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, 1999
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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 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 October 25, 1999 was 40,056,358.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
CONSOLIDATED BALANCE SHEET
(Expressed in U.S. dollars)
(unaudited)
September 30, December 31,
1999 1998
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 595,856 $ 52,480
Accounts and interest receivable 30,908 52,634
Marketable securities 359,415 828,839
Prepaid expenses 321,360 314,280
------------ ------------
Total current assets 1,307,539 1,248,233
------------ ------------
Marketable securities 400,000 1,300,000
Unproved oil, gas and mineral properties (full cost method) 4,760,836 4,735,619
Other 27,246 27,198
------------ ------------
Total assets $ 6,495,621 $ 7,311,050
============ ============
LIABILITIES, MINORITY INTERESTS AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 53,582 $ 67,299
------------ ------------
Minority interests - -
Shareholders' equity:
Common stock, par value $.12 per share:
Authorized - 250,000,000 shares
Outstanding - 40,056,358 shares 4,806,763 4,806,763
Capital in excess of par value 28,693,033 28,693,033
------------ ------------
33,499,796 33,499,796
Deficit accumulated during development stage (27,057,757) (26,256,045)
------------ ------------
Total shareholders' equity 6,442,039 7,243,751
------------ ------------
Total liabilities, minority interests and shareholders' equity $ 6,495,621 $ 7,311,050
============ ============
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
CONSOLIDATED STATEMENT OF OPERATIONS
(Expressed in U.S. dollars)
(unaudited)
From inception
Three months ended Nine months ended (Jan. 31, 1953)
September 30, September 30, to Sept. 30,
1999 1998 1999 1998 1999
--------- --------- --------- --------- -----------
Interest and other income $ 17,356 $ 37,300 $ 63,293 $ 136,081 $ 3,736,597
--------- --------- --------- --------- -----------
Expenses:
Legal fees and costs 85,461 93,425 289,128 356,369 12,260,739
Administrative expenses 95,871 123,214 346,300 376,178 7,210,610
Salaries 37,950 40,250 119,600 120,750 3,030,878
Shareholder communications 17,008 29,873 92,545 120,830 3,661,500
Exploration costs 5,284 1,512 17,432 18,387 801,092
Lawsuit judgments - - - - 1,941,916
Minority interests - - - - (632,974)
Other - - - - 364,865
Contractual services - - - - 2,155,728
--------- --------- --------- --------- -----------
241,574 288,274 865,005 992,514 30,794,354
--------- --------- --------- --------- -----------
Net loss $(224,218) $(250,974) $(801,712) $(856,433) $27,057,757
========== ========== ========== ========== ===========
Deficit accumulated during
development stage
Average number of shares
Outstanding (Basic & Diluted) 40,056,358 40,056,358 40,056,358 40,056,358
========== ========== ========== ==========
Net loss per share (Basic & Diluted) $(.01) $(.01) $(.02) $(.02)
====== ====== ====== ======
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in U.S. Dollars)
(unaudited)
From inception
Nine months ended (Jan. 31, 1953)
September 30, to Sept. 30,
1999 1998 1999
---------- ----------- ---------------
Operating activities:
Net loss $(801,712) $(856,433) $(27,057,757)
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 21,726 52,638 (30,908)
Prepaid expenses (7,080) (114,498) (321,360)
Current liabilities (13,717) (11,872) 53,582
Other (48) (343) 471,660
---------- ----------- ------------
Net cash provided by (used for) operating activities (800,831) (930,508) (26,761,783)
---------- ----------- ------------
Investing activities:
Additions to oil, gas, and mineral properties
net of assets acquired for common stock (25,217) (299,661) (4,760,836)
Reimbursement of lease rentals and other expenses - - 1,243,085
Marketable securities (net) 1,369,424 1,499,522 (759,415)
Purchase of fixed assets - - (61,649)
---------- ----------- ------------
Net cash provided by investing activities 1,344,207 1,199,861 (4,338,815)
---------- ----------- ------------
Financing activities:
Cash proceeds from sale of
common stock less expenses - - 26,342,205
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 - - 31,696,454
---------- ----------- ------------
Net increase in cash and cash equivalents 543,376 269,353 595,856
Cash and cash equivalents at beginning of period 52,480 316,333 -
---------- ----------- ------------
Cash and cash equivalents at end of period $ 595,856 $ 585,686 $ 595,856
========== ============ ===============
COASTAL CARIBBEAN OILS & MINERALS LTD.
PART I - FINANCIAL INFORMATION
September 30, 1999
ITEM 1 - Financial Statements
The information for the three month and nine month periods ended
September 30, 1999 and 1998 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 59.25% owned subsidiary,
Coastal Petroleum Company ("Coastal Petroleum").
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;
2. the substantial cost of continuing the litigation;
3. the uncertainty of obtaining the financing which would be
necessary to fund the litigation against the State of Florida.
The Company's principal assets are oil, gas, and mineral leases, the
costs of which total $4.8 million at September 30, 1999. The Company has been
and continues to be involved in several legal proceedings against the State of
Florida which has 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 legally taken. 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 September 30, 1999, Coastal Caribbean had cash and marketable
securities of approximately $1 million. These funds are expected to be used for
general corporate purposes and to continue the litigation against the State of
Florida.
Long Term Liquidity
The Company estimates that as much as $400,000 per year may be required
in connection with the Florida litigation. The Company expects that the Florida
litigation will continue at least through the year 2000, although the State may
take actions that could shorten or lengthen that period.
The Company's oil and gas properties are currently unproved and
undeveloped. The Company had applied for a drilling permit from the State of
Florida to drill an exploratory well (St. George Island prospect) in the water
near Apalachicola, Florida. The State of Florida resisted the issuance of a
drilling permit and denied the application. On October 6, 1999, Florida's First
District Court of Appeal ruled that Florida's Department of Environmental
Protection ("DEP") has the authority to deny Coastal Petroleum Company's
drilling permit for its St. George Island prospect, provided that Coastal
receives just compensation for what was taken. The State of Florida and the
Florida environmental groups filed on November 1, 1999 a joint motion for
clarification, rehearing, or certification with respect to that decision, asking
the Court of Appeal, among other things, to clarify that the question of whether
there has been a taking of Coastal Petroleum's leases should be determined in
the circuit court. Coastal Petroleum's response to that joint motion is due on
or before November 16, 1999.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operation (Cont'd)
The Company has assessed its Year 2000 readiness and it is currently
compliant. The Year 2000 change should have no material impact on the Company's
internal operations or financial results. However, the Company will be dependent
on its suppliers and potential partners to make their systems Year 2000
compliant. Due to the limited nature of the Company's current operations, the
Company does not expect that any inability of suppliers or potential partners to
be Year 2000 compliant would have a material impact on the Company.
Results of Operations
Three month period ended September 30, 1999 vs. September 30, 1998
The Company incurred a loss of $224,000 for the 1999 quarter, compared
to a loss of $251,000 for the comparable 1998 quarter.
Interest income and other income decreased 53% from $37,000 in 1998 to
$17,000 in 1999 because less funds were available for investment during the 1999
period and interest rates were lower.
Legal fees and costs decreased 9% to $85,000 for the 1999 quarter,
compared to $93,000 in the 1998 quarter period. In the 1998 period, the Company
had been involved in various appeals and hearings in opposition to the issuance
of a drilling permit. During the 1999 period, the level of legal activity
decreased because the Company was awaiting a decision on the appeal of the St.
George Island permit denial.
Administrative expenses decreased 22% from $123,000 during the 1998
period to $96,000 during the 1999 quarter. During the 1999 period, the level of
activity decreased because the Company was awaiting a decision on the appeal of
the St. George Island permit denial.
Salaries decreased 6% during the 1999 quarter to $38,000 compared to
$40,000 in the 1998 quarter because an employee resigned during the second
quarter. The employee has not yet been replaced.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operation (Cont'd)
Shareholder communications decreased 43% from $30,000 in 1998 to
$17,000 in 1999. The decrease in expense during the period results from a
reduction in mailing costs to the Company's shareholders.
Nine month period ended September 30, 1999 vs. September 30, 1998
The Company incurred a loss of $802,000 for the 1999 period, compared
to a loss of $856,000 for the comparable 1998 period.
Interest income and other income decreased 54% from $136,000 in 1998
to $63,000 in 1999 because less funds were available for investment during 1999
and interest rates were lower.
Legal fees and costs decreased 19% to $289,000 in the 1999 period,
compared to $356,000 in the 1998 period. During the 1999 period, the level of
expenditures decreased because the Company was awaiting a decision on the appeal
of its St. George Island permit denial.
Administrative expenses decreased 8% to $346,000 in 1999 from $376,000
in the 1998 period.
Salaries decreased 1% to $120,000 during the 1999 period compared to
$121,000 during the 1998 period.
Shareholder communications decreased 23% from $121,000 in 1998 to
$93,000 in 1999. The decrease in expense during the 1999 period results from a
reduction in mailing costs to the Company's shareholders.
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. At September 30, 1999, the carrying value of such investments was
approximately $1,238,000, the fair value was $1,243,000 and the face value was
$1,250,000. 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, 1999
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
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 2, 1999 By /s/ James R. Joyce
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James R. Joyce
Treasurer and Chief Accounting and
Financial Officer