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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarterly Period Ended SEPTEMBER 30, 2000
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 No. 0-24259
AUSTRALIAN-CANADIAN OIL ROYALTIES, LTD.
(Exact Name of Registrant as Specified in its Charter)
British Columbia, Canada 75-2712845
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification #)
1304 Avenue L, Cisco, TX 76437
(Address of Principal Executive Offices) (Zip Code)
(254) 442-2658
Registrant's Telephone Number Including Area Code
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 was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days [X] Yes [ ] NO
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 September 30, 2000
Transitional Small Business Disclosure Format; [ ] Yes [X] No
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INDEX
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 and Plan of Operations 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 September 30, 2000, and the related statements of
operations and cash flows for the three and nine months ended September 30,
2000 and 1999. 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, 1999, 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
April 10, 2000, 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, 1999 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
November 13, 2000
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AUSTRALIAN-CANADIAN OIL ROYALTIES, INC.
BALANCE SHEETS
June 30, December 31,
2000 1999
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(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 199,832 $ 246,152
Royalties receivable 1,405 1,575
Prepaid expenses and other 2,944 1,654
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Total Current Assets 204,181 249,381
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PROPERTY AND EQUIPMENT
Oil and gas properties 359,011 308,966
Accumulated depletion (14,781) (10,426)
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Total Property and Equipment 344,230 298,540
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OTHER ASSETS
Investment in Cooper Basin Oil & Gas, Inc. 4,212 4,212
Organization costs 2,645 2,645
Accumulated amortization (1,852) (1,455)
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Total Other Assets 5,005 5,402
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TOTAL ASSETS $ 553,416 $ 553,323
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable, trade $ 38,258 $ 1,279
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Total Current Liabilities 38,258 1,279
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STOCKHOLDERS' EQUITY
Common stock (50,000,000 shares authorized;
no par value; 5,150,000 shares issued
and outstanding) 602,448 602,448
Additional paid in capital 12,600 9,000
Accumulated deficit (99,737) (59,251)
Other comprehensive income:
Foreign currency translation adjustment (153) (153)
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Total Stockholders' Equity 515,158 552,044
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 553,416 $ 553,323
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See accompanying selected information.
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AUSTRALIAN-CANADIAN OIL ROYALTIES, INC.
STATEMENTS OF OPERATIONS
For the Three and Six Months Ended September 30, 2000 and 1999
Three Months Nine Months
2000 1999 2000 1999
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OIL AND GAS REVENUES $ 2,175 $ 1,789 $ 7,742 $ 4,415
COST OF SALES
Depletion 1,355 1,051 4,356 3,144
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GROSS PROFIT 820 738 3,386 1,271
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OPERATING EXPENSES
Personnel costs 5,284 4,100 21,586 7,543
Professional fees 1,394 8 15,703 6,464
Other 2,380 900 13,039 2,381
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Total Operating Expenses 9,058 5,008 50,328 16,388
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OPERATING LOSS (8,238) (4,270) (46,942) (15,117)
OTHER INCOME
Interest and dividends 2,768 2,733 8,779 5,829
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NET LOSS BEFORE INCOME TAXES (5,470) (1,537) (38,163) (9,288)
Australian income taxes 653 536 2,323 1,324
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NET LOSS $ (6,123) $ (2,073) $ (40,486) $ (10,612)
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BASIC (LOSS) PER COMMON SHARE $ (0.00) $ (0.00) $ (0.01) $ (0.00)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
Basic 5,150,000 5,150,000 5,150,000 5,150,000
See accompanying selected information.
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AUSTRALIAN-CANADIAN OIL ROYALTIES, INC.
STATEMENTS OF CASH FLOWS
For the Three and Six Months Ended June 30, 2000 and 1999
Increase/(Decrease) in Cash and Cash Equivalents
2000 1999
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CASH FLOWS (USED IN) OPERATING ACTIVITIES
Net (loss) $ (40,486) $ (10,612)
Adjustments to reconcile net (loss) to cash
from operating activities:
Depletion and amortization 4,752 3,538
Expenses contributed by officer 3,600 2,700
Change in current assets:
Royalties receivable 170 (134)
Interest receivable (1,290) -
Change in current liabilities:
Accounts payable 36,979 (2,647)
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Net Cash Provided by/(Used In) Operating Activities 3,725 (7,155)
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CASH FLOWS FROM INVESTING ACTIVITIES
Costs of oil and gas properties (50,045) -
Investment in subsidiary - Cooper Basin Oil
and Gas, Inc. - (2,112)
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Net Cash (Used In) Operating Activities (50,045) (2,112)
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CASH FLOWS FROM FINANCING ACTIVITIES - -
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NET INCREASE IN CASH (46,320) (9,267)
CASH, BEGINNING OF PERIOD 246,152 263,188
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CASH, END OF PERIOD $ 199,832 $ 253,921
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SUPPLEMENTAL CASH FLOW INFORMATION:
Interest and Income Taxes Paid
Income taxes $ 2,493 $ 1,324
Interest expense - -
Non-Cash Transactions
Contributed services and expenses 3,600 2,700
See accompanying selected information.
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AUSTRALIAN-CANADIAN OIL ROYALTIES, LTD.
SELECTED INFORMATION FOR FINANCIAL STATEMENTS
(Unaudited)
September 30, 2000
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, 1999. 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 nine month period ended September
30, 2000, are not necessarily indicative of the results that may be expected
for the year ending December 31, 2000.
NOTE 2: APPLICATION FOR CONCESSION
During the first and second quarter of 2000, the Company's secretary spent a
significant amount of time in Australia on behalf of the Company
coordinating the responses to followup requirements for an application for
an offshore concession. This activity was not successful. Travel costs,
included in Other Expenses amounted to $3,590 while costs for contract
services related to this effort, included in personnel costs, were
approximately $6,000.
During the third quarter of 2000, the Company was successful in its
applications for three Australian concessions in South Australia. The
Company received notice of its successful applications, which lie under
1,698,348 acres, during early August 2000. The Company submitted these
applications on a 50/50 basis with its President, Ely Sakhai. Costs of
obtaining these concessions, which were contingent on successful
applications, became due upon notification of successful application. The
Company's portion of these costs, paid in October 2000, totaled $37,500 and
were due to an entity controlled by the Company's secretary for services it
provided in preparing the applications. The Company's portion of the
minimum exploration commitments under these three applications total
$145,000 in year 1, $275,000 in year 2, and $1,450,000 in the third year.
NOTE 3: CONTRIBUTED EXPENSES
Officers of the Company have not been paid for their services.
Additionally, the Company has not established an office separate from that
of its officers. The value of the officers' unpaid services have been
estimated at $1,200, $900, and $600 during the first three quarters,
respectively. Office space utilization value has been estimated at $300 per
quarter. These costs have been recorded as expenses and as additional
capital.
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Item 2. Management's Discussion and Analysis and Plan of Operations
The Company plans to acquire oil and gas exploration properties, make trades
and deals for their exploration and development and actively conduct
exploration. The Company is in the process of acquiring Authority to
Prospect 582, which consists of 6,718,000 gross surface acres located in the
Cooper-Eromanga Basin of Queensland, Australia.
Application for listing on the NASD OTC Bulletin Board has been made by our
sponsoring broker and the Company. We have received comment letters from
the NASD and have responded to their request for additional information.
During the period ended September 30, 2000, the Company applied for three
new properties in South Australia known as CO2000-F, G, and H in conjunction
with the Company's President on a 50/50 basis. The applications for these
properties were strong, however, we were advised in October that we were not
the successful applicant on these properties. Costs incurred for these
applications were $22,884.33 for seismic, geological material and government
filing fees, which were paid to International Oil Lease Service Corp.
(IOLS).
The principal assets of ACOR are oil and gas properties, listed at $359,011
on September 30, 2000. The Company's cash position was $199,832 on
September 30, 2000 compared to $246,152 on September 30, 1999.
Stockholders' Equity declined in comparing September 30, 2000 to September
30, 1999 being $515,158 and $552,044 respectively. 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 farm out 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.
Oil and Gas Revenues increased from $1,789 for the three months ended
September 30, 1999 to $2,175 for the three months ended September 30, 2000.
This increase is due to higher oil prices. Total Operating Expenses were
$9,058 for the three months ended September 30, 2000 compared to $5,008 for
the same period in 1999. This increase is due to increases in personnel
costs and professional fees involved in the applications for new oil and gas
properties. The Company had a net loss of $6,123 for the period ended
September 30, 2000 compared to $2,073 for the period ended September 30,
1999.
On August 4, 2000 the Company received notification that the applications on
concessions CO2000-A, B and E were successful, which will require minimum
expenditures on exploration for the first year of $A290,000. ACOR's half is
$145,000 Australian ($84,100 US dollars). The leasing fee to IOLS for the
Company is $37,500, which was paid in October. Robert Kamon is Secretary of
ACOR and President of IOLS, which represents a conflict of interest. The
Company will assign a 1 1/2% overriding royalty interest out of its 50% working
interest to IOLS. Robert Kamon and Kamon's companies have made over
$100,000,000 worth of seismic data and geological information on Australian
properties available to ACOR.
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No significant changes in the number of employees are expected over the next
twelve months.
Trends or events that could have a material impact on the Company's revenues
and liquidity include the change from owning small royalties to a 50%
working interest under 1,698,348 acres in Australia's main onshore oil and
gas producing basin. This change to a working interest increases the
chances of the Company significantly increasing revenues, but also places
the responsibility and expenses on the Company rather than other companies,
as is the case under overriding royalties.
An internal source of liquidity is to exchange an interest in the areas in
return for exploration money for the areas. The issuance of the concessions
will be subject to native title agreement with the Aboriginal tribe where
the area is located. This should give the Company additional time to raise
money for the exploration program after the first year while keeping the
area tied up exclusively for issuance to ACOR-Sakhai.
The areas in South Australia, which the South Australian Government approved
for grant to ACOR-Sakhai, are in extremely dry country that has its wet
season in December, January and February. Roads in the areas are chiefly
dirt and movement of heavy trucks after rains are difficult which could
increase drilling costs in the wet season.
The forward-looking statements in this Form 10-QSB reflect the Company's
current views with respect to future events and financial performance.
These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ from those
anticipated. In the Form 10-QSB, the words "anticipates," "believes,"
"expects," "intends," "future," and similar expressions identify forward-
looking statements. The Company undertakes no obligations to publicly revise
these forward-looking statements to reflect events or circumstances that may
arise after the date hereof. All subsequent written and oral forward-
looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this section.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
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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: November 15, 2000 /s/ Robert Kamon
By: Robert Kamon, Secretary and
Principal Financial Officer
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