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 January 31, 1998 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 January 31, 1998, 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 January 31, 1998 PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements: Condensed Consolidated Balance Sheets. . . . . . . . . . . 1-2 Condensed Consolidated Statements of Operations. . . . . . .3-4 Condensed Consolidated Statement of Shareholders' Equity . . 5 Condensed Consolidated Statements of Cash Flows. . . . . . . 6 Notes to Condensed Consolidated Financial Statements . . . . 7 Item 2. Management's Discussion and Analysis or Plan of Operation. . . . . . . . . . . . . . . . . . . . . . . . . 8-9 PART II - OTHER INFORMATION Item 4.Submission of Matters to a Vote of Security Holders . 10 Item 6.Exhibits and Reports on Form 8- K . . . . . . . . . . 10 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 11 CASPEN OIL, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) January 31, July 31, ASSETS 1998 1997 CURRENT ASSETS Cash and cash equivalents $ 115,907 $ 112,514 Accounts rec., trade 80,679 179,785 Other 2,797 1,633 ----------- ----------- 199,383 293,932 ----------- ----------- PROPERTY AND EQUIPMENT, AT COST Oil and gas properties, full cost method of accounting 19,713,189 19,763,820 Other 102,061 302,061 ----------- ----------- 19,815,250 20,065,881 Less accum. depl., deprec., and amort. 17,152,890 17,252,217 ------------ ----------- 2,662,360 2,813,664 ------------ ----------- OTHER Investments 810,127 810,127 ------------ ----------- TOTAL ASSETS $ 3,671,870 $ 3,917,723 ============ =========== 1 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 1,280,738 $ 1,350,738 Accounts payable, trade 598,726 670,069 Accrued interest 955,821 893,777 Accrued expenses 374,354 281,235 ------------ ----------- 3,209,639 3,195,819 LONG-TERM LIABILITIES --- --- ------------ ----------- TOTAL LIABILITIES 3,209,639 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 (21,825,852)(21,566,179) ----------- ----------- 471,941 731,614 Less treasury stock 9,710 9,710 ---------- ----------- TOTAL SHAREHOLDERS' EQUITY 462,231 721,904 ---------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,671,870 $ 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 January 31, ------------------ 1998 1997 REVENUE Oil and gas sales $ 108,713 $ 278,313 Interest income 1,426 588 Other 7,678 14,299 --------- --------- 117,817 293,200 --------- --------- COSTS AND EXPENSES Production and operating 65,836 110,420 Depl., deprec., and amort. 26,997 51,798 General and administrative 133,388 172,615 Interest expense 37,737 510 --------- --------- 263,958 335,343 --------- --------- NET LOSS (146,141) (42,143) DIVIDEND REQUIREMENTS ON PREFERRED STOCK 269,775 269,775 --------- --------- LOSS APPLICABLE TO COMMON STOCK $(415,916) $(311,918) ========= ========= LOSS PER COMMON SHARE $ (.02) $ (.01) ========= ========= See accompanying notes to condensed consolidated financial statements. 3 CASPEN OIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) Six months ended January 31, ------------------ 1998 1997 REVENUE Oil and gas sales $ 248,344 $ 504,830 Interest income 2,848 1,225 Other (3,994) 27,778 --------- --------- 247,198 533,833 --------- --------- COSTS AND EXPENSES Production and operating 101,815 166,345 Depl., deprec., and amort. 70,673 104,040 General and administrative 271,826 318,346 Interest expense 62,556 1,563 --------- --------- 506,870 590,294 --------- --------- NET LOSS (259,672) (56,461) DIVIDEND REQUIREMENTS ON PREFERRED STOCK 539,550 539,550 --------- --------- LOSS APPLICABLE TO COMMON STOCK $(799,222) $(596,011) ========= ========= LOSS PER COMMON SHARE $ (.04) $ (.03) ========= ========= See accompanying notes to condensed consolidated financial statements. 4 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 shlders' 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 October 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 Net loss ( 146,141) (146,141) --------- ---------- ---------- --------- ----------- ------------- --------- -------- --------- Balance at January 31,1998 1,025,000 $1,025,000 21,092,222 $ 210,922 $21,094,871 $(21,825,851) $(33,000) $(9,710) $ 462,232 ========= ========== ========== ========= =========== ============= ========= ======== ========= 5 CASPEN OIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) Six months ended January 31, ------------------ 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(259,672) $(56,461) Adjustments to reconcile net income to net cash used in operating activities: Depletion, depreciation, and amortization ( 99,329) 104,040 Issuance of common stock --- 33,000 Disposition of junked asset 200,000 --- Changes in operating assets and liabilities: (Increase) decrease in accounts receivable 99,106 ( 63,803) (Increase) decrease in other assets ( 1,164) 8,889 Decrease in notes/accts. payable (141,343) ( 73,033) Increase (decrease) in accrued expenses 155,163 84,883 ---------- -------- NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES ( 47,239) 37,515 ---------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposition of property and equipment 54,652 4,401 Purchase of property and equipment ( 4,020) ( 7,729) ---------- -------- NET CASH PROVIDED BY (USED FOR)INVESTING ACTIVITIES 50,632 ( 3,328) --------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,393 34,187 CASH AND CASH EQUIVALENTS, BEG. 112,514 94,131 --------- --------- CASH AND CASH EQUIVALENTS, END $ 115,907 $128,318 ========= ========= See accompanying notes to condensed consolidated financial statements. 6 CASPEN OIL, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements Six Months Ended January 31, 1998 (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 January 31, 1998, and the results of operations for the six month periods ended January 31, 1998 and 1997. 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. $1,245,333 Non-interest bearing payable due in July, 1998; 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 ---------- $1,280,738 ========== The Lender note of $1,245,333 is in default at January 31, 1998, and may be demanded in total, thus is classified as a current liability. The default interest rate is an additional 4%. 7 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 six months ended January 31, 1998, the working capital deficit increased from July 31, 1997, by approximately $108,000. 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 $3,010,256 at January 31, 1998. The working capital deficit at January 31, 1998, is due primarily to the $1,245,333 of the Company's debt due to its Lender (See Note 2) and to outstanding trade and note payables of an approximate $634,000, as well as accrued interest and expenses approximating $1,330,000. 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 six months ended January 31, 1998, as compared to the six months ended January 31, 1997. 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, as well as lower overall oil and gas prices received for production in the first six months of fiscal year 1998 as compared to the same period in fiscal year 1997. The Company experienced slightly lower gas prices in the six months ended January 31, 1998, compared with those received in the same period last year, and significantly lower oil prices were experienced in the first six months of fiscal year 1998 when compared with the same period last year. Average oil and gas prices received in the six months ended January 31, 1998, were approximately $16.60 per barrel of oil and $2.40 per mcf gas as compared to approximately $22.00 per barrel of oil and $2.50 per mcf gas for the six months ended January 31, 1997. 8 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 $(259,672) for the six months ended January 31, 1998, compared to a net loss of $(56,461) for the six months ended January 31, 1997. This is primarily due to the sale of various oil and gas interests which facilitated the reduction in debt, as well as, to lower oil and gas revenues for the six months ended January 31, 1998, and an increase in interest expense accrued but unpaid to the Company's lender, as compared with the six months ended January 31, 1997. Oil and gas revenues approximated $248,000 for the six months ended January 31, 1998, while revenues for the same period in 1997 approximated $504,000. Production and operating expenses for the six months ended January 31, 1998, were approximately $102,000, as compared to the six months ended January 31, 1997, which were approximately $166,000. General and administrative expenses for the six months ended January 31, 1998, decreased by approximately $46,500 from the corresponding six months ended January 31, 1997. 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 January 31, 1998, dividends on the Company's Series A Shares are in arrears $19.79 per share for a total of $11,863,727. 9 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 10 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. March 16, 1998 By:/s/ Gary N. Davis Gary N. Davis, Treasurer 11 11