U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File No. 2-72232
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION
(Exact name of small business issuer as specified in its charter)
COMMONWEALTH OF VIRGINIA 54-1082057
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5990 Greenwood Plaza Blvd., Suite 127
Greenwood Village, Colorado 80111-4708
(Address of principal executive offices)
Issuer's telephone number: (303) 773-6016
NONE
- --------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
--- ---
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
Common Stock, $.10 par value 18,844,245
- ---------------------------- -----------------------------
Class Outstanding at April 30, 1996
Transitional Small Business Disclosure Format: Yes No X
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
INDEX
Page
Number
PART I. Financial Information
Item 1. - Financial statements
Consolidated Balance Sheet....................... 3
Consolidated Statement of Operations............. 4
Consolidated Statement of Cash Flows............. 5
Notes to Consolidated Financial Statements....... 6
Item 2. - Management's Discussion and Analysis of
Financial Condition and Result of
Operations........................... 7
PART II. Other Information............................ 9
Signatures............................................ 10
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
March 31,
1997 December 31,
(Unaudited) 1996
----------- ----------
ASSETS (In thousands)
CURRENT ASSETS
Cash and cash equivalents.................... $ 1,751 $ 1,580
Receivables, net of allowance for doubtful
accounts of $247 in 1997 and 1996........... 404 449
Prepaid expenses and other current assets.... 15 23
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Total current assets..................... 2,170 2,052
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OIL AND GAS PROPERTIES, at cost (accounted
for using the successful efforts method)
Proved oil and gas properties............... 9,642 9,514
Undeveloped leaseholds...................... 53 52
Pipeline equipment.......................... 1,348 1,346
Equipment inventory......................... 50 54
------- -------
11,093 10,966
Less accumulated depreciation, depletion,
amortization and impairment................ ( 9,828) ( 9,781)
------- -------
1,265 1,185
Properties held under installment sales, net
of accumulated depreciation, depletion and
amortization of $1,278 and $1,210,
respectively 932 1,000
------- -------
2,197 2,185
------- -------
OTHER ASSETS, at cost, net of accumulated
depreciation and amortization of $418 and $423 81 84
------- -------
4,448 $4,321
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable................................ $ 18 $ 18
Accounts payable and accrued expenses........ 175 156
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Total current liabilities................ 193 174
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NOTES PAYABLE................................. 26 29
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COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY
Preferred stock, $10.00 par value, 4,000,000
shares authorized, none issued or outstanding
Common stock, $.10 par value, 40,000,000
shares authorized, 18,844,245 shares issued
and outstanding............................. 1,884 1,884
Additional paid-in capital................... 29,242 29,242
Accumulated deficit.......................... (26,897) (26,968)
Notes receivable - officers.................. - (40)
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4,229 4,118
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$4,448 $4,321
======= =======
<FN>
The accompanying notes are an integral part
of the consolidated financial statements.
</FN>
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months
Ended March 31,
---------------
1997 1996
---- ----
(In thousands, except
per share amounts)
REVENUES
Oil and gas sales........................ $ 249 $ 210
Gas transmission sales................... 354 213
Income from pipeline relocation.......... - 498
Installment sales income (loss), net..... (4) (2)
Interest and other income................ 20 5
------ ------
619 924
------ ------
EXPENSES
Production costs......................... 58 52
Cost of gas transmission................. 219 191
Cost of pipeline relocation.............. - 258
Depletion, depreciation and amortization. 54 47
General and administrative............... 217 125
------ ------
548 673
------ ------
NET INCOME................................ $ 71 $ 251
====== ======
NET INCOME PER SHARE...................... $ .00 $ .01
====== ======
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING.............................. 18,844 18,844
====== ======
<FN>
The accompanying notes are an integral part
of the consolidated financial statements.
</FN>
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three Months
Ended March 31,
---------------
1997 1996
---- ----
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................. $ 71 $ 251
Adjustments to reconcile net income to net
cash provided by operating activities:
(Increase) decrease in accounts receivable 45 (379)
Decrease in other current assets.......... 8 130
Depletion, depreciation and amortization.. 54 47
Depletion, depreciation and amortization
charged against installment sales income
(loss), net.............................. 68 58
Increase in accounts payable and accrued
expenses................................. 19 51
Decrease in notes receivable - officers... 40 -
------ ------
Net cash provided by operating
activities............................. 305 158
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in certificates of deposit......... - (3)
Additions to oil and gas properties......... (127) (42)
Increase in other assets.................... (4) (10)
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Net cash used for investing activities.. (131) (55)
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CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of debt.......................... (3) (2)
------ ------
INCREASE IN CASH............................. 171 101
CASH AT BEGINNING OF PERIOD.................. 1,580 439
------ ------
CASH AT END OF PERIOD........................ $1,751 $ 540
====== ======
<FN>
The accompanying notes are an integral part
of the consolidated financial statements.
</FN>
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The interim financial data are unaudited; however, in the opinion of
Great Eastern Energy and Development Corporation and Subsidiaries ("Great
Eastern" or the "Company"), the interim data include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
statement of the results for the interim periods. These financial
statements should be read in conjunction with Great Eastern's December 31,
1996 audited consolidated financial statements and notes thereto included
in Form 10-KSB.
The consolidated financial statements include the accounts of Great
Eastern and its wholly-owned subsidiaries, Patton Oil Co., Zoandra
Petroleum, Inc. and Sycamore Valley Gathering, Ltd. All significant
intercompany balances and transactions have been eliminated in
consolidation.
NOTE 2 - RELATED PARTY TRANSACTIONS
During the first quarter of fiscal 1997, the Company forgave a loan
receivable from an officer in the amount of $40,000. The forgiveness and
associated payroll taxes in the aggregate gross amount of $77,000 is
reflected as compensation under general and administrative expenses in the
statement of operations for the three months ended March 31, 1997.
GREAT EASTERN ENERGY AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
First Quarter 1997 Compared to First Quarter 1996. The Company's
first quarter of fiscal 1997 operations reflected net income of $71,000 as
compared to net income of $251,000 for the corresponding quarter of fiscal
1996. Increased sales volumes from oil properties under waterflood and
increased sales prices have resulted in increased profits from oil and gas
operations of $191,000 in the first quarter of fiscal 1997 as compared to
$158,000 for the corresponding quarter of fiscal 1996.
An increase in production volumes from coalbed methane gas wells,
coupled with an increase in product prices, has resulted in an increase in
gas transmission sales. The increase in gas transmission sales volumes
resulted in a corresponding increase in the cost of gas, and the effect of
cost containment policies was a reduction to operating expenses. Natural
gas transmission operations reflected a profit of $135,000 for the first
quarter of fiscal 1997 as compared to a profit of $22,000 for the
corresponding quarter of fiscal 1996.
Management entered into a fixed-price contract whereby the Kansas
Department of Transportation agreed to pay the Company $498,000 to relocate
certain portions of its pipeline. Construction was completed during the
first quarter of fiscal 1996 at an aggregate cost of $258,000, and resulted
in a profit of $240,000 from the arrangement. There were no such transac
tions during the corresponding quarter of fiscal 1997.
A loss from installment sales of $4,000, net of depreciation,
depletion and amortization of $68,000, is reflected in the first quarter of
fiscal 1997 consolidated statement of operations as compared to a loss from
installment sales income of $2,000, net of depreciation, depletion and
amortization of $58,000 for the corresponding quarter of fiscal 1996.
General and administrative costs increased by $92,000 to $217,000
during the first quarter of fiscal 1997 as compared to $125,000 for the
corresponding quarter of fiscal 1996. The principal increase related to
compensation costs of $77,000 associated with the retirement of a certain
officer's obligation; the remaining increase was primarily attributed to
expenses associated with the proposed sale of the Company.
No provision for income taxes was reflected in the first quarter 1997
consolidated statement of operations, as the Company has adequate net
operating loss carryforwards available to offset taxable income.
Current Operations
Since January 1, 1997, the Company has drilled two development dry
holes; there has not been any exploratory drilling activities.
Liquidity and Capital Resources
Working Capital. The Company had working capital of $1,977,000 and
$1,878,000 at March 31, 1997 and December 31, 1996, respectively. The
Company has no bank debt and, with the exception of one compressor, no oil
and gas properties are pledged as collateral. Management believes that the
Company's liquidity is adequate to meet operating activities for fiscal
1997. Oil and gas development activities, if any, will be funded solely
from excess cash generated from operations and from proceeds generated from
the installment sale of certain southeastern Kansas coalbed methane gas
properties.
Future Operations. Some selected developmental drilling for oil and
gas may be conducted in Kansas in 1997. No exploratory wells are scheduled
to be drilled in 1997.
Other. On September 26, 1994, the Company retained the services of
Kirkpatrick Energy Associates, Inc. ("Kirkpatrick"), an investment banking
firm, to evaluate options available to the Company to maximize shareholder
value, including a possible sale of the Company. Except as to certain
identified companies considered to be active and viable candidates for the
purchase of, or merger with, Great Eastern, Kirkpatrick's services were
terminated October 30, 1995.
Except as noted above, management has assumed sole responsibility for
such efforts heretofore. There is no assurance that any action, including
a possible sale, will occur.
PART II - OTHER INFORMATION
Items 1 through 6 are not applicable.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
GREAT EASTERN ENERGY AND
DEVELOPMENT CORPORATION
(Registrant)
Date: May 14, 1997 By:
Donald G. Jumper
Chief Executive Officer, President, Chief
Financial and Accounting Officer and
Director