FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1996
Commission File No. 0-10286
General Energy Resources and Technology Corporation
(Exact name of registrant as specified in its charter)
Michigan 38-2266968
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
401 W. Front Street
Traverse City, Michigan 49684
(Address of principal executive offices)
616-946-1473
(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 Exchange Act of 1934 during the preceding 12 months
(or for a 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 ( ).
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.
Common Stock, Par Value $.10 - 7,991,870 shares, as of September
30, 1996.
GENERAL ENERGY RESOURCES AND TECHNOLOGY CORPORATION
Index to Form 10-Q
PART I - Financial Information Page
Item 1 Balance Sheets. . . . . . . . . . . . . . . . . . .3
Statements of Operations. . . . . . . . . . . . . .5
Statement of Cash Flows . . . . . . . . . . . . . .7
Notes to Financial Statements . . . . . . . . . . .8
Item 2 Management's Discussion and Analysis of Financial
Conditions and Results of Operations. . . . . . .9
PART II - Other Information
Signatures. . . . . . . . . . . . . . . . . . . . .11
PART I - FINANCIAL INFORMATION
General Energy Resources and Technology Corporation
Balance Sheets
Item 1
ASSETS
Sept. 30, December 31,
1996 1995
(Unaudited) (Unaudited)
CURRENT ASSETS
Cash $ 20,072 $ 136,108
Accounts receivable trade, less
allowance for doubtful accounts
of $8,698 129,373 583,526
Prepaid expenses 687 437
_________ _________
Total current assets 150,132 720,071
PROPERTY AND EQUIPMENT, AT COST
Proved oil and gas properties,
successful efforts method of
accounting 2,858,136 2,891,901
Unproved leasehold and minerals 85,106 85,106
Drilling contracts in progress 19,791 12,213
_________ _________
Total property and equipment 2,963,033 2,989,220
Less accumulated depreciation,
depletion, and amortization 2,633,811 2,650,669
_________ _________
Net property and equipment 329,222 338,551
OTHER ASSETS
Investments (net of unrealized
loss of $288,950) 1,050 1,050
_________ _________
$ 480,404 $1,059,672
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current installments of
long-term debt $ 3,000 $ 3,000
Accounts payable trade 469,641 746,954
Joint interest prepayments 0 135,371
Other current liabilities 0 111,000
Stock purchase overpayments 0 25,603
_________ _________
Total current liabilities 472,641 1,021,928
LONG-TERM DEBT 55,168 55,429
STOCKHOLDERS' EQUITY
Common stock ($.10 par value,
18,000,000 shares authorized,
7,991,870 shares issued and
outstanding) 799,187 799,187
Additional paid-in capital 7,435,012 7,435,012
Deficit <8,281,604> <8,251,884>
_________ _________
Total stockholders' equity <47,405> <17,685>
$ 480,404 $1,059,672
========= =========
See accompanying notes to financial statements.
GENERAL ENERGY RESOURCES AND TECHNOLOGY CORPORATION
Statements of Operations
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
1996 1995 1996 1995
Revenues:
Oil and gas sales:
Working interest $ 31,147 55,903 66,600 236,879
Royalty interest 19,012 15,379 50,701 43,443
Repromotional income 0 <101> 2,349 5,940
Gain/Loss on sale of assets <7,476> 0 <11,828> <8,883>
Administrative overhead 4,200 6,950 14,600 15,350
Consulting fees 0 19,687 577 54,334
Write-off of expired
credits 0 0 66,116 0
Miscellaneous income 100 0 102 2
__________ __________ __________ __________
Total revenues 46,983 97,818 189,217 347,065
Costs and expenses:
Lease and operating
expenses 29,365 87,217 51,954 214,334
Taxes other than on income 3,096 2,507 7,330 8,079
Dry holes and abandonments 58 88 142 <2,413>
Depreciation, depletion and
amortization 3,616 10,600 10,506 33,687
General and administrative 31,396 60,684 146,831 202,237
Interest expense 2,174 915 2,174 3,059
__________ __________ __________ __________
Total costs/expenses 69,705 162,011 218,937 458,983
__________ __________ __________ __________
Net income <loss> $ <22,722> <64,193> <29,720> <111,918>
========== ========== ========== ==========
Net income <loss> per weighted
average share of common stock $ <.003> <.008> <.004> <.01>
========== ========== ========== ==========
Weighted average number of
shares outstanding 7,991,870 7,991,870 7,991,870 7,991,870
========== ========== ========== ==========
See accompanying notes to financial statements.
General Energy Resources and Technology Corporation
Statement of Cash Flows
Nine Months Ended September 30, (Unaudited)
1996 1995
____ ____
CASH FLOWS FROM OPERATING ACTIVITIES
Net income <loss> $ <29,720> $ <111,918>
Adjustments to reconcile net
earnings to net cash provided
by operating activities
Depreciation, depletion and
amortization 10,506 33,687
<Gain> loss on sale of oil and
gas properties 1,928 8,883
<Increase> decrease in current
assets:
Trade accounts receivable 454,153 <112,663>
Prepaid expenses <250> <249>
Increase <decrease> in current
liabilities:
Trade accounts payable <277,313> 156,680
Joint interest prepayments <135,371> 58,851
Expired credits - stock
purchase overpayment <25,603> 0
_________ _________
NET CASH FROM OPERATING
ACTIVITIES <1,670> 33,271
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and
equipment <7,578> <2,288>
Proceeds from sale of oil and gas
property 4,473 694
_________ _________
NET CASH FROM INVESTING
ACTIVITIES <3,105> <1,594>
CASH FLOWS FROM FINANCING ACTIVITIES
Increase <decrease> in long-term
debt <111,261> <35,411>
_________ _________
NET CASH FROM FINANCING
ACTIVITIES <111,261> <35,411>
_________ _________
NET INCREASE <DECREASE>
IN CASH <116,036> <3,734>
CASH AT BEGINNING OF PERIOD 136,108 55,923
_________ _________
CASH AT END OF PERIOD $ 20,072 $ 52,189
========= =========
General Energy Resources and Technology Corporation
Notes to Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property and Equipment
The Company utilizes the successful efforts method of accounting
for its oil and gas exploration and development program. Under
this method of accounting, costs of drilling and completing
successful wells are capitalized, while costs of dry holes are
charged to expense when incurred. Depletion and amortization of
producing leasehold and mineral interests and related intangible
development costs are provided by the unit-of-production method
based on estimates of recoverable oil and gas reserves prepared
by independent petroleum engineers. Lease and well equipment is
depreciated over it's estimated useful life (seven years) by the
straight-line method.
Costs of nonproducing leasehold and mineral interests are not
amortized but are charged to operations when such properties are
abandoned, surrendered, determined to be worthless or transferred
to producing properties and depleted when successfully developed.
Maintenance and repairs are charged to expense when incurred.
Renewals and betterments are capitalized. When assets are sold,
retired or otherwise disposed of, applicable costs and
accumulated depreciation and depletion are removed from the
accounts and the resulting gain or loss is recognized.
Interest Capitalization
Interest costs applicable to the drilling and equipment of in-
progress and shut-in oil and gas wells are capitalized until such
time as the wells begin producing. There were no entries for
interest capitalization during 1996 and 1995.
Earnings Per Share
Earnings per share is based on the weighted average number of
shares outstanding.
NOTE 2
NON CASH TRANSACTIONS
The Company had the following Sept. 30, Dec. 31,
non cash transactions during the 1996 1995
periods ending September 30,
1996 and December 31, 1995 -0- -0-
NOTE 3
LONG-TERM DEBT
On June 1, 1990, the Company signed a $292,814 promissory note
with Mosbacher Energy Company (MEC) for the amount owed MEC by
General Energy Corporation for well operations as of May 7, 1990.
The note is secured by the Company's interest in eleven producing
properties operated by MEC and bears interest at 7 1/4 percent
per annum. Additional terms of the agreement call for monthly
payments of the lesser of $20,000 or the month's production to
MEC. Based on current production estimates, management expects to
reduce this loan by approximately $250 per month.
In 1991, the Company recorded approximately $875,500 of long-term
debt on the Tulare Lakes Field. This represents the Company's 25%
share of the outstanding debt on the field. This is a non
recourse debt. General Energy is not a party to the purchase
contract between Chevron, Penteco and American Barter. The
Company's 25% was to be paid from Penteco Corporation's working
interest percentage, net of expenses. As of December 31, 1995,
the total revenue from the field continued to be less than the
total expenses with no expectation of improvement within the next
twelve months. Management determined the asset and liability to
be unrealistically presented on the financial statements and the
outstanding debt balance of $908,410 which included accrued
interest and the asset balance of $717,288, net of accumulated
DD&A, were written off.
NOTE 4
INTERIM STATEMENTS
The Company believes that the accompanying unaudited financial
statements contain all adjustments (including appropriate
provision for depreciation, depletion and amortization normally
determined at year end) necessary to present fairly the financial
position as of September 30, 1996 and December 31, 1995, and the
results of operations for the nine months ended September 30,
1996 and 1995. All adjustments are of a normal recurring nature,
except as follows:
Sept. 30, Dec. 31,
1996 1995
____ ____
Tulare Lakes write-offs $299,164
Write-offs of Expired Credits $66,116
Interim financials should not necessarily be considered to be
indicative of the results of operations for the entire year.
NOTE 5
CONTINGENCIES
The prices of the Company's natural gas production are subject to
the regulations of the Federal Energy Regulatory Commission
(FERC). The Company believes it has substantially complied with
regulations as issued.
Item 2 - Management's Discussion and Analysis of Financial
Conditions and Results of Operations
Results of Operations
The Company's total earned revenue for the nine months ended
September 30, 1996 totaled $123,101. This represents a decrease
of <$223,964> from the same period in 1995 and is largely the
result of revenue from the Tulare Lakes Field which was recorded
as oil and gas income in 1995 but discontinued in 1996.
Total expenses decreased ($240,046) from $458,983 at September
30, 1995 to $218,937 at September 30, 1996. Again, this decrease
is the result of operating expenses and DD&A for the Tulare Lakes
Field which were recorded in 1995 but discontinued in 1996.
Despite the reduction in earned revenue, the Company's net loss
for the nine months ended September 30, 1996, was <$29,720>
compared to a loss of ($111,918) for the nine months ended
September 30, 1995.
Liquidity/Capital Resources
Net cash from operating activities decreased <$34,941> to
<$1,670> at September 30, 1996 compared to $33,271 at September
30, 1995.
On June 2, 1995, a lawsuit was filed in Kings County, California,
against General Energy and its subsidiary, G.E.N.Y. Operations,
Inc., by Kings County Development Limited and J.G. Boswell
Company.
As a result, and to protect the corporation against ongoing legal
expenses, on March 25, 1996, the Company and it's subsidiary
filed petitions for relief under Chapter 11 of the Bankruptcy
Code.
In July of 1996, the Chapter 11 Bankruptcy against General Energy
Resources and Technology Corporation was dismissed. G.E.N.Y.
Operations, Inc., a wholly owned subsidiary, remained under the
protection of the Chapter 11 Bankruptcy. In August of 1996,
G.E.N.Y. Operations was sold to Penteco Corporation and venue for
the Chapter 11 Bankruptcy was removed from Michigan to Oklahoma.
The lawsuit involving General Energy and Kings County
Development, Ltd., and J.G. Boswell is on going. However, General
Energy has never been a working interest owner in the Tulare
Lakes Project which is the subject of the litigation.
The Company anticipates that cash flows will be generated from an
oil and gas project scheduled for completion in 1996, sufficient
to pay current operating liabilities.
Management has developed contingency plans to obtain additional
capital by the issuance of debt or sale of equities to the extent
that these actions become necessary in the future.
PART II - OTHER INFORMATION
General Energy Resources and Technology Corporation
Signatures
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized, on
the 13th day of November, 1996.
GENERAL ENERGY RESOURCES AND
TECHNOLOGY CORPORATION
By: H. TERRY SNOWDAY, JR.
_______________________________
H. Terry Snowday, Jr.
President and Director
(Principal Executive Officer)