-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OTgVtD8i7qqwsG0qHBU9zkhbjKkRZNHOE2TCNz+SFPu9o8pBxVMek/Y2NP9fo3yA JEjMNmpZEs/IPgxvRKOXIA== 0000025743-97-000017.txt : 19971118 0000025743-97-000017.hdr.sgml : 19971118 ACCESSION NUMBER: 0000025743-97-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971117 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CROFF ENTERPRISES INC CENTRAL INDEX KEY: 0000025743 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 870233535 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-16731 FILM NUMBER: 97723008 BUSINESS ADDRESS: STREET 1: 1675 BROADWAY STREET 2: STE 1030 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3036281963 MAIL ADDRESS: STREET 1: 1675 BROADWAY STREET 2: SUITE 1030 CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: CROFF OIL CO DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended September 30, 1997 or [ ] 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: 1-100 CROFF ENTERPRISES, INC. (Exact name of registrant as specified in its charter) Utah 87-0233535 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1675 Broadway, Suite 1030, Denver, CO 80202 (Address of principal executive offices) (Zip Code) (303) 628-1963 (Registrant's telephone number, including area code) _________________________________________________________________ ______ (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant has required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X Yes ______ No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. _______ Yes ______ No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 516,305 shares, one class only, as of September 30, 1997. INDEX INDEX TO INFORMATION INCLUDED IN THE QUARTERLY REPORT (FORM 10-Q) TO THE SECURITIES AND EXCHANGE COMMISSION FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED). _________________________________________________________________ PART I. FINANCIAL INFORMATION Page Number Balance Sheets as of December 31, 1996 and September 30, 1997 3-4 Statements of Operations for the Three and Nine Months Ended September 30, 1997 and 1996 5 Statements of Cash Flows for the Three and Nine Months Ended September 30, 1997 and 1996 6 Notes to Financial Statements 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 7-9 PART II. OTHER INFORMATION Signatures. 9 _________________________________________________________________ The condensed financial statements included herein are for the Registrant, Croff Enterprises, Inc. The financial statements for the three and nine months ended September 30, 1997 and 1996 are unaudited; however, they reflect all adjustments which, in the opinion of management, are necessary to present fairly the results of the interim periods. All adjustments necessary to a fair representation of the financial statements are of a normal recurring nature. PART I: FINANCIAL INFORMATION CROFF ENTERPRISES, INC. BALANCE SHEET Unaudited Dec 31, Sept 30, 1996 1997 CURRENT ASSETS: Cash and Cash Equivalents: $184,565 $216,953 Marketable equity securities 10,500 15,250 Accounts receivable: Oil and gas purchasers 31,764 22,070 Refundable income taxes 4,362 2,206 Total current assets 231,191 256,479 PROPERTY AND EQUIPMENT, AT COST: Oil & gas properties, successful efforts method: Proved properties 329,700 368,196 Unproved properties 101,901 101,901 Less wazzu accumulated depletion and depreciation (229,621) (247,621) Net property and equipment 201,980 222,476 Coal Investment 82,533 20,533 $ 515,704 $ 499,488 PART I: FINANCIAL INFORMATION CROFF ENTERPRISES, INC. BALANCE SHEET Unaudited Dec 31, Sept 30, 1996 1997 Current Liabilities: Accounts payable $3,164 $1,451 Accrued liabilities 1,660 2,153 Total current liabilities 4,824 3,604 Stockholders' equity Class B Preferred stock, no par value; 520,000 shares authorized, 516,506 shares issued and outstanding 233,744 233,744 Common stock, $.10 par value 20,000,000 share authorized, 579,143 shares issued 57,914 57,914 Capital in excess of par value 672,799 672,799 Accumulated deficit (370,931) (385,677) 593,526 578,780 Less treasury stock at cost, 62,628 shares in 1996 and 62,878 in 1997 (82,646) (82,896) Total stockholders' equity 510,880 495,884 $ 515,704 $ 499,488 CROFF ENTERPRISES, INC. Statement of Operations For the Three and Nine Months Ended September 30, 1997 (Unaudited) For Nine Months For Three Months Ended Ended 9/30/96 9/30/97 9/30/96 9/30/97 Revenue: Oil and gas sales........ $133,784 $151,054 $46,315 $45,537 Other income...... 23,298 7364 611 4,120 Total revenue 157,082 158,418 46,926 49,657 Costs and expenses: Lease operating expense.. 29,636 25,760 9,324 7,589 Depreciation and depletion 16,500 18,000 4,500 6,000 General and administrative 61,447 58,584 21,857 17,686wazzu Interest 223 0 0 0 Rent Expense - Related Party 8,820 8,820 2,940 2,940 Write down of coal investment 0 62,000 0 62,000 116,626 173,164 38,621 96,215 Net income (loss) $ 40,456 $(14,746) $ 8,305 $(46,558) Earnings (Loss) Per Common Share $ .08 $ (.03) $ .02 $ (.09) CROFF ENTERPRISES, INC. Statement of Cash Flows Unaudited For the Nine Months Ended September 30, 1996 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net income/loss $40,456 $(14,746) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and depletion 16,500 18,000 Write down of coal investment 0 62,000 Change in assets and liabilities: Decrease in accounts receivable 2,585 11,850 Decrease/Increase in other assets 4,800 0 Increase/Decrease in accounts payable (2,433) (1,713) Gain/Loss sale of producing lease (20,966) 0 Decrease/Increase in accrued liabilities 45 493 Total adjustments 531 90,630 Net cash provided by operating activities: 40,987 75,884 CASH FLOWS FROM INVESTING ACTIVITIES: Sale/Purchase of Securities 4,557 (4,750) Sale of oil & gas field 118,020 0 Purchase/Return of coal investment 8,511 0 Purchase of producing leases (12,675) (38,496) 118,413 (43,246) CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of Treasury Stock 0 (250) Proceeds/Payoff of Note for Coal Purchase (50,000) 0 (50,000) (250) Increase in cash: 122,230 32,388 Cash at beginning of period: 37,933 184,565 Cash at end of period: $160,163 $216,953 CROFF ENTERPRISES, INC. NOTES TO FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 BASIS OF PREPARATION. The condensed financial statements for the three and nine month periods ended September 30, 1997 and 1996 in this report have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission and reflect, in the opinion of management, all adjustments necessary to present fairly the results of the operations of the interim periods presented herein. Certain information in footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations, although the Company believes the disclosures presented herein are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996, which report has been filed with the Securities and Exchange Commission, and is available from the Company. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS. Three-Month Period Ended September 30, 1997, as Compared to the Three-Month Period Ended September 30, 1996. OIL AND GAS OPERATIONS Oil and gas income, primarily from royalties, for the three months ended September 30, 1997 was $45,537 compared to $46,315 for the same time period of the prior year. This small decrease was due to lower oil and natural gas prices, offset somewhat by increased production. Oil prices were down about $2.00 per barrel and natural gas prices were flat compared to the quarter ending September 30, 1996. Production costs, which include lease operating expenses and production related taxes, for the three months ended September 30, 1997, decreased when compared to the same time period of the prior year, $7,589 in 1997 compared to $9,324 in 1996. This decrease was due to more royalty income, and less workovers on operated wells. Nine Month Period Ended September 30, 1997, as Compared to the Nine Month Period Ended September 30, 1996. OIL AND GAS OPERATIONS Oil and gas income, primarily from royalties, for the nine months ending September 30, 1997, was $151,054 compared to $133,784 for the same time period of the prior year. This increase was due to higher royalties, primarily from higher production of coal seam natural gas in the Four Corners region of Colorado and New Mexico, and to increased production from purchased working interests, offset by lower prices. Production costs, which include lease operating expenses and all production related taxes, for the nine months ended September 30, 1997, decreased when compared to the same time period of the prior year, $25,760 in 1997 compared to $29,636 in 1996. This difference was due to less workovers in 1997. OTHER INCOME. During the nine month period ended September 30, 1997, the Company had other income of $7,364 from interest earned, dividend payments, and lease bonuses. During the same nine month period in 1996, the Company had other income of $23,298. The Company's other income was lower due primarily to the sale of producing leases in Texas in the year earlier period. GENERAL AND ADMINISTRATIVE. General and administrative expenses for the nine month period ending September 30, 1997, were $58,584 compared to $61,447 for the nine month period ending September 30, 1996. This difference was due to moving costs in 1996 when the Company moved its offices in Denver. During the nine month period ended September 30, the Company's total expenses increased to $173,164 in 1997 from $116,626 in 1996. The increase was due to the write off of $62,000 in the value of the note and coal leases in Indiana, as explained below. General and administrative expenses remain at approximately the same level during both years. The Company is currently operating with two part time officers and employees, and is contracting for its accounting services, office space and supplies. FINANCIAL CONDITION As of September 30, 1997, the Company's current assets exceeded current liabilities by $252,875, compared to working capital of $226,367 at December 31, 1996. This increase of $26,508 in the Company's working capital position during the nine month period ending September 30, 1997 was due to the build-up of cash flow less the purchase of producing properties. The Company's ratio of current assets to current liabilities was approximately 48 to 1 on December 31, 1996 and 70 to 1 on September 30, 1997. The Company is continuing its program to invest its cash in non-operated oil and gas working interests and royalties, and retaining cash to assist in expenses of any acquisition. As of September 30, 1997, the Company determined that it must write down the value of its coal investment. This was an approximate two percent investment in a limited liability company (L.L.C.) that held a mortgage note with an option to own two percent of a coal mine in Indiana. The major purchaser of this coal canceled the contract in December, 1995, and the coal company subsequently filed for Chapter 11 Bankruptcy protection. The assets were being liquidated while the L.L.C. sued the utility. In July, 1997, the trial court ruled against the L.L.C. Without a cash recovery from this litigation, which is being appealed, recovery of most of this investment is unlikely and the Company determined to reduce its investment to the estimated liquidation value of cash, land and equipment remaining. PART II. OTHER INFORMATION ITEM 6(b). NONE. S I G N A T U R E S Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. REGISTRANT: CROFF ENTERPRISES, INC. By_________________________________ Gerald L. Jensen Chief Executive Officer By_________________________________ Beverly Licholat Chief Accounting Officer Date:__________________, 1997 -----END PRIVACY-ENHANCED MESSAGE-----