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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 August 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 August 31, 1999: Common Stock, $.04 par value - 4,603,473 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 August 31, 1999 1
Condensed Statements of Operations
For the Three Months Ended August 31, 1998 and 1999 2
For the Six Months Ended August 31, 1998 and 1999
Statements of Cash Flows
For the Six Months Ended August 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
4. Submission of Matters to a Vote of Security Holders 9
6. Exhibits and Reports on Form 8-K 9
Signatures 10
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.
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Item 1. Financial Statements.
Oakridge Energy, Inc.
CONDENSED BALANCE SHEETS
ASSETS
As of As of
February 28, 1999 August 31, 1999
------------------ ------------------
Current assets: (Unaudited)
Cash and cash equivalents $ 2,614,499 $ 2,657,429
Trade accounts receivable 139,556 166,184
Investment securities 425,350 464,687
Deferred tax asset 303,784 236,292
Prepaid expenses and other 74,372 188,819
------------------ ------------------
Total current assets 3,557,561 3,713,411
------------------ ------------------
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 $4,434,353 on August 31, 1999 2,283,691 2,085,198
Coal and gravel properties, net of accumulated depletion and depreciation
of $8,384,397 on February 28, 1999 and $8,394,971 on August 31, 1999 353,199 342,625
Real estate held for development 2,704,381 2,753,146
Other property and equipment, net of accumulated depreciation
of $686,404 on February 28, 1999 and $685,592 on August 31, 1999 183,260 166,274
Other assets 1,082,826 1,081,196
------------------ ------------------
$ 10,164,918 $ 10,141,850
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 106,380 $ 67,642
Accrued expenses 80,243 73,839
------------------ ------------------
Total current liabilities 186,623 141,481
Deferred Federal income taxes 464,917 464,917
------------------ ------------------
Total liabilities 651,540 606,398
------------------ ------------------
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 17,530,359
Unrealized gain (loss) on investment securities
available for sale, net of income taxes (123,700) 7,315
Less treasury stock, at cost, 5,540,199 shares on February 28, 1999
and 5,554,330 on August 31, 1999 (9,172,971) (9,213,626)
------------------ ------------------
Total stockholders' equity 9,513,378 9,535,452
------------------ ------------------
$ 10,164,918 $ 10,141,850
================== ==================
The accompanying notes are an integral part of these financial statements.
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Oakridge Energy, Inc.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
3 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended
August 31, 1998 August 31, 1999 August 31, 1998 August 31, 1999
--------------- --------------- --------------- ---------------
Revenues:
Oil and gas $ 345,638 $ 391,250 $ 751,349 $ 711,191
Gravel 23,794 26,000 41,269 42,768
Other 10,650 9,750 21,300 19,500
--------------- --------------- --------------- ---------------
Total revenues 380,082 427,000 813,918 773,459
--------------- --------------- --------------- ---------------
Operating expenses:
Oil and gas 347,712 325,074 712,738 691,347
Coal and gravel 23,948 14,480 53,822 31,548
Real estate development 19,880 7,071 56,141 15,983
General and administrative 119,052 115,877 261,072 241,592
--------------- --------------- --------------- ---------------
Total operating expenses 510,592 462,502 1,083,773 980,470
--------------- --------------- --------------- ---------------
Loss from operations (130,510) (35,502) (269,855) (207,011)
--------------- --------------- --------------- ---------------
Other income (expense):
Interest and dividend income 65,511 41,243 106,845 83,331
Gain on sale of oil and gas properties 12,890 6,574 1,516,963 14,552
Other, net (23,909) 332 (121,639) 6,012
--------------- --------------- --------------- ---------------
Total other income 54,492 48,149 1,502,169 103,895
--------------- --------------- --------------- ---------------
Income (loss) before income taxes (76,018) 12,647 1,232,314 (103,116)
--------------- --------------- --------------- ---------------
Income tax expense (benefit) (19,437) 4,471 418,448 (34,830)
--------------- --------------- --------------- ---------------
Net income (loss) $ (56,581) $ 8,176 $ 813,866 $ (68,286)
=============== =============== =============== ===============
Income (loss) per common share $ (0.01) $ 0.00 $ 0.17 $ (0.01)
=============== =============== =============== ===============
Weighted average shares outstanding 4,796,064 4,616,956 4,824,118 4,617,079
=============== =============== =============== ===============
The accompanying notes are an integral part of these financial statements.
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Oakridge Energy, Inc.
STATEMENTS OF CASH FLOWS
(Unaudited)
6 Months Ended 6 Months Ended
August 31, 1998 August 31, 1999
--------------- ---------------
Cash flows from operating activities:
Net income (loss) $ 813,866 $ (68,286)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depletion and depreciation 299,060 301,611
Accretion on investment securities, net (4,459) 14
Gain on sales of property and equipment (1,516,963) (20,051)
Deferred federal income taxes (89,761) 0
Other than temporary loss on investment securities 130,676 0
Net changes in assets and liabilities:
Trade accounts receivable 202,394 (26,628)
Federal income tax receivable 0 (128,059)
Prepaid expenses and other current assets 11,742 12,506
Accounts payable 54,971 (38,738)
Federal income tax payable 177,056 0
Accrued expenses 33,083 (6,404)
--------------- ---------------
Net cash provided by operating activities 111,665 25,965
--------------- ---------------
Cash flows from investing activities:
Additions to oil and gas properties (1,154,046) (71,053)
Additions to real estate held for development (178,271) (56,770)
Additions to other property and equipment (30,890) 0
Increase in other assets (10,222) 2,736
Proceeds from sale of oil and gas properties 3,005,199 18,052
Proceeds from sale of other property and equipment 100,736 64,655
Maturities/calls of investments available for sale 525,959 100,000
--------------- ---------------
Net cash provided by investing activities 2,258,465 57,620
--------------- ---------------
Cash flows from financing activities:
Purchases of treasury stock (412,941) (40,655)
--------------- ---------------
Net cash used in financing activities (412,941) (40,655)
--------------- ---------------
Net increase in cash and cash equivalents 1,957,189 42,930
Cash and cash equivalents at beginning of period 877,006 2,614,499
--------------- ---------------
Cash and cash equivalents at end of period $ 2,834,195 $ 2,657,429
=============== ===============
Supplemental disclosures of cash flow information:
Interest paid $ -- $ --
Income taxes paid $ 319,939 $ 229
Recognition in Stockholders' Equity of the net unrealized holding gain (loss) on available for sale securities
of ($87,822), net of tax effect of ($67,956) during the six months ended August 31, 1998 and $131,015
net of tax effect of $67,492 during the six months ended August 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 and six month
periods ended August 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 had net income of $8,176 ($.00 per share) in the three
months ended August 31, 1999 compared to a net loss of $56,581 ($.01 per share)
during the three months ended August 31, 1998. In the six months ended August
31, 1999, the Company incurred a net loss of $68,286 ($.01 per share) compared
to net income of $813,866 ($.17 per share) in the 1998 six-month period.
Improved product prices and reduced operating expenses were the primary reasons
for the Company's net income in the 1999 three-month period. In the six months
ended August 31, 1998, the Company realized an approximate $1,504,100 gain from
the sale of its Limestone County, Texas property (the "Limestone County
property"), which ensured the Company's profitability for that period. The
Company had a loss from operations in all reported periods but the amount of
such loss in the three months ended August 31, 1999 ($35,502) was significantly
less than that incurred in the preceding quarter ended May 31, 1999 ($171,509).
Oil and gas revenues increased approximately $45,600 (13.2%) in the
three months ended August 31, 1999 but declined approximately $40,200 (5.3%) in
the six-month period. The principal reason for the increase in revenues for the
three-month period was an approximate $7.00 per barrel increase (61.3%) in the
average price of oil received by the Company during the period compared to the
1998 period as oil production from the Company's principal property in Madison
County, Texas (the "Madison County property") declined 7,900 barrels, resulting
in an overall production decline for the Company of approximately 6,900 barrels
(29.0%). The Company's average gas price received also increased over 10% in the
three-month 1999 period. In the six-month period ended August 31, 1999, a $4.66
per barrel increase (38.5%) in the Company's average oil price received was not
sufficient to offset the 16,700 barrel decline in production from the Madison
County property. The Madison County property is fully developed and at the stage
in its production history where declines are to be expected; however, the
operator of the property has advised the Company that certain of the wells are
still flowing and production from them should increase when they quit flowing
and are placed on
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pumping units. Other wells operate with low volume pumping
units and are capable of greater production levels.
Revenues from the Company's gravel operations increased approximately
$2,200 (13.5%) and $1,500 (5.7%) in the three and six-month periods ended August
31, 1999, respectively, due to the higher level of gravel sales made by Durango
Construction, Inc. from the Company's Colorado gravel property. Rentals received
by the Company from its surface lease to such corporation were unchanged in the
comparable 1998 and 1999 periods. The Company had no coal revenues in any of the
periods.
The expenses of the Company's oil and gas operations declined
approximately $22,600 (6.5%) and $21,400 (3.0%) in the three and six-month
periods ended August 31, 1999, respectively. In the three-month period, the
absence of any dry hole costs and geological and geophysical expense more than
offset increased depletion and depreciation expense resulting from new
properties in Gregg and Panola Counties, Texas and greater lease operating
expense for the Madison County property. In the six-month period, a significant
reduction in geological and geophysical expense and smaller reductions in dry
hole costs, production and ad valorem taxes and engineering expense again
overcame smaller overall increases in depletion and depreciation and lease
operating expenses. Lease operating expense for the North Texas area was
significantly lower in the 1999 six-month period.
The expenses of the Company's coal and gravel operations were
approximately $9,500 (39.5%) and $22,300 (41.4%) lower in the three and six
months ended August 31, 1999 as most categories of operating expense continued
to decline. The only expense category reflecting an increase in the six-month
period was testing and permitting expense, which resulted from required
reclamation work. The expenses of the Company's real estate development
activities decreased approximately $12,800 (64.4%) and $40,200 (71.5%),
respectively, in the three and six-month 1999 periods due to the cutback in the
Company's operations in this area pending its finalizing a master development
plan for its Colorado land.
In the three and six months ended August 31, 1999, general and
administrative expense declined approximately $3,200 (2.7%) and $19,500 (7.5%),
respectively. In the three-month period, the principal reason for the decline
was reduced governmental reporting expense, the amount of which was partially
offset by higher auditing, tax accounting and shareholder reporting
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expenses. In the six-month period, significantly lower independent petroleum
engineering expense incurred with respect to the Company's yearend oil and gas
reserve report, the absence of any letter of credit fees for reclamation bonds
due to a timing difference and lower miscellaneous expense offset increased
payroll expense.
Other income (expense) was an income item in all 1998 and 1999 periods
although there was a significant difference in the level of such income between
the 1998 six-month period and each of the other periods. In the 1998 six-month
period, the Company sold its Limestone County property to Mitchell Energy
Corporation and recorded an approximate $1,504,100 gain from such sale, which
compared to gains from property sales of only approximately $14,600 in the 1999
six-month period. Interest and dividend income were greater in both 1998 periods
as compared to the 1999 periods due to the maturing of corporate bonds in 1999,
the proceeds of which were reinvested at a lower rate of interest. The Company
did, however, incur writedowns in the carrying value of the Company's investment
in an equity security in both 1998 periods, but there was no such expense in the
1999 periods.
The Company's weighted average shares outstanding declined
approximately 3.7% and 4.3%, respectively, in the three and six-month periods
ended August 31, 1999 primarily due to purchases of the Company's common stock
made by the Company prior to the commencement of the 1999 periods. The Company
purchased 13,631 shares of its common stock in the three months ended August 31,
1999 and only an additional 500 shares in the six-month period. The Company did
not purchase any of its shares from the Estate of Noel Pautsky prior to such
Estate's filing its federal estate tax return in August 1999 as it had
previously reported it might do.
FINANCIAL CONDITION AND LIQUIDITY
During the first half of fiscal 2000, the Company's operating and
investing activities funded its financing activities, resulting in an
approximate $42,900 increase in cash and cash equivalents at August 31, 1999.
Operating activities contributed approximately $26,000 and investing activities
provided approximately $57,600 in funds during the period. Cash from the
Company's investing activities came primarily from the maturity of an investment
available for sale and the sale of other property and equipment and more than
offset additions to oil and gas properties and real estate held for development.
The Company's financing
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activities during the six months ended August 31, 1999 consisted solely of
purchases of treasury stock and used approximately $40,700 in funds. At August
31, 1999, the Company had no indebtedness and cash, cash equivalents and
investment securities available for sale totaling approximately $3,122,100.
The Company expects to fund its contemplated operations and
any stock purchases it makes during the remainder of fiscal 2000 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 oil and gas properties.
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PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company's 1999 Annual Meeting of Shareholders (the "Meeting")
was held on July 21, 1999.
(b) At the Meeting, Sandra Pautsky, Danny Croker and Randy Camp were
elected as directors of the Company to serve until the 2000 Annual Meeting of
Shareholders or until their successors are elected.
(c) A total of 4,051,608 shares were represented in person or by proxy
at the Meeting. The election of directors was the only matter voted upon by the
Company's shareholders at the Meeting.
The following sets forth the results of the vote:
NUMBER OF SHARES NUMBER OF SHARES
NAME OF NOMINEE VOTED FOR AUTHORITY WITHHELD
--------------- ---------------- ------------------
Sandra Pautsky 4,050,808 800
Danny Croker 4,050,808 800
Randy Camp 4,050,808 800
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits - Financial Data Schedule for the six months ended August
31, 1999 filed as Exhibit 27.
(b) Reports on Form 8-K - During the three months ended August 31,
1999, the Company filed a report on Form 8-K dated July 6, 1999 reporting under
Item 4 the resignation of KPMG LLP as the independent public accountants of the
Company as of such date.
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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: October 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.
EXHIBIT
NUMBER DESCRIPTION
------- -----------
(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.