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
Quarterly Period Ended June 30, 1999
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the
Transition Period from __________ to _________
Commission file number 0-10006
AMERICAN RIVERS OIL COMPANY
---------------------------
(Exact name of small business issuer as specified in its charter)
Wyoming 84-0839926
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 East Ninth Avenue, Suite 106, Denver, CO 80203
- -------------------------------------------- ------
(Address of principal executive offices) (Zip Code)
(303) 832-1117
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(Issuer's telephone number)
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 as of June 30, 1999 of the issuer's $.01 par
value Common Stock and $.01 par value Class B Common Stock were 3,565,770 and
7,267,820, respectively.
Transitional Small Business Disclosure Format
(Check one):
Yes No X
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American Rivers Oil Company and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
June 30, 1999
Assets
Current asssets:
Cash and equivalents $ 83
Oil and gas properties held for sale 93,376
-----------
Total current assets $ 93,459
Other assets 3,382
-----------
Total assets $ 96,841
===========
Liabilities and Stockholders' Equity
Current liabilites:
Current maturities of long-term debt $ 75,824
Accounsts payable and accrued expenses 58,883
Payable to related parties 4,475
-----------
Total current liabilites $ 139,182
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.50 par value 5,000,000
shares authorized, no shares issued
Common stock $.01 par value, 20,000,000
shares authorized, 4,713,004 shares issued 47,130
Class B common stock $.01 par value,
8,000,000 shares authorized, 7,267,820 shares
issued and outstanding 72,678
Related party note receivable, net of
origination fee of $12,500 and allowance
for doubtful accounts of $150,000 0
Additional paid-in capital 6,193,892
Accumulated deficit (4,625,236)
Less treasury stock at cost, 1,147,234
common shares (1,730,805)
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Total stockholders' equity (42,341)
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Total liabilities and stockholders' equity $ 96,841
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See accompanying notes to these consolidated financial statements.
2
American Rivers Oil Company and Subsidiaries
Consolidated Statement of Operations
For the Three Months Ended June 30,
(Unaudited)
1999 1998
---- ----
Oil and gas sales $ 0 $ 18,871
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Total revenue 0 18,871
Expenses:
Production costs 0 21,043
Exploration costs 0 972
General and admin 29,488 82,929
Depletion 0 10,600
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Total expenses 29,488 115,544
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Income (loss) from operations (29,488) (96,673)
Other income (expense):
(Gain) loss on sale Oil & Gas Prop 0 205,174
Interest expense 0 (9,884)
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Income (loss) before income taxes (29,488) 98,617
Income taxes 0 0
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Net income (loss) ($ 29,488) $ 98,617
=========== ===========
Net income (loss) per share
Common stock ($ 0.00) $ 0.00
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Class B common stock ($ 0.00) $ 0.01
=========== ===========
Weighted average number of
shares outstanding
Common stock 3,565,770 3,611,700
=========== ===========
Class B common stock 7,267,820 7,267,820
=========== ===========
See accompanying notes to these consolidated financial statements.
3
American Rivers Oil Company and Subsidiaries
Consolidated Statement of Cash Flows
For the Three Months Ended June 30,
(Unaudited)
1999 1998
---- ----
Cash Flow from operating activities
Net Income (Loss) ($ 29,723) $ 98,617
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation, depletion and amortization 144 10,745
Gain on sale of oil and gas properties (205,174)
Changes in operating assets & liabilities:
(Increase) Decrease in:
Oil and gas sales receivable 68,660
Prepaid expenses 1,077 (1,177)
Accounts receivable, affiliates (150,000)
Increase (Decrease) in:
Accounts payable, class B shareholder 4,475 (42,894)
Accounts payabe and accrued expenses 21,136 (96,312)
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Net cash used in operating activities (2,891) (317,535)
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Cash flows from Investing:
Proceeds from sale of oil and gas properties 0 900,327
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Net cash provided by investing activities 0 900,327
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Cash flows from financing activities:
Principal payments on borrowings 0 (540,000)
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Net cash (used in) Investing activities 0 (540,000)
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Net increase (decrease) in cash and equivalents (2,891) 42,792
Cash Beginning 2,974 80
Cash Ending $ 83 $ 42,872
========= =========
See accompanying notes to these consolidated financial statements
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AMERICAN RIVERS OIL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
In the opinion of management, all adjustments, consisting of normal recurring
accruals, have been made which are necessary for a fair presentation of the
financial position of the Company at June 30, 1999 and the results of operations
and cash flows for the three months ended June 30 1999 and 1998. Quarterly
results are not necessarily indicative of expected annual results. For a more
complete understanding of the Company's operations and financial position,
reference is made to the consolidated financial statements of the Company, and
related notes thereto, filed with the Company's annual report on Form 10-KSB for
the year ended March 31, 1999, previously filed with the Securities and Exchange
Commission.
Certain reclassifications have been made to the 1998 financial statements to
conform to the presentation in 1999. The reclassifications had no effect on the
1998 results of operations.
2. Sale of Oil and Gas Properties -1998
On June 4, 1998, Company entered into an agreement to sell the Company's
Colorado oil and gas properties with an effective date of March 1, 1998, in
order to provide liquidity and to repay short-term bank debt. The Company
realized proceeds from the disposition of these properties in the amount of
$900,327. The proceeds were used as follows:
Bank debt $ 540,000
Payables to related parties 42,894
Advances to affiliates 150,000
Accounts payable and working capital 167,434
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900,327
3. Net Loss Per Share
The computation of net loss per share is based on the rights of each class of
common stock. Each class was allocated its pro rata percentage of the
consolidated net income (loss) based on the ratio of common shares outstanding
to total common and Class B shares outstanding.
4. Subsequent Event - Note Payable
On July 7,1999, the Company executed a promissory not to a bank in the amount of
$75,000.00, due December 1, 1999, bearing interest at 1% over Wall Street
Journal prime. The proceeds from the note were used to fund current trade
obligations and provide working capital. The Company's president, Karlton Terry,
also executed the note as a comaker.
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AMERICAN RIVERS OIL COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Company's unaudited consolidated financial statements and notes thereto.
Forward-Looking Statements
The Company believes that this report contains certain forward-looking
statements, as defined in the Private Securities Litigation Reform Act of 1995,
including, without limitation, statements containing the words "believes,"
"anticipates," "estimates," "expects," "may" and words of similar import, or
statements of management's opinion. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements.
Results of Operations
Three Months Ended June 30, 1999 Compared to 1998
The Company's oil and gas sales revenue decreased by $19,000 or 100% in the
quarter ended June 30, 1999 compared to the corresponding quarter in 1998. The
primary factor in the decrease is attributed to the sale of the properties
referred to in note 2 to the financial statements.
The production volumes and average sales prices during the periods were as
follows:
Three Months Ended
June 30,
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1999 1998
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Oil production (barrels) - 0 - 145
Average sales price per barrel $ n/a $11.50
Natural gas production (mcf) - 0 - 8,422
Average sales price per mcf $ n/a $ 2.10
Oil and gas production costs decreased by $21,000 compared to the corresponding
quarter ended June 30, 1998 because certain producing properties were sold in
1998 (see note 2 to the financial statements). The BOE basis (BOE means barrel
of oil equivalent, using a conversion ratio of six mcf of natural gas to one
barrel of oil), of comparing production costs per BOE were not applicable for
the quarter ended June 30, 1999 and were $13.59 for the comparable quarter of
1998.
General and administrative expenses decreased by $53,000 or 64% for the quarter
ended June 30, 1999 compared to the corresponding quarter in 1998 and is due
primarily to decreases in corporate overhead.
Depreciation, depletion and amortization expense decreased by $10,600, 100% in
the current quarter compared to the corresponding quarter in 1998 due to the
sale of the producing properties referred to in note 2.
Interest expense decreased by $10,000 or 100% for the current quarter of 1999
over the corresponding quarter of 1998 due to a repayment of debt in 1998.
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FINANCIAL CONDITION
At June 30, 1999, the Company had a working capital deficiency of $46,000.
The following summary table reflects the Company's cash flows for the nine
months ended June 30, 1999, and 1998:
Three Months Ended
June 30,
--------------------
1999 1998
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Net cash used in operating activities $ (2,900) $(317,000)
Net cash provided by (used in) investing activities $ 0 $ 900,000
Net cash provided (used in) by financing activities $ 0 $(540,000)
Net cash used in operating activities decreased $314,000 for the three months
ended June 30, 1999 compared to the three months ended June 30, 1998 is due
primarily to a decrease in operating activities. The Company utilized the
proceeds from the sale of certain properties in 1998 to repay its bank
obligations and currently has no significant operations which accounts for the
changes in investing and financing activities
Operating Strategy
In the fiscal year ended March 31, 1999, the Company has sold a significant
portion of its producing properties to meet its current obligations including
its then maturing indebtedness. The Company's operating objective is to increase
value through pursuing merger or acquisition opportunities with another company.
The Company is currently negotiating with a candidate. The Company cannot
predict whether any agreement may be reached if they are, the timing of the
contemplated transaction or the results of the transaction if any agreement is
reached
In view of the Company's lack of liquidity, if the contemplated merger does not
take place, the Company's value and future potential could be considerably
diminished.
General
Many of the factors which may affect the Company's future operating performance
and long-term liquidity are beyond the Company's control, including, but not
limited to, oil and natural gas prices, the availability and attractiveness of
properties for acquisition, the adequacy and attractiveness of financing and
operational results. The Company is examining alternative sources of long-term
capital, including bank borrowing, the issuance of debt instruments and the sale
of equity securities of the Company. Availability of these sources of capital
and, therefore, the Company's ability to execute its operating strategy will
depend upon a number of factors, some of which are beyond the control of the
Company.
Year 2000 Issues
"Year 2000 problems" result primarily from the inability of some computer
software to property store, recall or use data after December 31, 1999. These
problems may affect may computers and other devices that contain "embedded"
computer chips. The Company's operations, however, do not rely extensively on
information technology ("IT") systems. The IT software and hardware systems the
Company operates are all publicly available, pre-packaged systems that are
readily replaceable with other functionally similar systems. Accordingly, the
Company does not believe that it will be materially affected by Year 2000
problems in its IT software and hardware systems.
The Company relies on non-IT systems that may suffer from Year 2000 problems
including telephone systems and facsimile and other office machines. Moreover,
the Company relies on third parties that may suffer from Year 2000 problems that
could affect the Company's operations, including banks and utilities. In light
of the Company's substantially reduced operations, the Company does not believe
that such non-IT systems or third-party Year 2000 problems will affect the
Company in a manner that is different or more substantial than such problems
affect other similarly situated companies generally. Consequently, the Company
7
does not currently intend to conduct a readiness assessment of Year 2000
problems or to develop a detailed contingency plan with respect to Year 2000
problems that may affect the Company's IT and non-IT systems or third-parties.
The foregoing is a "Year 2000 Readiness Disclosure" within the meaning of the
Year 2000 Information and Readiness Disclosure Act of 1998.
8
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27. Financial Data Schedule (submitted only in
electronic format)
b. Reports on Form 8-K
None
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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.
AMERICAN RIVERS OIL COMPANY
(Registrant)
Date: August 13, 1999 By: /s/ Karlton Terry
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Karlton Terry
President
(Principal Executive Officer)
Date: August 13, 1999 By: /s/ Karlton Terry
-------------------------------
Karlton Terry
President and Acting Chief
Financial Officer
(Principal Financial Officer)
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