United States
Securities and Exchange Commission
Washington, DC 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
September 30, 2002 0-27849
BASIC ENERGY, INC.
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(Exact name of registrant as specified in its charter)
UTAH
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(State or other jurisdiction of incorporation or organization)
00001748413
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(I.R.S. Employer Identification No.)
3771 South State Street
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Salt Lake City, Utah 84115
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(Address of principal executive offices)
(801) 262-8429
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
None
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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.
X Yes No
---- ----
State the number of shares outstanding of each of the registrants classes of
common equity, as of the latest practicable date.
Common stock, par value $0.10; 8,131,226 shares outstanding
as of September 30, 2002
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BASIC ENERGY, INC.
(A Development Stage Company)
Financial Statements
September 30, 2002
BASIC ENERGY, INC.
(A Development Stage Company)
Balance Sheets
September 30, June 30,
2002 2002
------------ ------------
(Unaudited)
ASSETS
Current Assets
--------------
Cash $ 894 $ 1,694
------------ ------------
Total Assets $ 894 $ 1,694
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
-------------------
Accounts Payable $ 36,279 $ 14,324
Due to Officers 14,688 22,452
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Total Current Liabilities 50,967 36,776
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Stockholders' Equity
Common Stock, 20,000,000 Shares
Authorized at $0.10 Par Value;
8,131,226 and 7,339,030 Shares Issued
and Outstanding Respectively 813,122 733,903
Paid In Capital 42,741 42,741
Deficit Accumulated During the Development Stage (905,936) (811,726)
------------ ------------
Total Stockholders' Equity (50,073) (35,082)
------------ ------------
Total Liabilities & Stockholders' Equity $ 894 $ 1,694
============ ============
The accompanying notes are an integral part of these financial statements.
BASIC ENERGY, INC.
(A Development Stage Company)
Statement of Operations
(Unaudited)
For the Period
For the Three Months Ended June 4, 1926
--------------------------- (Inception)
September September to September
30, 2002 30, 2001 30, 2002
------------ ------------ ------------
REVENUE $ -- $ -- $ --
EXPENSES
General & Administrative 14,269 31,381 845,936
Loss on Mining Claims -- -- 60,000
------------ ------------ ------------
Total Expenses 14,269 31,381 905,936
------------ ------------ ------------
Income (Loss)
From Operations (14,269) (31,381) (905,936)
OTHER INCOME (EXPENSES)
Interest Expense -- -- --
------------ ------------ ------------
Total Other Income
(Expenses) -- -- --
------------ ------------ ------------
Income (Loss)
Before Taxes (14,269) (31,381) (905,936)
Taxes -- -- --
------------ ------------ ------------
Net Income (Loss) $ (14,269) $ (31,381) $ (905,936)
============ ============ ============
Loss Per
Common Share $ (0.00) $ (0.00)
Weighted Average
Outstanding Shares 8,131,226 7,348,024
The accompanying notes are an integral part of these financial statements.
BASIC ENERGY, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
For the Period
For the Three Months Ended June 4, 1926
----------------------------- (Inception) to
September 30, September 30, September 30,
2002 2001 2002
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (14,269) $ (31,381) $ (905,936)
Adjustments to Reconcile Net Loss to
Cash Used by Operating Activities;
Non Cash 13,888 -- 822,387
Loss on Mining Claim -- -- 60,000
Increase (Decrease) in Accounts Payable 381 10,860 29,701
Increase (Decrease) Due to Officers -- 18,921 (31,084)
------------- ------------- -------------
Cash Used from Operating Activities -- (1,600) (24,932)
CASH FLOWS FROM INVESTING ACTIVITIES -- -- --
------------- ------------- -------------
Cash Provided from Investing Activities -- -- --
CASH FLOWS FROM FINANCIAL ACTIVITIES
Proceeds from Sale of Common Stock -- -- 25,826
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Cash Provided from Financing Activities -- -- 25,826
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Increase (Decrease) in Cash -- (1,600) 894
Cash at Beginning of Period 894 1,694 --
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Cash at End of Period $ 894 $ 94 $ 894
============= ============= =============
DISCLOSURES FOR OPERATING ACTIVITIES
Interest $ -- $ -- $ --
Taxes -- -- --
The accompanying notes are an integral part of these financial statements.
Basic Energy, Inc.
(A Development Stage Company)
Notes to Financial Statements
NOTE #1 - Organization
----------------------
The Company was organized on June 4, 1926 under the laws of the state of Utah
using the name of M.M. Lead Company. On February 22, 1980 a Certificate of
Amendment was filed with the state of Utah changing the name to Basic Energy,
Inc. The Company has been dormant for many years and is considered to be a
development stage company.
NOTE #2 - Significant Accounting Policies
-----------------------------------------
A. The Company uses the accrual method of accounting.
B. Revenues and directly related expenses are recognized in the period
when the goods are shipped to the customer.
C. The Company considers all short term, highly liquid investments that
are readily convertible, within three months, to known amounts as cash
equivalents. The Company currently has no cash equivalents.
D. Primary Earnings Per Share amounts are based on the weighted average
number of shares outstanding at the dates of the financial statements.
Fully Diluted Earnings Per Shares shall be shown on stock options and
other convertible issues that may be exercised within ten years of the
financial statement dates.
E. Estimates: The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
NOTE #3 - Stockholders' Equity - Common Stock
---------------------------------------------
Upon Incorporation the Company had 1,000,000 shares of common stock authorized
with a par value of $0.10 per share. On February 28, 1979 the Articles of
Incorporation were changed authorizing 20,000,000 shares with a par value of
$0.10 per share.
The Company issued 600,000 shares of its common stock to acquire mining claims
in 1926. In 1937, the Company wrote the claims off as having no value.
The shares issued in 1926 were assessable, and in 1937 the 600,000 shares were
assessed at $.001 per share, 423,780 shares did not pay the assessment and were
canceled.
During the year ended June 30, 2002, the Company issued 792,196 shares to
officers and directors for services and out of pocket expenses. The shares were
issued at $0.10 per share.
NOTE #4 - Going Concern
-----------------------
The Company has had recurring operating losses since inception and is dependent
upon financing to continue operations. These factors indicate that the Company
may be unable to continue in existence. These financial statements do not
include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue its existence. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. It is the intent of the Company to find additional
capital funding and/or a profitable business venture to acquire or merge.
NOTE #5 - Subsequent Events
---------------------------
On October 5, 2002, the Company issued 138,875 shares of common stock to
officers and directors of the Company as full payment for services and out of
pocket expenses incurred during the quarter.
ITEM 2. PLAN OF OPERATIONS
Safe Harbor Statement
This Form 10-QSB contains certain forward-looking statements. For this
purpose any statements contained in this Form 10-QSB that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, words such as "may," "will," "expect," "believe," "anticipate,"
"estimate" or "continue" or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties, and actual results may differ materially depending on a
variety of factors.
Plan of Operations
------------------
The Company has little cash and has experienced losses. As of September 30,
2002, the Company had $ 894 cash on hand. As of that date the Company had
$49,224 in outstanding liabilities. The Company has no material commitments for
capital expenditures for the next twelve months.
As of the date of this report, the Company has yet to generate positive
cash flow. The Company has financed its operations primarily through the sale of
common stock.
The Company believes that its current cash needs can be met either through
the sale of additional stock or through loans. Should the Company obtain a
business opportunity, however, it may be necessary to raise additional capital.
This may be accomplished by selling common stock of the Company.
Management of the Company intends to actively seek business opportunities
for the Company during the next twelve months.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
No instruments defining the rights of the holders of any class of
registered securities have been materially modified, limited or qualified.
On January 23, 2002, the Company issued 198,178 shares of its restricted
common stock to its officers and directors for services rendered to the Company
during the quarter ended December 31, 2001. The number of shares received by
each such individual was based on a compensation rate of $40.00 per hour for
services rendered and $0.31 per mile as compensation for mileage. The shares
issued were valued at $.10 per share. Shares issued were issued as follows:
Number of Shares Value of Services
---------------- -----------------
Jay W. Gibson 138,115 $13,811.50
Ron Burnett 9,948 994.80
Karl Seljass 12,076 1,207.60
Joyce Sigler 8,219 821.90
Joe Graubard 29,820 2,982.00
The Company made no public offers or sale of these securities. All of the
shares listed above were issued pursuant to an exemption from registration set
forth in Section 4(2) of the Securities Act of 1933. No cash was received by the
Company.
Also on January 23, 2002, the Company issued 1,500 restricted common shares
to Carriage Motor Company as payment for rents due at a rate of $50.00 per month
for the preceding three months. The Company made no public offers or sales of
these securities. The shares were issued pursuant to an exemption from
registration provided by Section 4(2) of the '33 Act. No cash was received by
the Company. Mr. Burnett is the owner of Carriage Motor Company and may be
deemed to be the beneficial owner of these shares.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(A) Reports on Form 8-K
No reports on Form 8-K were filed or required to be filed during the
quarter ended September 30, 2002.
(B) Exhibits.
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this to be signed on its behalf by the undersigned
thereunto duly authorized.
Basic Energy, Inc.
November 25, 2002 /s/ Jay W. Gibson
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Jay W. Gibson
Chairman of the Board and President
November 25, 2002 /s/ Joseph M. Graubard
--------------------------------
Joseph M. Graubard
Treasurer and Director
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jay W. Gibson, certify that:
1. I have reviewed this annual report on Form 10-QSB of Basic Energy, Inc.
2. Based on my knowledge, this annual 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 annual report.
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report.
Date: November 25, 2002
/s/ Jay W. Gibson
-----------------------------
Jay W. Gibson
President and Chairman
of the Board
(principal executive officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Joseph M. Graubard, certify that:
1. I have reviewed this annual report on Form 10-QSB of Basic Energy, Inc.
2. Based on my knowledge, this annual 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 annual report.
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report.
Date: November 25, 2002
/s/ Joseph M. Graubard
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Joseph M. Graubard
Treasurer
(principal financial officer)