SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For Quarter Ended Commission File Number
October 31, 1997 1-7965
CASPEN OIL, INC.
(Exact name of registrant as specified in its charter)
Nevada 75-1325831
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 S. Wadsworth Boulevard
Irongate 3, Suite 201
Lakewood, CO 80226
(Address or principal executive offices)
(303) 987-0925
(Registrant's telephone number, including area code)
(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 and 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
As of October 31, 1997, the Registrant had 21,092,222 shares of
Common Stock outstanding.
Transitional Small Business Disclosure Format: Yes ; No X
CASPEN OIL, INC.
AND SUBSIDIARIES
FORM 10-QSB
October 31, 1997
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets. . . . . . . . . . . 1-2
Condensed Consolidated Statements of Operations. . . . . . . 3
Condensed Consolidated Statement of Shareholders' Equity . . 4
Condensed Consolidated Statements of Cash Flows. . . . . . . 5
Notes to Condensed Consolidated Financial Statements . . . . 6
Item 2. Management's Discussion and Analysis or Plan of
Operation. . . . . . . . . . . . . . . . . . . . . . . . . 7-8
PART II - OTHER INFORMATION
Item 4.Submission of Matters to a Vote of Security Holders . 9
Item 6.Exhibits and Reports on Form 8- K . . . . . . . . . . 9
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 10
CASPEN OIL, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
October 31, July 31,
ASSETS 1997 1997
CURRENT ASSETS
Cash and cash equivalents $ 124,570 $ 112,514
Accounts rec., trade 149,051 179,785
Other 2,215 1,633
----------- -----------
275,836 293,932
----------- -----------
PROPERTY AND EQUIPMENT, AT COST
Oil and gas properties, full cost
method of accounting 19,721,071 19,763,820
Other 302,061 302,061
----------- -----------
20,023,132 20,065,881
Less accum. depl., deprec., and amort. 17,295,893 17,252,217
------------ -----------
2,727,239 2,813,664
------------ -----------
OTHER
Investments 810,127 810,127
------------ -----------
TOTAL ASSETS $ 3,813,202 $ 3,917,723
============ ===========
1
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 1,345,738 $ 1,350,738
Accounts payable, trade 610,960 670,069
Accrued interest 918,596 893,777
Accrued expenses 329,535 281,235
------------ -----------
3,204,829 3,195,819
LONG-TERM LIABILITIES
--- ---
------------ -----------
TOTAL LIABILITIES 3,204,829 3,195,819
------------ -----------
SHAREHOLDERS' EQUITY
Convertible preferred stock:
Series A 600,000 600,000
Series C 300,000 300,000
Series E 125,000 125,000
Common stock 210,922 210,922
Additional paid-in capital 21,094,871 21,094,871
Note receivable-Officer (33,000) (33,000)
Accumulated deficit (21,679,710)(21,566,179)
----------- -----------
618,083 731,614
Less treasury stock 9,710 9,710
---------- -----------
TOTAL SHAREHOLDERS' EQUITY 608,373 721,904
---------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 3,813,202 $ 3,917,723
=========== ===========
See accompanying notes to condensed consolidated financial
statements.
2
CASPEN OIL, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended
October 31,
------------------
1997 1996
REVENUE
Oil and gas sales $ 139,631 $ 226,517
Interest income 1,422 637
Other (11,672) 13,479
--------- ---------
129,381 240,633
--------- ---------
COSTS AND EXPENSES
Production and operating 35,979 55,925
Depl., deprec., and amort. 43,676 52,242
General and administrative 138,438 145,731
Interest expense 24,819 1,053
--------- ---------
242,912 254,951
--------- ---------
NET LOSS (113,531) (14,318)
DIVIDEND REQUIREMENTS ON PREFERRED STOCK 269,775 269,775
--------- ---------
LOSS APPLICABLE TO COMMON STOCK $(383,306) $(284,093)
========= =========
LOSS PER COMMON SHARE $ (.02) $ (.02)
========= =========
See accompanying notes to condensed consolidated financial
statements.
3
CASPEN OIL, INC.
AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders' Equity
(Unaudited)
Series A,C,E Common stock Additional Accumu- Note Total
Preferred Stock paid-in lated Rec.- Treasury shareholders'
Shares Amount Shares Amount capital deficit Officer stock equity
------- -------- --------- --------- ----------- ------------ ------- -------- ------------
Balance at July 31, 1997 1,025,000 $1,025,000 21,092,222 $ 210,922 $21,094,871 $(21,566,179) $(33,000) $(9,710) $ 721,904
Net loss 113,531) (113,531)
--------- ---------- ---------- --------- ----------- ------------- --------- -------- ---------
Balance at Oct 31, 1997 1,025,000 $1,025,000 21,092,222 $ 210,922 $21,094,871 $(21,679,710) $(33,000) $(9,710) $ 608,373
========= ========== ========== ========= =========== ============= ========== ======== ==========
4
CASPEN OIL, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three months ended
October 31,
------------------
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(113,531) $(14,318)
Adjustments to reconcile net income
to net cash used in operating activities:
Depletion, depreciation, and amortization 43,676 52,242
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 30,734 ( 2,339)
(Increase) decrease in other assets ( 582) 450
Decrease in notes/accts. payable ( 64,109) ( 60,912)
Increase (decrease) in accrued expenses 73,118 ( 6,399)
---------- ---------
NET CASH USED FOR
OPERATING ACTIVITIES ( 30,694) ( 31,276)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposition of property and
equipment 45,383 8,356
Purchase of property and equipment ( 2,633) ( 4,484)
---------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES 42,750 3,872
--------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 12,056 ( 27,404)
CASH AND CASH EQUIVALENTS, BEG. 112,514 94,131
--------- ---------
CASH AND CASH EQUIVALENTS, END $ 124,570 $ 66,727
========= =========
See accompanying notes to condensed consolidated financial
statements.
5
CASPEN OIL, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Three Months Ended October 31, 1997
(1) Basis of Presentation
The condensed interim consolidated financial statements
included herein are unaudited but in the opinion of management
reflect all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation of the financial position of
the Company at October 31, 1997, and the results of operations
for the three month periods ended October 31, 1997, and 1996.
Interim results are not necessarily indicative of expected annual
results because of the impact of prices obtained for oil and gas
and other factors. These condensed consolidated financial
statements should be read in conjunction with the consolidated
financial statements of the Company, and related notes thereto,
included in its annual report on Form 10-KSB/A.
(2) Notes payable
Note payable to Lender with interest at prime
plus 1%, due in September, 2004; collateralized
by 100% of the outstanding stock of a
wholly-owned subsidiary, Summit Overseas
Exploration, Inc. $1,310,333
Non-interest bearing payable due in July, 1998;
collateralized by equipment and video tapes
costing $200,000 10,000
Note payable with interest at 8%; to be paid from
net revenue interest cash flow from an oil and
gas property; unsecured 25,405
----------
$1,345,738
==========
The Lender note of $1,310,333 is in default at October 31, 1997,
and may be demanded in total, thus is classified as a current
liability. The default interest rate is an additional 4%.
6
CASPEN OIL, INC.
AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis or Plan of
Operation
The following discussion of the Company's financial condition and
results of operations should be read in conjunction with the
condensed consolidated financial statements included in this
report and the consolidated financial statements and notes
contained in the Company's annual report on Form 10-KSB/A for the
fiscal year ended July 31, 1997.
Liquidity and Capital Resources
During the three months ended October 31, 1997, the working
capital deficit increased from July 31, 1997, by approximately
$27,000. This increase is due largely to the pay down of certain
outstanding trade payables from July 31, 1997, offset by an
increase in accrued expenses and collections of certain trade
receivables.
The Company's current liabilities exceed current assets by
$2,928,993 at October 31, 1997. The working capital deficit at
October 31, 1997, is due primarily to the $1,310,333 of the
Company's debt due to its Lender (See Note 2) and to outstanding
trade and note payables of an approximate $645,000, as well as
accrued interest and expenses approximating $1,250,000.
The Company anticipates that with its current cash position and
with a timely and satisfactory resolution of its litigation it
will have sufficient working capital to cure its lender default
and to meet its obligations throughout the remaining fiscal year.
Results of Operations
Oil and gas revenues were lower in the three months ended
October 31, 1997, as compared to the three months ended October
31, 1996. This reduction in oil and gas revenue was a result of
the sale of various oil and gas interests which facilitated the
reduction in debt.
The Company experienced slightly higher gas prices in the three
months ended October 31, 1997, compared with those received in
the same period last year, and lower oil prices were experienced
in the first three months of fiscal year 1997 when compared with
the same period last year. Average oil and gas prices received
in the three months ended October 31, 1997, were approximately
$18.00 per barrel of oil and $2.00 per MCF gas as compared to
approximately $20.00 per barrel of oil and $1.85 per MCF gas for
the three months ended October 31, 1996.
7
CASPEN OIL, INC.
AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis or Plan of
Operation, Continued
Results of Operations (Continued)
The Company reported a net loss of $(113,531) for the three
months ended October 31, 1997, compared to a net loss of
$(14,318)for the three months ended October 31, 1996. This is
primarily due to lower oil and gas revenues for the three months
ended October 31, 1997, and an increase in interest expense
accrued but unpaid to the Company's lender, as compared with the
three months ended October 31, 1996. Oil and gas revenues
approximated $140,000 for the three months ended October 31,
1997, while revenues for the same period in 1996 approximated
$227,000. Production and operating expenses for the quarter ended
October 31, 1997, were approximately $36,000, as compared to the
quarter ended October 31, 1996, which were approximately $56,000.
General and administrative expenses for the three months ended
October 31, 1997, decreased by approximately $7,000 from the
corresponding three months ended October 31, 1996.
Series A Preferred Stock Cumulative Dividends In Arrears
The terms of the Series A Shares provide that no dividends may be
paid on the Common Shares or Series C or E Preferred Shares while
dividends on the Series A Shares are in arrears. The Company has
not paid any dividends on the Series A Shares since June 30,
1988. As of October 31, 1997, dividends on the Company's Series
A Shares are in arrears $19.34 per share for a total of
$11,593,952.
8
CASPEN OIL, INC.
AND SUBSIDIARIES
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none
(b) Reports on Form 8-K - none
9
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.
CASPEN OIL, INC.
December 19, 1997 By:/s/ Gary N. Davis
Gary N. Davis,
Treasurer
10