2004, the result being an approximately 72% decrease in production. On a barrel of oil equivalent ("BOE") basis, the price paid at the wellhead for Petrol's production increased from $36.41 in third quarter of 2004 to $58.44 in the third quarter of 2005. The 72% decrease in production is due to the fact that the State of Louisiana suspended Petrol's R4's (Authority to Transport Oil) until Petrol plugged and abandoned certain wells. Petrol's Texas production was suspended until a saltwater disposal well could be tested. These suspensions were lifted in September and Petrol only had production for one month, plus sale of inventory. Revenues from operating fees, including rental charges for company-owned equipment, increased from $1,286 in the third quarter of 2004 to $405,275 in the third quarter of 2005. This results from contracts to service other operators. Petrol's lease operating expense increased from $510,429 for the nine months ended September 30, 2004, to $596,741 for the nine months ended September 30, 2005. Expenses attributable to the producing properties were consistent with the 7 prior year based on production. The costs of maintenance and supplies for Company equipment increased as Petrol utilized it more for outside operations. Net operating revenues from Petrol's oil and gas production are very sensitive to changes in the price of oil: thus it is difficult for management to predict whether or not Petrol will be profitable in the future. Management continues to explore possible approaches to increasing oil production, including technological developments or pursuing drilling operations. General and administrative expenses increased $98,462 for the nine months ended September 30, 2005, as compared to the 2004 period. This increase is attributed to increases in legal and audit expenses incurred by Petrol for the private placement and compliance issues. Consulting fees increased as Petrol is attempting to get the oil and gas production increased. Petrol has hired more staff to account for outside operations along with consultants. Depreciation, depletion and amortization decreased $335 for the nine months in 2005 and from 2004. Petrol acquired equipment at the end of the 2005 period and this was not depreciated in the period. The sale of property reduced the depletion. Interest income is $2,117 as of September 30, 2005 as compared to $696 at September 30, 2004. The increase is due to increased cash and cash equivalents for the period. Interest expense decreased in 2005 from $32,338 in 2004 due to the retirement of debt and the change of ownership on a certain note payable. Petrol's outgoing Board of Directors, with the consent of the new members of the Board, agreed to pay a bonus to certain officers and consultants of Petrol. Cash bonuses of $135,000 were paid and $75,000 was paid by assigning royalties and interest. This was a one-time charge. LIQUIDITY AND CAPITAL RESOURCES At September 30, 2005, Petrol had a working capital of $2,322. This working capital is a result of the debt retirement and increased receivables. Net cash used by operating activities totaled $468,782 for the nine months ended September 30, 2005, compared to $23,936 used by operating activities for the nine months ended September 30, 2004. In 2005, net income adjusted for reconciling items resulted in a cash inflow of $66,140. Changes in assets and liabilities resulted in a cash inflow of $595,119. In 2004, net income for reconciling items resulted in cash inflow of $151,184. Net Cash provided by investing activities totaled $736,104 for the nine months ended September 30, 2005, as compared to cash provided by investing activities of $151,184 for the nine months ended September 30, 2004. Net cash provided by financing activities totaled $900,009 for the nine months ended September 30, 2005, and net cash used by financing activities totaled $84,500 for the nine months ended September 30, 2004. Proceeds of $492,245 were received from private placements of Petrol's stock and conversion of debt of $875,960. Payments on notes payable resulted in a cash outflow of $568,196 in 2005. Payments on notes payable were $84,500 in 2004. Petrol had cash and cash equivalents at September 30, 2005, of $84,865, compared to $67,796 at the end of the 2004 fiscal year. 8 As reported in the Registrant's 2004 Annual Report on form 10-KSB, Petrol was under a Compliance Order with the Louisiana Department of Natural Resources (LDNR) regarding the breach of saltwater to the surface on one (1) of Petrol's wells. Under this order, Petrol had been assessed civil fines and penalties of approximately $20,000. Petrol filed for an abatement and removal of the fines/penalties assessed by the LDNR, contingent upon Petrol drilling a monitoring well next to the one in question to test the vertical and horizontal extent of the contamination, and its effect on ground water in the exposed area. On or about May 20, 2005, Petrol drilled the initial test monitoring well for the purpose of determining the presence of an Underground Source of Drinking Water (USDW). Based on an evaluation of the electric log run in the test well, and the formation descriptions submitted on the driller's log for the test, it was determined that no USDW was present at that location. Petrol also plugged and abandoned the well on which the saltwater reached the surface. On or about September 07, 2005 all suspensions were lifted by the State of Louisiana and Petrol paid a $1,500 penalty. The State of Texas released all suspensions on October 09, 2005. SUBSEQUENT EVENTS On November 1, 2005, Petrol completed a disposition of certain assets pursuant to an Agreement to Exchange Oil and Gas Working Interests for Corporate Stock dated as of October 31, 2005 (the "Agreement") with Black Dragon Resources Companies, Inc. ("BDRC") under the terms of which Petrol agreed to assign all its right, title and interest in oil and gas properties, including working interests in individual wells and leases, in properties located in Caddo Parish, Louisiana to BDRC in exchange for a $300,000 principal amount promissory note of BDRC and an aggregate of 700,000 shares of BDRC Series D Convertible Preferred Stock at a face value of $4.50 per share. The stock is convertible at the option of Petrol into shares of BDRC common stock. The preferred stock has a dividend rate of 2-1/2% per annum payable by cash or stock at the election of Petrol. The promissory note issued to Petrol pays interest at 6% per annum and matures on October 6,2008. BDRC has the option to prepay all of a portion of the indebtedness evidence by the note, in whole or in part, upon 10 days prior written notice to Petrol. EFFECT OF CHANGES IN PRICES Changes in prices during the past few years have been a significant factor in the oil and gas industry. The price received for the oil and gas produced by Petrol has fluctuated significantly during the last year. Changes in the price that Petrol receives for its oil and gas is set by market forces beyond Petrol's control as well as government intervention. The volatility and uncertainty in oil and gas prices have made it more difficult for a company like Petrol to increase its oil and gas asset base and become a significant participant in the oil and gas industry. Most of Petrol's oil and gas production is sold to certain major oil companies and gas transmission companies. However, in the event these purchasers discontinued oil and gas purchases, Petrol has made contact with other purchasers who would purchase the oil and gas at terms standard in the industry. 9 CRITICAL ACCOUNTING POLICIES AND ESTIMATES Management's Discussion and Analysis of Financial Condition and Results of Operations discuss Petrol's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, intangible assets, recovery of oil and gas reserves, financial operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of Petrol's financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources, primarily allowance for doubtful accounts, the discounted value of recoverable oil and gas reserves, the proceeds to be realized from the sale of real property, and the recognition and classification of net operating loss carryforwards between current and long-term assets. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements included in our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004. Item 3. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of its chief executive officer and chief financial officer of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, the Company's chief executive officer and chief financial officer concluded that its disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the Commission's rules and forms. The Company is working to improve the timeliness of the periodic filings. (b) Changes in internal controls. There was no change in the Company's internal controls or in other factors that could affect these controls during the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over fiscal reporting. 10 PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS. None. Item 2. UNREGISTERED SALES OF EQUITY SECURITIES & USE OF PROCEEDS. On August 04, 2005 the company issued 345,000 common shares reducing notes payable by $69,000. On August 08, 2005 the company issued 345,000 common shares reducing notes payable by $69,000. On August 11, 2005 the company issued 310,000 common shares reducing the notes payable by $62,000. On August 19, 2005 the company issued 509,800 common shares reducing the accounts payable by $101,960. On August 23, 2005 the company issued 100,000 common shares of which 50,000 were canceled on September 13,2005 for services rendered in the net amount of $10,000. On August 25, 2005 250,000 common shares of the company was issued for services rendered in the amount of $50,000. On September 20, 2005 500,000 shares were issued for a deposit on equipment of $50,000. On September 22, 2005 500,000 shares were issued for a deposit on equipment $50,000. On September 29, 2005 4,000,000 shares were issued reducing the notes payable by $400,000. *All of the above offerings and sales were deemed to be exempt under rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, business associates of Petrol Industries, Inc. or executive officers of Petrol Industries, Inc., and transfer was restricted by Petrol Industries, Inc. in accordance with the requirements of the Securities Act of 1933. In addition to representations by the above-referenced persons, we have made independent determinations that all of the above-referenced persons were accredited or sophisticated investors, and that they were capable of analyzing the merits and risks of their investment, and that they understood the speculative nature of their investment. Furthermore, all of the above-referenced persons were provided with access to our Securities and Exchange Commission filings. Item 3. DEFAULTS UPON SENIOR SECURITIES. None. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. Item 5. OTHER INFORMATION. 11 CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT. - ---------------------------------------------- On September 1, 2005, Heard, McElroy and Vestal, LLP (the "Former Accountant") resigned as the auditors for the Company. On December 13, 2005, the Company engaged Malone & Bailey, PC (the "New Accountant"), as its independent registered public accounting firm. The Company's decision to engage the New Accountant was approved by its Board of Directors on December 13, 2005. The reports of the Former Accountant on the financial statements of the Company for each of the two most recent fiscal years, did not contain an adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit, scope or accounting principles for the two most recent fiscal years and all subsequent interim periods, except that the Former Accountant's opinion in its report on the Company's financial statements expressed substantial doubt with respect to the Company's ability to continue as a going concern for the last two fiscal years. During the Company's two most recent fiscal years and the subsequent interim period through the date of resignation, there were no reportable events as the term described in Item 304 (a) (1) (iv) of Regulation S-B. During the Company's two most recent fiscal years and the subsequent interim period through the date of resignation, there were no disagreements with the Former Accountant on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which, if not resolved to the satisfaction of the Former Accountant, would have caused it to make a reference to the subject matter of the disagreements in connection with its reports on these financial statements for those periods. The Company did not consult with the New Accountant regarding the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, and no written or oral advice was provided by the New Accountant that was a factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issues. Departure of Directors or Principal Officers; Election of Directors; Appointment - -------------------------------------------------------------------------------- of Principal Officers. - ---------------------- On October 24,2005 Mr. Stephen Latieyre resigned as a Director of the Company. There was no disagreement or dispute between Mr. Latieyre and the Company, which led to his resignation. In addition, on October 24, 2005, the Company's Board of Directors appointed Mr. Michael Ferrone as a Director of the Company. There are no understandings or arrangements between Mr. Ferrone and any other person pursuant to which Mr. Ferrone was selected as Director of the Company. Mr. Ferrone does not have any family relationship with any director, executive officer or person nominated or chosen by the Company to become a director or executive officer. From 2004 to the present, Mr. Ferrone has served as a director of Innovative Food Holdings, Inc. (IVFH) and consults for a number of companies in various fields. Mr. Ferrone was the Executive Director of the "Bob Villa Home Again" television show from 1990 to 2000. Mr. Ferrone co-founded Building Media, Inc., a multi-media marketing and production company serving the building industry, which was sold in 2004. Completion of Acquisition or Disposition of Assets - -------------------------------------------------- On November 1, 2005, the Company completed a disposition of certain assets pursuant to an Agreement to Exchange Oil and Gas Working Interests for Corporate Stock dated as of October 31, 2005 (the "Agreement") with Black Dragon Resources Companies, Inc. ("BDRC") under the terms of which the Company agreed to assign all its right, title and interest in oil and gas properties, including working 12 interests in individual wells and leases, in properties located in Caddo Parish, Louisiana to BDRC in exchange for a $300,000 principal amount promissory note of BDRC and an aggregate of 700,000 shares of BDRC Series D Convertible Preferred Stock at a face value of $4.50 per share. The stock is convertible at the option of the Company into shares of BDRC common stock. The preferred stock has a dividend rate of 2-1/2% per annum payable by cash or stock at the election of the Company. The promissory note issued to the Company pays interest at 6% per annum and matures on October 6,2008. BDRC has the option to prepay all of a portion of the indebtedness evidence by the note, in whole or in part, upon 10 days prior written notice to the Company. The Pro Forma Financial information reflecting the disposition of certain assets of the company as described above is not included herewith. The Company will file a Current Report on Form 8-K containing such information within 60 days from the date that the Current Report on Form 8-K was required to be filed. Item 6. EXHIBITS 31.1 Certification by Chief Executive Officer and Chief Financial Officer pursuant to Sarbanes-Oxley Section 302 (Filed Herewith). 32.1 Certification by Chief Executive Officer and Chief Financial Officer pursuant to U.S.C. Section 1350 (Filed Herewith) 13 SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. PETROL INDUSTRIES, INC. Dated: January 23, 2005 By: /s/ David Taylor ---------------- David A. Taylor Chief Executive Officer, President (Principal Executive Officer) and Chief Financial Officer (Principal Accounting and Financial Officer) 14 EX-31 2 sept30200510qsbaex311.txt EXHIBIT 31.1 CERTIFICATION ------------- I, David A. Taylor, Chief Financial Officer, certify that: 1. I have reviewed this Form 10-QSB/A for the quarterly period ended September 30, 2005, of Petrol Industries, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors: a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuers internal control over financial reporting. Date: January 23, 2006 /s/ David Taylor ---------------- David A. Taylor Chief Executive Officer and Chief Financial Officer EX-32 3 sept30200510qsbaex321.txt Exhibit 32.1 CERTIFICATION PURSUANT TO ------------------------- 18 U.S.C. SECTION 1350, ----------------------- AS ADOPTED PURSUANT TO ---------------------- SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 ---------------------------------------------- In connection with the Quarterly Report of Petrol Industries, Inc. (the "Company") on Form 10-QSB/A for the period ended September 30, 2005, as filed with the Securities and Exchange commission on the date hereof (the "Report"), the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: i. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and ii. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been provided to Petrol Industries, Inc. and will be retained by Petrol Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. Dated: January 23, 2006 /s/ David Taylor ---------------- David A. Taylor Chief Executive Officer and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----