1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarerly Period Ended JULY 31, 1995
TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
---
For the transition period from to
------------- ---------------
Commission File Number 1-7191
THOR ENERGY RESOURCES, INC.
(Exact name of small business issuer as specified in its charter)
------------------
DELAWARE 59-1232278
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
719 WEST FRONT STREET
P.O. BOX 307
TYLER, TX 75710
(Address of principal executive offices)
(903) 533-9111
(Issuer's telephone number)
(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
--- ---
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court. 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: 6,464,676 shares of $0.01
par value common stock as of September 12, 1995.
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
Page 1 of 14
2
THOR ENERGY RESOURCES, INC.
INDEX TO THE JULY 31, 1995 FORM 10-QSB
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets................. 3
Consolidated Condensed Statement of Operations........ 4
Consoldiated Condensed Statments of Cash Flows........ 5
Notes to Consolidated Condensed Financial Statements.. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 7
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings........................................ 10
Item 6. Exhibits and Reports on Form 8-K......................... 11
SIGNATURE........................................................... 14
Page 2 of 14
3
THOR ENERGY RESOURCES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands)
July 31, January 31,
1995 1995
------------------
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and interest-bearing deposits $ 390 $ 265
Receivables, net 318 584
Other current assets 66 83
------ ------
Total current assets 774 932
------ ------
INVESTMENT IN DISCONTINUED OPERATIONS OF SUBSIDIARIES 38 38
------ ------
PROPERTY AND EQUIPMENT 7,434 7,440
LESS - Accumulated depreciation, depletion,
amortization and impairment (6,041) (5,809)
------ ------
Property and equipment, net 1,393 1,631
------ ------
OTHER ASSETS 369 370
------ ------
TOTAL ASSETS $2,574 $2,971
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ - $ -
Accounts payable and accrued expenses 1,524 1,577
------ ------
Total current liabilities 1,524 1,577
------ ------
LONG-TERM DEBT 123 145
------ ------
STOCKHOLDERS' EQUITY 927 1,249
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,574 $2,971
====== ======
The accompanying notes are an integral part of these statments.
Page 3 of 14
4
THOR ENERGY RESOURCES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Per Share Amounts)
Three Months Ended Six Months Ended
July 31 July 31
1995 1994 1995 1994
----- ----- ----- -----
REVENUES:
Oil and gas sales $ 267 $ 495 $ 507 $ 837
Other 8 10 12 13
----- ----- ----- -----
Total revenues 275 505 519 850
----- ----- ----- -----
COSTS AND EXPENSES:
Lease operations and
production taxes 49 92 75 191
General and administrative 245 283 520 553
Depreciation, depletion
and amortization 106 162 231 307
Interest 8 4 15 8
----- ----- ----- -----
Total expenses 408 541 841 1,059
----- ----- ----- -----
NET LOSS $(133) $ (36) $(322) $(209)
===== ===== ===== =====
NET LOSS PER COMMON SHARE $(.02) $(.01) $(.05) $(.03)
===== ===== ===== =====
The accompanying notes are an integral part of these statements.
Page 4 of 14
5
THOR ENERGY RESOURCES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
Six Months Ended
July 31
----------------
1995 1994
----- -----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(322) $(209)
----- -----
Adjustments to reconcile to net cash from operations:
Depreciation, depletion and amortization 231 307
Change in receivables 266 135
Change in accounts payable and accrued expenses (54) (215)
Change in other current assets 17 (25)
----- -----
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 138 (7)
----- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Change in investment in discontinued operations of
subsidiaries - 25
Additions to (deletions from) property and equipment (7) (220)
Decrease in other assets 17 1
----- -----
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 10 (194)
----- -----
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (23) -
----- -----
NET CASH USED IN FINANCING ACTIVITIES (23) -
----- -----
NET INCREASE (DECREASE) IN CASH 125 (201)
----- -----
CASH, beginning of year 265 548
----- -----
CASH, end of period $ 390 $ 347
===== =====
The accompanying notes are an integral part of these statements.
Page 5 of 14
6
THOR ENERGY RESOURCES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(1) GENERAL
In Management's opinion, the accompanying unaudited, consolidated,
condensed financial statements include all adjustments (which include only
normal recurring adjustments) necessary to present fairly Thor Energy
Resources, Inc.'s ("Thor's" or the "Company's") consolidated financial position
as of July 31, 1995 and January 31, 1995, the consolidated results of
operations for the three and six months ended July 31, 1995 and 1994, and the
consolidated statements of cash flows for the six months ended July 31, 1995
and 1994.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These consolidated condensed
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in Thor's January 31, 1995,
annual report on Form 10-KSB, as amended. The results of operations for the
six months ended July 31, 1995, are not necessarily indicative of the operating
results for the full year.
The accompanying notes are an integral part of these statements.
Page 6 of 14
7
THOR ENERGY RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three Months Ended July 31, 1995
On October 21, 1994, Thor filed for protection under Chapter 11 of the
federal Bankruptcy Code. Further discussion of this matter is set forth under
"Liquidity and Capital Resources" in this item.
Revenues decreased $230,000, or 46%, to $275,000 during the three
months ended July 31, 1995, compared with the same period of the prior year.
Oil and gas sales decreased $228,000, or 46%, to $267,000 in the three months
ended July 31, 1995. The decrease in revenues was primarily a result of lower
gas prices for the three months ended July 31, 1995, as compared with the same
period of the prior year.
The cost of lease operations and production taxes decreased $43,000,
or 47%, to $49,000 in the second quarter of fiscal 1996 due to additional
production tax refunds received on the Carter #1 well. As a result of the
foregoing factors, oil and gas sales, net of lease operations and production
taxes, decreased $185,000, or 46% to $218,000 in the second quarter of fiscal
1996 as compared to the second quarter of fiscal 1995.
General and administrative expenses decreased $38,000, or 13%, to
$245,000 in the current quarter. This was a result of decreases in personnel
and other general and administrative expenses along with a reduction of legal
fees.
Depreciation, depletion and amortization decreased $56,000, or 35%, to
$106,000 in the current quarter. This was mainly a result of a decrease in the
depletion and amortization rate per equivalent Mcf from $.84 to $.75 resulting
from the addition of reserves in fiscal 1995 attributable to the
Breedlove-Rogers #2 well.
Interest expense increased $4,000 from the comparable quarter last
year to $8,000 in the current quarter as a result of higher debt levels.
No income tax benefit is reflected in the current or the prior year's
quarter as a result of the limitation of available loss carryback.
As a result of the foregoing factors, the Company's net loss in the
second quarter of fiscal 1996 increased $97,000 to $133,000, or $.02 per share,
compared to a net loss of $36,000, or $.01 per share, for the prior year.
The accompanying notes are an integral part of these statements.
Page 7 of 14
8
THOR ENERGY RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Six Months Ended July 31, 1995
On October 21, 1994, Thor filed for protection under Chapter 11 of the
federal Bankruptcy Code. Further discussion of this matter is set forth under
"Liquidity and Capital Resources" in this item.
Revenues decreased $331,000, or 39%, to $519,000 during the six months
ended July 31, 1995, compared with the same period of the prior year. Oil and
gas sales decreased $330,000, or 39%, to $507,000 in the six months ended July
31, 1995. The decrease in revenues was primarily a result of lower gas prices
for the six months ended July 31, 1995, as compared with the same period of the
prior year.
The cost of lease operations and production taxes decreased $116,000,
or 61%, to $75,000 in the first six months of fiscal 1996 due to production tax
refunds received on the Carter #1 well. As a result of the foregoing factors,
oil and gas sales, net of lease operations and production taxes, decreased
$214,000, or 33% to $432,000 in the first six months of fiscal 1996 as compared
to the same period of the prior year.
General and administrative expenses decreased $33,000, or 6%, to
$520,000 in the current six months. This was a result of decreases in
personnel and other general and administrative expenses along with a reduction
of legal fees.
Depreciation, depletion and amortization decreased $76,000, or 25%, to
$231,000 in the current six month period. This was mainly a result of a
decrease in the depletion and amortization rate per equivalent Mcf from $.84 to
$.75 resulting from the addition of reserves in fiscal 1995 attributable to the
Breedlove-Rogers #2 well.
Interest expense increased $7,000 from the comparable six month period
last year to $15,000 in the current six month period as a result of higher debt
levels.
No income tax benefit is reflected in the current or the prior year's
quarter as a result of the limitation of available loss carryback.
As a result of the foregoing factors, the Company's net loss for the
first six months of fiscal 1996 increased $113,000 to $322,000, or $.05 per
share, compared to a net loss of $209,000, or $.03 per share, for the prior
year.
The accompanying notes are an integral part of these statements.
Page 8 of 14
9
THOR ENERGY RESOURCES, INC.
Liquidity and Capital Resources
On October 21, 1994, the Company filed for protection under Chapter 11
of the federal Bankruptcy Code in the Bankruptcy Court. The action was taken
in response to continuing and mounting litigation costs resulting from a
wrongful termination suit filed against the Comany by Lindsay Sneed, the
Company's former Chief Financial Officer, that has continued for the last three
years. The Company filed a plan of reorganization with the Bankruptcy Court on
April 18, 1995 (see Item 1. Legal Proceedings, for an update on the status of
the Company's Plan of Reorganization). The Bankruptcy filing and the fact that
the Common Stock is no longer listed on the American Stock Exchange or any
other stock exchange may have an adverse effect on the ability of the Company
to continue to obtain financing for its projects. However, Thor Exploration,
Inc. and Thor Operating Company, Thor's main operating subsidiaries, have not
filed for bankruptcy and intend to conduct business as usual and are looking
into future drilling programs with current working interest partners.
At July 31, 1995, Thor had a working capital deficit of $750,000
resulting from decreased payables and increased receivable collections. Net
cash provided by operations during the six months ended July 31, 1995, was
$138,000. The primary use of cash during the six months ended July 31, 1995,
was $23,000 in the reduction of long-term debt and a $54,000 reduction in
current liabilities.
At September 12, 1995, the Company had outstanding balances of
$118,636 and $172,571 on two lines of credit from an affiliate of the Company.
The Company is currently pursuing several oil and gas projects. The
Company is attempting to fund such drilling activities through farm-outs,
carried interests, non-recourse financing or other arrangements which would
result in a substantial reduction in the Company's cash requirements related
thereto, no assurance can be made as to the Company's success therein.
The sufficiency of the Company's financial resources for fiscal 1996
is a function of the success of the Company's planned oil and gas projects as
well as the Company's ability to obtain adequate sources of debt or equity
capital. As such, the Company is unable to accurately predict the adequacy of
its working capital or its liquidity. Additionally, the Company cannot
anticipate whether it will have available lines of credit.
The accompanying notes are an integral part of these statements.
Page 9 of 14
10
THOR ENERGY RESOURCES, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company knows of no pending or threatened legal proceedings except
as set forth in the Company's Annual Report on Form 10-KSB, as amended, for the
year ended January 31, 1995 (the "1995 10-KSB"). There have been no material
developments in the litigation described in the 1995 10-KSB since the date of
filing the 1995 10-KSB except for the Bankruptcy Court's ruling on certain
motions described below.
On May 30, 1995, the Bankruptcy Court issued a ruling (i) referring
the case to mediation to be held prior to July 3, 1995, (ii) denying Lindsay
Sneed's motion to have an independent trustee appointed to administer the
Company during the bankruptcy proceeding, (iii) denying Sneed's motion for
authority to pursue claims on behalf of the estate and (iv) granting the
Company's motion to have an independent examiner appointed to review the
Company's previous practices, although the examiner will not be appointed prior
to July 3, 1995 pending the results of the mediation described in subpart (i).
A compromise and settlement agreement was entered into between Thor and Sneed
as a result of the mediation. The agreement called for the payment to Sneed of
$1,000,000, contained various other conditions to completion, and required
approval in a plan of reorganization in the Thor bankruptcy proceeding. The
Thor plan of reorganization was confirmed by the United States Bankruptcy Court
following a hearing on August 15, 1995. The confirmation order is now final.
All payments called for in the settlement have been made and the Sneed
litigation has been finally dismissed.
The Company anticipates that, following the effective date of the plan
of reorganization, the Company will no longer be required to file reports under
the Securities Exchange Act of 1934.
The accompanying notes are an integral part of these statements.
Page 10 of 14
11
THOR ENERGY RESOURCES, INC.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
Exhibit No. Exhibit
------------------------------------------------------------------------
2.1 Notice of Commencement of Case under Chapter 11 of the
Bankruptcy Code, Meeting of Creditors and Fixing of Dates
in Re Thor Energy Resources, Inc., Case Number
94-61047.(1)
2.2 Press Release dated October 24, 1994.(1)
2.3 Proposed Plan of Reorganization.(2)
3.1 Restated Certificate of Incorporation.(3)
3.2 Bylaws and all amendments to date.(3)
10.1 Amended and Restated 1986 Stock Option Plan.(4)
10.2 Form of Indemnity Agreement between the Company and each
of its directors.(3)
10.3 Agreement for sale of property between the Company and
Neomar Resources, Inc.(2)
10.4 Agreement for sale of property between Thor Exploration,
Inc. and an unrelated party executed March 3, 1993 [dated
February 25, 1993].(5)
10.5 Securities Purchase Agreement between the Company,
Bio-Hazard Managment, Inc. and Morris & Co. dated March
31, 1993.(6)
10.6 Shareholders' Agreement between the Company and Morris &
Co. dated March 31, 1993.(6)
10.7 Pledge Agreement by Morris & Co. in favor of the Company
dated March 31, 1993.(6)
The accompanying notes are an integral part of these statements.
Page 11 of 14
12
THOR ENERGY RESOURCES, INC.
Exhibit No. Exhibit
------------------------------------------------------------------------
10.8 Severance Agreement dated July 16, 1990 between David M.
Fender and the Company.(2)
10.9 Letter dated November 21, 1990 from the Company to David
W. Sipperly.(3)
10.10 Letter dated August 30, 1991 from the Company to David W.
Sipperly.(3)
10.11 Letter dated September 3, 1991 from David W. Sipperly to
the Company.(3)
10.12 Letter dated October 7, 1991, from the Company to David W.
Sipperly.(3)
10.13 $135,000 Promissory Note, dated March 16, 1995, executed
by the Company and payable to the LaVelle D. Fender
Trust.(2)
10.14 Deed of Trust, dated March 16, 1992, executed by the
Company in favor of LaVelle D. Fender.(3)
10.15 Real Estate Lien Note, dated August 23, 1994, executed by
the Company and Thor Exploration, Inc. and payable to the
LaVelle D. Fender Trust.(2)
10.16 Deed of trust, dated August 23, 1994, executed by the
Company and Thor Exploration, Inc. in favor of the LaVelle
D. Fender Trust.(2)
10.17 Office lease between the Company and Lucy Corporation
commencing October 1, 1993.(4)
27.1 Financial Data Schedule.(7)
99.1 Order on Motion to Approve Compromise and Settlement of
Advisory Proceeding.(8)
The accompanying notes are an integral part of these statements.
Page 12 of 14
13
THOR ENERGY RESOURCES, INC.
________________________________________________________________________________
(1) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the Company's filing for bankruptcy on October
21, 1994.
(2) Filed as an exhibit to the Company's Annual Report on Form 10-KSB,
as amended, for the fiscal year ended January 31, 1995, and
incorporated herein by reference.
(3) Filed as an exhibit to the Company's Annual Report on Form 10-KSB
for the fiscal year ended January 31, 1993, as amended, and
incorporated herein by reference.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-KSB
for the fiscal year ended January 31, 1994, and incorporated herein
by reference.
(5) Filed as an exhibit to the Company's Current Report on Form 8-K,
regarding the sale of certain oil and gas properties, on March 5,
1993 and incorporated herein by reference.
(6) Filed as an exhibit to the Company's Current Report on Form 8-K,
regarding the issuance of Bio-Hazard Management, Inc. stock to
Morris & Co., on April 15, 1993, and incorporated herein by
reference.
(7) Filed herewith.
(8) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the change in the Company's accountants on March
13, 1995.
(B) Reports on Form 8-K.
A Current Report on Form 8-K was filed on March 13, 1995, and was sub-
sequently amended on March 31, 1995. The Current Report addressed, in Item 4 -
Changes in Registrant's Certifying Accountant, the dismissal of Hein +
Associates ("Hein") as the Company's principal independent accountants and the
engagement of Weaver and Tidwell to replace Hein as the Company's principal
independent accountants. The Current Report also updated certain litigation
matters involving the Company in Item 5 - Other Information.
The accompanying notes are an integral part of these statements.
Page 13 of 14
14
THOR ENERGY RESOURCES, INC.
SIGNATURE
Pursuant to the requirements of the Exchange Acts, the Registrant has caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
THOR ENERGY RESOURCES, INC.
(Registrant)
Date: September 14, 1995 By: /s/ Lashley A. Bell
------------------------------------------
Lashley A. Bell
Treasurer, Principal Accounting
Officer and Chief Financial Officer
The accompanying notes are an integral part of these statements.
Page 14 of 14
15
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Page
------- ---------------------- ----
2.1 Notice of Commencement of Case under Chapter 11 of the
Bankruptcy Code, Meeting of Creditors and Fixing of
Dates in Re Thor Energy Resources, Inc., Case Number
94-61047.(1)
2.2 Press Release dated October 24, 1994.(1)
2.3 Proposed Plan of Reorganization.(2)
3.1 Restated Certificate of Incorporation.(3)
3.2 Bylaws and all amendments to date.(3)
10.1 Amended and Restated 1986 Stock Option Plan.(4)
10.2 Form of Indemnity Agreement between the Company and each
of its directors.(3)
10.3 Agreement for sale of property between the Company and
Neomar Resources, Inc.(2)
10.4 Agreement for sale of property between Thor Exploration,
Inc. and an unrelated party executed March 3, 1993
[dated February 25, 1993].(5)
10.5 Securities Purchase Agreement between the Company,
Bio-Hazard Managment, Inc. and Morris & Co. dated March
31, 1993.(6)
10.6 Shareholders' Agreement between the Company and Morris &
Co. dated March 31, 1993.(6)
10.7 Pledge Agreement by Morris & Co. in favor of the Company
dated March 31, 1993.(6)
10.8 Severance Agreement dated July 16, 1990 between David
M. Fender and the Company.(2)
16
Exhibit
Number Description of Exhibit Page
------- ---------------------- ----
10.9 Letter dated November 21, 1990 from the Company to David
W. Sipperly.(3)
10.10 Letter dated August 30, 1991 from the Company to David W.
Sipperly.(3)
10.11 Letter dated September 3, 1991 from David W. Sipperly to
the Company.(3)
10.12 Letter dated October 7, 1991, from the Company to David
W. Sipperly.(3)
10.13 $135,000 Promissory Note, dated March 16, 1995, executed
by the Company and payable to the LaVelle D. Fender
Trust.(2)
10.14 Deed of Trust, dated March 16, 1992, executed by the
Company in favor of LaVelle D. Fender.(3)
10.15 Real Estate Lien Note, dated August 23, 1994, executed by
the Company and Thor Exploration, Inc. and payable to
the LaVelle D. Fender Trust.(2)
10.16 Deed of trust, dated August 23, 1994, executed by the
Company and Thor Exploration, Inc. in favor of the
LaVelle D. Fender Trust.(2)
10.17 Office lease between the Company and Lucy Corporation
commencing October 1, 1993.(4)
27.1 Financial Data Schedule.(7)
99.1 Order on Motion to Approve Compromise and Settlement of
Advisory Proceeding.(8)
17
THOR ENERGY RESOURCES, INC.
--------------------------------------------------------------------------------
(1) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the Company's filing for bankruptcy on October 21,
1994.
(2) Filed as an exhibit to the Company's Annual Report on Form 10-KSB, as
amended, for the fiscal year ended January 31, 1995, and incorporated
herein by reference.
(3) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for
the fiscal year ended January 31, 1993, as amended, and incorporated
herein by reference.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for
the fiscal year ended January 31, 1994, and incorporated herein by
reference.
(5) Filed as an exhibit to the Company's Current Report on Form 8-K,
regarding the sale of certain oil and gas properties, on March 5, 1993
and incorporated herein by reference.
(6) Filed as an exhibit to the Company's Current Report on Form 8-K,
regarding the issuance of Bio-Hazard Management, Inc. stock to Morris &
Co., on April 15, 1993, and incorporated herein by reference.
(7) Filed herewith.
(8) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the change in the Company's accountants on March 13,
1995.