FORM 10-Q/QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 period ended June 30, 1996
or
[ ] 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: 1-100
CROFF ENTERPRISES, INC. (Formerly Croff Oil Company)
(Exact name of registrant as specified in its charter)
Utah 87-0233535
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1675 Broadway Street, Suite 1030, Denver, CO 80202
(Formerly 1433 17th Street Suite, 220 Denver, CO 80202)
(Address of principal executive offices) (Zip Code)
(303) 623-1963
(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 (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 has required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
X Yes ______ No
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
_______ Yes ______ No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 516,515 shares, one
class only, as of June 30, 1996.
INDEX
INDEX TO INFORMATION INCLUDED IN THE QUARTERLY REPORT (FORM 10-Q)
TO THE SECURITIES AND EXCHANGE COMMISSION FOR THE THREE AND SIX
MONTHS ENDED JUNE 30, 1996 (UNAUDITED).
_________________________________________________________________
PART I. FINANCIAL INFORMATION Page Number
Balance Sheets as of December 31, 1995
and June 30, 1996 3, 4
Statements of Operations for the Three and
Six Months Ended June 30, 1995 and 1996 5
Statements of Cash Flows
for the Six Months
Ended June 30, 1995 and 1996 6
Notes to Financial Statements 7
Managements' Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 2 9
Item 5 9
Item 6 9
Signatures 10
_________________________________________________________________
The condensed financial statements included herein are for the
Registrant, Croff Oil Company. The financial statements for the
six months ended June 30, 1996 and 1995 are unaudited; however,
they reflect all adjustments which, in the opinion of management,
are necessary to present fairly the results of the interim periods.
All adjustments necessary to a fair representation of the financial
statements are of a normal recurring nature.
PART I: FINANCIAL INFORMATION
CROFF OIL COMPANY
BALANCE SHEET
December 31, June 30,
1995 1996
CURRENT ASSETS:
Cash and Cash Equivalents: $ 37,933 $140,472
Marketable equity securities 15,500 9,250
Accounts receivable:
Oil and gas purchasers 28,425 25,873
Refundable income taxes 4,290 6,389
Note receivable, secured by interests
in oil and gas properties, includ-
ing accrued interest 4,800 0
Total current assets $ 90,948 $ 181,984
PROPERTY AND EQUIPMENT, AT COST:
Oil & gas properties, successful
efforts method:
Proved properties 457,874 323,565
Unproved properties 110,051 110,051
567,925 433,616
Less accumulated depletion and
depreciation (249,154) (221,362)
Net property and equipment $ 318,771 $ 212,254
Coal Investment 95,299 91,044
$ 505,018 $ 485,282
============= ============
PART I: FINANCIAL INFORMATION
CROFF OIL COMPANY
BALANCE SHEET
December 31 June 30,
1995 1996
Current Liabilities:
Accounts payable $ 10,829 $ 8,898
Accrued liabilities 3,662 3,706
Note Payable 50,000 0
Total current liabilities 64,491 12,604
Commitments
Stockholders' equity
Common stock, $.10 par value
20,000,000 share authorized
579,143 shares issued 57,914 57,914
Capital in excess of par value 909,983 909,983
Accumulated deficit (444,724) (412,573)
523,173 555,324
Less treasury stock at cost,
52,788 shares in 1994 and 62,628
in 1995 (82,646) (82,646)
Total stockholders' equity 440,527 472,678
$ 505,018 $ 485,282
============= ==============
CROFF OIL COMPANY
Statement of Operations
For the Three And Six Months Ended June 30, 1996
(Unaudited)
For Three For Six
Months Ended Months Ended
6/30/95 6/30/96 6/30/95 6/30/96
Revenue:
Oil and gas sales........ $ 47,886 $ 39,984 $ 92,963 $ 87,469
Other income (loss)..... 2,602 21,699 6,322 22,687
Total revenue $ 50,488 $ 61,683 $ 99,285 $110,156
Costs and expenses:
Lease operating expense.. $ 9,821 $ 9,682 $20,352 $ 20,311
Depreciation and depletion 7,500 4,500 15,000 12,000
General and administrative 20,180 20,438 39,317 39,813
Rent Expense - Related Party 2,940 2,940 5,880 5,880
$ 40,441 $ 37,560 $80,549 $ 78,004
Net income (loss) $ 10,047 $ 24,123 $18,736 $ 32,152
======== ======== ===============
Earnings (Loss) Per Share $ .02 $ .04 $ .03 $ .06
========= ========= ===============
CROFF OIL COMPANY
Statement of Cash Flows
For the Six
Months Ended
June 30,
1995 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 18,736 $32,152
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and depletion 15,000 12,000
Change in assets and liabilities:
Decrease/(Increase) in Receivables 4,306 453
Decrease/(Increase) in other assets (500) 4,800
Decrease/(Increase) in accounts payable 2,297 (1,932)
Decrease/(Increase) in accrued liabilities (44) 21
(Gains)/Losses on Sale of Assets 0 (22,247)
-------- ---------
Total adjustments $ 21,059 $ (6,905)
Net cash provided by
operating activities: 39,795 25,247
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase)/Sale of oil & gas properties: 118,020
(Purchase)/Return of Coal Investment (100,000) 4,255
Sale/(Purchase) of Securities 7,750 5,017
--------- ---------
(92,250) 127,292
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Note Payable 50,000 (50,000)
Increase (decrease) in cash: (2,455) 102,539
Cash at beginning of period: $ 19,385 $37,933
========= ========
Cash at end of period: $ 16,930 $140,472
========= ========
CROFF ENTERPRISES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1996
BASIS OF PREPARATION.
The condensed financial statements for the three and six month
periods ended June 30, 1996 and 1995 in this report have been
prepared by the Company without audit pursuant to the rules and
regulations of the Securities and Exchange Commission and reflect,
in the opinion of management, all adjustments necessary to present
fairly the results of the operations of the interim periods
presented herein. Certain reclassifications have been made to the
prior years' financial statements to conform to the 1996
presentation. Certain information in footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been omitted pursuant
to such rules and regulations, although the Company believes the
disclosures presented herein are adequate to make the information
presented not misleading. It is suggested that these condensed
financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, which
report has been filed with the Securities and Exchange Commission,
and is available from the Company.
MANAGEMENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS.
Three-Month Period Ended June 30, 1996,
as Compared to the Three-Month Period Ended June 30, 1995.
OIL AND GAS OPERATIONS
Oil and gas income, primarily from royalties, for the three
months ended June 30, 1996 was $39,984 compared to $47,886 for the
quarter ending June 30, 1995. This decrease was caused by the sale
of the Taylor-Ina field in Texas and the sale of a well in North
Dakota. Prices were generally stable after increasing during the
first four months of the year. The lack of any significant
drilling in the Bluebell - Altamont field in Utah is decreasing
revenue to Croff as older wells decline. The Company purchased an
interest in two wells which will add to revenues in the next
quarter.
Production costs, which include lease operating expenses and
all production related taxes, for the three months ended June 30,
1996, were stable, $9,682 in 1996, compared to $9,821 during the
same time period in 1995. This was due primarily to sales this
year and smaller interests in the wells which were worked over.
Depreciation and depletion decreased as properties were sold.
OTHER INCOME
During the three month period ended June 30, 1996, the Company
had other income of $21,699. The other income figure was $2602 for
the quarter ending June 30, 1995. This was due to a gain from the
sale of producing leases during this quarter and interest earned on
higher cash balances.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the quarter ending
June 30, 1996, were $20,438 plus rent expense of $2940 for a total
of $23,378 compared to $20,180, plus rent expense of $2,940 in the
same period in 1995. The Company expects general and
administrative costs to remain stable this year.
Six Month Period Ended June 30, 1996,
as Compared to the Six Month Period Ended June 30, 1995.
OIL AND GAS OPERATIONS
Oil and gas income, primarily from royalties, for the six
months ending June 30, 1996, was $87,469 compared to $92,963 for
the six months ended June 30, 1995. This decrease was caused by
the sale of oil and gas wells, offset to some degree by higher
prices for oil and natural gas.
Production costs, which include lease operating expenses and
all production related taxes, for the six months ended June 30,
1996, were $20,311 in 1996, a decrease from $20,352 during the six
months ended June 30, 1995. There was no significant difference on
operating costs from 1995 to 1996.
OTHER INCOME.
During the six month period ended June 30, 1996, the Company
had other income of $22,687, primarily from interest and dividend
earnings, and profit on the sale of oil and gas leases. During the
same six month period in 1995, the Company had other income of
$6322, primarily from interest and dividend earnings, and gain on
marketable securities.
GENERAL AND ADMINISTRATIVE.
General and administrative expenses for the period ending June
30, 1996, were $39,813 compared to $39,317 for the six month period
ending June 30, 1995. The difference was insignificant.
FINANCIAL CONDITION
As of June 30, 1996, the Company's current assets of $181,984
exceeded current liabilities of $12,604 by $169,380. As of
December 31, 1995, the Company's current assets were $90,948, and
current liabilities were $64,491 for an increase in the Company's
working capital position of approximately $142,923. This increase
was due to the payoff of the short term note held by Union Bank in
the first quarter. During the second quarter, the Company sold
approximately $130,000 of oil and gas leases for cash. The Company
intends to reinvest these proceeds in oil and gas assets. The
Company expects to continue to operate at a positive cash flow for
the calendar year.
PART II. OTHER INFORMATION
ITEM 2: Changes in securities
See Information under Item 5 below on issuance of previously
authorized preferred securities.
ITEM 5: Other Information
As reported in the company's 10-K for December 31 1995, on
Febuary 28, 1996, the Company's shareholders authorized the change
of name to Croff Enterprises, Inc. and the issuance of prefered
shares to existing shareholders. The directors determined to file
the amended articles and begin using the new name after June 30,
1996. The oil and gas assets of the Company are pledged to the
preferred shareholders. The preferred shareholders are the current
common shareholders of the Company. The preferred shares will be
distributed during the second half of the 1996 calender year.
Futher information is available in the 10-K dated December 31, 1995
and the Proxy Statement for the February 28, 1996, Shareholders
Meeting, available from the Company and filed with the Securities
& Exchange Commission.
ITEM 6 Exhibits
Amended Articles of Incorporation filed with the Secretary of
State of Utah on July 1, 1996.
ITEM 6(b). REPORTS ON FORM 8-K.
The registrant has filed no reports on Form 8-K for the period
ending June 30, 1995.
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
REGISTRANT: CROFF OIL COMPANY
By_________________________________
Gerald L. Jensen
Chief Executive Officer and
Chief Financial Officer
By_________________________________
M. Ward Smith
Chief Accounting Officer
Date:___________________, 1995