x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended | |
o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from ______________to ______________. | |
Nevada | 20-8428738 | |||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||
Large accelerated filer o | Accelerated filer o | |||
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company x |
Class | Outstanding at |
Common Stock, par value $0.001 per share | 80,181,310 |
Page |
June 30, 2008 (unaudited) | March 31, 2008 | September 30, 2008 (unaudited) | March 31, 2008 | |||||||||
ASSETS | ||||||||||||
Current Assets: | ||||||||||||
Cash | $ | 346,276 | $ | 592,665 | $ | 284,932 | $ | 592,665 | ||||
Accounts Receivable: | ||||||||||||
Oil & Gas - Related Party | 1,877,381 | 868,406 | 1,212,377 | 868,406 | ||||||||
Other - Related Party | 237,156 | - | 1,149,370 | - | ||||||||
Other | 40,339 | - | ||||||||||
Inventory | 17,958 | 4,748 | 8,731 | 4,748 | ||||||||
Hedging Account | 6,410 | 13,062 | 6,316 | 13,062 | ||||||||
Total Current Assets | 2,525,520 | 1,478,881 | 2,661,726 | 1,478,881 | ||||||||
Note Receivable | 1,341,062 | 1,355,228 | 1,348,617 | 1,355,228 | ||||||||
Oil and Gas Properties - successful efforts method | 22,321,806 | 17,832,931 | 22,713,212 | 17,832,931 | ||||||||
Less Accumulated Depletion and Depreciation | (4,495,689 | ) | (4,139,337 | ) | (4,827,430 | ) | (4,139,337 | ) | ||||
Oil & Gas Properties (net) | 17,826,117 | 13,693,594 | 17,885,782 | 13,693,594 | ||||||||
Other Depreciable Assets: | 1,819,174 | 1,641,806 | 2,007,742 | 1,641,806 | ||||||||
Less Accumulated Depreciation | (165,738 | ) | (121,113 | ) | (215,656 | ) | (121,113 | ) | ||||
Other Depreciable Assets (net) | 1,653,436 | 1,520,693 | 1,792,086 | 1,520,693 | ||||||||
Other Related Party Receivable | 80,395 | 80,395 | 80,395 | 80,395 | ||||||||
Leasehold Held for Sale | 1,680,813 | 1,680,813 | 1,680,813 | 1,680,813 | ||||||||
Equity Method Investment | 142,395 | 142,395 | ||||||||||
Investment in Equity Method Investment | - | 142,395 | ||||||||||
Total Assets | $ | 25,249,738 | $ | 19,951,999 | $ | 25,449,419 | $ | 19,951,999 | ||||
LIABILITIES | ||||||||||||
Current Liabilities: | ||||||||||||
Accounts Payable | $ | 139,699 | $ | 103,479 | $ | 312,464 | $ | 103,479 | ||||
Notes Payable to Related Party | 500,000 | 324,330 | 500,000 | 324,330 | ||||||||
Payable to Related Parties | 4,300,224 | 1,547,136 | 3,717,266 | 1,547,136 | ||||||||
Royalties Payable | 69,879 | 57,485 | 86,947 | 57,485 | ||||||||
Accrued Expenses | 1,218,836 | 857,887 | 1,250,333 | 857,887 | ||||||||
Accrued Expenses - Related Party | 161,173 | 171,788 | 168,762 | 171,788 | ||||||||
Short Term Notes Payable | 525,000 | - | 525,000 | - | ||||||||
Current Portion of Long-Term Debt | 14,960 | 14,960 | 16,320 | 14,960 | ||||||||
Total Current Liabilities | 6,929,771 | 3,077,065 | 6,577,092 | 3,077,065 | ||||||||
Notes Payable | 1,472,999 | 1,647,769 | 1,521,940 | 1,647,769 | ||||||||
Notes Payable - Related Parties | 3,769,674 | 3,194,594 | 3,769,674 | 3,194,594 | ||||||||
Other Related Party Payables | 240,090 | 490,840 | 240,090 | 490,840 | ||||||||
Less Current Portion of Notes Payable | (14,960 | ) | (14,960 | ) | (16,320 | ) | (14,960 | ) | ||||
Total Long-Term Debt | 5,467,803 | 5,318,243 | 5,515,384 | 5,318,243 | ||||||||
Deferred Tax Liability | 2,584,761 | 2,163,183 | 2,796,083 | 2,163,183 | ||||||||
Total Liabilities | 14,982,335 | 10,558,491 | 14,888,559 | 10,558,491 | ||||||||
Commitments & Contingencies: | ||||||||||||
Contingent Stock Based Compensation | 268,856 | 214,976 | 268,856 | 214,976 | ||||||||
Stockholders' Equity | ||||||||||||
Common Stock, $.001 par,200,000,000 shares authorized and 80,181,310 shares outstanding on June 30, 2008 and March 31, 2008 | 80,181 | 80,181 | ||||||||||
Common Stock, $.001 par,200,000,000 shares authorized and 80,181,310 shares outstanding on September 30, 2008 and March 31, 2008 | 80,181 | 80,181 | ||||||||||
Additional Paid-In-Capital | 9,590,313 | 9,553,346 | 9,590,313 | 9,553,346 | ||||||||
Retained Deficit | 328,053 | (454,995 | ) | 621,510 | (454,995 | ) | ||||||
Total Stockholders' Equity | 9,998,547 | 9,178,532 | 10,292,004 | 9,178,532 | ||||||||
Total Liabilities & Stockholders' Equity | $ | 25,249,738 | $ | 19,951,999 | $ | 25,449,419 | $ | 19,951,999 | ||||
Three Months Ended | Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, 2008 (unaudited) | June 30, 2007 (unaudited) | September 30, 2008 (unaudited) | September 30, 2007 (unaudited) | September 30, 2008 (unaudited) | September 30, 2007 (unaudited) | ||||||||||||||
Revenues | |||||||||||||||||||
Oil & Gas Sales | $ | 2,752,747 | $ | 813,924 | $ | 2,282,048 | $ | 1,019,222 | $ | 5,034,795 | $ | 1,833,146 | |||||||
Sale of Leases | 18,005 | 307,028 | 18,005 | 307,028 | |||||||||||||||
Other Income | 99,416 | 65 | 109,568 | 79,367 | 208,983 | 79,432 | |||||||||||||
2,852,163 | 813,989 | 2,409,621 | 1,405,617 | 5,261,783 | 2,219,606 | ||||||||||||||
Costs and Expenses | |||||||||||||||||||
Oil & Gas Lease Operating Expenses | 596,033 | 333,521 | 789,234 | 491,703 | 1,385,267 | 825,224 | |||||||||||||
Workover Expenses | 72,425 | - | 87,982 | - | 160,407 | - | |||||||||||||
Severance & Ad Valorem Taxes | 154,620 | 48,936 | 132,125 | 59,947 | 286,237 | 108,883 | |||||||||||||
Delay Rentals | - | 43,615 | - | 8,571 | - | 52,186 | |||||||||||||
Depletion & Depreciation | 400,976 | 286,131 | 381,660 | 332,245 | 782,636 | 618,376 | |||||||||||||
General & Administrative: | |||||||||||||||||||
Salaries & Benefits | 196,376 | 233,479 | 135,068 | 249,533 | 321,613 | 483,012 | |||||||||||||
Legal & Professional | 149,334 | 157,849 | 193,129 | 121,953 | 313,639 | 279,802 | |||||||||||||
Other General & Administrative | 132,326 | 59,415 | 40,295 | 101,751 | 211,784 | 161,166 | |||||||||||||
Interest, net of capitalized interest of $161,576 and $141,012 for the periods ended 6/30/08 and 6/30/07, respectively | - | - | |||||||||||||||||
1,702,090 | 1,162,946 | ||||||||||||||||||
Interest, net of capitalized interest of $151,343 and $126,676 for the three months ended 9/30/08 and 9/30/07, respectively and $312,919 and $267,688 for the six months ended 9/30/08 and 9/30/07, respectively | 2,900 | - | 2,900 | - | |||||||||||||||
1,762,393 | 1,365,703 | 3,464,483 | 2,528,649 | ||||||||||||||||
Interest Income | 61,205 | 23,332 | 40 | 70,930 | 61,246 | 94,262 | |||||||||||||
Loss on Equity Method Investments | (142,395 | ) | - | (142,395 | ) | - | |||||||||||||
Hedging Loss | (6,653 | ) | - | (93 | ) | - | (6,746 | ) | - | ||||||||||
Income (Loss) from continuing operations before income taxes and discontinued operations | 1,204,625 | (325,625 | ) | 504,780 | 110,844 | 1,709,405 | (214,781 | ) | |||||||||||
Income Tax Provision | (421,618 | ) | 113,969 | (211,323 | ) | (38,796 | ) | (632,941 | ) | 75,173 | |||||||||
Income (Loss) from Continuing Operations | 783,007 | (211,656 | ) | ||||||||||||||||
Income from discontinued operations, net of income taxes: | |||||||||||||||||||
Pipeline Income | - | 22,930 | - | - | - | 22,930 | |||||||||||||
Gain on Sale of Pipeline | - | 1,458,827 | - | (5,169 | ) | - | 1,453,658 | ||||||||||||
Income from discontinued operations | - | 1,481,757 | - | (5,169 | ) | - | 1,476,588 | ||||||||||||
Net Income (Loss) | $ | 783,007 | $ | 1,270,101 | $ | 293,457 | $ | 66,879 | $ | 1,076,464 | $ | 1,336,980 | |||||||
Basic & Diluted Loss per Common Share | $ | 0.00 | $ | 0.00 | $ | $0.01 | $ | 0.02 | |||||||||||
Continuing Operations | $ | 0.01 | (0.00 | ) | |||||||||||||||
Discontinued Operations | $ | - | $ | 0.02 | |||||||||||||||
$ | 0.01 | $ | 0.02 | ||||||||||||||||
Weighted Average Common Shares Outstanding | 80,181,310 | 76,524,026 | 80,181,310 | 79,711,310 | 80,181,310 | 77,907,148 | |||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, 2008 (unaudited) | June 30, 2007 (unaudited) | September 30, 2008 (unaudited) | September 30, 2007 (unaudited) | |||||||||
Operating Activities: | ||||||||||||
Net Income | $ | 783,007 | $ | 1,270,101 | $ | 1,076,464 | $ | 1,336,980 | ||||
Adjustments to reconcile net income to cash from operating activities: | ||||||||||||
Income Tax Expense | 421,619 | 683,900 | 632,941 | 719,913 | ||||||||
Depletion, Depreciation, & Amortization | 400,977 | 286,131 | 782,636 | 618,376 | ||||||||
Expired Leases | - | - | ||||||||||
�� Loss on Equity Method Investment | 142,395 | - | ||||||||||
Stock based compensation | 53,880 | 144,070 | 53,880 | 309,451 | ||||||||
Joint Venture Partner Expense | - | 3,072,448 | - | 3,080,400 | ||||||||
Gain on Sale of Pipeline | - | (5,272,701 | ) | - | (5,272,701 | ) | ||||||
Changes in Operating Assets and Liabilities | ||||||||||||
Changes in Accrued Liabilities | 47,000 | 37,027 | 86,086 | 124,366 | ||||||||
Change in Inventory | (13,210 | ) | - | (3,983 | ) | - | ||||||
Change in Related Party Receivables/Payables | (237,156 | ) | 25,902 | (1,149,370 | ) | (392,168 | ) | |||||
Changes in Other Receivables | (40,339 | ) | 63,389 | - | (674,524 | ) | ||||||
Changes in Hedging Account | 6,652 | - | 6,746 | - | ||||||||
Changes in Royalties Payable | 12,394 | - | 29,462 | 13,834 | ||||||||
Change in Revenue Receivables | (1,008,975 | ) | (9,387 | ) | (343,971 | ) | (142,099 | ) | ||||
Changes in Accounts Payable | 36,220 | (193,131 | ) | 208,985 | 67,875 | |||||||
Net Cash provided from operating activities | 462,069 | 107,749 | ||||||||||
Net Cash provided from discontinued operations | - | 7,164,405 | ||||||||||
Net Cash provided by operating activities and discontinued operations | 462,069 | 7,272,154 | ||||||||||
Net Cash provided (used) from operating activities | 1,522,271 | (210,297 | ) | |||||||||
Net Cash provided (used) from discontinued operations | - | 6,802,113 | ||||||||||
Net Cash provided (used) by operating activities and discontinued operations | 1,522,271 | 6,591,816 | ||||||||||
Investing Activities: | ||||||||||||
Oil & Gas Drilling, Completing and Leasehold Acquisition Costs | (4,451,908 | ) | (960,681 | ) | (4,843,315 | ) | (2,813,409 | ) | ||||
Change in Capitalized Note Accretion | - | 35,000 | - | 70,000 | ||||||||
Change in Related Party Payable Related to Drilling | 2,753,088 | (3,826,575 | ) | |||||||||
Change in Related Party Payable related to drilling | 2,170,131 | (4,120,568 | ) | |||||||||
Investment in Other Depreciable Assets | (177,368 | ) | (918,679 | ) | (365,936 | ) | (1,372,717 | ) | ||||
Note Receivable Collections | 14,166 | 81,451 | ||||||||||
Note Receivable Collections (Advances) | 6,611 | 148,794 | ||||||||||
Net Cash used in investing activities | (1,862,022 | ) | (5,589,484 | ) | (3,032,509 | ) | (8,087,900 | ) | ||||
Financing Activities | ||||||||||||
Notes Payable (Payments) Advances | 653,564 | (1,950,000 | ) | 702,505 | (2,029,603 | ) | ||||||
Related Party Note Advances | 500,000 | - | 500,000 | - | ||||||||
Net Cash Received from Common Stock Subscriptions | - | 6,885,353 | ||||||||||
Net cash received from common stock subscriptions | - | 6,885,353 | ||||||||||
Net Cash provided (used) from financing activities. | 1,153,564 | 4,935,353 | 1,202,505 | 4,855,750 | ||||||||
Net Increase (Decrease) in cash | (246,389 | ) | 6,618,023 | (307,733 | ) | 3,359,666 | ||||||
Cash - Beginning of the period | 592,665 | 212,254 | 592,665 | 212,254 | ||||||||
Cash - End of the period | $ | 346,276 | $ | 6,830,277 | $ | 284,932 | $ | 3,571,920 | ||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, 2008 (unaudited) | June 30, 2007 (unaudited) | September 30, 2008 (unaudited) | September 30, 2007 (unaudited) | |||||||||
Supplemental Disclosure of Cash Flow Information | ||||||||||||
Cash paid during period for: | ||||||||||||
Interest | $ | 87,988 | $ | 59,993 | $ | 195,386 | $ | 64,330 | ||||
Income Taxes | $ | - | $ | - | $ | - | $ | - | ||||
Non Cash Investing and Financing Activities | ||||||||||||
Warrants Issued | $ | 36,967 | $ | - | $ | 36,967 | $ | - | ||||
Transfer of Accrued Interest from Notes | ||||||||||||
Payable to Accrued Liabilities | $ | 303,334 | $ | - | ||||||||
Stock Based Property Acquisition | $ | - | 298,800.00 | |||||||||
Year Ending March 31, | ||||||
2009 | 2010 | |||||
Restricted Stock Compensation | $ | 194,783 | $ | - | ||
Stock Option Compensation | 21,264 | 9,208 | ||||
$ | 216,047 | $ | 9,208 |
Year Ending March 31, | |||||||||
2009 | 2010 | 2011 | |||||||
Restricted Stock Compensation | $ | 48,564 | $ | - | $ | - | |||
Stock Option Compensation | 5,316 | 186,719 | 82,423 | ||||||
$ | 53,880 | $ | 186,719 | $ | 82,423 |
Year Ending March 31, | |||||||||
2009 | 2010 | 2011 | |||||||
Stock Option Compensation | $ | 275,885 | $ | 151,631 | $ | 58,967 | |||
Fiscal Years Ending March 31, | |||||||||||||||||
2009 | 2010 | 2011 | 2012 | Thereafter | Total | ||||||||||||
Office Lease Payments | $ | 150,000 | $ | 160,000 | $ | - | $ | - | $ | - | $ | 310,000 | |||||
Construction Loan | 14,960 | 16,320 | 16,320 | 16,320 | 126,699 | 190,619 | |||||||||||
Notes Payable - Related Parties | - | 3,518,924 | - | 250,750 | - | 3,769,674 | |||||||||||
Short Term Note Payable - Related Party | - | 500,000 | - | - | - | 500,000 | |||||||||||
Line of Credit | 525,000 | - | - | - | - | 525,000 | |||||||||||
Leasehold Notes Payable | - | - | - | - | 1,285,100 | 1,285,100 | |||||||||||
$ | 539,960 | $ | 4,035,244 | $ | 16,320 | $ | 267,070 | $ | 1,411,799 | $ | 6,270,393 |
Fiscal Years Ending March 31, | |||||||||||||||||
2009 | 2010 | 2011 | 2012 | Thereafter | Total | ||||||||||||
Office Lease Payments | $ | 75,000 | $ | 160,000 | $ | - | $ | - | $ | - | $ | 235,000 | |||||
Construction Loan ** | 8,160 | 16,320 | 16,320 | 16,320 | 179,720 | 236,840 | |||||||||||
Notes Payable - Related Parties * | - | 3,518,924 | - | 250,750 | - | 3,769,674 | |||||||||||
Short Term Note Payable - Related Party ** | - | 500,000 | - | - | - | 500,000 | |||||||||||
Line of Credit ** | 525,000 | - | - | - | - | 525,000 | |||||||||||
Lease Notes Payable | - | - | - | - | 1,285,100 | 1,285,100 | |||||||||||
$ | 608,160 | $ | 4,195,244 | $ | 16,320 | $ | 267,070 | $ | 1,464,820 | $ | 6,551,614 |
REOSTAR ENERGY CORPORATION | |
By /s/ Scott D. Allen | |
Scott D. Allen, Chief Financial Officer | |