UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
-------------------------------------------------
[ ] 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
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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 HM 11
................................................................................
(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 November 6, 2000 was 43,468,358.
<PAGE>
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
SEPTEMBER 30, 2000
Table of Contents
PART I - FINANCIAL INFORMATION
ITEM 1 Financial Statements Page
-----
Consolidated balance sheets at September 30, 2000 and
December 31, 1999 3
Consolidated statements of operations from inception (January
31, 1953) to September 30, 2000 and for the nine
months ended September 30, 2000 and September 30, 1999 4
Consolidated statements of cash flows from inception (January
31, 1953) to September 30, 2000 and for the nine
months ended September 30, 2000 and September 30, 1999 5
Notes to consolidated financial statements 6
ITEM 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
ITEM 3 Quantitative and Qualitative Disclosure About Market Risk 11
PART II - OTHER INFORMATION
ITEM 5 Other Information 12
ITEM 6 Exhibits and Reports on Form 8-K 12
Signatures 13
<PAGE>
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars)
(A Bermuda Corporation)
A Development Stage Company
<TABLE>
September 30, December 31,
2000 1999
ASSETS (Unaudited) (Note)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 189,445 $ 651,124
Accounts and interest receivable 7,218 25,583
Prepaid expenses 359,120 352,089
------------- ----------
Total current assets 555,783 1,028,796
------------- ---------
Marketable securities - 390,941
Unproved oil, gas and mineral properties (full cost method) 4,813,887 4,759,532
Other 205,128 27,445
--------------- ---------------
Total assets $ 5,574,798 $ 6,206,714
============ ============
LIABILITIES, MINORITY INTERESTS AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 366,437 $ 68,424
-------------- --------------
Minority interests - -
Shareholders' equity:
Common stock, par value $.12 per share:
Authorized - 250,000,000 shares
Outstanding - 40,056,358 shares 4,806,763 4,806,763
Capital in excess of par value 28,768,033 28,693,033
------------ ----------
33,574,796 33,499,796
Deficit accumulated during development stage (28,366,435) (27,361,506)
------------- ------------
Total shareholders' equity 5,208,361 6,138,290
------------- -------------
Total liabilities, minority interests and shareholders' equity $ 5,574,798 $ 6,206,714
============ ------------
</TABLE>
Note: The balance sheet at December 31, 1999 has been derived from the
audited consolidated financial statements at that date.
See accompanying notes.
<PAGE>
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. dollars)
(A Bermuda Corporation)
A Development Stage Company
(unaudited)
<TABLE>
From inception
-----------------
Three months ended Nine months ended (Jan. 31, 1953)
------------------ ----------------- to September
September 30, September 30, 30, 2000
------------- ------------- -----------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Interest and other income $ 3,622 $ 17,356 $ 23,094 $ 63,293 $ 3,751,673
--------- --------- --------- --------- ------------
Expenses:
Legal fees and costs 138,415 85,461 392,498 289,128 12,769,489
Administrative expenses 129,469 95,871 415,373 346,300 7,753,710
Salaries 37,951 37,950 113,851 119,600 3,182,679
Shareholder communications 9,200 17,008 97,893 92,545 3,769,673
Exploration costs 1,981 5,284 8,408 17,432 813,022
Lawsuit judgments - - - - 1,941,916
Minority interests - - - - (632,974)
Other - - - - 364,865
Contractual services - - - - 2,155,728
--------------- --------------- --------------- ---------------- ------------
317,016 241,574 1,028,023 865,005 32,118,108
--------- --------- ----------- ---------- -----------
Net loss $(313,394) $(224,218) $(1,004,929) $(801,712)
========== ========== ============ ==========
Deficit accumulated during
Development stage $(28,366,435)
=============
Average number of shares
Outstanding (Basic & Diluted) 40,056,358 40,056,358 40,056,358 40,056,358
========== ========== ========== ==========
Net loss per share (Basic & Diluted) $(.01) $(.01) $(.03) $(.02)
====== ====== ====== ======
See accompanying notes.
</TABLE>
<PAGE>
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
(A Bermuda Corporation)
A Development Stage Company
(unaudited)
<TABLE>
From inception
Nine months ended (Jan. 31, 1953)
September 30, to September
2000 1999 30, 2000
----------- ---------- ---------------
Operating activities:
<S> <C> <C> <C>
Net loss $(1,004,929) $(801,712) $(28,366,435)
Adjustments to reconcile net loss
to net cash used in operating activities:
Minority interest - - (632,974)
Exploration and other - - 755,974
Compensation recognized for stock option grants 75,000 - 75,000
Net change in:
Accounts receivable 18,365 21,726 (7,218)
Prepaid expenses (7,031) (7,080) (359,120)
Current liabilities 298,013 (13,717) 366,437
Other (177,683) (48) 293,778
---------- -------------- ---------------
Net cash used in operating activities (798,265) (800,831) (27,874,558)
---------- ---------- --------------
Investing activities:
Additions to oil, gas, and mineral properties
net of assets acquired for common stock (54,355) (25,217) (4,813,887)
Reimbursement of lease rentals and other expenses - - 1,243,085
Proceeds from sale of marketable securities 390,941 1,369,424 -
Purchase of fixed assets - - (61,649)
---------------- ---------------- ----------------
Net cash provided by (used in) investing activities 336,586 1,344,207 (3,632,451)
----------- ---------- --------------
Financing activities:
Cash proceeds from sale of
common stock less expenses - - 26,342,205
Shares issued upon exercise of options - - 884,249
Sale of shares by subsidiary - - 750,000
Sale of subsidiary shares - - 3,720,000
---------------- ---------------- -------------
Net cash provided by financing activities - - 31,696,454
--------------- ---------------- ----------
Net increase(decrease) in cash and cash equivalents (461,679) 543,376 189,445
Cash and cash equivalents at beginning of period 651,124 52,480 -
----------- ------------ ------------
Cash and cash equivalents at end of period $ 189,445 $ 595,856 $ 189,445
========== ========== =============
See accompanying notes.
</TABLE>
<PAGE>
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART I - FINANCIAL INFORMATION
September 30, 2000
ITEM 1 - Notes to Consolidated Financial Statements
------ ------------------------------------------
Note 1. Basis of Presentation
---------------------
The accompanying unaudited condensed consolidated financial statements
include the Company's 59.25% owned subsidiary, Coastal Petroleum Company
("Coastal Petroleum") and have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included. All such adjustments are of a normal recurring nature. Operating
results for the three month and nine month periods ended September 30, 2000 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2000. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999.
Note 2. Continuation as Going Concern
-----------------------------
At September 30, 2000, Coastal Caribbean had cash and cash equivalents
of approximately $189,000. At September 30, 2000, the Company had a limited
amount of working capital, had incurred recurring losses and had an accumulated
deficit. As of that date, these situations raised substantial doubt about the
Company's ability to continue as a going concern. On October 23, 2000, the
Company concluded a sale of approximately 3.4 million shares of its common stock
to its shareholders and added approximately $3.4 million to its working capital.
Management currently believes that the Company has sufficient capital to fund
its operations through December 31, 2002.
Note 3. Common Stock
------------
On September 11, 2000, the Company commenced a rights offering to its
shareholders. The offering was concluded on October 23, 2000 and approximately
3.4 million shares were sold at $1.00 per share and $3.4 million of gross
proceeds were realized. The costs incurred relating to the offering totaled
approximately $180,000 at September 30, 2000 and are included in other assets.
<PAGE>
ITEM 1 - Notes to Consolidated Financial Statements Cont'd)
------ --------------------------------------------------
Note 3. Common Stock (Cont'd)
---------------------
On March 6, 2000, options to purchase 312,000 shares of the Company's
common stock at $1.125 per share expired without being exercised. On March 24,
2000, ten year options to purchase 700,000 shares of the Company's common stock
at $.91 per share were granted to directors, officers and legal counsel of the
Company. All of the options are vested and exercisable. The Company recorded a
charge to legal expense in the amount of $75,000 in connection with the grants
to nonemployees of the Company.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
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. Among the risks and uncertainties are:
1. the uncertainty of any decision favorable to Coastal Petroleum
in its litigation against the State of Florida; and
2. the substantial cost of continuing the litigation.
The Company's principal assets are oil, gas, and mineral leases, the
costs of which total $4.8 million at September 30, 2000. The Company had a
limited amount of working capital, had incurred recurring losses and had an
accumulated deficit at September 30, 2000. The Company has been and continues to
be involved in litigation against the State of Florida which has limited the
Company's ability to commence development activities on its unproved oil and gas
properties or obtain compensation for certain property rights it believes have
been taken. These situations had raised substantial doubt about the Company's
ability to continue as a going concern. On October 23, 2000, the Company
concluded a sale of approximately 3.4 million shares of its common stock it its
shareholders and added approximately $3.4 million to its working capital.
Management currently believes that the Company has sufficient capital to fund
its operationsthrough December 31, 2002. The Company's 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.
Short Term Liquidity
At September 30, 2000, Coastal Caribbean had cash and cash equivalents
of approximately $189,000. On October 23, 2000, the Company concluded a sale of
approximately 3.4 million shares of its common stock to its shareholders and
added approximately $3.4 million to its working capital. The available funds are
expected to be used for general corporate purposes and to continue the
litigation against the State of Florida.
Long Term Liquidity
The Company's oil and gas properties are currently unproved and
undeveloped. The Company had applied for a drilling permit from the State of
Florida to drill an exploratory well (the St. George Island prospect) in the
waters near Apalachicola, Florida. The State of Florida resisted the issuance of
a drilling permit. On October 6, 1999, Florida's First District Court of Appeal
ruled that Florida's Department of Environmental Protection has the authority to
deny Coastal Petroleum's drilling permit for its St. George Island prospect,
provided that Coastal receives just compensation for what has been taken. The
State of Florida and certain Florida environmental groups filed on November 1,
1999 a joint motion for clarification, rehearing, or certification with respect
to that decision, asking the Court of Appeal, among other things, to clarify
that the question of whether there has been a taking of Coastal Petroleum's
leases should be determined in the Circuit Court. On June 26, 2000, the Court of
Appeal denied all of the State's motions and stated that the issue of whether
the denial of a permit constituted a "taking" was not before the Court. The
Court declined to rule on the merits of the taking issue and stated that the
issue was a matter for the Circuit Court. Coastal Petroleum intends to commence
an inverse condemnation action in the Circuit Court to be compensated for the
value of its properties. The cost of the litigation is expected to be
substantial.
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
------ ---------------------------------------------------------------
Results of Operations (Cont'd)
------------------------------
In 1997, Coastal Petroleum filed 12 additional applications for
drilling permits. Coastal Petroleum had objected to certain requests for
additional data by the State of Florida DEP. On March 26,1999, an administrative
law judge upheld the DEP's requirements. The decision of the administrative law
judge was affirmed by the First District Court of Appeal on February 29, 2000.
In order to fully permit the Apalachicola Reef Play which includes the
St. George Island prospect on October 29, 1998, Coastal Petroleum filed four
additional permit applications (1310-1313). The DEP also requested additional
data for these permits. Although these permits are still pending, Coastal
Petroleum does not believe the DEP will ever grant these permits.
In the unlikely event that any of the drilling permits are granted, the
Company would not have the assets sufficient to fund all the expenditures which
would be necessary to drill the St. George Island prospect ($5.5 million) or any
other exploration wells. 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.
Results of Operations
---------------------
Three month period ended September 30, 2000 vs. September 30, 1999
------------------------------------------------------------------
The Company incurred a loss of $313,000 for the 2000 quarter, compared
to a loss of $224,000 for the comparable 1999 quarter.
Interest income and other income decreased 79% from $17,000 in the 1999
quarter to $4,000 in the 2000 quarter because less funds were available for
investment during the 2000 period.
Legal fees and costs increased 62% to $138,000 for the 2000 quarter
from $85,000 in the 1999 period. Legal fees and costs increased in the 2000
period because the Company has been preparing its complaint to file in the
Florida Circuit Court to claim that the Company's Lease 224-A has been taken by
the State of Florida.
Administrative expenses increased 35% during the 2000 quarter to
$129,000 compared to $96,000 in the 1999 quarter. During December 1999, the
Company increased its Directors and Officers liability insurance coverage from
$6.2 million to $12.2 million which increased insurance costs. In addition,
accounting and administrative costs increased as a result of the rights offering
to shareholders.
Salaries did not change between the periods and remained at $38,000.
Shareholder communications decreased 46% to $9,000 in the 2000 quarter
compared to $17,000 in the 1999 quarter because of a timing difference in the
periods in which the costs were incurred.
Exploration costs decreased from $5,000 in the 1999 quarter to $2,000
in the 2000 quarter.
Nine month period ended September 30, 2000 vs. September 30, 1999
The Company incurred a loss of $1,005,000 for 2000, compared to a loss
of $802,000 for 1999.
Interest income and other income decreased 64% from $63,000 in 1999 to
$23,000 in 2000 because less funds were available for investment during the 2000
period.
Legal fees and costs increased 36% to $392,000 in 2000, from $289,000
in the 1999 period because the Company has been preparing its complaint to file
in the Florida Circuit Court to claim that the Company's Lease 224-A has been
taken by the State of Florida. The Company also recorded a noncash charge to
legal expense in the amount of $75,000 in connection with the issuance of a
stock option grant.
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
------ ---------------------------------------------------------------
Results of Operations (Cont'd)
------------------------------
Administrative expenses increased 20% during 2000 to $415,000 compared
to $346,000 in 1999. During December 1999, the Company increased its Directors
and Officers liability insurance coverage from $6.2 million to $12.2 million
which increased insurance costs. In addition, accounting and administrative
costs increased as a result of the rights offering to shareholders.
.
Salaries decreased 5% during 2000 to $114,000 from $120,000 in 1999. An
employee who has not been replaced left the Company during the 1999 period.
Shareholder communications increased 6% during 2000 to $98,000 compared
to $93,000 in 1999 because of increased mailing and printing costs.
Exploration costs decreased from $17,000 in 1999 to $8,000 in 2000.
These miscellaneous exploration expenses do not include exploration expenditures
totaling $54,000 that were capitalized in 2000 ($25,000 in 1999).
ITEM 3 - Quantitative and Qualitative Disclosure About Market Risk
------ ---------------------------------------------------------
The Company does not have any significant exposure to market risk as
the only market risk sensitive instruments are its investments in marketable
securities. At September 30, 2000, the carrying value of such investments
(including those classified as cash and cash equivalents) was approximately
$99,533, the fair value was $99,675 and the face value was $100,000. Since the
Company expects to hold the investments to maturity, the maturity value should
be realized.
<PAGE>
COASTAL CARIBBEAN OILS & MINERALS, LTD.
PART II - OTHER INFORMATION
September 30, 2000
ITEM 5 - Other Information
------ -----------------
On October 23, 2000, the Company concluded a sale of approximately 3.4
million shares of its common stock and $ 3.4 million of gross proceeds were
realized. The costs incurred relating to the offering totaling approximately
$180,000 at September 30, 2000 are included in other assets.
ITEM 6 - Exhibits and Reports on Form 8-K
------ --------------------------------
(a) Exhibits
--------
None.
(b) Reports on Form 8-K
-------------------
None.
<PAGE>
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
September 30, 2000
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: November 13, 2000 By/s/ James R. Joyce
----------------------------------
James R. Joyce
Treasurer and Chief Accounting and
Financial Officer
