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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 JUNE 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 June 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 June 30, 2000, and the related statements of
operations and cash flows for the three and six months ended June 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
July 31, 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 $ 216,158 $ 246,152
Royalties receivable 1,458 1,575
Prepaid expenses and other 1,654 1,654
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Total Current Assets 219,270 249,381
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PROPERTY AND EQUIPMENT
Oil and gas properties 308,966 308,966
Accumulated depletion (13,427) (10,426)
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Total Property and Equipment 295,539 298,540
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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 (1,719) (1,455)
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Total Other Assets 5,138 5,402
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TOTAL ASSETS $ 519,947 $ 553,323
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable, trade $ 166 $ 1,279
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Total Current Liabilities 166 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) 613,548 611,448
Accumulated deficit (93,614) (59,251)
Other comprehensive income:
Foreign currency translation adjustment (153) (153)
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Total Stockholders' Equity 519,781 552,044
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 519,947 $ 553,323
========== ==========
See accompanying selected information.
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AUSTRALIAN-CANADIAN OIL ROYALTIES, INC.
STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 2000 and 1999
Three Months Six Months
2000 1999 2000 1999
--------- --------- --------- ---------
OIL AND GAS REVENUES $ 3,548 $ 1,432 $ 5,567 $ 2,626
COST OF SALES
Depletion 1,561 1,091 3,001 2,093
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GROSS PROFIT 1,987 341 2,566 533
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OPERATING EXPENSES
Personnel costs 7,725 1,158 16,302 3,443
Professional fees 13,583 5,988 14,309 6,681
Other 5,908 774 10,659 1,254
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Total Operating Expenses 27,216 7,920 41,270 11,378
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OPERATING LOSS (25,229) (7,579) (38,704) (10,845)
OTHER INCOME
Interest and dividends 3,112 2,219 6,011 3,096
--------- --------- --------- ---------
NET LOSS BEFORE INCOME TAXES (22,117) (5,360) (32,693) (7,749)
Australian income taxes 1,065 430 1,670 788
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NET LOSS $ (23,182) $ (5,790) $ (34,363) $ (8,537)
========= ========= ========= =========
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) $ (34,363) $ (8,537)
Adjustments to reconcile net (loss) to cash
(used in) operating activities:
Depletion and amortization 3,266 2,358
Expenses contributed by officer 2,100 1,800
Change in current assets:
Royalties receivable 116 301
Change in current liabilities:
Accounts payable (1,113) (3,031)
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Net Cash (Used In) Operating Activities (29,994) (7,109)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in subsidiary - Cooper Basin
Oil and Gas, Inc. - (2,112)
CASH FLOWS FROM FINANCING ACTIVITIES - -
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NET INCREASE IN CASH (29,994) (9,221)
CASH, BEGINNING OF PERIOD 246,152 263,188
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CASH, END OF PERIOD $ 216,158 $ 253,967
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SUPPLEMENTAL CASH FLOW INFORMATION:
Interest and Income Taxes Paid
Income taxes $ 955 $ 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)
June 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 six month period ended June 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 first and second quarter of 2000, the Company's efforts turned to
identifying the next potential concessions that might be available to be
obtained and initiated efforts to prepare applications for these. At the
end of the second quarter, the application period had not closed and the
Company did not know whether any of its applications were successful.
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 and office
space utilization have currently been estimated at $900 and $300 for the
second quarter and $600 and $300 for the first 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
Over the next twelve months the Company plans to acquire oil and gas
exploration properties, make trades and deals for their exploration and
development and actively conduct exploration.
To meet the financial requirements of the Australian governments,
applications have been made in conjunction with other oil and gas companies
and/or the Company's president. The Company is very pleased to report that
Australian-Canadian Oil Royalties Ltd. (ACOR) - Sakhai (each 50%) was
notified on August 4, 2000, by the State Government of South Australia, that
it was the successful applicant for areas CO2000 A, CO2000 B and CO2000 E
comprising 506,811 acres, 372,633 acres, and 818,904 acres respectively, out
of the PEL's formerly held by Santos-Exxon, et al. This totals 1,698,348
acres or 10% of the total area of former PEL's 5 and 6 in South Australia.
The area is in the Eromanga-Cooper Basin which is the main onshore oil and
gas producing basin in Australia. The part of former PEL's 5 and 6 retained
by Santos-Exxon, et al is producing approximately 336 million Australian
dollars worth of hydrocarbons a year.
All three of the areas awarded to ACOR-Sakhai contain undrilled seismograph
highs, and area A contains an area believed to be the largest undrilled
seismograph high mapped to date on all of the former PEL's 5 and 6. The
areas have been the source of 980 kilometers of 2D seismic which cost others
approximately $US4,905,000. The seismic tapes have been furnished to the
Company by International Oil Lease Service Corp. (IOLS) under our leasing
agreement with them.
On June 30, 2000, the Company had 1,303 times as much cash and cash
equivalents as it had liabilities. The cash and cash equivalents on June
30, 1999 were $216,158 and liabilities were $166. In the first quarter of
this year ACOR was required to have a $20,000,000 performance bond to
guarantee the performance of the first three year's work on the V99-2
application filed jointly with its president, Ely Sakhai. The bond was
delivered to the Victorian and Australian Commonwealth governments. That
application was unsuccessful and the bond was released. The Company has no
present plans to raise additional funds in a public offering during the next
twelve months.
The three new oil and gas concessions received in August 2000, will require
minimum expenditures on exploration for the first year of $A290,000. ACOR's
half is $145,000 Australian or $84,100 US dollars. The leasing fee to IOLS
for the Company's is $37,500. 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.
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
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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 is difficult which could
increase drilling costs in the wet season.
The increase in net loss from $5,790 to $23,182 in the first quarter of 2000
was caused by travel expenses for attending a joint meeting with the Federal
Government of Australia and the Victoria State Government of Victoria. Our
president, secretary, consultant, and five members of the industry partner,
which had agreed to fund the drilling and seismic program if we got the area
in exchange for a 3/4 working interest in the area, attended the meeting.
The Company was not granted this particular area. The increase in net loss
from $8,537 to $34,363 for the six month period was attributable to the same
reason (travel expenses).
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 obligation 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
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: August 10, 2000 /s/ Robert Kamon
By: Robert Kamon, Secretary and
Principal Financial Officer
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