AMENDMENT NUMBER 2
THIS AMENDMENT IS BEING FILED IN ORDER TO CLARIFY THE PREVIOUS 10-K
THAT WAS TRANSMITTED AND ACCEPTED VIA EDGAR ON JULY 25, 1996.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934 for the Fiscal Year Ended
July
31, 1995 [Fee Required] or
[ ] Transition Report Under Section 13 or 15(d) of the
Securities
Exchange Act of 1934 [No Fee Required]
Commission File No. 2-67096
TRI-VALLEY CORPORATION
(Exact Name of Registrant as Specified in its
Charter)
Delaware
84-0617433
(State or Other Jurisdiction of (I.R.S.
Employer
Incorporation or Organization)
Identification Number)
230 South Montclair Street, Suite 101,
Bakersfield, California 93309
(Address of Principal Executive
Offices)
Registrant's Telephone Number Including Area Code: (805) 837-9300
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Act:
Title of Each Class Name of Each Exchange on Which
Registered
Common Electronic Bulletin Board
Nasdaq
$0.01 Par Value Common Stock
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 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 requirement
for the past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this Form, and no
disclosure will be contained to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K, if
applicable, or any amendment to this Form 10-K.
X Yes No
Indicate by check mark whether the Registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by the Court.
Yes No
As of May 20, 1996, 7,337,248 common shares were outstanding, and
the aggregate market value of the common shares of Tri-Valley
Corporation held by non-affiliates was approximately $800,000.
Documents incorporated by reference: None
The total number of pages in this Form 10-K are 70.
The Index of Exhibits included in this Form 10-K is located at page
65.
PART I
ITEM 1. BUSINESS
Tri-Valley Corporation (formerly Tri-Valley Oil & Gas Corporation),
a Delaware corporation, hereinafter referred to as "Company,"
"Registrant", "Parent" or "Tri-Valley", has been engaged in the
business of exploring, acquiring, developing and dealing in
prospective and producing petroleum and mineral properties and
interests therein. Precious metal activity has been carried on
directly by the Parent and oil and gas activities through its
wholly owned subsidiary, Tri-Valley Oil & Gas Company (TVOG).
TVOG was organized as a California corporation in 1963. TVOG, the
subsidiary, effects exploration relationships with various major
oil companies such as Phillips Petroleum Company (Houston Regional
Office), Occidental USA and Texaco USA with whom it has co-ventured
on a 50-50 basis to use their proprietary data to generate
exploration plays in the Sacramento Valley. This relationship
involves a TVOG submittal procedure wherein the major company has
a short period to accept or reject plays generated by TVOG in the
area of mutual interest (AMI). If it accepts, it joins up to 50%
under the terms of the agreement involved. TVOG is operator for
these co-ventures.
Historically an oil and gas exploration and production company
emphasizing the Sacramento Valley natural gas province, the Company
added precious metals exploration in fiscal 1987. The precious
metal properties are located in interior Alaska, known as the
Richardson, Alaska property. Precious metal activity has been an
exploratory activity since inception. In February 1991, Tri-Valley
signed an agreement with the Moscow based Central Research
Institute of Geological Prospecting for Base and Precious Metals
(TsNIGRI) to demonstrate their proprietary technology for
evaluating large areas of covered sub-Arctic terrain for precious
metals on Tri-Valley's then 64 square mile lode gold claim block at
Richardson, Alaska. Based on the results of this study, Tri-Valley
management believes it to be prudent for the Company to continue to
develop the precious metals segment of the Company. At present,
this is only a prognostic resource and not a proven reserve.
Chapter 11 Proceedings
Certain Developments
On January 30, 1996, Tri-Valley Corporation ("TVC") and its wholly
owned subsidiary, Tri-Valley Oil & Gas Co. ("TVOG") filed voluntary
petitions in the United States Bankruptcy Court (the "Bankruptcy
Court") for the Eastern District of California sitting in Fresno
seeking to reorganize under Chapter 11 of the Federal Bankruptcy
Code (the "Code"). The companies are currently operating as
debtors-in-possession under the Code. The Chapter 11 cases of TVC
and TVOG have been substantially consolidated under TVC, and TVC
continues to file consolidated tax and SEC reports.
ITEM 1. BUSINESS (Continued)
Chapter 11 Reorganization
In March, April and September 1995, the Company arranged borrowings
of $100,000, $400,000 and $120,000, respectively, totaling $620,000
from Frank Agar, an individual of Midland Texas. Terms of the
loans were on a six month note with a 30 day call paying 10% annual
interest and collateralized by all of TVOG's producing gas
properties in the Sacramento Valley of California. The purpose of
the loans was to consolidate increasingly short term obligations
and provide short term operating capital enabling the Company to
accommodate two years of heavy losses due to production declines
and gas prices plunging to unforeseen 20 year lows.
At the time of the loans, the Company's management anticipated
hooking up a major discovery, and drilling an offset well to
accelerate production revenues. With this enhancement and some
third party collateral it appeared take out financing from a
conventional institution could be arranged. Permit delays and
freezing of credit lines due to a merger between banks eliminated
that approach. As the six month financing period ended, the board
of directors met with the secured lender and worked out a 90 day
standstill in order to sell the reserves and preserve the
stockholder equity above the lender's interest.
Three substantial offers from capable parties were received. The
lead offer exceeded the loan principal by approximately $1 million
and the Company proceeded toward acceptance. One day before the
close the offerer abruptly terminated citing several unacceptable
conditions. The Company believed none of the conditions were items
that affected the economic value of the deal and none that could
not be handled in the closing and post closing stages.
The Company immediately contacted its other two backup buyers. One
could not arrange financing before the foreclosure date. The other
pulled out one day before the foreclosure citing a "wait and see"
position. On the day of the foreclosure deadline, discussions with
the secured lender promised to "work something out", but were not
attended by any forbearance in writing. The Company obviously
could not negotiate without such written forbearance and advised
its only alternative was to file for protection under chapter 11 of
the Federal Bankruptcy Code. Given no alternative, the filing was
made 30 minutes before the deadline on January 30, 1996.
The ability of the Company to effect a successful reorganization
under Chapter 11 of the Bankruptcy Code will depend, in significant
part, upon the Company's ability to formulate a reorganization plan
that is approved by the Bankruptcy Court and meets the standards
for plan confirmation under the Bankruptcy Code. In a chapter 11
reorganization plan, the rights of the Company's creditors and
stockholders may be substantially altered. Creditors may realize
substantially less than the full face amount of their claim. Equity
interests of the Company's stockholders may be diluted or even
canceled. Investment in any security of the Company, therefore,
should be regarded as highly speculative. It is impossible at this
time to predict the actual recovery that different classes of
creditors and stockholder might ultimately realize.
ITEM 1. BUSINESS (Continued)
Operations During Chapter 11 Reorganization
The Company became debtor-in-possession and was approved for use of
the cash collateral to continue operations while preparing a plan
of reorganization. Pursuant to the Code, transactions outside the
ordinary course of business require the approval, after notice and
hearing, of the Bankruptcy Court and liabilities arising prior to
the filing of petitions under Chapter 11 of the Code may not be
paid without prior approval of the Bankruptcy Court. Offers for
the reserves revived; however, the Company was made aware of an
opportunity to acquire very substantial assets in the burgeoning
telecommunications industry through a "roll up" of partnership
interests owned by approximately 1,000 investors looking for
publicly traded stock in exchange for their partnership interests.
After preliminary due diligence, including visits to the physical
facilities and trade areas in New York state, the Company is
proceeding to prepare and file a plan of reorganization and
disclosure statement aimed at consummating this business
combination in a manner that will satisfy TVC creditors and equity
security holders and be approved by the court. As a back up, the
Company would proceed to sell its reserves.
Since the filing of petitions under Chapter 11 of the Code, the
Company has successfully arranged $900,000 in cash. The first
$150,000 was raised and approved by the court on April 25, 1996,
for use by the Company. The loan is secured by producing properties
of the Company and has a stated interest rate of 10%, interest only
for two years with the outstanding balance due and payable at the
end of two years. The remaining $750,000 has been arranged through
29 individuals. As of May 20, 1996, this amount had not been
deposited; however, the checks are in the name of the Company and
held by the Company's President. These funds will be held outside
of the Bankruptcy Court until either the Company's reorganization
plan is confirmed or the Court allows the Company to establish a
trust account with the specific purpose of the funds identified to
pay-off the Agar loan in full. Stated interest rate is 10%.
Interest only for two years with the principal due and payable at
the end of two years. The loans are secured by the producing
properties of the Company. In the event the new lenders and loan
terms are not approved by the Court, this money will be returned.
The Company is also the target of an attempt by a dissident
minority to discredit and remove the existing board and management
and replace them with a group which post petition purchased 25,570
shares (less than 4/10ths of 1% of the outstanding shares). The
Company has advised shareholders that this effort is an attempt to
grab several million dollars in assets for little more than the
cost of postage. The majority of shareholders did not side with the
dissidents in a solicitation they conducted in March and April of
1996. The Company will hold a shareholder meeting on or before
July 31, 1996 to present its plan of reorganization and other
matters of concern, including who should manage the Company.
ITEM 1. BUSINESS (Continued)
Operations During Chapter 11 Reorganization (continued)
At July 31, 1995, the Company records total balance sheet assets of
$3,825,053 and liabilities of $2,111,428 for a net worth of
$1,713,625. The Company has an offer to purchase its off balance
sheet reserves of approximately $2.1 million for a total of
$3,813,625 net value as of July 31, 1995. (Consummation of this
offer is not assured). The Company's management believes that
completion of its two main projects could greatly increase that
figure. Completion of these projects is dependent on securing the
requisite capital and the Company believes that will occur if its
plan of reorganization is confirmed.
Company liabilities include the secured lender, a number of
unsecured creditors and dozens of executory contracts that are
primarily oil and gas mineral leases, mineral claims, and leases or
purchase contracts on office space, equipment and real property.
Pursuant to the orders of the Bankruptcy Court, the Official Equity
Security Holders Committee of TVC and the Creditors Committee have
been appointed by the U.S. Trustee with authority to obtain counsel
and other professionals whose fees are being paid by the Debtor.
Reorganization related professional fees are being recorded as
incurred. The first filing by Debtor's counsel through May 30, 1996
amount to $27,000. The Company has not been advised of any other
professional fees at this time.
Transfers of assets, including cash payments, prior to the
commencement of the Chapter 11 cases could be revised by the
Bankruptcy Court if they were determined to constitute preferential
transfers or fraudulent conveyances under certain sections of the
Code. Upon the reversal of a transaction, the assets returned
would be part of the bankruptcy estate of the Debtor and would be
subject to the claims of the Debtor's creditors. If any assets are
returned to the Debtor, the entity from which the assets are
recovered would have an unsecured claim against the debtor in the
amount of the value of the assets transferred by the Debtor to such
entity. Since Pre-petition transfers were in the ordinary course
of business the Company does not believe any preferential treatment
occurred.
The Chapter 11 filings by the Company operate as an automatic stay
against commencement or continuation of any judicial,
administrative or other proceedings against the Company; any act to
obtain possession of property of or from the Company; or any act to
create, perfect or enforce any lien against the Company, any act to
obtain possession of property of the estate or of property from the
estate or to exercise over the property of the estate. The Company
believes certain acts of dissidents and certain creditors may have
violated the automatic stay and other sections as set forth in the
Code, various securities rules and regulations and corporate law
and has reserved the right to pursue such parties for various
torts.
ITEM 1. BUSINESS (Continued)
Operations During Chapter 11 Reorganization (continued)
The Company is the subject of vatatement schedules contained
herein.
In our opinion, such financial statements present fairly the
information set forth
therein.
BROWN ARMSTRONG RANDALL & REYES
ACCOUNTANCY CORPORATION
Bakersfield, California
October 20, 1995
TRI-VALLEY CORPORATION
SCHEDULE V - PROPERTY, PLANT &
EQUIPMENT
YEARS ENDED JULY 31, 1995, 1994
AND 1993
Productive
Productive Non Productive
Leasehold Oil & Gas
Oil & Gas Oil & Gas Mining
Land Building Equipment
Improvements Leases Leases Prospects Totals
Balances at
July 31, 1991 $ - $ - $ 83,593 $
5,748 $ 184,511 $ 268,489 $ 623,462 $1,165,803
Additions at
Cost - - 41,238
- 256,041 366,659 486,004 1,149,942
Deletions at
Cost - - 32,538
- - 44,403 35,062 112,003
Balances at
July 31, 1992 - - 92,293
5,748 440,552 590,745 1,074,404 2,203,742
Additions at
Cost 11,281 45,124 5,553
- 23,780 247,658 435,314 768,710
Deletions at
Cost - - 1,210
- 19,171 12,901 12,712 45,994
Balance at
July 31, 1993 11,281 45,124 96,636
5,748 445,161 825,502 1,497,006 2,926,458
Additions at
Cost - - 539
- - 9,236 60,087 317,251 387,113
Deletions
at Cost - - -
- - 163,173 94,052 257,225
Balances at
July 31, 1994 11,281 45,124 97,175
5,748 454,397 722,416 1,720,205 3,056,346
Additions at
Cost - - 5,193
- - - 50,111 238,068 293,372
Deletions at
Cost - - 18,422
- - 9,025 125,835 - 153,282
Balances at
July 31, 1995 $ 11,281 $ 45,124 $ 83,946 $
5,748 $ 445,372 $ 646,692 $1,958,273 $3,196,436
TRI-VALLEY CORPORATION
SCHEDULE VI - ACCUMULATED DEPRECIATION,
DEPLETION & AMORTIZATION
YEARS ENDED JULY 31, 1995, 1994
AND 1993
Accumulated
Depreciation
Depletion Amortization Totals
Balances at July 31, 1992 54,375 $
106,482 $ 5,748 $ 166,605
Additions at Cost 11,230
58,024 - 69,254
Retirements at Cost 1,089
16,561 - 17,650
Balances at July 31, 1993 64,516
147,945 5,748 218,209
Additions at Cost 11,126
30,062 - 41,188
Retirements at Cost -
- - -
Balances at July 31, 1994 75,642
178,007 5,748 259,397
Additions at Cost 11,129
26,454 - 37,583
Retirements at Cost 7,894
7,720 - 15,614
Balances at July 31, 1995 $ 78,877 $
196,741 $ 5,748 $ 281,366
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
, 1996By:
F. Lynn Blystone
President, Chief
Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been
signed below by the following persons on behalf of the Registrant
and in the capacities and
on the dates included:
, 1996By:
Earl H. Beistline,
Director
, 1996By:
Milton J. Carlson,
Director
, 1996By:
Dennis P. Lockhart,
Director
, 1996By:
Loren Miller, Director
, 1996By:
Terrance L. Stringer,
Director