FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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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
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 NONE
...............................................................................
(Address of principal executive offices) (Zip Code)
809-295-1422
...............................................................................
(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.
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X Yes No
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The number of shares outstanding of the issuer's single class of common
stock as of July 15, 1996 was 40,046,358.
PART 1 - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
CONSOLIDATED BALANCE SHEET
(Expressed in U.S. dollars)
(unaudited)
June 30, December 31,
1996 1995
----- ----
ASSETS
Current assets:
Cash and cash equivalents $ 5,891,244 $ 247,452
Accounts and interest receivable 25,927 6,836
U.S. government securities 497,969 -
Prepaid insurance 118,159 125,342
----------- ------------
Total current assets 6,533,299 379,630
Unproved oil, gas and mineral properties (full cost method) 3,707,405 3,688,568
Other 25,386 59,708
----------- -------------
$10,266,090 $ 4,127,906
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 93,397 $ 71,212
------------- --------------
Minority interests -
-
Shareholders' equity:
Common stock, par value 12(cent) per share:
Authorized - 100,000,000 shares
Outstanding - 40,046, 358 and 33,363,632 shares, respectively 4,805,563 4,003,636
Capital in excess of par value 28,203,970 22,395,084
---------- -----------
33,009,533 26,398,720
Deficit accumulated during development stage (22,836,840) (22,342,026)
------------ ------------
10,172,693 4,056,694
---------- -------------
$10,266,090 $ 4,127,906
=========== =============
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
CONSOLIDATED STATEMENT OF OPERATIONS
(Expressed in U.S. dollars)
(unaudited)
From inception
Three months ended Six months ended (Jan. 31, 1953)
------------------ ----------------
June 30, June 30, to June 30,
-------- -------- -----------
1996 1995 1996 1995 1996
---- ---- ---- ---- ----
Interest and other income $34,344 $ 4,190 $ 35,192 $ 8,692 $3,069,480
------- --------- ------- -------- ----------
Expenses:
Legal fees and costs 121,741 85,365 221,509 163,146 9,013,802
Administrative expenses 81,413 80,230 166,004 182,134 5,748,937
Salaries 36,167 36,167 75,667 70,667 2,519,278
Shareholder communications 47,604 49,547 61,175 70,334 3,216,014
Exploration costs 5,628 681 5,651 681 678,754
Lawsuit judgments - - - - 1,941,916
Minority interests - - - - (632,974)
Other - - - - 364,865
Contractual services - - - - 2,155,728
-------------- --------------- ------- -------- ----------
292,553 251,990 530,006 486,962 25,006,320
-------- --------- ------- -------- ----------
Net loss $(258,209) $(247,800) $(494,814) $(478,270)
========== ========== ========== ==========
Deficit accumulated during
development stage $22,836,840
Average number of shares
outstanding 36,709,995 33,363,632 35,275,839 33,363,632
========== ========== ========== ==========
Net loss per share $(.01) $(.01) $(.01) $(.01)
====== ====== ====== ======
PART 1 - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in U.S. Dollars)
(unaudited)
From inception
Six months ended (Jan. 31, 1953)
June 30, to June 30,
1996 1995 1996
----- ----- ----
Operating activities:
Net loss $(494,814) $(478,270) $(22,836,840)
Adjustments to reconcile net loss
to net cash used for operating activities:
Minority interest - - (632,974)
Exploration and other - - 755,974
Net change in:
Accounts receivable (19,090) 4,125 (25,927)
U.S. Government securities (497,969) - (497,969)
Prepaid insurance 7,183 7,708 (118,159)
Current liabilities 22,185 (119) 93,397
Other 34,321 - 473,519
----------- --------------- -------------
Net cash used for operating activities (948,184) (466,556) (22,788,979
----------- ---------- -----------
Investing activities:
Additions to oil, gas, and mineral
properties net of assets acquired
for common stock (18,837) - (3,707,405)
Reimbursement of lease rentals and
other expenses - - 1,243,086
Purchase of fixed assets - - (61,649)
------------ ---------------- --------------
Net cash used for investing activities (18,837) - (2,525,968)
----------- ---------------- ------------
Financing activities:
Cash proceeds from sale of
common stock less expenses 6,357,313 - 26,343,192
Shares issued upon exercise of
options 13,500 - 872,999
Sale of shares by subsidiary - - 750,000
Sale of subsidiary shares 240,000 360,000 3,240,000
---------- ----------- -----------
Net cash provided by
financing activities 6,610,813 360,000 31,206,191
--------- ----------- ----------
Net increase (decrease) in cash
and cash equivalents 5,643,792 (106,556) 5,891,244
Cash and cash equivalents at
beginning of period 247,452 553,236 -
---------- ---------- -----------------
Cash and cash equivalents at
end of period $5,891,244 $ 446,680 $5,891,244
========== ========== ==========
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS LTD.
June 30, 1996
ITEM 1 - Financial Statements
The information for the three and six month periods ended June 30, 1996 and
1995 is unaudited, but includes all adjustments which Coastal Caribbean Oils &
Minerals, Ltd. (the "Company") considers necessary for a fair statement of the
results of operations for those periods. The consolidated financial statements
include the Company's 63.4% owned subsidiary, Coastal Petroleum Company
("Coastal Petroleum").
The Company's principal assets are oil, gas, and mineral leases which total
$3,707,405 at June 30, 1996. The Company has been and continues to be involved
in several proceedings which have limited the Company's ability to commence
development activities on its unproved oil and gas properties or obtain
compensation for certain property rights it believes have been confiscated.
These consolidated financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or amounts and classification of liabilities that may result from the
outcome of this uncertainty.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operation
Liquidity and Capital Resources
Short Term Liquidity
At June 30, 1996, Coastal Caribbean had working capital of approximately
$6,300,000. These funds are expected to be used for general corporate purposes,
including exploration and development and to continue the litigation against the
State of Florida.
On May 29, 1996, the Company concluded its offering of approximately 6.7
million shares to its shareholders at $1.00 per share. The offering was
oversubscribed and the proceeds to the Company were approximately $6.4 million
after the expenses of the offering.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS LTD.
June 30, 1996
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operation (Cont'd)
Long Term Liquidity
The Company estimates that as much as $1,200,000 over a three-year period
may be required in connection with the Florida litigation. The Company expects
that the Florida litigation could continue for at least the next three years,
although the State may take actions that could shorten or lengthen that period.
The Company is planning a program to evaluate the Company's leases which is
estimated to cost approximately $2 million and is subject to the outcome of the
Florida litigation.
The Company's oil and gas properties are currently unproved and
undeveloped. The Company has applied for a drilling permit from the State of
Florida to drill an exploratory well in the water near Apalachicola, Florida.
The State of Florida has denied the Company's application. If the Company is
successful in obtaining a state drilling permit, then the Company must also do
the following:
1. Obtain a federal drilling permit.
2. Finance drilling of the well, which is estimated to cost between $10-15
million.
3. Begin drilling the well within one year of the date the state permit is
issued.
The Company does not currently have assets sufficient to fund these
expenditures to drill the exploration well, if a permit were granted. If oil
and/or gas is discovered in commercial quantities, a production program would
require additional permitting and construction of production, storage and
delivery systems. The Company may seek additional financing to fund these
development expenditures.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS LTD.
June 30, 1996
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operation (Cont'd)
Results of Operations
Three month period ended June 30, 1996 vs. June 30, 1995
The Company incurred a loss of $258,209 for the second quarter of 1996,
compared to a loss of $247,800 for the 1995 quarter.
Interest income and other income increased from $4,190 in 1995 to $34,344
in 1996 due to the funds available for investment from the May 1996 rights
offering to shareholders.
Legal fees and costs increased 43 % to $121,741 for the second quarter of
1996, compared to $85,365 in the prior period. These costs increased due to (1)
the various appeals filed in connection with the State of Florida's opposition
to the issuance of a drilling permit and (2) the May 6, 1996 trial to determine
whether there has been a taking of the Company's royalty interests.
Exploration costs increased from $681 to $5,628 in connection with the
Company's program to upgrade its unproved oil and gas properties.
Six month period ended June 30, 1996 vs. June 30, 1995
The Company incurred a loss of $494,814 for the second quarter of 1996,
compared to a loss of $478,270 for the 1995 quarter.
Interest income and other income increased from $8,692 in 1995 to $35,192
in 1996 due to the funds available for investment from the May 1996 rights
offering to shareholders.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS LTD.
June 30, 1996
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operation (Cont'd)
Results of Operations
Legal fees and costs increased 36% to $221,509 for the second quarter of
1996, compared to $163,146 in the prior period. These costs increased due to (1)
the various appeals filed in connection with the State of Florida's opposition
to the issuance of a drilling permit and (2) the May 6, 1996 trial to determine
whether there has been a taking of the Company's royalty interests.
Administrative expenses decreased 9% to $166,004 for the 1996 period
compared to $182,134 for the 1995 period. The decrease is attributable to lower
administrative, accounting and travel expenses incurred during the current
period.
Salary expense increased 7% to $75,667 from $70,667 due to an increase in
compensation levels.
Shareholder communications decreased 13% to $61,175 in 1996 from $70,334
during the 1995 period. The decrease in costs is attributable to cost reduction
measures including the savings from utilizing the recent prospectus as the
Company's 1995 annual report.
Exploration costs increased from $681 to $5,651 in 1996 in connection with
the Company's program to upgrade its unproved oil and gas properties.
PART II - FINANCIAL INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
June 30, 1996
Item 1. Legal Proceedings.
On May 10, 1996, Florida's First District Court of Appeal (the "Court of
Appeal") denied the State of Florida's motion for rehearing, rehearing en banc
or certification to the Florida Supreme Court with respect to the Court of
Appeal's April 8, 1996 decision. On that date, the Court had overturned a state
order that required a $1.9 surety bond as a condition for the issuance of a
drilling permit to Coastal Petroleum Company, a majority owned subsidiary.
On June 7, 1996, the State of Florida filed a brief with the Florida
Supreme Court claiming that the Court had jurisdiction to review the Court of
Appeal decision. On June 27, the Company filed its brief in opposition to the
State's claim of jurisdiction. The Company does not know when the Florida
Supreme Court will decide whether it will review this case.
On June 7, 1996, the Company and the State of Florida filed closing
arguments in the royalty interest taking case. The Company is awaiting a
decision on the legal issue of whether there has been a "taking" by the State of
Coastal Petroleum's royalty interest acreage property.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) On June 17, 1996, the Company held its Annual Meeting of Shareholders.
(b) Directors Charles T. Collis, Benjamin W. Heath, John D. Monroe, C. Dean
Reasoner and Phillip W. Ware Were reelected for the ensuing year. The results of
the votes cast by the Company's shareholders were as follows:
Number of Shares Voted Number of Shareholders Voting
Nominee For Withheld For Withheld
Charles T. Collis 25,984,684 284,129 2,993 147
Benjamin W. Heath 25,974,309 294,504 2,998 152
John D. Monroe 25,969,522 299,291 2,991 149
C. Dean Reasoner 25,975,201 293,612 2,993 147
Phillip W. Ware 25,977,584 291,229 2,999 141
PART II - FINANCIAL INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
June 30, 1996
Item 4. Submission of Matters to a Vote of Security Holders (Cont'd).
(c) The firm of Ernst & Young LLP was approved as the independent auditors
for the fiscal year ending December 31, 1996. The results of the votes cast by
the Company's shareholders were as follows:
Number of Shares Voted Number of Shareholders Voting
For Against Abstain For Against Abstain
26,027,182 108,481 133,150 2,975 48 117
Item 6. Exhibits and Reports on Form 8-K.
(a) On April 8, 1996, the Company filed a Report on Form 8-K to report
that on April 4, 1996, Florida's First District Court of Appeal overturned a
State of Florida order that required a $1.9 billion surety bond as a condition
for the issuance of a drilling permit to Coastal Petroleum Company, a
majority-owned subsidiary.
(b) On May 14, 1996, the Company filed a Report on Form 8-K to report
that Florida's First District Court of Appeal denied the State of Florida's
motion for rehearing, rehearing en banc or certification to the Florida Supreme
Court with respect to the April 4, 1996 decision of Florida's First District
Court of Appeal.
(c) On June 3, 1996, the Company filed a Report on Form 8-K to report
that on May 31, 1996, the Company announced that the offering of 6,672,726
shares of its common stock at $1.00 per share was oversubscribed.
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: July 16,1996 By /s/ James R. Joyce
James R. Joyce
Treasurer and Chief Accounting and
Financial Officer