US SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: ________________
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: ________________
Commission file number: 000-29722
AURORA ENERGY, LTD.
(Exact name of small business issuer as specified
in its charter)
NEVADA
(State or other jurisdiction of incorporation or
organization)
91-1780941
(IRS Employer Identification No.)
3760 North U.S. 31 South, Traverse City, MI 49684
(Address of principal executive offices)
(616) 941-0073
(Issuer's telephone number)
N/A
(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 __ No X
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
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 ____ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each
of the issuer's classes of common equity,
as of the latest practicable date: 8,691,697
Transitional Small Business Disclosure Format
(check one); Yes __ No X
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
AURORA ENERGY, LTD.
(a development stage company)
STATEMENT OF FINANCIAL POSITION
(Unaudited)
ASSETS June 30, 1998 June 30,1997
Current assets
Cash and cash equivalents $ 41,554 $ 51,329
Accounts receivable 331,420 10,000
Prepaid expenses 144 --
Total current assets 373,118 61,329
Oil and gas properties, not
subject to amortization, using
full cost accounting 1,245,895 --
Investment in oil and gas
partnerships 135,280 143,000
Property and equipment, net 65,080 --
Total assets $1,819,373 $204,329
See notes to financial statements
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
June 30, 1998 June 30, 1997
Current liabilities
Accounts payable $ 162,726 $ 768
Current portion of capital
lease obligations 9,837 --
Line of credit 220,000 --
Advances from investors 49,500 --
Accrued expenses 26,738 3,982
Total current liabilities 468,801 4,750
Capital lease obligations, net of
current portion 28,739 --
Total liabilities 497,540 4,750
Stockholders' equity
Common stock, $.001 par value;
500,000,000 shares authorized;
8,691,697 shares issued
and outstanding 8,692 6,720
Additional paid-in capital 1,869,073 201,295
Deficit accumulated during the
development stage (555,932) (8,436)
Total stockholders' equity 1,321,833 199,579
Total liabilities and stockholders'
equity $1,819,373 $204,329
See notes to financial statements
AURORA ENERGY, LTD.
(a development stage company)
STATEMENTS OF OPERATIONS
(UNAUDITED)
For the
For the For the Period For the
6 months 3 months 3/12/97 3 months
ended ended (inception) ended
6/30/98 6/30/98 to 6/30/97 6/30/97
Operating revenues $ 7,527 $ 6,923 $ -- $ --
Other revenue 2,091 5,487 -- --
General and
administrative
expenses 275,059 123,144 7,921 7,086
Operating loss (265,441) (110,734) (7,921) (7,086)
Other income (expense)
Equity in loss
of investee
partnerships (46,807) (2,623) -- --
Interest income 11,043 3,501 -- --
Interest expense (3,883) (2,385) -- --
Other expense, net (39,647) (1,507) -- --
Net loss $(305,088) $(112,241) (7,921) $(7,086)
Net loss per basic
and diluted common
share $ (.035) $ (.013) $ (.002) $ (.001)
See notes to financial statement
AURORA ENERGY, LTD.
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 12, 1997 (INCEPTION)
THROUGH JUNE 30, 1998 (UNAUDITED)
Deficit
Accumulated
During the
Add'l Develop-
Common Stock Paid in mental
Shares Amount Capital Stage Totals
Common stock issued
for cash at
$.001 per share 514,997 $ 515 $ -- $ -- $ 515
Common stock issued
for cash at
$.025 per share 580,000 580 13,920 -- 14,500
Common stock issued
in exchange for
interest in oil and
gas partnership 5,575,200 5,575 137,425 -- 143,000
Common stock issued
for cash at
$1.00 per share 50,000 50 49,950 -- 50,000
Common stock issued
in exchange for
cancellation of
loan at $.7142857
per share 700,000 700 499,300 -- 500,000
Common stock issued
for cash at $.90
per share 1,191,500 1,192 1,071,158 -- 1,072,350
Common stock options
issued to consultant
and nonemployee
director -- -- 17,400 -- 17,400
Common stock issued
in exchange for
oil and gas working
interests 80,000 80 79,920 -- 80,000
Net loss -- -- - (555,932) (555,932)
Balance at
June 30, 1998 8,691,697 $8,692 $1,869,073 $(555,932) $1,321,833
See notes to financial statements
AURORA ENERGY, LTD.
(a development stage company)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM MARCH 12, 1997 (INCEPTION)
THROUGH JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1998
(Unaudited)
1998 1997
Cash flows from operating activities:
Net loss $(305,088) $ (7,921)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 4,174 --
Equity in loss of investee
partnership 46,807 --
Services received in exchange
for stock options -- --
Changes in operating assets
and liabilities which provided
(used) cash:
Accounts receivable (27,250) (7,921)
Prepaid expenses 4,806 --
Accounts payable (23,425) 768
Accrued expense 3,435 3,982
Net cash used in operating activities (296,541) (3,171)
Cash flows from investing activities
Acquisition of interests in oil and
gas properties (465,045) --
Acquisition of interests in investee
partnerships (82,773) --
Capital expenditures for property
and equipment (6,950) --
Net cash used in investing activities (554,768) --
Cash flows from financing activities
Proceeds from the sale of common stock 198,450 54,500
Proceeds of loan from financial
institution 220,000 --
Advances from affiliate -- --
Repayment of advancement from affiliate -- --
Advances from investors 49,500 --
Payments to investors (89,000) --
Payments made to reduce capital
lease obligations (4,495) --
Net cash provided by financing activities 374,455 54,500
Net increase in cash and cash equivalents (476,854) 51,329
Cash and cash equivalents, beginning
of period 518,408 --
Cash and cash equivalents, end of period $ 41,554 $51,329
See notes to financial statement
AURORA ENERGY, LTD.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited condensed financial
statements have been prepared in accordance
with generally accepted accounting principles
for interim financial information and with
the instructions to form 10-QSB and Article 10
of Regulation S-X. Accordingly, they do not
include all of the information and footnotes
required by generally accepted accounting
principles for complete financial statements.
In the opinion of management, all adjustments
(consisting only of normal recurring accruals
and recognition of equity in the results of
operations of affiliates) considered necessary
for a fair presentation have been included.
Operating results for the six month period
ended June 30, 1998 are not necessarily
indicative of the results that may be expected
for the year ended December 31, 1998. For
further information, refer to the financial
statements and footnotes thereto included in
the Company's annual report for the period
March 12, 1997 (inception) through December 31,
1997.
NOTE 2 COMPUTATION OF LOSS PER SHARE
Loss per share is computed for the six months
ended June 30, 1998 and for the period
March 12, 1997 to June 30, 1997 using the
weighted average number of common shares
outstanding during the period (8,579,842 and
4,635,130 respectively) determined pursuant
to Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings Per Share." This
Statement requires a dual presentation and
reconciliation of "basic" and "diluted" per share
amounts. Diluted reflects the potential
dilution of all common stock equivalents.
Since the assumed exercise of common stock
options would be antidilutive for all periods
presented, such exercise is not assumed for
purposes of determining diluted loss per share.
Accordingly, diluted and basic per share amounts
are equal.
ITEM 2 PLAN OF OPERATIONS
The Company seeks to maximize stock price and
shareholder value through exploration in lower
risk shale natural gas plays and through the
acquisition of properties with proven production
and positive cash flow. The Company's short
term goal (the next 12 months) is to acquire or
to find through exploration and bring on line
enough production and positive cash flows to
cover its general and administrative expenses.
The Company's long term goals include continued
building of reserves and cash flows from production
to allow for further development of existing
properties, and mortgaging proved developed
reserves to finance continued exploration and
growth in value through development of untapped
Antrim Shale, New Albany Shale or other formations.
The Company should be able to meet its cash
requirements for the rest of the 1998 calendar
year. It will be necessary to raise additional
funds for operations into 1999. These funds
can be raised in part by selling the Company's
common stock through a private placement and,
in part, by the sale of undeveloped or
incomplete oil and gas properties and projects.
The Company is also attempting to obtain
recourse financing for the acquisition of
productive properties capable of adding positive
cash flows after servicing the related debts.
The Company anticipates no change in the
number of employees.
Part II OTHER INFORMATION
Items 1 through 5 not applicable.
ITEM 6 INDEX TO EXHIBITS
(2) Plan of acquisition None
(3)(i) Restated Articles of Incorporation
(ii) Bylaws Incorporated by
reference from
Form 10-SB
(4) Instruments defining the rights Incorporated by
reference of security
holders from Form 10-SB
(10) Material contracts Incorporated by
reference from Form
10-SB
P Bank Loan Documents
(11) Statement regarding computation of
Per share earnings None
(15) Letter on unaudited interim None
financial information
(18) Letter on change in accounting
principles None
(22) Published report regarding matters None
submitted to vote
(24) Power of Attorney None
(27) Financial Data Schedule
(99) Additional Exhibits None
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.
Date: August 14, 1998
AURORA ENERGY, LTD.
By:/s/ William W. Deneau, President
EXHIBIT 3(i)
RESTATED ARTICLES OF INCORPORATION
OF
AURORA ENERGY, LTD.
KNOW ALL MEN BY THESE PRESENTS:
That we the undersigned, having this day
associated ourselves together for the purpose
of forming a corporation under and by virtue of
the laws of the State of Nevada, hereby
adopt the following Articles of Incorporation:
ARTICLE I
The name of the corporation is Aurora Energy, Ltd.
ARTICLE II
The principal place of business of the
corporation located within the State of Nevada
shall be 825 N. Lamb, No. 77, Las Vegas, Nevada.
Corporate mail to be directed to: P. O. Box
70011, Las Vegas, Nevada 89170-0011, in Clark
County. The Board of Directors may establish
from time to time other offices within and
without the State of Nevada.
ARTICLE III
The nature of the business or purposes proposed
to be transacted or carried on by the corporation
shall be to engage in any lawful activity.
ARTICLE IV
The total authorized capital stock of the
corporation is the amount of Five Hundred
Million shares of common stock having a par
value of $.001 per share.
ARTICLE V
The names and post office addresses of the
Board of Directors of Aurora Energy, Ltd.
are as follows:
H. Eugene Gerke
Chairman of the Board and Treasurer
P. O. Box 70011
Las Vegas, NV 89170-0011
Nicky R. Vaughn
President and Director
P. O. Box 390
Brisbane, CA 94005
Harold D. Blethen
Secretary and Director
P. O. Box 6175
San Jose, CA 95150
John H. Schmelter II
Director
17921-G Skypark Circle
Irvine, CA 92714
Warren Fieldhouse
Vice President and Director
P. O. Box 3774
Carmel, CA 93921
The business and affairs of the Corporation
shall be conducted by a board of directors
of such number as the By-laws may provide:
but the directors may not be less than three.
A governing board of directors may elect to
increase the number of directors by a vote
of the board.
ARTICLE VI
Consideration for issuance of shares may be
paid in whole or in part, in money, labor,
property, or other things of value to the
Corporation. When payment of the consideration
for which said shares are to be issued shall have
been received by the Corporation, such shares
shall be deemed to be fully paid and
non-assessable. In absence of fraud in the
transaction, the judgment of the Board of
Directors as to the value of the consideration
for shares shall be conclusive.
ARTICLE VII
The Board of Directors shall have the power
to authorize from time to time, other
classifications of stock, such as preferred,
special, or additional common, and to
designate the number of said shares and shall fix
and determine the designations, rights, preferences
or other variations of each class or series
of stock. The Board of Directors shall also have
the power to authorize the issuance of bonds,
and variations of same for any purpose determined
by the Board, to be in the best interests of the
Corporation, and its shareholders.
ARTICLE VIII
The Corporation shall have perpetual existence.
ARTICLE IX
Any one or more of the directors may be removed,
with or without cause, at any time by a vote or
written consent of the stockholders representing
a majority of the issued and outstanding capital
stock of the Corporation entitled to voting power.
ARTICLE X
The Board of Directors shall elect or appoint
officers: president, secretary, treasurer, etc.,
a resident agent, and such other officers, agents,
advisors or others for the administration of the
business of the Corporation as it shall from time
to time determine. Officers of the Corporation
need not be members of the Board of Directors.
ARTICLE XI
In furtherance and not in limitation of the powers
vested by law, the Board of Directors is
expressly authorized:
A. To hold meetings within or without the State
of Nevada.
B. If the By-laws so provide, to designate two or
more of its number to constitute an Executive
Committee, which Committee shall have and exercise
any or all of the powers of the Board of Directors
in the management of the business and affairs of
the Corporation.
C. Subject to the Bylaws: to make, alter, amend
or change the By-laws of the Corporation.
D. Subject to the By-laws, to appoint a resident
agent of the state of domicile; to dismiss the
registrant agent and file an appointment of
another resident agent, for any valid reason
what-so-ever.
ARTICLE XII
To the extent permitted by law, the private
property of each and every stockholder, officer
and director of the Corporation, real or personal,
tangible or intangible, now owned or hereafter
acquired by any of them, is and shall be forever
exempt from all debts and obligations of the
Corporation, of any type what-so-ever.
ARTICLE XIII
The Corporation shall indemnify all of its
officers and directors, present and future,
against any and all expenses incurred by them,
and each of them including, but not limited
to, legal fees, judgments, and penalties which
may be incurred, rendered, or levied in any
legal action brought against any or all
of them for or on account of any act or
omission alleged to have been committed
while acting within the scope of their duties
as officers or directors of this Corporation.
ARTICLE XIV
The names and post office addresses of the
incorporators are as follows:
Name Post Office Address
H. Eugene Gerke P.O. Box 70011, Las Vegas, NV 89170
Nicky R. Vaughn P.O. Box 390, Brisbane, CA 94005
Harold D. Blethen P. O. Box 6175, San Jose, CA 95150
ARTICLE XV
The Corporation's shareholders do not have
a preemptive right to acquire the Corporation's
unissued shares.
ARTICLE XVI
A director or officer is not liable for
damages for breach of fiduciary duty as a
director or officer except for: (a) acts or
omissions which involve intentional
misconduct, fraud or a knowing violation
of the law; or (b) the payment of a
distribution in violation of NRC 78.300.
[ARTICLE] 5
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-END] JUN-30-1998
[CASH] 41,554
[SECURITIES] 0
[RECEIVABLES] 331,420
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 373,118
[PP&E] 69,986
[DEPRECIATION] 4,906
[TOTAL-ASSETS] 1,819,373
[CURRENT-LIABILITIES] 468,801
[BONDS] 28,739
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 8,692
[OTHER-SE] 1,869,073
[TOTAL-LIABILITY-AND-EQUITY] 1,819,373
[SALES] 0
[TOTAL-REVENUES] 12,410
[CGS] 0
[TOTAL-COSTS] 6,578
[OTHER-EXPENSES] 116,566
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 2,385
[INCOME-PRETAX] (112,241)
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 0
[EPS-PRIMARY] 0
[EPS-DILUTED] 0