-----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, SPUjhvXapjglqtsWNCyBrq3ADa7HDnzpB6dEqyQEjGKGTFxow2kyCt36LhBS3TdJ /Xf6goM7NyYNYNOBfGCASA== 0000948830-96-000199.txt : 19961016 0000948830-96-000199.hdr.sgml : 19961016 ACCESSION NUMBER: 0000948830-96-000199 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961015 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: METEOR INDUSTRIES INC CENTRAL INDEX KEY: 0000912875 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO & HOME SUPPLY STORES [5531] IRS NUMBER: 841236619 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27968 FILM NUMBER: 96643389 BUSINESS ADDRESS: STREET 1: 216 16TH ST STE 730 CITY: DENVER STATE: CO ZIP: 80202 MAIL ADDRESS: STREET 1: 216 16TH ST STREET 2: STE 730 CITY: DENVER STATE: CO ZIP: 80202 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 1996 Commission File Number: 0-10157 ALFA RESOURCES, INC. ---------------------------------------------------------------- (Exact Name of Small Business Issuer as Specified in its Charter) COLORADO 84-0846529 - ------------------------------- ------------------------------------- (State or Other Jurisdiction of (I.R.S. Employer Identication Number) Incorporation or Organization) 216 SIXTEENTH STREET, SUITE 730, DENVER, COLORADO 80202 ----------------------------------------------------------- (Address of Principal Executive Offices including zip code) (303) 572-1135 --------------------------- (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 Issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes -X- No --- There were 44,865,212 shares of the Registrant's $.001 par value common stock outstanding as of August 31, 1996. Transitional Small Business Disclosure Format (check one): Yes--- No -X- ALFA RESOURCES, INC. CONSOLIDATED BALANCE SHEET ASSETS August 31 May 31 1996 1996 CURRENT ASSETS Cash and cash equivalents $ 46,379 $ 29,790 Accounts Receivable-trade, net of allowance for bad debts of 25,091 43,472 Other receivables 4,997 4,997 Total current assets 76,467 78,259 Oil and gas properties using the full cost method 1,441,535 1,441,535 Less: depletion, depreciation, amortization and valuation allowance (1,410,822) (1,409,022) 30,713 32,513 Other assets 9,038 9,038 TOTAL ASSETS $ 116,218 $ 119,810 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts Payable $ 52,659 $ 42,335 Dividends Payable 26,463 26,463 Accrued Expenses 9,584 9,770 Total current liabilities 88,706 78,568 Minority Interest 66,178 69,619 Commitments and contingencies SHAREHOLDERS' EQUITY (Deficit) Preferred Stock, $1.00 par value; authorized 10,000,000 shares, 240,875 shares issued & outstanding 240,875 240,875 Common stock, $.001 par value; authorized 150,000,000 shares; 44,865,212 shares issued and outstanding 44,865 44,865 Additional paid-in capital 2,409,636 2,409,636 Accumulated deficit (2,734,042) (2,723,753) Total shareholders' equity (Deficit) (38,666) (28,377) TOTAL LIABILITIES AND SHARE- HOLDERS' EQUITY (DEFICIT) $ 116,218 $ 119,810 The accompanying notes are an integral part of the financial statements. -2- ALFA RESOURCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended August 31, 1996 and 1995 1996 1995 REVENUES Oil and gas sales $ 11,121 $ 77,979 Management Fees 1,875 7,613 Interest and other income 290 2,465 Total revenues 13,286 88,057 EXPENSES Production 9,048 51,290 General and Administrative 15,033 22,855 Depletion, depreciation, amortization, and valuation allowance 1,800 31,200 Interest -- 6,395 Total expenses 25,881 111,740 Gain on Sale of Assets 1,135 -- Income (loss) before minority interest (13,730) (23,683) (Gain) Loss Attributable to minority interest 3,441 -- Net Income (Loss) $ (10,289) $ (23,683) Net (Loss) per share $ * $ * Weighted average shares outstanding 44,865,212 44,865,212 The accompanying notes are an integral part of the financial statements. -3- ALFA RESOURCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended August 31, 1996 and 1995 1996 1995 Cash provided by (used in) operations: Net Income (Loss) $(10,289) $(23,683) Adjustments: Minority Interest (3,441) -- Depletion, depreciation and amortization 1,800 31,200 (Increase) decrease in accounts receivable 18,381 (6,892) Increase (decrease) in accounts payable 10,324 (48,887) Increase (decrease) in accrued expenses (186) 1,142 Amortization of debt discount -- 6,395 Cash provided by (used in) operations 16,589 (40,725) Cash provided by (used in) investing activities: Sale of oil and gas properties and equipment -- 23,694 Cash provided by (used in)investing activities -- 23,694 Net increase (decrease) in cash 16,589 (17,031) Cash, beginning of period 29,790 133,155 Cash, end of period $ 46,379 $116,124 The accompanying notes are an integral part of the financial statements. -4- ALFA RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 1996 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION AND BASIS OF ACCOUNTING The financial statements include the accounts of Alfa Resources, Inc., (Alfa or the Company); its wholly owned subsidiary, Granite Alfa Corporation; and an 80% owned subsidiary, Meteor Developments, Inc. (Meteor, Alfa's subsidiary). The accompanying financial statements have been prepared on the basis of a going concern. However, the Company has depleted its working capital because of past operating losses, and has experienced the loss of production income because most of its oil and gas properties have been sold. Certain current production revenue is being withheld by operators to liquidate trade payables, and this situation is expected to continue through much of fiscal year 1997. Management intends to use unencumbered production revenue and other sources to meet reduced administrative costs and continue in operation, but this cannot be assured. A decrease in the price of oil or other unexpected circumstances could cause operations to cease within a short period of time. Management has sold all of Meteor's oil and gas properties, with the intent to liquidate Meteor over time. Management has also sold some of Alfa's properties. OIL AND GAS ACCOUNTING The Company and its subsidiaries account for oil and gas properties using the "full cost" method. Under this method, all costs associated with property acquisition, exploration and development activities are capitalized, including costs of unsuccessful activities. Oil and gas properties are depleted using the units-of-production method based on the ratio of current period production to estimated proved oil and gas reserve quantities. No gain or loss resulting from the disposition of oil and gas properties is recognized unless the relationship between capitalized costs and reserves in the cost center is significantly changed. In addition to normal depletion, net capitalized costs are subject to a ceiling limitation required by the Securities and Exchange Commission (SEC). Such costs are limited to the present value (discounted at 10%) of the future net revenues from proved oil and gas properties, using year end costs and prices, after considering potential future income tax effects. There were no charges related to the ceiling limitation during the years quarter. Revenue from oil and gas production is recognized upon sale to unaffiliated purchasers. CASH EQUIVALENTS Cash equivalents include money-market accounts or other highly-liquid debt instruments with an original maturity of three months or less. -5- USE OF ESTIMATES Preparation of financial statements in accordance with generally accepted accounting principles requires the use of estimates. The unaudited oil and gas reserve estimates prepared by management should be considered as reasonably possible to change, which can affect depletion and the net carrying value of oil and gas properties. INCOME (LOSS) PER SHARE Income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the period. Shares issued to insiders are considered to be outstanding from the beginning of the period issued. Common stock equivalents represented by options are not included as shares outstanding if their effect is antidilutive, or if estimated market value has not exceeded exercise price. 2. ADJUSTMENTS In the opinion of the Company, the accompanying unaudited financial statements contain all adjustments (consisting of normal recurring accruals only) necessary to present fairly, the Consolidated Balance Sheet as of August 31, 1996, and the Consolidated Statement of Operations and the Consolidated Statement of Cash flow for the three months then ended. 3. ADDITIONAL DETAILS For additional details of the Company's financial condition, refer to the notes to the Company's annual financial statements for the year ended May 31, 1996, filed in the Company's Form 10-KSB annual report. -6- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The Company continues to have working capital problems because of continued losses and has sold property to satisfy debts. Several properties were not able to generate sufficient revenue to pay operating costs in prior years and were shut in and subsequently disposed of. At August 31, 1996, the Company had a working capital deficit in the amount of ($12,239). Management has sold assets and settled liabilities, with the intent to liquidate its subsidiary over time. Management's intent is to use the Company as a public shell merger candidate. Some current production revenue is currently being withheld by operators to liquidate operators' liens for trade payables and this situation is expected to continue through fiscal 1997. Management intends to use unencumbered pro- duction revenue and other sources, such as sales proceeds, to meet reduced administrative costs and continue in operation, but this cannot be assured. A decrease in the price of oil could cause operations to cease within a short period of time. If the Company is not able to sell assets and to settle its debts, the Company may not be able to continue in business. Cash flows provided (used) in operations for the three months ended August 31, 1996, and 1995, were $16,589 and ($40,725) respectively. The increase in cash provided during the last period is principally due to the additional accounts payable, the Company's net loss and collection of receivables. Sale of oil and gas properties provided $23,694 cash flows in the three month period ended August 31, 1995. Alfa sells most of its oil production to three major oil companies. However, in the event these purchasers discontinued oil purchases, Alfa has made contact with other purchasers who would purchase the oil. Alfa's past strategy has been the merger with or acquisition of other small independent oil and gas production companies and the acquisition of interests in producing oil and gas properties in exchange for cash and shares of Alfa's equity securities. Alfa's current financial position makes it extremely difficult to accomplish this business plan. Alfa's long-term needs, if it is able to overcome its current financial deficit, will continue to depend on many outside factors beyond its control, such as the demand for oil and natural gas, the price of oil and gas, the general economic climate and Alfa's ability to raise additional capital and to find a merger candidate. RESULTS OF OPERATIONS THREE MONTHS ENDED AUGUST 31, 1996 COMPARED TO AUGUST 31, 1995 Alfa's oil and gas sales decreased 86% to $11,121 in 1996 from $77,979 in 1995. This decrease is primarily due to the sale of properties. Management fees decreased 75% to $1,875 in 1996 from $7,613 in 1995. This decrease is due to discontinuation of the services the Company was providing. Interest and other income decreased to $290 in 1996 from $2,465 in 1995. Production expenses decreased 82% to $9,048 in 1996 from $51,290 in 1995. This decrease resulted primarily from sale of properties. General and Admin- istrative expenses decreased 34% to $15,033 in 1996 from $22,855 in 1995. -7- This decrease is due to decreased activity of the Company and management's attempt to decrease expenses which reduced salaries and other costs. Since net operating revenues from Alfa's oil production are very sensitive to changes in the price of oil, it is difficult for management to predict whether or not the Company will be profitable in the future. Unless oil prices increase, the Company will not be able to produce its marginal properties and since management has reduced its services, total revenues will continue to decline. EFFECT OF CHANGES IN PRICES Changes in prices during the past few years have been a significant factor in the oil and gas industry. The price received for the oil and gas produced by Alfa has fluctuated significantly during the last year. Changes in the price that Alfa receives for its oil and gas is set by market forces beyond Alfa's control. That uncertainty in oil and gas prices make it more difficult for a company like Alfa to increase its oil and gas asset base and become a significant participant in the oil and gas industry. PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities. None. Item 3. Defaults 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. None. -8- SIGNATURES In accordance with the requirements of the Exchange Act, the Issuer caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. ALFA RESOURCES, INC. /s/ C.L. Nordstrom Dated: October 11, 1996 By____________________________ C.L. Nordstrom, President /s/ Dennis R. Staal Dated: October 11, 1996 By____________________________ Dennis R. Staal, Chief Financial and Accounting Officer -9- EX-27 2
5 This schedule contains summary financial information extracted from the consolidated balance sheets and consolidated statements of operations found on pages 2 and 3 of the Company's Form 10-QSB for the quarter ended August 31, 1996, and is qualified in its entirety by reference to such financial statements. 3-MOS AUG-31-1996 AUG-31-1996 46,379 0 30,088 0 0 76,467 1,441,535 (1,410,822) 116,218 88,706 0 44,865 0 240,875 (324,406) 116,218 11,121 13,286 9,048 0 16,833 0 0 (10,289) 0 (10,289) 0 0 0 (10,289) 0 0
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