U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended April 30, 2001
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-1394
SEVEN J STOCK FARM, INC.
(Name of small business issuer as specified in its charter)
Texas 74-1110910
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(State of incorporation) (I.R.S. Employer Identification No.)
16945 Northchase Dr., Ste 1800, Houston, TX 77060-2151
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(Address of principal executive offices)
(281) 875-9100
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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. Yes (X) No ( )
As of June 14, 2001 there were 1,451,000 shares of Seven J Stock Farm,
Inc. common stock $1.00 par value outstanding.
SEVEN J STOCK FARM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS)
(IN THOUSANDS EXCEPT FOR SHARES AND PER SHARE DATA)
(UNAUDITED)
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
APRIL 30, APRIL 30,
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2001 2000 2001 2000
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REVENUES
Pipeline operations $ 188 $ 106 $ 371 $ 376
Net oil and gas royalties 53 91 132 126
Ranch lease rentals 30 21 60 51
Farm produce sales 5 11 14 71
Contract and irrigation service
revenues - - 22 -
Other revenues 26 17 42 27
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TOTAL REVENUES 302 246 641 651
COSTS AND EXPENSES
Operating expenses 238 132 435 409
General and administrative expenses 64 73 116 158
Depreciation and amortization 32 34 64 64
Equity in loss of 50% owned affiliate - 6 - 16
Other costs and expenses - (1) - -
Interest expense 8 5 10 6
Taxes - other than income taxes 13 10 29 20
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TOTAL COSTS AND EXPENSES 355 259 654 673
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LOSS BEFORE PROVISION (BENEFIT)
FOR INCOME TAXES (53) (13) (13) (22)
Provision (benefit) for
income taxes (24) - 5 1
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NET LOSS $ (29) $ (13) $ (18) $ (23)
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NET LOSS PER SHARE - BASIC AND
DILUTED
(1,451,000 weighted average shares
outstanding) $ (.02) $ (.01) $ (.01) $ (.02)
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DIVIDENDS PER SHARE None None None None
See notes to the condensed consolidated financial statements.
SEVEN J STOCK FARM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
APRIL 30, 2001
(IN THOUSANDS EXCEPT FOR SHARE DATA)
(UNAUDITED)
APRIL 30,
ASSETS 2001
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CURRENT ASSETS
Cash and cash equivalents $ 26
Accounts receivable 18
Accounts receivable - related parties 184
Refundable income taxes 2
Deferred income taxes 17
Other current assets 15
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TOTAL CURRENT ASSETS 262
PROPERTY AND EQUIPMENT, net 1,719
OTHER ASSETS 1
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TOTAL ASSETS $ 1,982
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 71
Accounts payable - related parties 191
Accrued expenses 29
Deferred income taxes -
Notes payable 2
Current maturities of long-term debt 102
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TOTAL CURRENT LIABILITIES 395
LONG-TERM DEBT 57
DEFERRED INCOME TAXES 68
OTHER LIABILITIES 150
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TOTAL LIABILITIES 670
SHAREHOLDERS' EQUITY
Common stock, par value $1 per share:
authorized 1,500,000 shares; issued and
outstanding 1,451,000 shares 1,451
Accumulated deficit (139)
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TOTAL SHAREHOLDERS' EQUITY 1,312
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,982
=========
See notes to the condensed consolidated financial statements.
SEVEN J STOCK FARM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
FOR THE SIX
MONTHS ENDED
APRIL 30,
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2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (18) $ (23)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization 64 64
Deferred income taxes 5 (3)
Equity in loss of 50% owned affiliate - 16
Changes in operating assets and liabilities:
Accounts receivable 41 (9)
Other current assets (2) 1
Accounts payable 46 123
Other liabilities 7 -
Accrued expenses (50) (40)
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NET CASH PROVIDED BY OPERATING
ACTIVITIES 93 129
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures for property and equipment (8) (95)
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NET CASH USED IN INVESTING ACTIVITIES (8) (95)
CASH FLOWS FROM FINANCING ACTIVITIES
Long-term debt and notes payable repayments (105) (90)
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NET CASH USED IN FINANCING ACTIVITIES (105) (90)
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NET DECREASE IN CASH AND CASH EQUIVALENTS (20) (56)
CASH AND CASH EQUIVALENTS - beginning of period 46 60
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CASH AND CASH EQUIVALENTS - end of period $ 26 $ 4
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SUPPLEMENTAL CASH FLOW DATA:
Cash paid during the period for:
Interest $ 13 $ 6
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Income taxes $ - $ -
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See notes to the condensed consolidated financial statements.
SEVEN J STOCK FARM, INC. AND SUBSIDIARY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying interim condensed consolidated financial statements are
unaudited and include the accounts of Seven J Stock Farm, Inc. and its
wholly owned subsidiary, Madison Pipe Line Company, collectively referred to as
the "Company".
The unaudited interim condensed consolidated financial statements and
related notes have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States
have been omitted pursuant to such rules and regulations. The accompanying
unaudited interim condensed consolidated financial statements and related notes
should be read in conjunction with the financial statements and related notes
included in the Company's 2000 Annual Report to Shareholders.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to
present fairly the Company's financial position as of April 30, 2001 and the
results of its operations and its cash flows for the periods ended April 30,
2001 and 2000. Such adjustments consisted only of normal recurring items.
The results of operations for the periods ending April 30, 2001 and 2000 are
not necessarily indicative of the results to be expected for the full year.
Certain items and amounts for the prior period have been reclassified. The
reclassifications have no effect on net income.
NOTE 2 - SUBSEQUENT EVENT
During May 2001, the Company increased its available credit to approximately
$210,000 under its loan agreement with Frost Bank to pay off an existing loan
with The First National Bank of Crockett, and to acquire a conservation
easement on certain real property for flood prevention.
SEVEN J STOCK FARM, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Pipeline Operations - Revenue for the three months ended April 30, 2001
increased $82,000 or 77% as compared to the three months ended April 30,
2000. This is primarily the result of an increase in gas prices.
Net Oil and Gas Royalties - Revenue for the three months ended April 30, 2001
decreased $38,000 or 42% as compared to the three months ended April 30,
2000. This is a result of the decrease of volumes sold.
Operating expense for the three months ended April 30, 2001 increased $106,000
or 80% as compared to the three months ended April 30, 2000. This is
attributable to an increase in cost of fuel to run the compressor.
Farm Produce Sales - Revenue for the six months ended April 30, 2001 decreased
$57,000 or 80% as compared to the six months ended April 30, 2000. This
was the result of drought conditions.
General and Administrative Expenses - Expenses for the six months ended April
30, 2001, decreased $42,000 or 27%. This increase is primarily the result
of a reduction in personnel expenses.
Liquidity and Capital Resources
The Company had a negative cash flow of $20,000 for the six months ended
April 30, 2001 as compared to a negative cash flow of $56,000 from operating
activities for the six months ended April 30, 2000. The reason for the
improvement in cash flows from the prior period is due to a decrease in capital
expenditures on property and equipment.
The Company's liquidity could be adversely affected due to losses from and loan
guarantees for Trinity Valley Pecan Company. An additional provision of $48,000
was recorded in 2000 relating to guarantees of certain debt of Trinity.
As of April 30, 2001, the Company's working capital deficit was $133,000.
Payments of $51,000 attributable to notes payable and long-term debt are
required during the fiscal year ending October 31, 2001. It is not anticipated
that dividends will be paid in the near future.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(A) Annual meeting of shareholders was held March 20, 2001.
(B) Seven J Stock Farm, Inc. did not solicit proxies and the following
directors were elected
1. John R. Parten
2. R. F. Pratka
3. Patrick J. Moran
4. William C. Bennett
Shareholders approved the appointment of the firm Mann Frankfort Stein &
Lipp, CPAs, L.L.P. as the Company's Independent Auditors.
ITEM 5. OTHER INFORMATION
(A) During June 2001, the Company began hay bailing and hay sales operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits - none
(B) Reports on Form 8-K - there were no reports on Form 8-K filed for
the quarter ended April 30, 2001.
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.
Date: June 14, 2001 SEVEN J STOCK FARM, INC.
(Registrant)
s/
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John R. Parten, President
(Principal Financial Officer)