FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
-------------------------------------------
[ ] 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 1-4668
COASTAL CARIBBEAN OILS & MINERALS, LTD.
................................................................................
(Exact name of registrant as specified in its charter)
BERMUDA NONE
................................. .....................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Clarendon House, Church Street, Hamilton, Bermuda NONE
................................................................................
(Address of principal executive offices) (Zip Code)
441-295-1422
................................................................................
(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 (l) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
l934 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
The number of shares outstanding of the issuer's single class of common
stock as of October 20, 1998 was 40,056,358.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
CONSOLIDATED BALANCE SHEET
(Expressed in U.S. dollars)
(unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------ ------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 585,686 $ 316,333
Accounts and interest receivable 24,664 77,302
Marketable securities 633,513 3,433,035
Prepaid insurance 328,338 213,840
------------ ------------
Total current assets 1,572,201 4,040,510
------------ ------------
Marketable securities 1,300,000 -
Unproved oil, gas and mineral properties (full cost method) 4,694,793 4,395,132
Other 27,107 26,765
------------ ------------
Total assets $ 7,594,101 $ 8,462,407
============ ============
LIABILITIES, MINORITY INTERESTS AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 52,103 $ 63,975
------------ ------------
Minority interests
- -
------------ ------------
Shareholders' equity:
Common stock, par value 12(cent) per share:
Authorized - 250,000,000 shares
Outstanding - 40,056,358 shares 4,806,763 4,806,763
Capital in excess of par value 28,693,033 28,693,033
------------ ------------
Total capital 33,499,796 33,499,796
Deficit accumulated during development stage (25,957,798) (25,101,364)
------------ ------------
Total shareholders' equity 7,541,998 8,398,432
------------ ------------
Total liabilities, minority interests and shareholders' equity $ 7,594,101 $ 8,462,407
============ ============
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
CONSOLIDATED STATEMENT OF OPERATIONS
(Expressed in U.S. dollars)
(unaudited)
<TABLE>
<CAPTION>
From inception
Three months ended Nine months ended (Jan. 31, 1953)
September 30, September 30, to Sept. 30,
1998 1997 1998 1997 1998
--------- --------- --------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Interest and other income $ 37,300 $ 66,713 $ 136,081 $ 221,330 $3,642,207
--------- --------- --------- ----------- ----------
Expenses:
Legal fees and costs 93,425 329,379 356,369 650,530 11,826,272
Administrative expenses 123,214 107,684 376,178 334,095 6,745,327
Salaries 40,250 39,000 120,750 117,000 2,871,028
Shareholder communications 29,873 40,298 120,830 169,031 3,556,861
Exploration costs 1,512 28,935 18,387 38,990 770,981
Lawsuit judgments - - - - 1,941,916
Minority interests - - - - (632,974)
Other - - - - 364,866
Contractual services - - - - 2,155,728
--------- --------- --------- ----------- ----------
-
288,274 545,296 992,514 1,309,646 29,600,005
--------- --------- --------- ----------- ----------
Net loss $(250,974) $(478,583) $(856,433) $(1,088,316)
========== ========== ========== ============
Deficit accumulated during
development stage $(25,957,798)
=============
Average number of shares
Outstanding 40,056,358 40,056,358 40,056,358 40,055,358
========== ========== ========== ==========
Net loss per share (basic & diluted) $(.01) $(.01) $(.02) $(.03)
====== ====== ====== ======
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
COASTAL CARIBBEAN OILS & MINERALS, LTD.
(A Bermuda Corporation)
A Development Stage Company
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in U.S. Dollars)
(unaudited)
<TABLE>
<CAPTION>
From inception
Nine months ended (Jan. 31, 1953)
September 30, to Sept. 30,
1998 1997 1998
----------- ------------ -------------
Operating activities:
<S> <C> <C> <C>
Net loss $ (856,433) $(1,088,316) $(25,957,798)
Adjustments to reconcile net loss
to net cash used for operating activities:
Minority interest - (632,974)
Exploration and other - 755,974
Net change in:
Accounts receivable 52,638 51,465 (24,664)
Marketable securities 1,499,522 1,129,304 2,799,522
Prepaid insurance (114,498) (49,122) (328,338)
Current liabilities (11,872) (151,703) 52,102
Other (343) (991) 471,799
---------- ----------- ------------
Net cash used for operating activities 569,014 (109,363) (22,864,377)
---------- ----------- ------------
Investing activities:
Additions to oil, gas, and mineral
properties net of assets acquired
for common stock (299,661) (442,026) (4,694,793)
Reimbursement of lease rentals and
Other expenses - - 1,243,086
Marketable securities purchased - - (61,649)
Purchase of fixed assets - 1,649 (4,733,035)
---------- ----------- ------------
Net cash provided by (used for) investing activities
(299,661) (440,377) (8,246,391)
---------- ----------- ------------
Financing activities:
Cash proceeds from sale of
common stock less expenses - - 26,342,205
Shares issued upon exercise of options - 11,250 884,249
Sale of shares by subsidiary - - 750,000
Sale of subsidiary shares - 240,000 3,720,000
---------- ----------- ------------
Net cash provided by financing activities - 251,250 31,696,454
---------- ----------- ------------
Net increase (decrease) in cash
and cash equivalents 269,353 (298,490) 585,686
Cash and cash equivalents at
beginning of period 316,333 424,330 -
---------- ----------- ------------
Cash and cash equivalents at
end of period $ 585,686 $ 125,840 $ 585,686
========== =========== ============
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
September 30, 1998
ITEM 1 - Financial Statements
--------------------
The information for the three and nine month periods ended September
30, 1998 and 1997 is unaudited, but includes all adjustments which Coastal
Caribbean Oils & Minerals, Ltd. (the "Company") considers necessary for a fair
statement of the results of operations for those periods. The consolidated
financial statements include the Company's 59.25% owned subsidiary, Coastal
Petroleum Company ("Coastal Petroleum").
Statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations which are not historical in nature
are intended to be, and are hereby identified as "forward looking statements"
for purposes of the "Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995. The Company cautions readers that forward looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those indicated in the forward looking
statements.
The Company's principal assets are oil, gas, and mineral leases, the
costs of which totaled $4.7 million at September 30, 1998. The Company has been
and continues to be involved in several legal proceedings against the State of
Florida which have limited the Company's ability to commence development
activities on its unproved oil and gas properties. These consolidated financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or amounts and classification
of liabilities that may result from the outcome of this uncertainty.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operation
--------------------
Liquidity and Capital Resources
Short Term Liquidity
At September 30, 1998, Coastal Caribbean had cash and securities of
approximately $2.5 million. These funds are expected to be used for general
corporate purposes, including exploration and development and to continue the
litigation against the State of Florida.
<PAGE>
PART I - FINANCIAL INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
September 30, 1998
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operation (Cont'd)
-----------------------------
Long Term Liquidity
The Company estimates that as much as $500,000 per year may be required
in connection with the Florida litigation. The Company expects that the Florida
litigation will continue at least through 1999, although the State may take
actions that could shorten or lengthen that period. The Company has a program to
evaluate the Company's leases which is estimated to cost approximately $1
million for the 1998-1999 period, and is subject to the outcome of the Florida
litigation. During the quarter ended September 30, 1998, the Company spent
approximately $300,000 under its program to identify potential drilling
prospects.
The Company's oil and gas properties are currently unproved and
undeveloped. In 1992, the Company applied for a drilling permit from the State
of Florida to drill an exploratory well (the St. George Island prospect) in the
water near Apalachicola, Florida. The State of Florida has resisted the issuance
of the drilling permit. If the Company is successful in obtaining the state
drilling permit, then the Company must also do the following:
1. Obtain a federal permit.
2. Finance drilling of the well (including the cost of the
recommended surety), which is estimated to cost approximately
$5.5 million.
3. Begin drilling the well within one year of the date the state
permit is issued.
The Company does not currently have assets sufficient to fund these
expenditures to drill the exploration well, if a permit were granted. If oil
and/or gas is discovered in commercial quantities, a production program would
require additional permitting and construction of production, storage and
delivery systems. The Company would be required to seek additional financing or
partners to fund these expenditures. During the recent quarterly period, the
Company has been meeting with various oil and gas companies to present its
drilling prospects.
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operation (Cont'd)
-----------------------------
Results of Operations
Three month period ended September 30, 1998 vs. September 30, 1997
The Company incurred a loss of $251,000 for the 1998 quarter, compared
to a loss of $479,000 for the comparable 1997 quarter.
Interest income and other income decreased 44% from $67,000 in 1997 to
$37,000 in 1998 because less funds were available for investment during the 1998
period and interest rates were lower.
Legal fees and costs decreased 72% to $93,000 for the 1998 quarter,
compared to $329,000 in the prior period. In the 1997 period, the Company had
been involved in various appeals and hearings in connection with the opposition
by the state and others to the issuance of a drilling permit. During the 1998
period, the level of expenditures decreased.
Administrative expenses increased 14% to $123,000 in 1998 from $108,000
in the prior quarter. The primary reason for the increase was an increase in the
amount of directors' and officers' liability insurance in 1998.
Shareholder communications decreased 26% from $40,000 in 1997 to
$30,000 in 1998. In 1997, the cost of printing and mailing was higher because of
the size of the documents and the number of mailings compared to the 1998
period.
Exploration costs decreased from $29,000 in 1997 to $1,512 in 1998 in
connection with the Company's project to identify potential drilling prospects.
During 1998, the project was substantially completed.
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operation (Cont'd)
-----------------------------
Nine month period ended September 30, 1998 vs. September 30, 1997
The Company incurred a loss of $856,000 for the 1998 period, compared
to a loss of $1,088,000 for the comparable 1997 period.
Interest income and other income decreased 39% from $221,000 in 1997 to
$136,000 in 1998 because less funds were available for investment during 1998
and interest rates were lower.
Legal fees and costs decreased 45% to $356,000 for the 1998 period,
compared to $651,000 in the prior period. In the 1997 period, the Company had
been involved in various appeals and hearings in connection with the opposition
by the State and others to the issuance of a drilling permit. During the 1998
period, the level of expenditures decreased.
Administrative expenses increased 13% to $376,000 in 1998 from $335,000
in the prior period. The primary reason for the increase was an increase in the
amount of directors' and officers' liability insurance in 1998.
Shareholder communications decreased 29% from $169,000 in 1997 to
$121,000 in 1998. In 1997, the cost of printing and mailing was higher because
of the size of the documents and the number of mailings compared to the 1998
period.
Exploration costs decreased 53% from $39,000 in 1997 to $18,000 in 1998
in connection with the Company's project to identify potential drilling
prospects. During 1998, the project was substantially completed. In addition,
the Company also capitalized $300,000 of exploration costs during the 1998
period compared to $442,000 during the 1997 period.
<PAGE>
PART II - OTHER INFORMATION
COASTAL CARIBBEAN OILS & MINERALS LTD.
September 30, 1998
ITEM 5 - Other Information
-----------------
A hearing before the State of Florida Division of Administrative
Hearings regarding Coastal Petroleum Company's 12 permit applications is
scheduled for January 4-12, 1999.
On September 29, 1998, Coastal Petroleum Company filed its brief with
Florida's First District Court of Appeal regarding the denial of its permit
application for an exploration well near Apalachicola (the St. George Island
prospect).
ITEM 6 - Exhibits and Reports on Form 8-K
--------------------------------
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
Registrant
Date: October 26, 1998 By /s/ James R. Joyce
----------------------------------
James R. Joyce
Treasurer and Chief Accounting and
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 585,686
<SECURITIES> 633,513
<RECEIVABLES> 24,664
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,572,201
<PP&E> 4,694,793
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,594,101
<CURRENT-LIABILITIES> 52,103
<BONDS> 0
0
0
<COMMON> 4,806,763
<OTHER-SE> 2,735,235
<TOTAL-LIABILITY-AND-EQUITY> 7,594,101
<SALES> 0
<TOTAL-REVENUES> 136,081
<CGS> 0
<TOTAL-COSTS> 992,514
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (856,433)
<INCOME-TAX> 0
<INCOME-CONTINUING> (856,433)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (856,433)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
