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 | 80,743,912 |
Page |
June 30, 2010 (unaudited) | March 31, 2010 | September 30, 2010 (unaudited) | March 31, 2010 | |||||||||
ASSETS | ||||||||||||
Current Assets: | ||||||||||||
Cash | $ | 215,540 | $ | 277,307 | $ | 235,602 | $ | 277,307 | ||||
Accounts Receivable: | ||||||||||||
Oil and Gas - Related Party | 803,444 | 639,738 | ||||||||||
Oil & Gas - Related Party | 489,939 | 639,738 | ||||||||||
Related Party | 639,608 | 561,169 | 848,656 | 561,169 | ||||||||
Other | 2,087 | - | 447 | - | ||||||||
Inventory | 123,158 | 130,886 | 118,715 | 130,886 | ||||||||
Other Current Assets | 103,975 | 248,759 | - | 248,759 | ||||||||
Total Current Assets | 1,887,812 | 1,857,859 | 1,693,359 | 1,857,859 | ||||||||
Notes Receivable | 213,619 | 213,619 | 212,773 | 213,619 | ||||||||
Oil and Gas Properties - Successful Efforts Method | 27,082,096 | 26,847,329 | ||||||||||
Oil and Gas Properties - successful efforts method | 26,842,132 | 26,847,329 | ||||||||||
Less Accumulated Depletion and Depreciation | (9,706,400 | ) | (9,034,348 | ) | (10,283,771 | ) | (9,034,348 | ) | ||||
Oil and Gas Properties (net) | 17,375,696 | 17,812,981 | ||||||||||
Oil & Gas Properties (net) | 16,558,361 | 17,812,981 | ||||||||||
Other Depreciable Assets: | 2,028,487 | 2,028,487 | 2,028,487 | 2,028,487 | ||||||||
Less Accumulated Depreciation | (474,696 | ) | (427,013 | ) | (522,381 | ) | (427,013 | ) | ||||
Other Depreciable Assets (net) | 1,553,791 | 1,601,474 | 1,506,106 | 1,601,474 | ||||||||
Total Assets | $ | 21,030,918 | $ | 21,485,933 | $ | 19,970,599 | $ | 21,485,933 | ||||
LIABILITIES | ||||||||||||
Current Liabilities: | ||||||||||||
Accounts Payable | $ | 344,532 | $ | 278,233 | $ | 408,662 | $ | 278,233 | ||||
Revenue Payable | 59,443 | 20,912 | 17,104 | 20,912 | ||||||||
Payable to Related Parties | 148,550 | 148,550 | 148,550 | 148,550 | ||||||||
Other Current Liabilities | 16,302 | 93,923 | - | 93,923 | ||||||||
Accrued Expenses | 277,361 | 140,390 | 433,467 | 140,390 | ||||||||
Accrued Expenses - Related Parties | 77,855 | 88,458 | ||||||||||
Accrued Expenses - Related Party | 131,861 | 88,458 | ||||||||||
Current Portion of Long-Term Debt | 10,365,373 | 10,283,339 | 10,447,407 | 10,283,339 | ||||||||
Total Current Liabilities | 11,289,416 | 11,053,805 | 11,587,051 | 11,053,805 | ||||||||
Notes Payable - Related Parties | 3,518,924 | 3,518,924 | 3,518,924 | 3,518,924 | ||||||||
Total Long-Term Debt | 3,518,924 | 3,518,924 | 3,518,924 | 3,518,924 | ||||||||
Asset Retirment Obligation | 334,914 | 324,773 | ||||||||||
Asset Retirement Obligation | 345,055 | 324,773 | ||||||||||
Deferred Tax Liability | 393,764 | 639,034 | - | 639,034 | ||||||||
Total Liabilities | 15,537,018 | 15,536,536 | 15,451,030 | 15,536,536 | ||||||||
Commitments & Contingencies: | - | - | ||||||||||
Stockholders' Equity | ||||||||||||
Common Stock, $.001 par,200,000,000 shares authorized and 80,743,912 and 80,743,912 shares outstanding on June 30, 2010 and March 31, 2010, respectively | 80,743 | 80,743 | ||||||||||
Common Stock, $.001 par,200,000,000 shares authorized and 80,743,912 shares outstanding on September 30, 2010 and March 31, 2010, respectively | 80,743 | 80,743 | ||||||||||
Additional Paid-In-Capital | 11,479,998 | 11,460,893 | 11,499,103 | 11,460,893 | ||||||||
Treasury Stock, at cost | (12,240 | ) | (12,240 | ) | (12,240 | ) | (12,240 | ) | ||||
Retained Deficit | (6,054,601 | ) | (5,579,999 | ) | (7,048,037 | ) | (5,579,999 | ) | ||||
Total Stockholders' Equity | 5,493,900 | 5,949,397 | 4,519,569 | 5,949,397 | ||||||||
Total Liabilities & Stockholders' Equity | $ | 21,030,918 | $ | 21,485,933 | $ | 19,970,599 | $ | 21,485,933 | ||||
Three Months Ended | |||||||
June 30, 2010 (unaudited) | June 30, 2009 (unaudited) | ||||||
Revenues | |||||||
Oil and Gas Sales | $ | 873,188 | $ | 618,071 | |||
Other Income | 90,911 | 83,463 | |||||
964,099 | 701,534 | ||||||
Costs and Expenses | |||||||
Oil and Gas Lease Operating Expenses | 396,002 | 528,203 | |||||
Severance and Ad Valorem Taxes | 52,581 | 34,066 | |||||
Geologic and Geophysical | 16,519 | - | |||||
Plugging Costs and Expired Leases | 8,757 | - | |||||
Depletion and Depreciation | 801,769 | 711,566 | |||||
ARO Accretion | 10,141 | 10,750 | |||||
General and Administrative: | |||||||
Salaries and Benefits | 153,087 | 201,560 | |||||
Legal and Professional | 184,113 | 127,851 | |||||
Other General and Administrative | 79,704 | 145,965 | |||||
Interest, net of capitalized interest of $209,423 and $121,898 for the three months ended June 30, 2010 and June 30, 2009, respectively | - | - | |||||
1,702,673 | 1,759,961 | ||||||
Other Income | |||||||
Interest Income | 10 | 13,970 | |||||
Hedging Gains | 18,693 | - | |||||
Loss from operations before income taxes | (719,871 | ) | (1,044,457 | ) | |||
Income Tax Benefit | 245,269 | 340,044 | |||||
Net Loss | $ | (474,602 | ) | $ | (704,413 | ) | |
Basic and Diluted Loss per Common Share: | |||||||
Net Loss per Common Share | $ | (0.01 | ) | $ | (0.01 | ) | |
Weighted Average Common Shares Outstanding | 80,743,912 | 80,353,912 | |||||
Three Months Ended | Six Months Ended | ||||||||||||||
September 30, 2010 (unaudited) | September 30, 2009 (unaudited) | September 30, 2010 (unaudited) | September 30, 2009 (unaudited) | ||||||||||||
Revenues | |||||||||||||||
Oil & Gas Sales | $ | 796,972 | $ | 556,141 | $ | 1,670,161 | $ | 1,174,212 | |||||||
Sale of Leases | - | 137,677 | - | 137,677 | |||||||||||
Other Income | (18,120 | ) | 90,119 | 72,793 | 173,582 | ||||||||||
778,852 | 783,937 | 1,742,954 | 1,485,471 | ||||||||||||
Costs and Expenses | |||||||||||||||
Oil & Gas Lease Operating Expenses | 385,849 | 515,195 | 781,854 | 1,043,398 | |||||||||||
Workover Expenses | 13,680 | 43,998 | 13,680 | 43,998 | |||||||||||
Severance & Ad Valorem Taxes | 48,109 | 31,129 | 100,691 | 65,195 | |||||||||||
Geologic & Geophysical | 21,975 | - | 38,494 | - | |||||||||||
Plugging and Abandonments | 9,030 | - | 17,787 | - | |||||||||||
Depletion & Depreciation | 707,090 | 684,361 | 1,508,860 | 1,395,927 | |||||||||||
ARO Accretion | 10,141 | 11,031 | 20,282 | 21,781 | |||||||||||
General & Administrative: | |||||||||||||||
Salaries & Benefits | 279,851 | 201,935 | 432,937 | 403,495 | |||||||||||
Legal & Professional | 159,728 | 648,979 | 343,841 | 776,830 | |||||||||||
Other General & Administrative | 76,165 | 126,406 | 155,870 | 272,371 | |||||||||||
Interest, net of capitalized interest of $0 and $132,375 for the three months ended 9/30/10 and 9/30/09, respectively and $0 and $254,273 for the six months ended 9/30/10 and 9/30/09, respectively | 419,955 | - | 419,955 | - | |||||||||||
2,131,573 | 2,263,034 | 3,834,251 | 4,022,995 | ||||||||||||
Other Income (Expense) | |||||||||||||||
Interest Income | 10 | 13,934 | 20 | 27,904 | |||||||||||
Hedging Gain (Loss) | (34,493 | ) | (103,643 | ) | (15,800 | ) | (103,643 | ) | |||||||
Income (Loss) from continuing operations before income taxes | (1,387,204 | ) | (1,568,806 | ) | (2,107,077 | ) | (2,613,263 | ) | |||||||
Income Tax Benefit (Expense) | 393,765 | 351,944 | 639,034 | 691,988 | |||||||||||
Net Income (Loss) | $ | (993,439 | ) | $ | (1,216,862 | ) | $ | (1,468,043 | ) | $ | (1,921,275 | ) | |||
Basic & Diluted Loss per Common Share | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.02 | ) | |||
Weighted Average Common Shares Outstanding | 80,743,912 | 80,998,912 | 80,743,912 | 80,722,483 | |||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
June 30, 2010 (unaudited) | June 30, 2009 (unaudited) | September 30, 2010 (unaudited) | September 30, 2009 (unaudited) | |||||||||||
Operating Activities: | ||||||||||||||
Net Loss | $ | (474,602 | ) | $ | (704,413 | ) | ||||||||
Adjustments to reconcile net loss to net cash from operating activities: | ||||||||||||||
Deferred Income Tax Benefit | (245,269 | ) | (340,044 | ) | ||||||||||
Net (Loss) Income | $ | (1,468,043 | ) | $ | (1,921,275 | ) | ||||||||
Adjustments to reconcile net (loss) income to cash from operating activities: | ||||||||||||||
Income Tax (Benefit) Expense | (639,034 | ) | (691,988 | ) | ||||||||||
Depletion, Depreciation, & Amortization | 801,769 | 711,566 | 1,508,860 | 1,395,927 | ||||||||||
Stock based compensation | 38,210 | 146,171 | ||||||||||||
Non-employee stock based compensation | - | 580,500 | ||||||||||||
ARO Accretion | 10,141 | 10,750 | 20,282 | 43,274 | ||||||||||
Stock Based Compensation | 19,105 | 72,903 | ||||||||||||
Changes in Operating Assets and Liabilities | ||||||||||||||
Changes in Accrued Liabilities | 136,971 | (1,226 | ) | 293,077 | 26,826 | |||||||||
Change in Inventory | 7,728 | 7,490 | 12,172 | 5,069 | ||||||||||
Change in Related Party Receivables/Payables | (89,043 | ) | (339,658 | ) | (244,084 | ) | 194,691 | |||||||
Changes in Other Receivables | (2,087 | ) | (14,085 | ) | (447 | ) | (25,794 | ) | ||||||
Changes in Prepaid Expenses | (7,500 | ) | - | |||||||||||
Changes in Hedging Activity | 74,663 | - | 154,836 | 145,925 | ||||||||||
Changes in Revenue Payable | (3,808 | ) | - | |||||||||||
Change in Revenue Receivables | (163,706 | ) | (86,822 | ) | 149,800 | (45,173 | ) | |||||||
Change in Revenue Payable | 38,531 | - | ||||||||||||
Changes in Accounts Payable | 66,299 | 24,755 | 130,429 | 37,433 | ||||||||||
Net Cash provided (used) from operating activities | 173,000 | (658,784 | ) | (47,750 | ) | (108,414 | ) | |||||||
Investing Activities: | ||||||||||||||
Oil & Gas Drilling, Completing and Leasehold Acquisition Costs | (234,767 | ) | (134,836 | ) | 5,199 | (1,062,046 | ) | |||||||
Change in Related Party Payable related to drilling | - | - | ||||||||||||
Investment in Other Depreciable Assets | - | (113,988 | ) | - | (150,513 | ) | ||||||||
Net Cash used in continuing activities | (234,767 | ) | (248,824 | ) | ||||||||||
Note Receivable Collections (Advances) | 846 | - | ||||||||||||
Net Cash used in investing activities | 6,045 | (1,212,559 | ) | |||||||||||
Financing Activities | ||||||||||||||
Notes Payable Advances Net of Loan Fees | - | 1,000,000 | ||||||||||||
Net Cash provided by continuing activities | - | 1,000,000 | ||||||||||||
Notes Payable (Payments) Advances | - | 1,000,000 | ||||||||||||
Net Cash provided from financing activities. | - | 1,000,000 | ||||||||||||
Net (Decrease) Increase in cash | (61,767 | ) | 92,392 | |||||||||||
Net Decrease in cash | (41,705 | ) | (320,973 | ) | ||||||||||
Cash - Beginning of the period | 277,307 | 426,430 | 277,307 | 426,430 | ||||||||||
Cash - End of the period | $ | 215,540 | $ | 518,822 | $ | 235,602 | $ | 105,457 | ||||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, 2010 (unaudited) | June 30, 2009 (unaudited) | September 30, 2010 (unaudited) | September 30, 2009 (unaudited) | |||||||||
Supplemental Disclosure of Cash Flow Information | ||||||||||||
Cash paid during period for: | ||||||||||||
Interest | $ | 64,609 | $ | 139,771 | $ | 64,609 | $ | 118,709 | ||||
Income Taxes | $ | - | $ | - | $ | - | $ | - | ||||
Non Cash Investing and Financing Activities | ||||||||||||
Stock Based Compensation | $ | 19,105 | $ | 72,903 | $ | 38,102 | $ | 146,171 | ||||
Stock Based Consulting Fees | $ | - | $ | 580,500 | ||||||||
Settlement Period | Monthly Volumes | Fixed Price | Price Floor | Price Ceiling | ||||||||
Crude Oil Collars | ||||||||||||
7/01/10 - 12/31/10 | 2,000 | BBLS | N/A | $ | 65.00 | $ | 85.00 | |||||
Natural Gas Collars | ||||||||||||
7/1/10 - 12/31/10 | 20,000 | MMBTU | N/A | $ | 5.50 | $ | 6.50 |
Type of Contract | Balance Sheet Location | Estimated Fair Value | |||||
Crude Oil Collars | Other Current Liabilities | $ | 16,302 | ||||
Natural Gas Collars | Other Current Assets | (96,475 | ) | ||||
Total Current Derivative Liabilities | $ | (80,173 | ) | ||||
Crude Oil Collars | Other Non-Current Liabilities | $ | - | ||||
Natural Gas Collars | Other Non-Current Liabilities | - | |||||
Total Non-Current Derivative Liabilities | $ | - | |||||
Total Derivative Liabilities | (80,173 | ) | |||||
Fiscal Years Ending March 31, | Fiscal Years Ending March 31, | |||||||||||||||||||||||||||||
2011 | 2012 | 2013 | Thereafter | Total | 2011 | 2012 | 2013 | Thereafter | Total | |||||||||||||||||||||
Office Lease Payments | $ | 119,416 | $ | - | $ | - | $ | - | $ | 119,416 | $ | 74,635 | $ | - | $ | - | $ | - | $ | 74,635 | ||||||||||
Notes Payable - Related Parties | - | - | 3,518,924 | - | 3,518,924 | - | - | 3,518,924 | - | 3,518,924 | ||||||||||||||||||||
Senior Secured Note Payable | 10,800,000 | - | - | - | 10,800,000 | 10,800,000 | - | - | - | 10,800,000 | ||||||||||||||||||||
$ | 10,919,416 | $ | - | $ | 3,518,924 | $ | - | $ | 14,438,340 | $ | 10,874,635 | $ | - | $ | 3,518,924 | $ | - | $ | 14,393,559 | |||||||||||
REOSTAR ENERGY CORPORATION | |
By /s/ Scott D. Allen | |
Scott D. Allen, Chief Financial Officer (Principal Financial Officer and duly authorized signatory) | |