SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Mark One
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended December 31, 2000; 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 No. 0-9997
United Heritage Corporation
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(Exact name of registrant as specified in charter)
Utah 87-0372826
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2 North Caddo Street, Cleburne, Texas 76031
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(Address of principal executive offices)
(817) 641-3681
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(Registrant's telephone number, including area code)
No Change
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(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 was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES __X__ NO ______
The number of shares of common stock, $0.001 par value, outstanding at
February 5, 2001, was 10,215,025 shares.
Page 1
UNITED HERITAGE CORPORATION
INDEX
Part I - Financial Information Page Number
Item 1 - Financial Statements (unaudited)
Consolidated Condensed Balance Sheets
at December 31, 2000 and March 31, 2000 2
Consolidated Condensed Statements of Income
for the Three Months and Nine Months ended
December 31, 2000 and December 31, 1999 4
Consolidated Condensed Statements of Cash
Flows for the Nine Months ended December 31,
2000 and December 31, 1999 5
Notes to Consolidated Condensed Financial
Statements 6
Item 2 - Management's Discussion and Analysis
of Financial Condition and Results of Operations 10
Item 3 - Quantitative and Qualitative Disclosures About
Market Risk 14
Forward-Looking Statements 15
Part II - Other Information
Item 1 -Legal Proceedings 16
Item 2- Changes in Securities 16
Item 3 - Defaults upon Senior Securities 16
Item 4- Submission of Matters to a Vote
of Security Holders 16
Item 5- Other Information 16
Item 6- Exhibits and Reports on Form 8-K 16
Page 2
UNITED HERITAGE CORPORATION
Part I, Item 1. Financial Statements
UNITED HERITAGE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
December 31, March 31,
2000 2000
----------- -----------
UNAUDITED
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 136,327 $ 116,421
Accounts receivable - trade 254,601 65,206
Inventory 355,566 67,297
Other current assets 124,094 67,373
----------- -----------
Total Current Assets 870,588 316,297
----------- -----------
PROPERTY AND EQUIPMENT, at cost 241,520 168,756
Less accumulated depreciation (115,511) (90,161)
----------- -----------
Net Property and Equipment 126,009 78,595
----------- -----------
OIL AND GAS PROPERTIES 29,363,526 27,707,069
Less accumulated depletion (11,197) (7,290)
----------- -----------
Net Oil and Gas Properties 29,352,329 27,699,779
----------- -----------
TOTAL ASSETS $30,348,926 $28,094,671
=========== ===========
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UNITED HERITAGE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS - CONTINUED
December 31, March 31,
2000 2000
----------- -----------
UNAUDITED
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 813,828 $ 150,457
Notes payable 2,000,000 --
----------- -----------
Total Current Liabilities 2,813,828 150,457
----------- -----------
SHAREHOLDERS' EQUITY
Common stock, $0.001 par value;
125,000,000 shares authorized;
shares issued and outstanding:
10,215,025 shares at December 31, 2000 10,215 --
10,111,543 shares at March 31, 2000 -- 10,112
Additional paid-in capital 35,463,436 35,216,040
Accumulated deficit (7,533,713) (6,966,138)
Deferred compensation and consulting (404,840) (315,800)
----------- -----------
Total Shareholders' Equity 27,535,098 27,944,214
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $30,348,926 $28,094,671
=========== ===========
See notes to consolidated condensed financial statements
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UNITED HERITAGE CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF INCOME (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
December 31 December 31
2000 1999 2000 1999
----------- ---------- ----------- ----------
REVENUES
Processed meat products $ 693,314 $ 589,348 $ 1,600,405 $2,898,372
Oil Sales 22,214 26,152 70,522 65,919
----------- ---------- ----------- ----------
TOTAL REVENUE 715,528 615,500 1,670,927 2,964,291
----------- ---------- ----------- ----------
COSTS AND EXPENSES
Processed meat products 612,724 524,075 1,304,451 2,407,193
Oil production and operating costs 11,679 13,550 40,919 40,570
Depreciation and depletion 10,408 - 29,256 -
Selling 108,975 45,071 228,474 105,273
General and administrative 207,109 141,887 551,354 334,309
----------- ---------- ----------- ----------
TOTAL COSTS AND EXPENSES 950,895 724,583 2,154,454 2,887,345
----------- ---------- ----------- ----------
INCOME (LOSS) from Operations (235,367) (109,083) (483,527) 76,946
OTHER INCOME (EXPENSE)
Interest income 422 660 8,702 8,839
Interest expense (48,686) (92,748)
----------- ---------- ----------- ----------
NET INCOME (LOSS) $ (283,631) $ (108,423) $ (567,573) $ 85,785
=========== ========== =========== ==========
Net Income (Loss) per Common Share $ (0.03) $ (0.01) $ (0.06) $ 0.01
=========== ========== =========== ==========
Weighted average number of common shares 10,169,058 9,962,520 10,156,953 9,888,961
=========== ========== =========== ==========
See notes to consolidated condensed financial statements
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UNITED HERITAGE CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED
December 31, December 31,
2000 1999
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (567,573) $ 85,785
Adjustments to reconcile net income (loss)
to net cash (used in) provided by operating activities:
Depreciation and depletion 29,256 17,762
Deferred compensation and consulting 158,458 12,482
Changes in assets and liabilities:
In accounts receivable (189,395) (97,371)
In inventory (288,269) 23,008
In other current assets (72,911) (32,005)
In accounts payable and accrued expenses 663,371 27,282
------------ ------------
Net cash (used in) provided by operating activities (267,063) 36,943
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from note receivable 16,190 -
Additions to oil and gas properties (1,656,457) (362,215)
Additions to property and equipment (72,764) (54,061)
------------ ------------
Net cash used in investing activities (1,713,031) (416,276)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing 2,000,000 -
------------ ------------
Net cash provided by financing activities 2,000,000 -
------------ ------------
Increase (Decrease) in cash and cash equivalents 19,906 (379,333)
Cash and cash equivalents at beginning of period 116,421 440,805
------------ ------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 136,327 $ 61,472
============ ============
See notes to consolidated condensed financial statements
Page 6
UNITED HERITAGE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the nine-month period ended December 31, 2000
are not necessarily indicative of the results that may be expected for the year
ending March 31, 2001. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended March 31, 2000.
NOTE 2 - INVENTORY
Inventory consists of the following:
December 31, March 31,
2000 2000
------------ ----------
Lite Beef $334,967 $ 35,912
Oil in Tanks 20,599 31,385
------------ ----------
$355,566 $ 67,297
============ ==========
NOTE 3 - OIL AND GAS PROPERTIES
The Company participates in oil and gas exploration activities in
Texas and New Mexico.
Capitalized costs related to oil and gas producing activities and
related accumulated depletion, depreciation and amortization are as follows:
December 31, March 31,
2000 2000
------------ ----------
Capitalized costs of oil and gas properties:
Proved $ 26,660,956 $26,484,381
Unproved 2,702,570 1,222,688
------------ -----------
29,363,526 27,707,069
Less accumulated depletion, depreciation,
and amortization 11,197 7,290
------------ -----------
$ 29,352,329 $27,699,779
============ ===========
Page 7
UNITED HERITAGE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
NOTE 3 - OIL AND GAS PROPERTIES (CONTINUED)
Proved Reserves
Oil (Bbls) Gas (Mcf)
----------- -------------
March 31, 2000 22,465,635
Extensions, additions and discoveries - -
Less production for period (3,226) -
----------- -------------
December 31, 2000 22,462,409 -
=========== =============
Proved Developed Reserves
December 31, 2000 909,440 -
=========== =============
Standardized Measure of Discounted Future
Net Cash Flows Relating to Proved Reserves
Future cash inflows $ 499,411,000
Future costs:
Production (141,028,000)
Development (5,138,000)
-------------
Future net cash flows before income tax 353,245,000
Future income tax (117,523,000)
Future net cash flows 235,722,000
10% annual discount (71,060,000)
-------------
Standardized measure $ 164,662,000
=============
NOTE 4 - NOTE RECEIVABLE
During May 2000, the Company advanced $370,074 to CVR, Inc. under a
loan agreement with a one-year term. The loan was secured by a first lien on a
refrigerated warehouse plus interest at 12% or 3% over prime, whichever is
greater. In June 2000, Almac Financial Corporation (Almac), a company controlled
by Walter G. Mize, purchased 50% of the note receivable, reducing the Company's
portion to $185,074. In September 2000, Almac purchased the remaining balance of
the note receivable.
Page 8
UNITED HERITAGE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
NOTE 5 - CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk consist of cash and cash equivalents and trade
receivables. During the year ended March 31, 2000, and the nine months ended
December 31, 2000, the Company maintained money market accounts with a bank
which, at times, exceeded federally insured limits.
Concentrations of credit risk with respect to trade receivables
consist principally of food industry customers operating in the United States.
Receivables from one customer at December 31, 2000 comprised approximately 69%
of the trade receivables balance. No allowance for doubtful accounts has been
provided, because the recorded amounts were determined to be fully collectible.
NOTE 6 - NOTE PAYABLE
The note payable represents amounts drawn under a $2,000,000
revolving credit facility with a financial institution. The credit line matures
on April 25, 2001, and bears interest at one percent above the Wall Street
Journal prime rate. The Company's largest shareholder provided collateral for
this loan.
NOTE 7 - NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per share of common stock is based on the weighted
average number of shares outstanding during the periods ended December 31, 2000,
and December 31, 1999, after adjustment for the reverse stock split (See Note
10).
NOTE 8 - INCOME TAXES
As of March 31, 2000, the Company had net operating loss carryovers
of approximately $4,781,000 available to offset future income for income tax
reporting purposes, which will ultimately expire in 2018, if not previously
utilized.
NOTE 9 - ESTIMATES
The preparation of interim financial statements as of December 31,
2000, in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities, and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Page 9
UNITED HERITAGE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
NOTE 10 - REVERSE COMMON STOCK SPLIT
On November 1, 1999, the Company effected a one-for-ten reverse
common stock split as had been previously approved by the shareholders. The data
shown for prior periods relating to common shares has been retroactively
adjusted to reflect the reverse stock split. Also, the Company's Shareholders'
Equity accounts have been retroactively adjusted. There was no effect on total
Shareholders' Equity as a result of the reverse stock split.
NOTE 11 - RECLASSIFICATIONS
Certain amounts reported for prior periods have been reclassified to
conform to the presentation for current reporting periods.
NOTE 12 - SUBSEQUENT EVENT
In late January 2001, the Company received $1,000,000 under a
short-term financing agreement with Almac Financial Corporation, a corporation
owned by the Company's largest shareholder.
Page 10
UNITED HERITAGE CORPORATION
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
MEAT PRODUCTS
During the quarter ended June 30, 2000, the Company began marketing
our new line of Heritage LIFESTYLE Products-TM-. The change in our product line
resulted in lower sales, which were expected, and increased costs. Management
believes the new line will meet with good customer acceptance. The Company has
placed its primary emphasis on the new product line, Heritage LIFESTYLE
Products-TM-, which consists of the products described below. The Company also
continues to offer its fresh beef product line, Heritage LIFESTYLE Lite
Beef-Registered Trademark-.
Heritage LIFESTYLE offers a wide variety of prepackaged fully
seasoned products with full-bodied flavor to please the most discerning tastes.
The products are sold from the self-service meat counter in supermarkets. The
products are:
Lite Beef - 50% Less Fat & 1/3 Fewer Calories. Our flagship product,
Heritage LIFESTYLE Lite Beef-Registered Trademark- is "Beef the way
it should be!"-Registered Trademark- This trademarked line of beef is
specifically bred to be lean and rich in great beef taste. The
Company believes Heritage LIFESTYLE Lite Beef-Registered Trademark-
will be a preferred beef for individuals wanting less fat, fewer
calories, quicker cooking times and no compromise in flavor!
USDA Choice Beef - Heritage LIFESTYLE Choice Beef-TM- is for the
discriminating beef connoisseur. Hand selected for its superior
quality, Heritage Choice is designed to impress beef lovers with its
premium flavor, tenderness and well marbled cuts.
Chicken - Heritage LIFESTYLE Chicken-TM- is intended to be a gourmet,
low fat, high flavor choice for many recipes. Two boneless, skinless
breast selections are pre-seasoned for full bodied flavor....SANTA FE
BRAND GRILL, in southwestern style; and FOUR SEASONS for everyday
recipes. Oriental marinated thigh meat... CHINA WOK STIR FRY is
perfect for a quick and easy saute.
Pork - Heritage LIFESTYLE Pork-TM- contains marinated cuts that are
rich in flavor and ready for the grill, skillet or oven. CHOP HOUSE
SPECIAL PORK packs thick boneless chops with five-star restaurant
taste. Our BLUE RIBBON PORK ROAST is a signature fresh ham - oven or
smoker ready and seasoned to perfection. HUNAN BRAND PORK STIR FRY
turns any skillet into a tasty walk around China Town.
OIL AND GAS
United Heritage Corporation announced a five-well infill drilling
program during the quarter ended September 30, 2000. This program was
implemented in the quarter ended December 31, 2000. The drilling activity was
located in the northwest portion of the Cato
Page 11
OIL AND GAS (CONTINUED)
Unit in Chaves County, New Mexico. The wells were drilled on 20-acre spacing.
Production casing has been set and cemented on all five (5) wells. Completion
operations began December 8, 2000 on Well No. 328. Perforations are currently
in the P2 zone. Well No. 302 is also perforated in the P2 zone. Well No. 334
is currently perforated on the P1 zone. Production equipment should be
installed by the end of February 2001 on these three wells. Production tests
will then be conducted. The remaining two wells, No. 330 and No. 355, are
scheduled for completion by mid March 2001.
The decision to implement this drilling program came as a result of a
thorough geological/engineering review of approximately 62 well files of bores
located in four sections, approximately 2,560 acres, of the 15,321.83 acre Cato
Unit. These existing well bores were drilled on 40-acre spacing. The infill
wells were offset, or in between, the existing well bores.
The geological/engineering review included the study of the existing
"Original Oil in Place" report prepared by Pecos Petroleum Engineering Inc.;
subsurface mapping of the three pay sections of the San Andres zone; the
cumulative production of oil and gas; and an estimate of remaining oil and gas
reserves. The purpose of the review was to determine the feasibility of
drilling infill wells on 20 acre spacing within the Cato Unit. The Cato Unit
has 197 existing well bores on 40 acre spacing.
The review was led by Tobin D. Andrews, Petroleum Geologist and
manager of Oil and Gas Operations for United Heritage Corporation's wholly
owned subsidiaries involved in oil and gas development and production. He was
assisted by outside consulting Petroleum Engineers and Geologists. Andrews
stated, "In this review, we concluded that a substantial amount of recoverable
reserves remain in place largely due to the original wells being drilled on
40-acre spacing. We believe, as other colleagues do, that effective drainage of
the reserves in this San Andreas dolomite cannot be accomplished with wells on
40-acre spacing, therefore, we have identified new drilling locations on
20-acre spacing based not only on this fact, but also reservoir property
information obtained from well logs, core data, and other available
information."
Additionally, United Heritage Corporation has implemented a
recompletion on six (6) wells in the Cato Unit. A research of well records,
including well history, well logs, and completion reports, was conducted in an
effort to identify possible existing San Andres pay zones within each wellbore
that have not been produced. Since the three (3) producing zones (P1, P2, P3)
are most prominent in the northwest portion of the Unit, this area was chosen
for the initial phase of research. Six (6) wellbores have been identified in
the area with existing pay zones that, according to available records, have not
been perforated, tested, or produced. These wellbores include Well Nos. 35, 36,
37, 38, 66, and 103.
The recompletion program began with Well No. 66. Records indicated
that the P2 zone in the well tested 1.8 MCFGDP in 1966, however, a packer and
plug was placed over the P2 and the P1 was produced. UHC entered the wellbore
and removed the packer and plug. The P2 zone was isolated and treated with acid.
Currently, the well is shut-in with
Page 12
OIL AND GAS (CONTINUED)
500 psi tubing pressure awaiting production equipment. The program then moved
to Well No. 37. The P2 and P1 zones were isolated and acidized. The well was
put into production in late November 2000 and is currently producing 350 MCFGPD
with 290 psi flowing tubing pressure. Recompletion procedures on the remaining
four (4) wells are being scheduled.
A six (6) well re-work program was designed specifically for Well
Nos. 35, 42, 43, 115, 129 and 130, which had existing pumping units and
down-hole equipment. Electricity was restored to all six (6) locations and the
program began with Well No. 35. The wellbore was treated with acid, iron
inhibitors and demulsifiers in an effort to clean the perforations and
stimulate the producing formation. Production was increased from 1.5 BOPD and
6.3 MCFGPD to 9 BOPD and 170 MCFGPD. The same procedures were conducted on Well
No. 43. Production was increased from 0 BOPD and 8.4 MCFGPD to 4 BOPD and 80
MCFGPD with limited pump action. When full pump action is restored, production
for the well should double. Re-work procedures on the remaining four (4) wells
are being scheduled.
Current monthly oil and gas production is 18.9 MMCF gas and 1,800
barrels oil.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
MEAT PRODUCTS. Revenues for the Company's meat products were $693,314
and $1,600,405 for the quarter and nine-month periods ended December 31, 2000,
respectively. Sales levels have declined from the prior year nine-month period
due primarily to a lower volume of meat sold to the Company's largest customer.
This customer and others ordered reduced quantities while awaiting the
introduction of the Company's new product, as discussed above. We are optimistic
that this decrease is only temporary as can be seen by the increase in sales
volume for the current quarter as compared to the prior year.
Total revenue for sales of meat products for the prior year quarter
and nine months were $589,348 and $2,898,372, respectively. Gross profit from
meat products was $295,954 for the nine-month period ended December 31, 2000, as
compared with $491,179 gross profit for the same period last year. The cost of
meat products as a percentage of sales was 81.5% for the nine months ended
December 31, 2000, as compared to 83% for the nine months ended December 31,
1999. The decrease in the cost of meat products over the same period last year
is due primarily to the lower costs of pre-seasoned and marinated meat products
instead of beef purchased by the head. The Heritage Lifestyle Products-TM- line,
including pork and chicken, was introduced August 2, 2000.
The Company presently sells Heritage LIFESTYLE Products-TM- in
approximately 700 stores of two major supermarket's California and Nevada
divisions and 100 stores of a major chain with stores from Texas to Florida, a
total of approximately 800 stores. While the Company is urging these customers
to offer the Company's meat products in some or
Page 13
MATERIAL CHANGES IN RESULTS OF OPERATIONS (CONTINUED)
all of their approximately 3,370 additional stores in other areas, there can be
no assurance that these efforts will succeed. Also, the Company sells Heritage
LIFESTYLE Products-TM- to 48 stores of an 80 store regional chain located in the
Dallas/Fort Worth metroplex.
OIL AND GAS. Gross sales of oil and gas totaled $138,517 and $271,375
for the quarter and nine months ended December 31, 2000, respectively, of which
$116,303 and $200,853, respectively, were offset against the full cost pool
related to unproved properties under development. The resulting revenues from
the sale of oil and gas were $22,214 and $70,522 for the quarter and nine months
ended December 31, 2000, respectively. Resulting revenues from the sale of oil
and gas revenues for the prior year's quarter and nine-month periods were
$26,152 and $65,919, respectively. Revenues have increased for the nine-month
period for the current year due to higher prices. Production costs were $40,919
and $40,570 for the nine months ended December 31, 2000 and 1999, respectively.
Oil and gas revenues are expected to increase in future periods, as more Company
properties are placed in production. The costs of additional development and
drilling, including the five-well drilling program mentioned above, is being
capitalized under the full cost method of accounting.
GENERAL. Selling expenses of $108,975 and $228,474 for the current
quarter and nine months have increased from the prior year amounts of $45,071
and $105,273, respectively. This increase results mainly from introduction of
new meat product lines. Selling expenses include the outside sales costs and
additional demonstration costs of new product line. General and administrative
costs have increased to $207,109 for the quarter and $551,354 for the nine
months, respectively. This is a result of increased consulting and public
relations costs.
On a consolidated basis, the Company had a net loss for the current
nine-month period of ($567,573). The comparable result for the prior fiscal year
was a net income of $85,785. The primary reason for the change from 1999 to 2000
was a decrease in Company meat sales, increased selling expenses, and increased
general and administrative costs, most of which were related to the introduction
of the new product line.
MATERIAL CHANGES IN FINANCIAL POSITION
The Company's equity capital has shown a decrease of $409,116 since
March 31, 2000, the previous fiscal year-end. This decrease is primarily the
result of the net loss of $567,573 for the nine-month period.
The working capital of the Company was a $1,943,240 deficit for the period ended
December 31, 2000, a decrease from the working capital of $165,840 reported at
March 31, 2000. Current assets increased $554,291 during the current period due
to accounts receivable, inventory, and other current asset increases. Current
liabilities increased $2,663,371 primarily due to the advances under a credit
line, resulting in a decrease in the
Page 14
MATERIAL CHANGES IN FINANCIAL POSITION (CONTINUED)
overall working capital position of $2,109,080 during the nine months ended
December 31, 2000. The total assets of the Company were $30,348,926 for the
period ended December 31, 2000, which is $2,254,255 greater than total assets at
the previous year-end. This increase in total assets is primarily due to
receivable and inventory increases related to meat products and the
capitalization of oil and gas development costs on the Company's oil and gas
properties.
The Company's operating activities used $267,063 in cash flow for the
nine months ended December 31, 2000, as compared to providing $36,943 of cash
flow during the nine months ended December 31, 1999. Investing activities used
$1,713,031 of cash during the nine months ended December 31, 2000, due primarily
to additions to the oil and gas properties. Investing activities used cash of
$416,276 for the nine months ended December 31, 1999, also due to additions to
oil and gas properties. Advances under a credit facility provided $2,000,000
during the period. The Company foresees that it's oil and gas operations will
continue to require expenditures at this level in the immediate future.
At the end of the quarter, the Company had $136,327 of cash and cash
equivalents compared with $61,472 a year ago. The Company believes that it's
cash position will improve when the new product line, Heritage LIFESTYLE
Products-TM-, is complete and oil production increases.
SUBSEQUENT EVENT
In late January 2001, the Company received $1,000,000 under a
short-term financing agreement with Almac Financial Corporation, a corporation
owned by the Company's largest shareholder. This loan is in addition to a
$2,000,000 loan from a savings bank that remains outstanding. The Company is
currently in negotiations with a financial institution in order to provide
additional financing to fund oil and gas development, however, there is no
assurance that the additional financing efforts will be successful.
Part I, Item 3 - Quantitative and Qualitative Disclosures About Market Risk
Pursuant to the Instructions to Item 305(e) of Regulation S-K, no
disclosure is required.
Page 15
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements. Examples of
these statements include estimates of oil and gas reserves, the potential for
increased sales of beef products and increased oil and gas production. Others
may exist as well.
There can be no assurance that any forward-looking statements will
occur or that they will occur as anticipated. Investors are cautioned against
placing too much reliance on forward-looking statements. For additional
information, see the Company's Annual Report on Form 10-K for the year ended
March 31, 2000.
Page 16
UNITED HERITAGE CORPORATION
Part II - Other Information
Item 1. Legal Proceedings
The Company and its subsidiaries are not a party
to any material legal proceedings.
Item 2. Change in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
27 Financial Data Schedule
(b) Reports on Form 8-K
Date Item(s) Financial
Filed Reported Statements Included
---------------- -------- -------------------
November 9, 2000 Item 9 None
November 9, 2000 Item 9 None
December 19, 2000 Item 9 None
Page 17
UNITED HERITAGE CORPORATION
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.
UNITED HERITAGE CORPORATION
By: /s/ Walter G. Mize
-----------------------------------
Date: February 12, 2001 Walter G. Mize, President and
Chief Executive Officer
By: /s/ Harold L. Gilliam
-----------------------------------
Date: February 12, 2001 Harold L. Gilliam, Chief Financial
Officer and Secretary
Page 18
INDEX TO EXHIBITS
Exhibit Number Description
-------------- -----------
27 Financial Data Schedule