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U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-24259
Australian-Canadian Oil Royalties Ltd.
(Exact name of small business issuer as specified in its charter)
British Columbia, Canada 75-2712845
(State or other jurisdiction of (IRS Employer
incorporation or organization) I. D. Number)
1304 Avenue L, Cisco, Texas 76437
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (254) 442-2658
Check whether the issuer (1) filed all reports required to be filed by
Sections 13 or 15(d) of the Securities 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 [ ]
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.
There were 5,150,000 shares of common stock, $.001 Par Value,
outstanding as of March 31, 1999.
Transitional Small Business Disclosure Format (check one);
Yes [ ] No [X]
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AUSTRALIAN-CANADIAN OIL ROYALTIES, INC.
TABLE OF CONTENTS
March 31, 1999
Page
PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
Report on Review by Independent Certified Public Accountants . 3
Balance Sheet . . . . . . . . . . . . . . . . . . 4
Statement of Operations . . . . . . . . . . . . . . 5
Statement of Cash Flows . . . . . . . . . . . . . . 6
Selected Information Regarding the Financial Statements . . 7
Item 2: Management's Discussion and Analysis
or Plan of Operation . . . . . . . . . . . . 8
Part II: OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K . . . . . . . . 9
Signatures . . . . . . . . . . . . . . . . . 9
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Australian-Canadian Oil Royalties, LTD.
Cisco, Texas
We have reviewed the accompanying balance sheet of Australian-Canadian
Oil Royalties, LTD. as of March 31, 1999, and the related statements of
operations and cash flows for the three months ended March 31, 1999 and
1998. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet as of December 31, 1998, and the
related statements of operations, changes in stockholders' equity, and
cash flows for the year then ended (not presented herein); and in our
report dated March 22, 1999, we expressed an unqualified opinion on
those financial statements. In our opinion, the information set forth
in the accompanying condensed balance sheet as of December 31, 1998 is
fairly stated in all material respects in relation to the balance sheet
from which it has been derived.
/s/ Robert Early & Company, P.C.
Robert Early & Company, P.C.
Abilene, Texas
May 13, 1999
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AUSTRALIAN-CANADIAN OIL ROYALTIES, INC.
BALANCE SHEETS
March 31, December 31,
1999 1998
--------- ---------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 258,892 $ 263,188
Royalties receivable 1,624 1,674
Prepaid expenses 1,965 1,965
--------- ---------
Total Current Assets 262,481 266,827
--------- ---------
PROPERTY AND EQUIPMENT
Oil and gas properties 307,976 307,976
Accumulated depletion (2,300) (2,061)
--------- ---------
Total Property and Equipment 305,676 305,915
--------- ---------
OTHER ASSETS
Investment-Cooper Basin Oil & Gas, Inc. 2,112 -
Organization costs 2,645 2,645
Accumulated amortization (1,058) (926)
--------- ---------
Total Other Assets 3,699 1,719
--------- ---------
TOTAL ASSETS $ 571,856 $ 574,461
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable, trade $ 1,835 $ 3,356
--------- ---------
Total Current Liabilities 1,835 3,356
--------- ---------
STOCKHOLDERS' EQUITY
Common stock (50,000,000 shares
authorized; no par value; 5,150,000
shares issued and outstanding) 602,448 602,448
Accumulated deficit (32,090) (31,006)
Other comprehensive income:
Foreign currency translation adjustment (337) (337)
--------- ---------
Total Stockholders' Equity 570,021 571,105
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 571,856 $ 574,461
========= =========
See accompanying selected information.
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AUSTRALIAN-CANADIAN OIL ROYALTIES, INC.
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1999 and 1998
1999 1998
--------- ---------
OIL AND GAS REVENUES $ 1,194 $ 1,553
COST OF SALES
Depletion 239 233
--------- ---------
GROSS PROFIT 955 1,320
--------- ---------
OPERATING EXPENSES
Personnel costs 1,684 1,718
Professional fees 685 5,215
Accounting 8 1,551
Other 181 1,006
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Total Operating Expenses 2,558 9,490
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OPERATING LOSS (1,603) (8,170)
OTHER INCOME
Interest and dividends 877 -
--------- ---------
NET LOSS BEFORE INCOME TAXES (726) (8,170)
Australian income taxes (358) (468)
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NET LOSS $ (1,084) $ (8,638)
========= =========
BASIC (LOSS) PER COMMON SHARE $ (0.00) $ (0.00)
========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
Basic 5,150,000 4,000,000
========= =========
See accompanying selected information.
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AUSTRALIAN-CANADIAN OIL ROYALTIES, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1999 and 1998
Increase/(Decrease) in Cash and Cash Equivalents
1999 1998
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (1,084) $ (8,638)
Adjustments to reconcile net (loss) to cash
(used in) operating activities:
Depletion and amortization 371 381
Change in current assets:
Royalties receivable 50 212
Prepaid expenses - -
Change in current liabilities:
Accounts payable (1,521) 4,439
--------- ---------
Net Cash (Used In) Operating Activities (2,184) (3,606)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in subsidiary - Cooper
Basin Oil and Gas, Inc. (2,112) -
CASH FLOWS FROM FINANCING ACTIVITIES - -
--------- ---------
NET INCREASE IN CASH (4,296) (3,606)
CASH, BEGINNING OF PERIOD 263,188 39,347
--------- ---------
CASH, END OF PERIOD $ 258,892 $ 35,741
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest and Income Taxes Paid
Income taxes $ 358 $ 468
Interest expense - -
Non-Cash Transactions None None
See accompanying selected information.
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AUSTRALIAN-CANADIAN OIL ROYALTIES, LTD.
SELECTED INFORMATION FOR FINANCIAL STATEMENTS
(Unaudited)
March 31, 1999
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions of Regulation S-B. They
do not include all information and footnotes required by generally
accepted accounting principles for complete financial statements.
However, except as disclosed herein, there has been no material change
in the information included in the Company's Report on Form 10-SB for
the year ended December 31, 1998. In the opinion of Management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The report of
Robert Early and Company, P.C. commenting on their review accompanies
the condensed financial statements included in Item 1 of Part 1.
Operating results for the three month period ended March 31, 1999, are
not necessarily indicative of the results that may be expected for the
year ending December 31, 1999.
NOTE 2: INVESTMENT IN SUBSIDIARY
During the first quarter of 1999, the Company invested $2,112 in Cooper
Basin Oil & Gas, Inc. for a 20% ownership interest. The amount
invested was based on 20% of the costs to file and pursue six Australian
concessions. Cooper Basin was unsuccessful in its effort to obtain a
concession in this round. However, the Company and its partners plan to
have Cooper Basin continue its efforts to obtain one or more Australian
concessions. The Company will pay its pro rata share of all costs of
obtaining and maintaining any concessions obtained by Cooper Basin and
will share accordingly in any proceeds received from activities
regarding such concessions.
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Item 2. Management's Discussion and Analysis and Plan of Operation.
Plan of Operation
Australian-Canadian Oil Royalties Ltd. (ACOR or the Company) is
currently focusing on two plans of operation: 1) The 27,319,087 gross
acres and under which the Company holds 955,521 net royalty acres of
overriding royalties in Australia. Eleven wells were drilled on these
overriding royalties last year resulting in eight oil wells and three
gas discoveries. These wells were paid for by the working interest
holders, which are major companies. ACOR holds overriding royalties so
our company takes a free ride, but participates in the gross production.
2) Some areas are opening for lease from the Government between
excellent producing fields in South Australia. ACOR has participated in
seven applications in South Australia and Queensland, Australia since
October, 1998. All of these applications were unsuccessful due to keen
competition from many oil companies. We plan to apply for new areas
which have just become available in Australia.
ACOR's primary goal is to pursue applications on new areas in Australia.
Results of Operations
Oil and Gas Revenues declined from $1,553 to $1,194 in comparing March
31, 1998 to March 31, 1999. This decline was due to the low price of
oil. Total Operating Expenses were $2,558 on March 31, 1999 compared to
$9,490 for the period ended March 31, 1998. The Company had a net loss
of $1,084 for the period ended March 31, 1999 compared to $8,638 for the
period ended March 31, 1998.
The Company was extremely busy during the quarter in geological and
geophysical investigation in South Australia and has regional seismic
summary maps over all of the former PEL's 5 & 6, which represents South
Australia's main gas and oil producing area. We now have a database of
well information on all wells drilled covering this same area. We
currently have a representative in South Australia investigating the new
areas which have just become available for application.
Liquidity and Capital Resources
The principle asset of ACOR is their oil and gas properties, which is
$307,976. The Company's cash position was $258,892 on March 31, 1999,
compared to $263,188 on March 31, 1998. Stockholders' Equity remained
about the same comparing March 31, 1999 to March 31, 1998 being $570,021
and $571,105 respectively. The Company has essentially no outstanding
debts or liabilities.
As of March 31, 1999, The Company had a cash balance of $258,892. The
Company's capital requirements to conduct its plan of operation is not
significant at this time. Management believes that its current cash
balance is sufficient to fund immediate needs. However, long term plans
may require significant additional capital and there is not any
assurance that the Company will be able to obtain such funds or obtain
the required capital on terms favorable to the Company.
The Company plans to farmout interests in any oil and gas concessions it
acquires in order to pay for seismic, drilling, etc. The Company may
also satisfy its future capital requirements by selling the Company's
securities. If unable to obtain financing from the sale of its securities
or some other source, the Company may not be able to achieve some of its
future goals.
Year 2000 Issues
Computer programs or other embedded technology that have been written
using two digits (rather than four) to define the applicable year and
that have time-sensitive logic may recognize a date using "00" as the
year 1900 rather than the year 2000, which could result in widespread
miscalculations or system failures. Both information technology ("IT")
systems and non-IT systems may be affected by the Year 2000.
The Company has completed an internal assessment of the Year 2000 issue
and believes that its computer equipment and information technology
systems are Year 2000 compliant. The Company's computer equipment was
purchased within the prior two years and the Company has been informed
it is Year 2000 compliant. The Company uses a commercially available
accounting software program and the 1998 Microsoft Word word processing
program. The Company has been advised that those software programs are
Year 2000 compliant.
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The Company has not completed the process of verification of whether
vendors, suppliers and significant customers with which the Company has
material relationships are Year 2000 compliant. Under a worst-case
scenario, if the Company and such third parties are unable to address
Year 2000 issues in a timely manner, it could result in a material
financial risk to the Company, including supplier and service customer
delays resulting in short- term delay of revenue and substantial
unanticipated costs. Accordingly, the Company plans to devote all
resources necessary to resolve significant Year 2000 issues in a timely
manner. The Company does not expect that costs of remediating its Year
2000 issues will be material and has not incurred any material costs
associated with its assessment of the Year 2000 issue. The Company does
not currently have a Year 2000 contingency plan.
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
None
Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter
ended March 31, 1999
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.
Australian-Canadian Oil Royalties Ltd.
Date: May 26, 1999 By: /s/ Robert Kamon
Robert Kamon, Secretary and
Principal Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> The following schedule contains summary financial information which
has been extracted from the financial statements of Australian-Canadian Oil
Royalties LTD.s for the quarterly financial statements filed on Form 10QSB for
the period presented. These summary schedules are qualified in their entirety
by reference to such financial statements and the notes thereto.
</LEGEND>
<CIK> 0001061288
<NAME> AUSTRALIAN-CANADIAN OIL ROYALTIES
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> MAR-31-1999 MAR-31-1998
<CASH> 258,892 0
<SECURITIES> 0 0
<RECEIVABLES> 1,624 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 262,481 0
<PP&E> 307,976 0
<DEPRECIATION> (2,300) 0
<TOTAL-ASSETS> 571,856 0
<CURRENT-LIABILITIES> 1,835 0
<BONDS> 0 0
0 0
0 0
<COMMON> 602,448 0
<OTHER-SE> (32,427) 0
<TOTAL-LIABILITY-AND-EQUITY> 571,856 0
<SALES> 1,194 1,553
<TOTAL-REVENUES> 1,194 1,553
<CGS> 239 233
<TOTAL-COSTS> 239 233
<OTHER-EXPENSES> 2,558 9,490
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (726) (8,170)
<INCOME-TAX> (358) (468)
<INCOME-CONTINUING> (1,084) (8,638)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,084) (8,638)
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
