United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2004.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission file number 0-8532
OAKRIDGE ENERGY, INC.
(Exact name of small business issuer as specified in its charter)
Utah
(State or other jurisdiction of
incorporation or organization)
87-0287176
(I.R.S. Employer
Identification No.)
4613 Jacksboro Highway
Wichita Falls, Texas 76302
(Address of principal executive offices)
(940) 322-4772
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
The number of shares outstanding of each of the issuer's classes of common
equity, as of May 25, 2005: Common Stock, $.04 par value, 4,284,867 shares
Transitional Small Business Disclosure Format (check one);
YES [ ] NO [X]
INDEX
Page
----
Part I - Financial Information
1. Financial Statements
Condensed Balance Sheets at
November 30, 2004 (Unaudited and restated) and February 29, 2004 (Audited and restated) 1
Condensed Statements of Operations (Unaudited and restated)
For the Three and Nine Months Ended November 30, 2004 and 2003 2
Statements of Cash Flows (Unaudited and restated)
For the Nine Months Ended November 30, 2004 and 2003 3
Notes to Condensed Financial Statements 4
2. Management's Discussion and Analysis or Plan of Operation 5
3. Controls and Procedures 10
Part II - Other Information
6. Exhibits 11
Signatures 11
Index to Exhibits 12
Part I of this Report contains forward looking statements that involve risks and
uncertainties. Accordingly, no assurances can be given that the actual events
and results will not be materially different than the anticipated results
described in the forward looking statements. See "Item 2. - Management's
Discussion and Analysis or Plan of Operation" for a description of various
factors that could materially affect the ability of the Company to achieve the
results described in the forward looking statements.
ITEM 1. FINANCIAL STATEMENTS.
OAKRIDGE ENERGY, INC.
CONDENSED BALANCE SHEETS
November 30, 2004 February 29, 2004
------------------------ -----------------
(Unaudited and restated) (Restated)
ASSETS
Current assets:
Cash and cash equivalents $ 2,266,640 $ 2,853,798
Trade accounts receivable 173,275 150,564
Investment securities available for sale 667,064 436,378
Prepaid expenses and other 9,603 20,698
------------ ------------
Total current assets 3,116,582 3,461,438
------------ ------------
Oil and gas properties, at cost using the successful efforts method of
accounting, net of accumulated depletion and depreciation of
$6,327,786 on November 30, 2004 and $6,215,903 on February 29, 2004 963,176 948,900
Coal and gravel properties, net of accumulated depletion and depreciation
of $8,051,719 on November 30, 2004 and $8,046,348 on February 29, 2004 260,488 265,859
Real estate held for development 3,019,946 2,986,658
Other property and equipment, net of accumulated depreciation
of $396,281 on November 30, 2004 and $376,406 on February 29, 2004 146,755 138,540
Deferred tax asset 226,751 56,649
Other non-current assets 865,809 865,809
------------ ------------
$ 8,599,507 $ 8,723,853
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 49,666 $ 67,492
Accrued expenses 63,649 49,473
Deferred federal income taxes 171,775 86,490
------------ ------------
Total current liabilities 285,090 203,455
Asset retirement obligations 625,658 606,105
------------ ------------
Total liabilities 910,748 809,560
------------ ------------
Stockholders' equity:
Common stock, $.04 par value, 20,000,000
shares authorized, 10,157,803 shares issued 406,312 406,312
Additional paid-in capital 805,092 805,092
Retained earnings 16,416,922 16,684,193
Accumulated other comprehensive income 292,859 147,457
Less treasury stock, at cost, 5,872,311 shares on November 30, 2004
and 5,851,724 shares on February 29, 2004 (10,232,426) (10,128,761)
------------ ------------
Total stockholders' equity 7,688,759 7,914,293
------------ ------------
$ 8,599,507 $ 8,723,853
============ ============
The accompanying notes are an integral part of these financial statements.
1
OAKRIDGE ENERGY, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
3 Months Ended November 30, 9 Months Ended November 30,
2004 2003 2004 2003
(Restated) (Restated) (Restated) (Restated)
------------ ----------- ----------- ------------
Revenues:
Oil and gas $ 328,584 $ 223,265 $ 923,815 $ 732,904
Gravel 7,908 87,310 47,616 192,468
------------ ----------- ----------- -----------
Total revenues 336,492 310,575 971,431 925,372
------------ ----------- ----------- -----------
Operating expenses:
Oil and gas 236,212 191,165 652,699 633,810
Coal and gravel 17,830 43,770 67,038 75,798
Real estate development 989 3,330 1,109 9,482
General and administrative 110,892 110,587 706,178 375,717
------------ ----------- ----------- -----------
Total operating expenses 365,923 348,852 1,427,024 1,094,807
------------ ----------- ----------- -----------
Loss from operations (29,431) (38,277) (455,593) (169,435)
Interest and other, net 11,831 28,213 31,556 25,717
------------ ----------- ----------- -----------
Loss before income taxes and cumulative
effect of accounting change (17,600) (10,064) (424,037) (143,718)
Income tax benefit (6,507) (3,721) (156,766) (53,133)
------------ ----------- ----------- -----------
Net loss before cumulative effect of
accounting change (11,093) (6,343) (267,271) (90,585)
Cumulative effect of accounting change,
net of income tax benefit - - - (161,793)
------------ ----------- ----------- -----------
Net loss $ (11,093) $ (6,343) $ (267,271) $ (252,378)
============ =========== =========== ===========
Basic and diluted loss per common share:
Net loss before cumulative effect of
accounting change ($ 0.00) ($ 0.00) ($ 0.06) ($ 0.02)
Cumulative effect of accounting change,
net of income tax benefit - - - ($ 0.04)
------------ ----------- ----------- -----------
Net loss ($ 0.00) ($ 0.00) ($ 0.06) ($ 0.06)
============ =========== =========== ===========
Weighted average shares outstanding 4,287,800 4,319,338 4,293,805 4,341,039
============ =========== =========== ===========
2
OAKRIDGE ENERGY, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For 9 Months Ended For 9 Months Ended
November 30, 2004 November 30, 2003
(Restated) (Restated)
------------------ ------------------
Cash flows from operating activities:
Net loss $ (267,271) $ (252,378)
Adjustments to reconcile net loss to net cash
used in operating activities:
Cumulative effect of accounting change,
net of income tax benefit - 161,793
Depletion and depreciation 137,129 155,855
Accretion of discount on asset retirement obligations 20,391 20,645
Loss on sales of property and equipment - 18,364
Deferred federal income taxes (170,102) (68,572)
Net changes in assets and liabilities:
Trade accounts receivable (22,711) 145,169
Prepaid expenses and other current assets 11,095 12,944
Accounts payable (17,826) (38,502)
Accrued expenses 14,176 (9,813)
Reclamation costs (838) (252,146)
------------ ------------
Net cash used in operating activities (295,957) (106,641)
------------ ------------
Cash flows from investing activities:
Additions to oil and gas properties (126,158) (47,433)
Additions to real estate held for development (33,288) (73,051)
Additions to other property and equipment (28,090) -
Proceeds from sale of oil and gas properties - 237
Proceeds from sale of other property and equipment - 25,000
------------ ------------
Net cash used in investing activities (187,536) (95,247)
------------ ------------
Cash flows from financing activities:
Purchases of treasury stock (103,665) (244,884)
------------ ------------
Net cash used in financing activities (103,665) (244,884)
------------ ------------
Net decrease in cash and cash equivalents (587,158) (446,772)
Cash and cash equivalents at beginning of period 2,853,798 3,375,427
------------ ------------
Cash and cash equivalents at end of period $ 2,266,640 $ 2,928,655
============ ============
Supplemental disclosures of cash flow information:
Interest paid - -
Taxes paid $ 16,822 $ 19,790
Recognition in Stockholders' Equity of the net unrealized holding gain on
available for sale securities of $76,514 net of tax effect of $44,880 during the
nine months ended November 30, 2003 and $145,402 net of tax effect of $85,285
during the nine months ended November 30, 2004.
3
OAKRIDGE ENERGY, INC.
Notes to Condensed Financial Statements
(Unaudited)
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial statements and with the instructions to Form
10-QSB and Regulation S-B for the three and nine month periods ended November
30, 2004 and 2003 and reflect, in the opinion of management, all adjustments,
which are of a normal and recurring nature, necessary for a fair presentation of
the results for such periods. The foregoing financial statements do not include
all information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
However, except as disclosed herein, there has been no material change in the
information disclosed in the notes to the financial statements for the year
ended February 29, 2004 included in the Company's Annual Report on Form 10-KSB
filed with the Securities and Exchange Commission. The interim unaudited
financial statements should be read in conjunction with the annual financial
statements and accompanying notes. Operating results for the three and nine
months ended November 30, 2004 are not necessarily indicative of the results
that may be expected for the year ending February 28, 2005. The Company's
operating segments are set forth in the annual financial statements and
accompanying notes for the fiscal year ended February 29, 2004.
Information regarding operations and assets by segment is as follows:
For the Three For the Three For the Nine For the Nine
Months Ended Months Ended Months Ended Months Ended
November 30, 2004 November 30, 2003 November 30, 2004 November 30, 2003
----------------- ----------------- ----------------- -----------------
Business segment revenue:
Oil and gas $ 328,584 $ 223,265 $ 923,815 $ 732,904
Gravel 7,908 87,310 47,616 192,468
-------------- -------------- -------------- --------------
$ 336,492 $ 310,575 $ 971,431 $ 925,372
-------------- -------------- -------------- --------------
Business segment profit (loss):
Oil and gas $ 92,372 $ 32,100 $ 271,116 $ 99,094
Coal and gravel (9,922) 43,540 (19,422) 116,670
Real estate development (989) (3,330) (1,109) (9,482)
General corporate (110,892) (110,587) (706,178) (375,717)
-------------- -------------- -------------- --------------
Loss from operations (29,431) (38,277) (455,593) (169,435)
Interest and other, net 11,831 28,213 31,556 25,717
-------------- -------------- -------------- --------------
Loss before income taxes and
cumulative effect of accounting change $ (17,600) $ (10,064) $ (424,037) $ (143,718)
============== ============== ============== ==============
As of As of
November 30, 2004 February 29, 2004
----------------- -----------------
Total assets:
Oil and gas $ 4,346,189 $ 4,495,572
Coal and gravel 260,488 265,859
Real estate development 3,019,946 2,986,658
General corporate 972,884 975,764
-------------- --------------
$ 8,599,507 $ 8,723,853
-------------- --------------
4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion should be read in conjunction with Items 6
and 7 of the Company's Annual Report on Form 10-KSB for the fiscal year ended
February 29, 2004 and the Notes to Condensed Financial Statements contained in
this report.
RESULTS OF OPERATIONS
The Company had a net loss of $11,093 ($.00 per share) in the three
months ended November 30, 2004 compared to a net loss of $6,343 ($.00 per share)
in the three months ended November 30, 2003. In the nine-month 2004 period, the
Company had a net loss of $267,271 ($.06 per share) compared to a net loss of
$252,378 ($.06 per share) in the 2003 nine-month period after a cumulative
effect of accounting change, net of income tax benefit of $161,793. The Company
had increased oil and gas revenues in both 2004 periods but reduced gravel
revenues and interest and other net, revenues adversely affected the three-month
results. In the nine-month 2004 period, a $315,000 bonus paid to the Company's
Chief Executive Officer in April 2004 for her extraordinary services over a
number of years with respect to the Company's proposed Colorado real estate
development project along with reduced gravel revenues were the principal
reasons for the greater loss.
Oil and gas revenues increased approximately $105,300 (47.2%) and
$190,900 (26.0%) in the three and nine-month 2004 periods due to very
significant increases in the Company's average oil prices received as oil and
gas production sales volumes in both periods declined as compared to the 2003
periods. The following tables compare the Company's oil and gas revenues and
average prices received and its sales volumes of oil and gas during the three
and nine months ended November 30, 2004 with those during the three and nine
months ended November 30, 2003:
THREE MONTHS THREE MONTHS
ENDED ENDED PERCENTAGE
NOVEMBER 30, 2004 NOVEMBER 30, 2003 DIFFERENCE
----------------- ----------------- ----------
Oil:
Revenues $ 270,036 $ 172,210 + 56.8%
Volume (Bbls.) 5,604 5,874 - 4.6
Average Price
(per Bbl.) $ 48.19 $ 29.32 + 64.4
5
THREE MONTHS THREE MONTHS
ENDED ENDED PERCENTAGE
NOVEMBER 30, 2004 NOVEMBER 30, 2003 DIFFERENCE
----------------- ----------------- ----------
Gas:
Revenues $ 46,060 $ 38,786 + 18.8%
Volume (MCF) 7,860 8,753 - 10.2
Average Price
(per MCF) $ 5.86 $ 4.43 + 32.2
NINE MONTHS NINE MONTHS
ENDED ENDED PERCENTAGE
NOVEMBER 30, 2004 NOVEMBER 30, 2003 DIFFERENCE
----------------- ----------------- ----------
Oil:
Revenues $ 760,232 $ 564,541 + 34.7%
Volume (Bbls.) 18,195 19,215 - 5.3
Average Price
(per Bbl.) $ 41.78 $ 29.38 + 42.2
Gas:
Revenues $ 129,249 $ 134,683 - 4.0%
Volume (MCF) 21,966 24,720 - 11.1
Average Price
(per MCF) $ 5.88 $ 5.45 + 8.0
Non-material amounts of natural gas liquids revenues and sales are excluded from
the foregoing tables.
The Company's principal producing oil and gas property in Madison
County, Texas is in the process of being waterflooded. Revenues from the
property increased significantly in both 2004 periods, rather than declining as
had been the case in recent years, primarily due to the increase in the
Company's average oil prices received from the property. A water supply well was
recompleted on the property approximately six months ago and the production from
that well is supplying the three water injection wells being used in the
waterflood. The water supply well has produced approximately 400,000 barrels of
water so far and the producing wells also produce approximately 1,000 to 1,200
barrels of water per month, which is also reinjected into the formation. The
operator of the property does not expect any significant increase in oil
production volumes from the property until the void
6
in the producing formation from prior oil production, which is the equivalent of
roughly 2,000,000 barrels of oil, has been filled.
The Company's gravel revenues declined approximately $79,400 (90.9%)
and $144,900 (75.3%) in the three and nine-month 2004 periods as a result of
reduced gravel sales and road usage fees and the lack of any rentals for surface
use. A dispute developed in fiscal 2004 between the Company and Four Corners
Materials, which at the time was conducting gravel mining operations on the
Company's Colorado property, that was detailed in the Company's Annual Report on
Form 10-KSB for the fiscal year ended February 29, 2004. As a result of such
dispute, Four Corners Materials is no longer mining the property and the only
gravel sales made during the 2004 periods were from stockpiles of gravel
accumulated prior to the cessation of mining. The Company received only road
usage fees and a small amount of income from gravel sales during the three
months ended November 30, 2004. The Company would consider leasing the property
again for gravel operations but has no intention of conducting any operations
itself.
The expenses of the Company's oil and gas operations increased
approximately $45,000 (23.6%) and $18,900 (3.0%) in the three and nine months
ended November 30, 2004 due to higher lease operating expense and production and
ad valorem taxes. Lease operating expense rose approximately $36,700 (32.1%) in
the three months ended November 30, 2004 and $18,800 (4.8%) in the nine-month
2004 period primarily due to the significant level of workovers the Company
performed on multiple leases in the North Texas area. Lease operating expense in
the North Texas area alone increased approximately $29,400 in the three months
ended November 30, 2004 and approximately $36,800 in the nine-month period.
Workover expense incurred on the Hunt #1 well in Panola County, Texas also
affected the 2004 nine-month period lease operating expense. Production taxes
increased approximately $4,400 (39.4%) in the 2004 three-month period and $3,900
(10.8%) in the nine-month period due to the Company's increased oil and gas
revenues. Ad valorem taxes increased approximately $3,000 in each of the 2004
periods to adjust for the difference between the actual tax statements received
for calendar 2004 and the accruals in prior periods based on calendar 2003
payments. Depletion and depreciation expense was approximately the same in the
2004 three-month period as compared to 2003 but declined approximately $6,300
(5.3%) in the 2004 nine-month period. Such decline was primarily attributable to
the Madison County, Texas property and was due to lower production volumes than
in the 2003 period and a lower depletable balance for
7
the property at the fiscal 2004 year end as compared to the prior year. The
Company did not incur any exploration expense, dry hole expense or leasehold
abandonment charges during any of the 2004 or 2003 periods, and field payroll
and engineering expense were at the same levels in all 2004 and 2003 periods.
The expenses of the Company's coal and gravel operations decreased
approximately $25,900 (59.3%) in the three months ended November 30, 2004 and
$8,800 (11.6%) in the nine months ended November 30, 2004 compared to the 2003
periods primarily as a result of the absence (or significantly reduced) legal
expense, lower permitting expense in the three-month period and reduced
depletion expense resulting from the lower level of gravel sales in both
periods, partially offset in both periods by higher ad valorem taxes. Real
estate development expenses declined approximately $2,300 (70.3%) and $8,400
(88.3%) in the three and nine-month 2004 periods due to the absence of any legal
or depreciation expense. In the 2003 periods, the Company incurred legal expense
in connection with obtaining the Area Plan approval for its proposed "Oakridge
at Durango" project and depreciation expense for a trailer used in the Company's
operations, which was sold during the 2003 nine-month period. The Company
incurred virtually no expense (as opposed to capitalized costs) in the 2004
periods after the Company made the decision during the three months ended May
31, 2004 to attempt to sell its proposed real estate development.
General and administrative expenses were at approximately the same
levels in the 2004 and 2003 three-month periods; however, such expenses
increased approximately $330,500 (88.0%) in the nine months ended November 30,
2004. In the three-month 2004 period, increases in employee benefit and office
repair and maintenance expenses offset declines in travel, payroll and
governmental reporting expense. The significant increase in the 2004 nine-month
period was primarily as a result of the previously mentioned $315,000 bonus paid
to Sandra Pautsky in April 2004 and the employer portion of payroll taxes
associated with such bonus.
Interest and other income, net declined approximately $16,400 in the
three months ended November 30, 2004 due to lower levels of interest and
dividend income received. The Company received significant one-time dividend
income in the 2003 three-month period. Other income increased approximately
$5,800 in the 2004 nine-month period. Although interest and dividend income were
lower than 2003 amounts, the Company did not incur any loss from the sale of
property in the 2004 period. In the 2003 nine-month
8
period, the Company incurred an approximate $18,400 loss on the sale of a
trailer used in the Company's real estate operations.
The Company's weighted average shares outstanding decreased
approximately .7% and 1.1% during the three and nine months ended November 30,
2004, respectively. The Company purchased 5,000 shares of its stock during the
2004 three-month period and an additional 15,587 shares in the remainder of the
2004 nine-month period. All of such purchases were from unrelated parties.
FINANCIAL CONDITION AND LIQUIDITY
During the first nine months of fiscal 2005, all of the Company's
activities were again net users of funds. As a consequence, the Company's cash
and cash equivalents decreased by approximately $587,200 at November 30, 2004.
The Company actually had a small positive cash flow in the third fiscal quarter,
however, as the cash and cash equivalents decrease at the end of the second
fiscal quarter on August 31, 2004 was approximately $606,000. Despite the fact
that the Company did not participate in any exploratory or development oil and
gas drilling during the period, the Company's operating activities used
approximately $296,000 of funds during the nine-month period. The Company's
investing activities used approximately $187,500, primarily in additions to oil
and gas properties, and the Company did not receive any funds from sales of oil
and gas properties or other property and equipment during the period. The
Company's financing activities used approximately $103,700, all on purchases of
the Company's common stock. Notwithstanding the net reduction in funds during
the nine-month period, at November 30, 2004 the Company had no indebtedness and
cash, cash equivalents and investment securities available for sale totaling
approximately $2,933,704, an approximate $200,000 increase from the same level
at August 31, 2004.
The Company expects to fund its contemplated operations and any
purchases of the Company's stock it makes during the remainder of fiscal 2005
from its cash and cash equivalents, sales of all or a portion of its investment
securities available for sale and any cash flow from its operations. Given the
Company's decision to attempt to sell its proposed Colorado real estate
development project, the Company currently does not expect to make any material
expenditures on such project for the remainder of fiscal 2005.
9
ITEM 3. CONTROLS AND PROCEDURES.
The term "disclosure controls and procedures" is defined in Rules
13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, or the Exchange
Act. This term refers to the controls and procedures of a company that are
designed to ensure that information required to be disclosed by a company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified by the Securities and
Exchange Commission. Our management, including our Chief Executive Officer and
Principal Financial Officer, has evaluated the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this annual
report. Based upon that evaluation, our Chief Executive Officer and Principal
Financial Officer have concluded that our disclosure controls and procedures
were effective as of the end of the period covered by this annual report.
There were no changes to our internal control over financial reporting during
our last fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
10
ITEM 6. EXHIBITS
(31) Rule 13a-14(a)/Rule 15d-14(a) Certifications:
(i) Certification of Sandra Pautsky, Principal Executive
Officer of the Company, filed herewith.
(ii) Certification of Carol J. Cooper, Principal Financial
Officer of the Company, filed herewith.
(32) Section 1350 Certifications - Certifications of Sandra
Pautsky, Principal Executive Officer of the Company, and Carol
J. Cooper, Principal Financial Officer of the Company, filed
herewith.
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.
OAKRIDGE ENERGY, INC.
(Registrant)
DATE: May 31, 2005 By /s/ Sandra Pautsky
------------------
Sandra Pautsky, President and Principal
Executive Officer
By /s/ Carol J. Cooper
-------------------
Carol J. Cooper, Principal Financial Officer
11
INDEX TO EXHIBITS
The exhibits filed with this report are filed in accordance with the
requirements of Item 601 of Regulation S-B for filings on Form 10-QSB. For
convenient reference, each exhibit is listed according to the number assigned to
it in the Exhibit Table of such Item 601.
(2) Plan of purchase, sale, reorganization, arrangement, liquidation, or
succession - not applicable.
(3) (i) Articles of Incorporation - not applicable.
(ii)By-laws - not applicable.
(4) Instruments defining the rights of security holders, including
indentures - not applicable.
(10) Material contracts - not applicable.
(11) Statement re: computation of per share earnings - not applicable.
(15) Letter on unaudited interim financial information - not applicable.
(18) Letter on change in accounting principles - not applicable.
(19) Reports furnished to security holders - not applicable.
(20) Other documents or statements to security holders or any document
incorporated by reference - not applicable.
(22) Published report regarding matters submitted to vote of security
holders - not applicable.
(23) Consent of experts and counsel - not applicable.
(24) Power of attorney - not applicable.
(31) Rule 13a-14(a)/Rule 15d-14(a) Certifications:
(i) Certification of Sandra Pautsky, Principal Executive Officer
of Oakridge Energy, Inc., filed herewith.
(ii) Certification of Carol J. Cooper, Principal Financial Officer
of Oakridge Energy, Inc., filed herewith.
(32) Section 1350 Certifications - Certification of Sandra Pautsky,
Principal Executive Officer of Oakridge Energy, Inc. and Carol J.
Cooper, Principal Financial Officer of Oakridge Energy, Inc., filed
herewith.
(99) Additional exhibits - not applicable.
12