U. S. Securities and Exchange Commission Washington, D. C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------------- --------------- Commission File No. 0-23729 CHEROKEE MINERALS AND OIL, INC. ------------------------------- (Name of Small Business Issuer in its Charter) NEVADA 87-0575839 ------ ---------- (State or Other Jurisdiction of (I.R.S. Employer I.D. No.) incorporation or organization) 8989 South Scofield Circle Sandy, Utah 84093 -------------------------- (Address of Principal Executive Offices) Issuer's Telephone Number: (801) 942-2912 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. (1) Yes X No (2) Yes X No --- --- --- --- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Not applicable. APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date: October 15, 1998 4,474,539 ------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements. The Financial Statements of the Registrant required to be filed with this 10-QSB Quarterly Report were prepared by management, and commence on the following page, together with Related Notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Registrant. CHEROKEE MINERALS AND OIL, INC. (A Development Stage Company) Balance Sheets ASSETS September 30, December 31, 1998 1997 (Unaudited) CURRENT ASSETS Cash $ - $ - Total Current Assets - - TOTAL ASSETS $ - $ - LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 33 $ 225 Shareholder payable 1,667 1,667 Total Current Liabilities 1,700 1,892 STOCKHOLDERS' EQUITY (DEFICIT) Common stock, $0.001 par value, 2000,000,000 shares authorized, 4,474,539 and 2,474,539 shares issued and outstanding, respectively 4,475 2,475 Additional paid-in capital 513,709 493,531 Deficit accumulated during the development stage (519,884) (497,898) Total Stockholders' Equity (Deficit) (1,700) (1,892) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ - $ - CHEROKEE MINERALS AND OIL, INC. (A Development Stage Company) Statements of Operations (Unaudited) From Inception on January 15, For the Three Months For the Nine Months 1986 Through Ended September 30, Ended September 30, September 30, 1998 1997 1998 1997 1998 REVENUE $ - $ - $ - $ - $ - LOSS ON DISCONTINUED OPERATIONS (6,463) - (21,986) (1,645) (519,884) NET LOSS $ (6,463) $ - $(21,986) $(1,645) $(519,884) BASIC LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00) BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 4,474,539 2,474,539 3,807,872 2,474,539 CHEROKEE MINERALS AND OIL, INC. (A Development Stage Company) Statements of Stockholders' Equity (Deficit) Deficit Accumulated Additional During the Common Stock Paid-In Development Shares Amount Capital Stage At inception on April 30, 1919 - $ - $ - $ - Common stock issued for cash at approximately $4.46 per share 55,200 55 245,933 - Common stock issued for services at approximately $0.33 per share 10,656 11 3,489 - Common stock issued for placer mining leases at approximately $0.50 per share 40,000 40 19,960 - Contributed capital - - 16,993 - Net loss from inception April 30, 1919 to December 31, 1994 - - - (286,481) Balance, December 31, 1994 105,856 106 286,375 (286,481) Net loss for the year ended December 31, 1995 - - - - Balance, December 31, 1995 105,856 106 286,375 (286,481) Common stock issued for services at $0.09 per share 2,368,680 2,369 204,577 - Reverse split adjustment 3 - - - Contributed capital - - 2,125 - Net loss for the year ended December 31, 1996 - - - (209,525) Balance, December 31, 1996 2,474,539 2,475 493,077 (496,006) Contributed capital - - 454 - Net loss for the year ended December 31, 1997 - - - (1,892) Balance, December 31, 1997 2,474,539 $ 2,475 $ 493,531 $(497,898) Common stock issued for cash at $0.01 per share (unaudited) 2,000,000 2,000 8,000 - Contributed capital (unaudited) - - 12,178 - Net loss for the nine months ended September 30, 1998 (unaudited) - - - (21,986) Balance, September 30, 1998 (unaudited) 4,474,539 $ 4,475 $ 513,709 $(519,884) CHEROKEE MINERALS AND OIL, INC. (A Development Stage Company) Statements of Cash Flows (Unaudited) From Inception on January 15, For the Three Months For the Nine Months 1986 Through Ended September 30, Ended September 30, September 30, 1998 1997 1998 1997 1998 CASH FLOWS FROM OPERATING ACTIVITIES Income (loss) from operation $ (6,463) $ - $ (21,986) $(1,645) $(519,884) Adjustments to reconcile net income to net cash provided by operating activities: Amortization and depreciation expense - - - - 23,500 Contributed capital for expenses 9,883 - 12,178 1,645 31,748 Stock issued for services - - - - 206,948 Increase in shareholder payable - - - - 1,667 Increase in accounts payable (3,420) - (192) - 33 Net Cash Provided (Used) by Operating Activities - - (10,000) - (255,988) CASH FLOWS FROM INVESTING ACTIVITIES - - - - - CASH FLOWS FROM FINANCING ACTIVITIES Issuance of common stock for cash - - 10,000 - 255,988 Net Cash Provided (Used) by Financing Activities - - 10,000 - 255,988 INCREASE (DECREASE IN CASH AND CASH EQUIVALENTS - - - - - CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD - - - - - CASH AND CASH EQUIVALENTS AT END OF PERIOD $ - $ - $ - $ - $ - Cash Paid For: Interest $ - $ - $ - $ - $ - Income taxes $ - $ - $ - $ - $ - NON-CASH FINANCING ACTIVITIES Common stock issued for services $ - $ - $ - $ - $206,948 Contributed capital for expenses $9,883 $ - $12,178 $ 1,645 $ 31,748 Common stock issued for subsidiary $ - $ - $ - $ - $ 20,000 CHEROKEE MINERALS AND OIL, INC. (A Development Stage Company) Notes to Financial Statements September 30, 1998 and December 31, 1997 (Unaudited) NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS The Company was incorporated in 1919 under the laws of the State of Nevada as Lincoln Divide Mining Company. In July, 1973, the name of the Company was changed to Lincoln Divide Industries, Inc. In February, 1980, the name of the Company was changed to Cherokee Mineral and Oil, Inc. The Company's operations primarily consisted of the acquisition and preliminary exploration of two placer-mining leases situated in Canada. Presently, the Company does not engage in any business. The Company has authorized 200,000,000 shares of $0.001 par value common stock. The Company has elected a calendar year end. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Accounting Method The Company's financial statements are prepared using the accrual method of accounting. b. Provision for Taxes At September 30, 1998, the Company had net operating loss carryforwards of approximately $230,000 that may be offset against future taxable income through 2013. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carryforwards will expire unused. Accordingly, the potential tax benefits of the loss carryforwards are offset by a valuation account of the same amount. c. Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. d. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. e. Unaudited Financial Statements The accompanying unaudited financial statements include all of the adjustments which, in the opinion of management, are necessary for a fair presentation. Such adjustments are of a normal, recurring nature. NOTE 3 - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not established revenues sufficient to cover its operating costs and allow it to continue as a going concern. Management believes that the Company will soon be able to generate revenues sufficient to cover its operating costs. Currently management is committed to covering all operating and other costs until sufficient revenues are generated. NOTE 4 - DISCONTINUED OPERATIONS The Company discontinued its operations in 1985. Therefore, all revenues generated by the Company have been netted against the expenses and are grouped into the discontinued operations line on the statement of operations. NOTE 5 - STOCK TRANSACTIONS The Company issued 374,000 shares of common stock for services valued at $187,000 during February, 1996. On March 3, 1996, the board of directors approved a reverse stock split on a basis of 50 for 1. The reverse stock split has been applied retroactively to the financial statements. The Company subsequently issued 1,994,680 post split common shares for services valued at $19,946. On January 27, 1998, the Board of Directors approved a change on the par value from $0.01 to $0.001, while retaining the currently authorized capital. The change in par value has been applied retroactively to the annual statements. The Company issued 2,000,000 shares of common stock for $10,000 cash, which was paid directly to the Company's attorney for legal fees. NOTE 6 - RELATED PARTY TRANSACTION During 1997, an officer and shareholder of the Company paid expenses on behalf of the Company. At September 30, 1998 the amount owed to the shareholder was $1,667. Item 2. Management's Discussion and Analysis or Plan of Operation. - -------------------------------------------------------------------- Plan of Operation. - ------------------ The Company has not engaged in any material operations since the calendar year ended December 31, 1991, or during the quarterly period ended September 30, 1998. During this period, the Company received revenues of $0. During the same period, losses from discontinued operations were ($6,463) and net income totaled ($6,463). The Company's plan of operation for the next 12 months is to continue to seek the acquisition of assets, properties or businesses that may benefit the Company and its stockholders. Management anticipates that to achieve any such acquisition, the Company will issue shares of its common stock as the sole consideration for such acquisition. During the next 12 months, the Company's only foreseeable cash requirements will relate to maintaining the Company in good standing or the payment of expenses associated with reviewing or investigating any potential business venture, which the Company expects to pay from its cash resources. Results of Operations. - ---------------------- During the quarterly period ended September 30, 1998, the Company had no business operations. During this period, the Company received total revenues of $0 and had net income of ($6,463). Liquidity. - ---------- At September 30, 1998, the Company had no current assets, with total current liabilities of $1,700. Total stockholder's equity was ($1,700). PART II - OTHER INFORMATION Item 1. Legal Proceedings. - ---------------------------- None; not applicable. Item 2. Changes in Securities. - -------------------------------- None; not applicable. Item 3. Defaults Upon Senior Securities. - ------------------------------------------ None; not applicable. Item 4. Submission of Matters to a Vote of Security Holders. - -------------------------------------------------------------- None; not applicable. Item 5. Other Information. - ---------------------------- None; not applicable. Item 6. Exhibits and Reports on Form 8-K. - ------------------------------------------- (a) Exhibits. Financial Data Schedule. (b) Reports on Form 8-K. None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. CHEROKEE MINERALS AND OIL, INC. Date: 10/17/98 By /s/ Joe Johnson -------------- ------------------------------------- Joe Johnson Director and President Date: 10/17/98 By /s/ Melinda Johnson -------------- ------------------------------------- Melinda Johnson Director and Treasurer