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 March 31, 1997
-----------------------------
[ ] 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.
X Yes No
The number of shares outstanding of the issuer's single class of common
stock as of April 9, 1997 was 40,056,358.
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)
March 31, December 31,
1997 1996
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 272,727 $ 424,330
Accounts and interest receivable 125,039 105,115
U.S. Government securities 3,051,981 3,341,820
Prepaid insurance 155,853 178,868
------------ ------------
Total current assets 3,605,600 4,050,133
----------- -----------
U.S. Government securities 1,803,377 2,001,441
Unproved oil, gas and mineral properties
(full cost method) 4,136,556 3,943,520
Other 26,374 25,644
------------ ------------
$ 9,571,907 $10,020,738
============ ============
LIABILITIES, MINORITY INTERESTS AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 82,836 $ 262,422
------------ ------------
Minority interests - -
------------ ------------
Shareholders' equity:
Common stock, par value 12(cent) per share:
Authorized - 100,000,000 shares
Outstanding - 40,056, 358 and 40,046,358 shares 4,806,763 4,805,563
Capital in excess of par value 28,453,033 28,442,983
------------ ------------
33,259,796 33,248,546
Deficit accumulated during development stage (23,770,725) (23,490,230)
------------ ------------
Total shareholders' equity 9,489,071 9,758,316
------------ ------------
$ 9,571,907 $10,020,738
============ ============
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 (Jan. 31, 1953)
March 31, to March 31,
1997 1996 1997
---- ---- ----
Interest and other income $ 82,458 $ 848 $3,309,115
--------- --------- -----------
Expenses:
Legal fees and costs 158,212 99,768 10,581,336
Administrative expenses 123,390 84,591 6,044,917
Salaries 39,000 39,500 2,633,278
Shareholder communications 34,799 13,571 3,283,186
Exploration costs 7,552 23 707,588
Lawsuit judgments - - 1,941,916
Minority interests - - (632,974)
Other - - 364,865
Contractual services - - 2,155,728
--------- --------- -----------
362,953 237,453 27,079,840
--------- --------- -----------
Net loss $(280,495) $(236,605)
========== ==========
Deficit accumulated during
development stage $23,770,725
============
Average number of shares
outstanding 40,053,858 33,363,632
========== ==========
Net loss per share $(.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)
Three months ended (Jan. 31, 1953)
March 31, to March 31,
1997 1996 1997
---- ---- ----
Operating activities:
Net loss $(280,495) $(236,605) $(23,770,725)
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 (19,924) 6,356 (125,039)
U.S. Government securities 289,839 - (3,051,981)
Prepaid insurance 23,015 (908) (155,853)
Current liabilities (179,586) 20,980 82,836
Other (730) (49,102) 472,531
---------- ----------- ------------
Net cash used for operating activities (167,881) (259,279) (26,425,231)
---------- ----------- ------------
Investing activities:
Additions to oil, gas, and mineral
properties net of assets acquired
for common stock (193,036) - (4,136,556)
Reimbursement of lease rentals and
other expenses - 1,243,086
Sale (purchase) U.S. Government securities 198,064 - (1,803,377)
Purchase of fixed assets - - (61,649)
---------- ----------- ------------
Net cash provided by (used for) investing activities
5,028 - (4,758,496)
---------- ----------- ------------
Financing activities:
Cash proceeds from sale of
common stock less expenses - - 26,342,205
Shares issued upon exercise of
options 11,250 - 884,249
Sale of shares by subsidiary - - 750,000
Sale of subsidiary shares - 240,000 3,480,000
---------- ----------- ------------
Net cash provided by
financing activities 11,250 240,000 31,456,454
---------- ----------- ------------
Net increase (decrease) in cash
and cash equivalents (151,603) (19,279) 272,727
Cash and cash equivalents at
beginning of period 424,330 247,452 -
---------- ----------- ------------
Cash and cash equivalents at
end of period $ 272,727 $228,173 $ 272,727
========= ======== ==========
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS LTD.
March 31, 1997
ITEM 1 - Financial Statements
The information for the three month periods ended March 31, 1997 and
1996 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 61.3% owned subsidiary, Coastal Petroleum Company
("Coastal Petroleum").
The Company's principal assets are oil, gas, and mineral leases which
total $4.1 million at March 31, 1997. 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 March 31, 1997, Coastal Caribbean had working capital of
approximately $5.3 million. 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.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS LTD.
March 31, 1997
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 $500,000 per year may be required
in connection with the Florida litigation. The Company expects that the Florida
litigation could continue at least through 1998, although the State may take
actions that could shorten or lengthen that period. The Company has a program to
evaluate the Company's leases which is estimated to cost approximately $500,000
for 1997 and $1 million for the 1998-1999 period, and is subject to the outcome
of the Florida litigation. During 1997, the Company has spent approximately
$200,000 under its continuing program to identify potential drilling prospects.
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 resisted the issuance of a drilling permit. 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 would be required to seek additional financing or
partners to fund these expenditures.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS LTD.
March 31, 1997
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operation (Cont'd)
-----------------------------
Results of Operations
Three month period ended March 31, 1997 vs. March 31, 1996
The Company incurred a loss of $280,496 for the 1997 quarter, compared
to a loss of $236,605 for the comparable 1996 quarter.
Interest income and other income increased from $800 in 1996 to $82,000
in 1997 due to the funds available for investment from the May 1996 rights
offering to shareholders.
Legal fees and costs increased 59% to $158,000 for the 1997 quarter,
compared to $100,000 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 appeal of the adverse decision
that there has not been a taking of the Company's royalty interests.
Administrative expenses increased 46% to $123,000 in 1997 from $85,000
in the prior quarter. The primary reason for the increase is the first time
purchase of directors' and officers' liability insurance in 1996. In addition,
auditing fees also increased during the period.
Shareholder communications increased 156% from $14,000 in 1996 to
$35,000 in 1997. In 1996, the Company saved the cost of printing and mailing a
separate annual report by utilizing the May 1996 rights offering prospectus in
lieu of an annual report.
Exploration costs increased from nil in 1996 to $8,000 in 1997 in
connection with the Company's continuing program to identify potential drilling
prospects.
PART II - FINANCIAL INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
March 31, 1997
ITEM 5 - Other Information
On April 21, 1997, Lykes Minerals Corp. is expected to exercise its
final option to acquire six shares of Coastal Petroleum Company ("CPC") for
$240,000. At the date of purchase, Lykes will have acquired a total 26.7%
interest in CPC at a cost of $3,120,000. The purchase will reduce the Company's
interest in CPC from 61.3% to 59.3%.
On April 7, 1997, Mr. Nicholas B. Dill was elected a director of the
Company to fill the vacancy created by Mr. C. Dean Reasoner's resignation.
Mr. Dill, age 64, has been a partner of the law firm of Conyers, Dill & Pearman,
Hamilton, Bermuda, since 1963. Mr. Dill is a director of a number of private
Bermuda companies and specializes in international corporate law.
ITEM 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) On March 17, 1997, the Company filed a Current Report on Form 8-K
to report that Florida's First District Court of Appeal denied Coastal Petroleum
Company's motion for clarification of an earlier decision.
(e) On March 21, 1997, the Company filed a Current Report on
Form 8-K to report that on March 20, 1997, Mr. C. Dean Reasoner, 79, resigned as
a director of the Company for health related reasons.
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: April 15, 1997 By /s/ James R. Joyce
James R. Joyce
Treasurer and Chief Accounting and
Financial Officer