EXHIBIT 99.6
LATEX RESOURCES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
JANUARY 31, 1997 JULY 31, 1996
ASSETS (UNAUDITED) (AUDITED)
------ ---------------- -------------
Current assets:
Cash...................... $ 27,670 $ 19,337
Accounts receivable-net... 2,680,488 3,324,309
Accounts and notes receiv-
able-other............... 3,884 515,820
Inventories............... 175,493 175,493
Other current assets...... 58,245 27,587
Assets held for resale.... 164,792 164,792
----------- -----------
Total current assets.... $ 3,110,572 $ 4,227,338
----------- -----------
Property, plant, and equip-
ment:
Oil and gas properties--at
cost..................... $35,379,541 $41,264,573
Other depreciable assets.. 855,513 854,259
----------- -----------
$36,235,054 $42,118,832
Less accumulated deprecia-
tion and depletion....... 8,826,463 10,173,524
----------- -----------
Net property, plant and
equipment................ $27,408,591 $31,945,308
----------- -----------
Other assets:
Notes receivable-net of
current portion.......... $ -- $ 757,500
Deposits and other assets. 123,839 130,734
Accounts and notes receiv-
able-related parties..... -- 392,297
Intangible assets, net of
amortization............. 1,357,592 1,512,899
----------- -----------
Total other assets...... 1,481,431 2,793,430
----------- -----------
Total assets................ $32,000,594 $38,966,076
=========== ===========
See accompanying notes to consolidated condensed financial statements.
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LATEX RESOURCES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS(CONTINUED)
JANUARY 31, 1997 JULY 31, 1996
LIABILITIES AND STOCKHOLDERS EQUITY (UNAUDITED) (AUDITED)
----------------------------------- ---------------- -------------
Current liabilities:
Accounts payable.................................. $ 10,018,608 $ 9,057,707
Accounts payable-other............................ 880,424 132,000
Accrued expenses payable.......................... 523,584 607,055
Current portion long-term debt.................... $ 18,758,909 22,235,867
------------ ------------
Total current liabilities....................... 30,181,525 32,032,629
------------ ------------
Other liabilities................................... $ 565,000 $ 615,000
------------ ------------
Total liabilities............................... $ 30,746,525 $ 32,647,629
------------ ------------
Stockholders' equity:
Preferred stock--par value $0.01; 5,000,000 shares
authorized:
Series A convertible preferred stock ($10.00
liquidation preference), 454,290 and 449,828
issued and outstanding at January 31, 1997 and
July 31, 1996, respectively.................... $ 4,543 $ 4,498
Series B convertible preferred stock ($10.00
liquidation preference), 509,259 and 480,025
issued and outstanding at January 31, 1997 and
July 31, 1996, respectively.................... 5,093 4,800
Common stock--par value $.01; 50,000,000 shares
authorized; 20,813,995 and 19,123,995 issued and
outstanding at January 31, 1997 and July 31,
1996, respectively............................... 208,140 191,240
Additional paid-in capital........................ 19,202,981 18,355,134
Accumulated deficit............................... (17,677,323) (11,747,860)
Treasury stock 1,008,500 common shares at cost.... (489,365) (489,365)
------------ ------------
Total stockholders' equity...................... $ 1,254,069 $ 6,318,447
------------ ------------
Total liabilities and stockholders' equity.......... $ 32,000,594 $ 38,966,076
============ ============
See accompanying notes to consolidated condensed financial statements.
2
LATEX RESOURCES, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS
ENDED THREE MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, 1997 JANUARY 31, 1996 JANUARY 31, 1997 JANUARY 31, 1996
(UNAUDITED) (RESTATED, UNAUDITED) (UNAUDITED) (RESTATED, UNAUDITED)
---------------- --------------------- ---------------- ---------------------
Revenue:
Oil and gas sales..... $ 1,180,445 $2,848,059 $ 3,558,146 $ 5,882,811
Crude oil and gas
marketing............ 42,228 114,737 132,455 303,580
Lease operations and
management fees...... 205,385 166,346 455,274 402,079
------------ ---------- ------------ ------------
Total operating
income............. $ 1,428,058 $3,129,142 $ 4,145,875 $ 6,588,470
Operating expenses:
Lease operating
expense.............. $ 1,091,733 $1,909,659 $ 2,557,281 $ 3,471,175
Cost of crude oil &
gas marketing........ 5,605 31,491 22,876 115,674
General &
administrative
expense.............. 802,691 798,105 2,697,435 1,545,968
Depreciation,
depletion and
amortization......... 862,406 1,351,353 3,469,957 2,599,332
Dry hole costs and
abandonments......... (5,672) 27,775 16,441 101,068
------------ ---------- ------------ ------------
Total operating
expenses $ 2,756,763 $4,118,383 $ 8,763,990 $ 7,833,217
------------ ---------- ------------ ------------
Net operating loss...... $ (1,328,705) $ (989,241) $ (4,618,115) $ (1,244,747)
Other income:
Equity in losses and
writeoffs of
investments in
affiliates........... $ (16,746) $ (30,500) $ (16,746) $ (72,000)
Gain on sale of
assets............... 38,487 1,292,279 106,520 1,292,279
Interest Income....... 1,688 4,842 33,622 43,495
Interest Expense...... (497,966) (568,843) (1,097,784) (1,149,510)
------------ ---------- ------------ ------------
Net loss................ $ (1,803,242) $ (291,463) $ (5,592,503) $ (1,130,483)
Preferred stock
dividends.............. $ 170,710 $ 139,760 $ 336,960 $ 275,990
------------ ---------- ------------ ------------
Net loss for common
shareholders........... $ (1,973,952) $ (431,223) $ (5,929,463) $ (1,406,473)
============ ========== ============ ============
Loss per share for
common shareholders.... $ (0.09) $ (0.02) $ (0.29) $ (0.08)
============ ========== ============ ============
Weighted average number
of shares outstanding.. 20,813,995 18,022,195 20,069,940 17,986,325
============ ========== ============ ============
See accompanying notes to consolidated condensed financial statements.
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LATEX RESOURCES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JANUARY 31, 1997
PREFERRED STOCK ADDITIONAL TOTAL
----------------- COMMON PAID-IN ACCUMULATED TREASURY STOCKHOLDERS
CLASS A CLASS B STOCK CAPITAL DEFICIT STOCK EQUITY
-------- -------- ------- ---------- ----------- -------- ------------
Balance July 31, 1996... $ 4,498 4,800 191,240 18,355,134 (11,747,860) (489,365) 6,318,447
Issued 4,462 shares of
Class A and 29,234
shares of Class B in
lieu of cash dividends. 45 293 -- 336,622 (336,960) -- --
Issued 1,690,000 shares
for employee bonus..... -- -- 16,900 511,225 -- -- 528,125
Net loss................ -- -- -- -- (5,592,503) -- (5,592,503)
-------- ------- ------- ---------- ----------- -------- ----------
Balance January 31,
1997................... $ 4,543 5,093 208,140 19,202,981 (17,677,323) (489,365) 1,254,069
======== ======= ======= ========== =========== ======== ==========
See accompanying notes to consolidated condensed financial statements.
4
LATEX RESOURCES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, 1997 JANUARY 31, 1996
(UNAUDITED) (UNAUDITED) (RESTATED)
---------------- ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................. $ (5,592,503) $ (1,130,483)
Adjustments to reconcile net loss to
net cash provided by (used in) oper-
ating activities: -- --
Depreciation, amortization and
depletion......................... 3,469,957 2,599,332
Gain on sale of assets............. (106,520) (1,292,279)
Equity in losses and writeoffs of
investments in affiliates......... 16,746 72,000
Dryhole costs and abandonments..... 16,441 101,068
Employee bonus..................... 528,125 --
Forgiveness of debt................ 384,744 --
Changes in assets and liabilities:
Accounts receivable.............. 643,821 (84,604)
Accounts and notes receivable-
related parties................. (7,257)
Inventories...................... -- (129,446)
Other assets..................... (23,763) 1,160
Prepaid expenses................. -- (97,235)
Accrued expenses payable......... (83,471) (87,916)
Accounts payable................. 1,709,325 (52,135)
Other liabilities................ (50,000) --
------------ ------------
Net cash provided by (used in)
operating activities.................. 905,645 (100,538)
------------ ------------
Cash flows from investing activities:
Proceeds from sale of property and
equipment........................... 1,573,625 2,885,320
Purchases of property and equipment.. (261,479) (2,297,023)
Collections on notes receivable...... 1,267,500 --
------------ ------------
Net cash provided by (used for)
investing activities.................. 2,579,646 588,297
------------ ------------
See accompanying notes to consolidated condensed financial statements
5
LATEX RESOURCES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS(CONTINUED)
SIX MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, 1997 JANUARY 31, 1996
(UNAUDITED) (UNAUDITED) (RESTATED)
---------------- ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Payments on notes payable............ (3,476,958) (801,988)
----------- ----------
Net cash used for financing
activities.......................... (3,476,958) (801,988)
----------- ----------
Net increase (decrease) in cash and
cash equivalents.................... 8,333 (314,229)
Cash and cash equivalents beginning
of period........................... $ 19,337 $ 314,229
----------- ----------
Cash and cash equivalents end of
period.............................. $ 27,670 $ --
=========== ==========
Supplemental disclosures of cash flow
information:
Cash paid during the period for
interest............................ $ 1,097,784 $1,149,510
=========== ==========
See accompanying notes to consolidated condensed financial statements.
6
LATEX RESOURCES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERIM REPORTING
The interim consolidated condensed financial statements reflect all
adjustments which, in the opinion of management, are necessary for a fair
presentation of the results for the interim periods presented. All such
adjustments are of a normal recurring nature. Due to the seasonal nature of
the business, the results of operations for the six months ended January 31,
1997 are not necessarily indicative of the results that may be expected for
the year ended July 31, 1997. For further information refer to the
consolidated fianancial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended July 31, 1996.
RECLASSIFICATION
Certain amounts in the January 1996 consolidated condensed financial
statements have been reclassified to conform with the January 1997
presentation.
ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 121
Effective August 1, 1996, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 121, Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of, which requires
impairment losses to be recognized for long-lived assets when indicators of
impairment are present and the undiscounted cash flows are not sufficient to
recover the assets carrying amount. The impairment loss is measured by
comparing the fair value of the asset to its carrying amount. Fair values are
based on discounted future cash flows or information provided by sales and
purchases of similar assets. Under SFAS No. 121. the Company now evaluates
impairment of production assets on a well by well basis rather than using a
total company basis for its proved properties. As a result, the Company
recognized a pre-tax impairment loss of $1.4 million in the three months ended
October 31, 1996. Such a loss is included in depreciation, depletion and
amortization expense.
RESTATEMENT OF PRIOR YEAR
Effective March 31, 1995 the Company acquired Germany Oil Company
("Germany") in a purchase transaction. The net assets acquired consisted
primarily of oil and gas properties. In connection with the transaction the
Company failed to allocate the purchase price to all assets acquired as
required by generally accepted accounting principles. During fiscal 1996 the
Company, based on the reports of independent petroleum engineers, reallocated
the adjusted purchase price as of the date of acquisition. Accordingly, the
previously reported 1995 amounts have been restated as follows:
STATEMENT OF
ASSET LIABILITY OPERATIONS
INCREASE (INCREASE) (INCREASE)
(DECREASE) DECREASE DECREASE
----------- ---------- ------------
Oil and gas properties..................... $ 7,859,993 $ -- $ --
Goodwill................................... (9,929,199) -- --
Deferred loan cost......................... 871,270 -- --
Accounts payable........................... -- 1,197,936 --
Goodwill amortization...................... (220,650) -- 220,650
Depletion expense.......................... (49,283) -- 49,283
Amortization expense....................... 58,085 -- (58,085)
----------- ---------- --------
Total.................................... $(1,409,784) $1,197,936 $211,848
=========== ========== ========
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