1
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1999.
[ ] TRANSITION REPORT PURSUANT TO 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 87-0287176
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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)
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 [ ]
The number of shares outstanding of each of the issuer's classes of common
equity, as of May 31, 1999: Common Stock, $.04 par value, 4,617,104 shares
Transitional Small Business Disclosure Format (check one);
YES [ ] NO [X]
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INDEX
Page #
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Part I - Financial Information
1. Financial Statements:
Condensed Balance Sheets at
February 28, 1999 and May 31, 1999 1
Condensed Statements of Operations
For the Three Months Ended May 31, 1998 and 1999 2
Statements of Cash Flows
For the Three Months Ended May 31, 1998 and 1999 3
Notes to Condensed Financial Statements 4
2. Management's Discussion and Analysis or Plan of Operation 5
Part II - Other Information
6. Exhibits and Reports on Form 8-K 8
Signatures 8
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 Note 4 of "Notes to Condensed
Financial Statements" and "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."
(i)
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Item 1. Financial Statements.
Oakridge Energy, Inc.
CONDENSED BALANCE SHEETS
ASSETS
As of As of
February 28, 1999 May 31, 1999
----------------- ------------
Current assets: (Unaudited)
Cash and cash equivalents $ 2,614,499 $ 2,670,804
Trade accounts receivable 139,556 150,846
Investment securities 425,350 442,049
Deferred tax asset 303,784 264,102
Prepaid expenses and other 74,372 205,170
------------ ------------
Total current assets 3,557,561 3,732,971
------------ ------------
Oil and gas properties, at cost using the successful efforts method of
accounting, net of accumulated depletion and depreciation of
$4,447,294 on February 28, 1999 and $4,379,894 on May 31, 1999 2,283,691 2,154,610
Coal and gravel properties, net of accumulated depletion and depreciation
of $8,384,397 on February 28, 1999 and $8,388,757 on May 31, 1999 353,199 348,839
Real estate held for development 2,704,381 2,733,173
Other property and equipment, net of accumulated depreciation
of $686,404 on February 28, 1999 and $677,291 on May 31, 1999 183,260 174,575
Other assets 1,082,826 1,081,359
------------ ------------
$ 10,164,918 $ 10,225,527
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 106,380 $ 184,841
Accrued expenses 80,243 62,947
------------ ------------
Total current liabilities 186,623 247,788
Deferred Federal income taxes 464,917 464,917
------------ ------------
Total liabilities 651,540 712,705
------------ ------------
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 17,598,645 17,522,183
Unrealized loss on investment securities
available for sale, net of income taxes (123,700) (46,669)
Less treasury stock, at cost, 5,540,199 shares on February 28, 1999
and 5,540,699 on May 31, 1999 (9,172,971) (9,174,096)
------------ ------------
Total stockholders' equity 9,513,378 9,512,822
------------ ------------
$ 10,164,918 $ 10,225,527
============ ============
The accompanying notes are an integral part of these financial statements.
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OAKRIDGE ENERGY, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For 3 Months For 3 Months
Ended Ended
May 31, 1998 May 31, 1999
------------ ------------
Revenues:
Oil and gas $ 405,711 $ 319,941
Gravel 17,475 16,768
Other 10,650 9,750
----------- -----------
Total revenues 433,836 346,459
----------- -----------
Operating expenses:
Oil and gas 365,026 366,273
Coal and gravel 29,874 17,068
Real estate development 36,261 8,912
General and administrative 142,020 125,715
----------- -----------
Total operating expenses 573,181 517,968
----------- -----------
Loss from operations (139,345) (171,509)
----------- -----------
Other income (expense):
Interest and dividend income 41,334 42,088
Gain on sale of oil and gas properties 1,504,073 7,978
Other, net (97,730) 5,680
----------- -----------
Total other income 1,447,677 55,746
----------- -----------
Income (loss) before income taxes 1,308,332 (115,763)
----------- -----------
Income tax expense 437,885 (39,301)
----------- -----------
Net income (loss) $ 870,447 $ (76,462)
=========== ===========
Income (loss) per common share $ 0.18 ($ 0.02)
=========== ===========
Weighted average shares outstanding 4,852,172 4,617,202
=========== ===========
The accompanying notes are an integral part of these financial statements.
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OAKRIDGE ENERGY, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For 3 Months For 3 Months
Ended Ended
May 31, 1998 May 31, 1999
------------ ------------
Cash flows from operating activities:
Net income (loss) $ 870,447 $ (76,462)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depletion and depreciation 149,608 141,951
Accretion on investment securities, net (2,449) 14
Gain on sale of oil and gas properties (1,470,896) (7,978)
Gain on sale of other property and equipment 0 (5,500)
Gain on sale of other assets (33,177) 0
Deferred federal income taxes (245,758) 0
Other than temporary loss on investment securities 106,769 0
Net changes in assets and liabilities:
Trade accounts receivable 176,577 (11,290)
Prepaid expenses and other current assets 3,980 1,675
Accounts payable (43,782) 78,461
Federal income tax payable 528,899 (132,360)
Accrued expenses 15,255 (17,296)
----------- -----------
Net cash provided by (used in) operating activities 55,473 (28,785)
----------- -----------
Cash flows from investing activities:
Additions to oil and gas properties (797,457) (323)
Additions to real estate held for development (137,048) (32,794)
Additions to other property and equipment (27,734) 0
Increase in other assets (12,959) 0
Proceeds from sale of oil and gas properties 0 12,478
Proceeds from sale of other property and equipment 0 5,500
Maturities of investments available for sale 300,000 100,000
Principal payments received on notes receivable 1,356 1,354
----------- -----------
Net cash provided by (used in) investing activities (673,842) 86,215
----------- -----------
Cash flows from financing activities:
Purchases of treasury stock (102,701) (1,125)
----------- -----------
Net cash (used in) financing activities (102,701) (1,125)
----------- -----------
Net increase (decrease) in cash and cash equivalents (721,070) 56,305
Cash and cash equivalents at beginning of period 877,006 2,614,499
----------- -----------
Cash and cash equivalents at end of period $ 155,936 $ 2,670,804
=========== ===========
Supplemental disclosures of cash flow information:
Income taxes paid $ 149,839 $ 120,437
Recognition in Stockholders' Equity of the net unrealized holding loss on
available for sale securities of $15,771, net of tax effect of $8,125
during the quarter ended May 31, 1998 and $77,031, net of tax effect
of $39,683 during the quarter ended May 31, 1999
The accompanying notes are an integral part of these financial statements.
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OAKRIDGE ENERGY, INC.
Notes to Condensed Financial Statements
(Unaudited)
(1) The accompanying unaudited financial statements for three month periods
ended May 31, 1998 and 1999 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.
(2) The foregoing financial statements should be read in conjunction with
the annual financial statements and accompanying notes for the fiscal
year ended February 28, 1999.
(3) In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, Reporting Comprehensive Income and SFAS No. 131, Disclosure about
Segments of an Enterprise and Related Information. SFAS No. 130
established standards for reporting and display of comprehensive income
and its components in financial statements. SFAS No. 131 established
annual and interim reporting standards for an enterprise's operating
segments and related disclosures about its products, services,
geographic areas and major customers. Adoption of these statements will
not impact the Company's financial position, results of operations or
cash flows, and any effect will be limited to the form and content of
its disclosures. Both statements are effective for fiscal years
beginning after December 15, 1997.
(4) The Company has prepared for the year 2000 through the replacement of
its computers and updating of its software and network system. The
Company and the software manufacturer have tested the software and it
worked properly for the year 2000. The Company does not anticipate
incurring any additional significant costs in preparation of the year
2000. The Company has been provided with documentation from the oil and
gas operator who is responsible for the distribution of most of the
Company's revenue and to whom the Company pays many expense items that
indicates that it is in year 2000 compliance.
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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 28, 1999 and the Notes to Condensed Financial Statements
contained in this report.
RESULTS OF OPERATIONS
The Company incurred a net loss of $76,462 ($.02 per share) in
the three months ended May 31, 1999 compared to net income of $870,447 ($.18 per
share) during the three months ended May 31, 1998. In the 1998 period, the
Company realized an approximate $1,504,100 gain from the sale of its Limestone
County, Texas property. The Company incurred a loss from operations in both
periods ($139,345 in 1998 vs. $171,509 in 1999).
Oil and gas revenues declined approximately $85,800 (21.1%) in
the three months ended May 31, 1999 due to a substantial decrease in oil and
associated gas production from the Company's principal property located in
Madison County, Texas. Revenues from the property were approximately $93,100
(26.5%) lower in the 1999 period. Most of the drop in revenues was attributable
to production decline as the average oil price received from the property
increased $2.59 per barrel in the 1999 period. For comparison purposes, the
three months ended May 31, 1998 was the quarter of highest production from the
Madison County, Texas property during the fiscal year ended February 28, 1999.
Nevertheless, revenues from the Madison County property were approximately
$69,400 higher during the three months ended May 31, 1999 than in the
three-month period ended February 28, 1999 due to the effect of the increase in
oil prices that occurred subsequent to the Company's fiscal year end.
The Company's 1999 period oil and gas revenues were aided by
an approximate 19% increase in the average oil price received as compared to
1998. Although the Company's average gas price suffered a 14.4% drop during the
same period, the overall effect of pricing changes was positive because of the
Company's significant weighting in favor of oil production. Individual property
oil prices received by the Company in the second quarter to date have either
been flat or higher to those received in the first quarter.
Revenues from the Company's gravel operations decreased
approximately $700 in the three months ended May 31, 1999 due to the lower level
of gravel sales made by Durango Construction, Inc. from the Company's Colorado
gravel property during the 1999 period. Rentals received by the Company from its
surface lease to such corporation were the same in both periods. The Company had
no coal revenues in either the 1998 or 1999 period.
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The expenses of the Company's oil and gas operations increased
slightly (approximately $1,250) in the 1999 period due to an approximate $50,600
increase in the Company's dry hole costs as all other categories of such
expenses declined. The Company incurred approximately $86,700 in dry hole costs
in the 1999 period due to the failure to achieve commercial production from
completion attempts in two separate zones in the Vivian Parker No. 2 well in
Gregg County, Texas. Depletion and depreciation expense and production taxes
fell in the 1999 period due to the lower level of oil and gas production. Lease
operating expense dropped approximately $16,300 (12.1%) due to a marked decline
in such expense in the North Texas operational area resulting primarily from a
cutback in field personnel and the abandonment of a non-productive well.
The expenses of the Company's coal and gravel operations were
approximately $12,800 (42.9%) lower in the three months ended May 31, 1999 as
virtually all categories of operating expense continued to decline. The only
categories of expense reflecting increases in the 1999 period were depletion and
depreciation expense and testing and permitting expense. The increase in the
latter expense was due to required reclamation work. The expenses of the
Company's real estate development activities decreased approximately $27,300 in
the 1999 period due to the cutback in the Company's operations in this area
pending its finalizing a master development plan for its Colorado land.
General and administrative expense declined approximately
$16,300 (11.5%) in the 1999 period due primarily to the absence of any letter of
credit fees due to a timing difference between periods and lower engineering
expense, audit fees and miscellaneous expense. The amount of the decline was
partially offset by higher payroll expense and governmental reporting expense.
Other income (expense) was an income item in both the 1998 and
1999 periods although there was a significant difference in the level of such
income between the periods. Such difference principally accounted for the
Company's being profitable in the 1998 period and incurring a loss in the 1999
period. In the 1998 period, the Company sold its Limestone County, Texas gas
production to Mitchell Energy Corporation and recorded an approximate $1,504,100
gain from such sale compared to gains from property sales of only $8,000 in the
1999 period. The Company did, however, incur an approximate $106,800 writedown
in the carrying value of the Company's investment in an equity security in the
1998 period, but there was no such expense in the 1999 period.
The Company's weighted average shares outstanding declined
approximately 4.8% in the 1999 period primarily due to purchases of the
Company's common stock made by the Company from June 1, 1998
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through February 28, 1999 as the Company purchased only 500 shares of its common
stock during the three months ended May 31, 1999. As previously reported, the
Company may purchase a non-material amount of its shares from the Estate of Noel
Pautsky prior to such Estate's filing its federal estate tax return in August
1999.
FINANCIAL CONDITION AND LIQUIDITY
During the first quarter of fiscal 2000, the Company's
investing activities again funded its operating and financing activities,
resulting in an approximate $56,300 increase in cash and cash equivalents at May
31, 1999. Investing activities provided approximately $86,200 in funds during
the period primarily from the maturity of an investment available for sale as
the amount of offsetting additions to oil and gas properties and real estate
held for development were not significant. The Company's operating activities
and financing activities during the three months ended May 31, 1999 combined to
use $29,900 in funds. At May 31, 1999, the Company had no indebtedness and cash,
cash equivalents and investment securities available for sale totaling
approximately $3,112,800.
The Company expects to fund its contemplated operations and
any stock purchases it makes during the second quarter and the remainder of
fiscal 2000 from its cash and cash equivalents, sales or maturities of all or a
portion of its investment securities available for sale and any cash flow from
its oil and gas properties. Assuming that oil and gas prices do not deviate
markedly from current levels, the Company will likely expand the levels of its
oil and gas and real estate development activities during the remainder of the
fiscal year from those undertaken in the first quarter.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits - Financial Data Schedule for the three months ended
May 31, 1999 filed as Exhibit 27.
(b) Reports on Form 8-K - No reports on Form 8-K were filed by the
Company during the three months ended May 31, 1999.
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: July 15, 1999 By /s/ Sandra Pautsky
------------------------------
Sandra Pautsky, President
By /s/ Carol J. Cooper
-----------------------------
Carol J. Cooper, Chief Accounting Officer
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INDEX TO EXHIBITS
The exhibits filed herewith are filed in accordance with the
requirements of Item 601 to 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 acquisition, reorganization, arrangement,
liquidation or succession - not applicable.
(3) - (i) Articles of Incorporation - not applicable.
(ii) Bylaws - 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.
(22) - Published report regarding matters submitted to
vote - not applicable.
(23) - Consents of experts and counsel - not applicable.
(24) - Power of Attorney - not applicable.
(27) - Financial Data Schedule - filed herewith.
(99) - Additional exhibits - not applicable.