UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to _________________
Commission file number 1-4668
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COASTAL CARIBBEAN OILS & MINERALS, LTD.
................................................................................
(Exact name of registrant as specified in its charter)
BERMUDA NONE
.................................. ...........................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Clarendon House, Church Street, Hamilton, Bermuda HM 11
................................................................................
(Address of principal executive offices) (Zip Code)
441-295-1422
................................................................................
(Registrant's telephone number, including area code)
................................................................................
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
l934 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
The number of shares outstanding of the issuer's single class of common
stock as of November 12, 2001 was 43,468,329.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
SEPTEMBER 30, 2001
Table of Contents
PART I - FINANCIAL INFORMATION
Page
ITEM 1 Financial Statements
Consolidated balance sheets at September 30, 2001
and December 31, 2000 3
Consolidated statements of operations from January 31, 1953
(inception) to September 30, 2001 and for the three and nine
months ended September 30, 2001 and 2000 4
Consolidated statements of cash flows from January 31, 1953
(inception) to September 30, 2001 and for the nine months
ended September 30, 2001 and 2000 5
Notes to consolidated financial statements 6
ITEM 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
ITEM 3 Quantitative and Qualitative Disclosure About Market Risk 10
PART II - OTHER INFORMATION
ITEM 6 Exhibits and Reports on Form 8-K 11
Signatures 12
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars)
(A Bermuda Corporation)
A Development Stage Company
September 30, December 31,
2001 2000
ASSETS (Unaudited) (Note)
Current assets:
Cash and cash equivalents $ 1,203,830 $ 2,958,674
Interest and accounts receivable 12,665 41,520
Prepaid expenses 386,609 323,897
----------- ---------
Total current assets 1,603,104 3,324,091
----------- ---------
Unproved oil, gas and mineral properties (full cost method) 4,864,773 4,807,722
Other - 27,866
----------- ---------
Total assets $ 6,467,877 $ 8,159,679
=========== ===========
LIABILITIES, MINORITY INTERESTS AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 279,685 $ 193,176
----------- ------------
Minority interests - -
Shareholders' equity:
Common stock, par value $.12 per share:
Authorized - 250,000,000 shares
Outstanding - 43,468,329 shares 5,216,199 5,216,199
Capital in excess of par value 31,497,362 31,497,362
----------- ----------
36,713,561 36,713,561
Deficit accumulated during development stage (30,525,369) (28,747,058)
------------ ------------
Total shareholders' equity 6,188,192 7,966,503
----------- -----------
Total liabilities, minority interests and shareholders' equity $ 6,467,877 $ 8,159,679
=========== -----------
Note: The balance sheet at December 31, 2000 has been derived from
the audited consolidated financial statements at that date.
See accompanying notes.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. dollars)
(A Bermuda Corporation)
A Development Stage Company
(Unaudited)
For the
period from
Jan. 31, 1953
(inception)
to Sept. 30,
Three months ended Sept. 30, Nine months ended Sept. 30, 2001
---------------------------- --------------------------- --------------
2001 2000 2001 2000
---- ---- ---- ----
Interest and other income $ 12,407 $ 3,622 $ 73,153 $ 23,094 $ 3,864,276
--------- --------- --------- --------- ------------
Expenses:
Legal fees and costs 327,643 138,415 1,236,604 392,498 14,247,117
Administrative expenses 121,254 129,469 402,530 415,373 8,276,191
Salaries 37,950 37,951 113,850 113,851 3,334,478
Shareholder communications 12,170 9,200 98,000 97,893 3,877,632
Exploration costs - 1,981 480 8,408 824,692
Lawsuit judgments - - - - 1,941,916
Minority interests - - - - (632,974)
Other - - - - 364,865
Contractual services - - - 2,155,728
--------------- --------------- ---------------- ----------------- ------------
-
499,017 317,016 1,851,464 1,028,023 34,389,645
--------- --------- --------- ----------- -----------
Net loss $(486,610) $(313,394) $(1,778,311) $(1,004,929)
========== ========== ============ ============
Deficit accumulated during
development stage $(30,525,369)
=============
Average number of shares
outstanding (basic &
diluted) 43,468,329 40,056,358 43,468,329 40,056,358
========== ========== ========== ==========
Net loss per share (basic & $(.01) $(.01) $(.04) $(.03)
====== ====== ====== ======
diluted)
See accompanying notes.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
(A Bermuda Corporation)
A Development Stage Company
(Unaudited)
For the
period from
Jan. 31, 1953
Nine months ended (inception)
September 30, to Sept. 30,
2001 2000 2001
Operating activities:
Net loss $(1,778,311) $(1,004,929) $(30,525,369)
Adjustments to reconcile net loss
to net cash used in operating activities:
Minority interest - - (632,974)
Exploration and other - - 755,974
Compensation recognized for stock options grant - 75,000 75,000
Net change in:
Interest and accounts receivable 28,855 18,365 (12,665)
Prepaid expenses (62,712) (7,031) (386,609)
Current liabilities 86,509 298,013 279,685
Other 27,866 (177,683) 498,906
---------- ---------- ---------------
Net cash used in operating activities (1,697,793) (798,265) (29,948,052)
------------ ---------- --------------
Investing activities:
Additions to oil, gas, and mineral properties
net of assets acquired for common stock (57,051) (54,355) (4,864,773)
Reimbursement of lease rentals and other expenses - - 1,243,085
Proceeds of matured marketable securities - 390,941 -
Purchase of fixed assets (61,649)
---------------- ---------------- ----------------
- -
Net cash provided by (used in) investing activities (57,051) 336,586 (3,683,337)
------------- ----------- --------------
Financing activities:
Cash proceeds from sale of
common stock less expenses - - 29,480,970
Shares issued upon exercise of options - - 884,249
Sale of shares by subsidiary - - 750,000
Sale of subsidiary shares 3,720,000
---------------- ---------------- -------------
- -
Net cash provided by financing activities 34,835,219
---------------- ---------------- ----------
- -
Net (decrease) increase in cash and cash equivalents (1,754,844) (461,679) 1,203,830
Cash and cash equivalents at beginning of period 2,958,674 651,124
---------- -----------
-
Cash and cash equivalents at end of period $1,203,830 $ 189,445 $ 1,203,830
========== ========== ===========
See accompanying notes.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART I - FINANCIAL INFORMATION
September 30, 2001
ITEM 1 - Financial Statements
Note 1. Basis of Presentation
---------------------
The accompanying unaudited condensed consolidated financial statements
include the Company's 59.25% owned subsidiary, Coastal Petroleum Company
(Coastal Petroleum) and have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included. All such adjustments are of a normal recurring nature. Operating
results for the three and nine months ended September 30, 2001 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2001. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 2000.
Note 2. Litigation
----------
On January 16, 2001, Coastal Petroleum Company filed a complaint in the
Leon County Circuit Court, Florida against the State of Florida seeking
compensation for the State's taking of its property rights to explore for oil
and gas within its state Lease 224-A.
On April 24, 2001, the Leon County Circuit trial judge granted certain
royalty holders with overriding royalties, which aggregate approximately 4% on
State Lease 224-A, the right to intervene on a limited basis in the takings
lawsuit, which was filed on January 16, 2001. On May 22, 2001, the royalty
holders appealed the Circuit Court's order granting them limited intervention to
the First District Court of Appeal, claiming the order denied them the right to
fully participate in the case until after final judgment and that the court
erroneously found that the royalty holders lack an ownership interest in
Coastal's lease. On June 12, 2001, the Court of Appeal ordered the royalty
holders to show cause why the appeal should not be dismissed for lack of
jurisdiction. The royalty holders filed a response to the Court of Appeal on
June 21, 2001, Coastal Petroleum filed its reply on July 2, 2001 and the State
of Florida filed its reply on July 5, 2001. The Court of Appeal is currently
considering the matter.
ITEM 1 - Financial Statements (Cont'd)
Note 2. Litigation (Cont'd)
-------------------
On April 26, 2001, the Leon County Circuit trial judge denied the State
of Florida's motions to dismiss the takings lawsuit, which was filed on January
16, 2001. Discovery in the case is now proceeding.
On October 1, 2001, the Leon County Circuit Court trial judge on its
own motion issued an order scheduling a case management conference for November
27, 2001. The order provides that counsel should be prepared to discuss a
discovery schedule, the setting of a trial date, and several other matters.
At September 30, 2001, the amount of unproved oil, gas and mineral
properties totaled $4.9 million, which costs the Company expects to recover.
However, no assurances can be given that Coastal Petroleum or Coastal Caribbean
will prevail in the Florida litigation, or that they will recover compensation
for any of their claims.
Note 3. Earnings (loss) per share
-------------------------
Earnings per common share are based upon the weighted average number of
common and common equivalent shares outstanding during the period. The Company's
basic and diluted calculations of EPS are the same because the exercise of
options is not assumed in calculating diluted EPS, since the Company's
continuing losses would have an anti-dilutive effect.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operation
--------------------
Liquidity and Capital Resources
Statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations which are not historical in nature
are intended to be, and are hereby identified as, "forward looking statements"
for purposes of the "Safe Harbor Statement" under the Private Securities
Litigation Reform Act of 1995. The Company cautions readers that forward looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those indicated in the forward looking
statements. Among the risks and uncertainties are:
1. the uncertainty of any decision favorable to Coastal Petroleum
in its litigation against the State of Florida; and
2. the substantial cost of continuing the litigation.
Short Term Liquidity
At September 30, 2001, Coastal Caribbean had approximately $1.2 million
of cash and cash equivalents available and this amount should be sufficient to
fund the Company's operations in the year 2001. These funds are expected to be
used for general corporate purposes, including any required exploration and
development and to continue the litigation against the State of Florida.
Long Term Liquidity
On January 16, 2001, Coastal Petroleum Company filed a complaint in the
Leon County Circuit Court, Florida against the State of Florida seeking
compensation for the State's taking of its property rights to explore for oil
and gas within its state Lease 224-A. The Company expects that the cost of the
litigation will be substantial. If the litigation is prolonged, the Company may
be required to seek additional financing.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operation
--------------------
Results of Operations
- ---------------------
Three months ended September 30, 2001 vs. September 30, 2000
- ------------------------------------------------------------
The Company incurred a loss of $487,000 for the 2001 quarter, compared
to a loss of $313,000 for the comparable 2000 quarter.
Interest income and other income increased 244% from $3,600 in the 2000
quarter to $12,400 in the 2001 quarter because of the funds realized and
invested from the October 2000 sale of common stock to the Company's
shareholders.
Legal fees and costs increased 138% to $328,000 for the 2001 quarter
from $138,000 in the prior period. Legal fees and costs increased in the 2001
period in connection with Coastal Petroleum Company's lawsuit against the State
of Florida seeking compensation for the State's taking of its property rights to
explore for oil and gas within its state Lease 224-A. The Company expects that
the cost of the litigation will be substantial.
Administrative expenses decreased 6% during the 2001 period to $121,000
from $129,000 in the 2000 period.
Salaries did not change during the periods and remained at $38,000 in
the 2001 quarter.
Shareholder communications increased 33% during the 2001 period to
$12,000 from $9,000 in the 2000 period because of a timing difference between
the periods in the mailing of the materials for the annual meeting of
shareholders.
Exploration costs decreased from $2,000 in the 2000 quarter to $0 in
the 2001 quarter.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operation
--------------------
Nine months ended September 30, 2001 vs. September 30, 2000
- -----------------------------------------------------------
The Company incurred a loss of $1,778,000 for the 2001 period, compared
to a loss of $1,005,000 for the comparable 2000 period.
Interest income and other income increased 217% from $23,000 in 2000 to
$73,000 in 2001 because of the funds realized and invested from the October 2000
sale of common stock to the Company's shareholders.
Legal fees and costs increased 216% to $1,237,000 for 2001 from
$392,000 in the prior period. Legal fees and costs increased in the 2001 period
in connection with Coastal Petroleum Company's lawsuit against the State of
Florida seeking compensation for the State's taking of its property rights to
explore for oil and gas within its state Lease 224-A. The Company expects that
the cost of the litigation will be substantial.
Administrative expenses decreased 3% in 2001 to $403,000 from $415,000
in the 2000 period.
Salaries did not change during the periods and remained at $114,000 in
2001.
Shareholder communications did not change during the periods and
remained at $98,000 in 2001.
Exploration costs decreased from $8,400 in the 2000 period to $500 in
2001.
ITEM 3 - Quantitative and Qualitative Disclosure About Market Risk
- ------ ---------------------------------------------------------
The Company does not have any significant exposure to market risk as
the only market risk sensitive instruments are its investments in marketable
securities classified as cash and cash equivalents. At September 30, 2001, the
carrying value of such investments was approximately $1.09 million, the fair
value was $1.09 million and the face value was $1.1 million. Since the Company
expects to hold the investments to maturity, the maturity value should be
realized.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
PART II - OTHER INFORMATION
September 30, 2001
ITEM 6 - Exhibits and Reports on Form 8-K
- ------ --------------------------------
(a) Exhibits
None.
(b) Reports on Form 8-K
None
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
September 30, 2001
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.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
---------------------------------------
Registrant
Date: November 12, 2001 By/s/ James R. Joyce
----------------------------------------
James R. Joyce
Treasurer and Chief Accounting and
Financial Officer