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 March 31, 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
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 May 1, 2000 was 40,056,358.
<PAGE>
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
MARCH 31, 2000
Table of Contents
PART I - FINANCIAL INFORMATION
ITEM 1 Financial Statements Page
Consolidated balance sheets at March 31, 2000 and
December 31, 1999 3
Consolidated statements of operations from inception (January
31, 1953) to March 31, 2000 and for the three
months ended March 31, 2000 and March 31, 1999 4
Consolidated statements of cash flows from inception
(January 31, 1953)to March 31, 2000 and for the three
months ended March 31, 2000 and March 31, 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 10
PART II - OTHER INFORMATION
ITEM 5 Other Information 11
ITEM 6 Exhibits and Reports on Form 8-K 11
<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>
<CAPTION>
March 31, December 31,
2000 1999
ASSETS (Unaudited) (Note)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 821,018 $ 651,124
Accounts and interest receivable 5,248 25,583
Prepaid expenses 301,170 352,089
------------- ----------
Total current assets 1,127,436 1,028,796
------------ ---------
Marketable securities - 390,941
Unproved oil, gas and mineral properties (full cost method) 4,758,227 4,759,532
Other 27,613 27,445
--------------- ---------------
Total assets $ 5,913,276 $ 6,206,714
============ ============
LIABILITIES, MINORITY INTERESTS AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 75,334 $ 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 (27,736,854) (27,361,506)
------------- ------------
Total shareholders' equity 5,837,942 6,138,290
------------- -------------
Total liabilities, minority interests and shareholders' equity $ 5,913,276 $ 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 (Jan. 31, 1953)
March 31, to March 31,
2000 1999 2000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest and other income $ 9,547 $ 25,369 $ 3,738,126
---------- ---------- ------------
Expenses:
Legal fees and costs 166,898 106,749 12,543,889
Administrative expenses 150,131 133,017 7,488,468
Salaries 37,950 43,700 3,106,778
Shareholder communications 27,373 27,404 3,699,153
Exploration costs 2,543 3,316 807,157
Lawsuit judgments - - 1,941,916
Minority interests - - (632,974)
Other - - 364,865
Contractual services - - 2,155,728
---------------- ---------------- -------------
384,895 314,186 31,474,980
---------- ---------- ------------
Net loss $(375,348) $(288,817)
========== ==========
Deficit accumulated during
development stage $(27,736,854)
=============
Net loss per share (Basic & Diluted) $(.01) $(.01)
====== ======
Average number of shares
Outstanding (Basic & Diluted) 40,056,358 40,056,358
========== ==========
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>
<CAPTION>
From inception
Three months ended (Jan. 31, 1953)
March 31, to March 31,
2000 1999 2000
Operating activities:
<S> <C> <C> <C>
Net loss $(375,348) $(288,817) $(27,736,854)
Adjustments to reconcile net loss
to net cash used in operating activities:
Minority interest - - (632,974)
Exploration and other - - 755,974
Net change in:
Accounts receivable 20,335 34,910 ( 5,248)
Prepaid expenses 50,919 27,242 (301,170)
Current liabilities 6,910 12,914 75,334
Other (168) 118 471,293
------------- ------------ ---------------
Net cash used in operating activities (297,352) (213,633) (27,373,645)
---------- ---------- --------------
Investing activities:
Additions to oil, gas, and mineral properties
net of assets acquired for common stock 1,305 31,746 (4,758,227)
Reimbursement of lease rentals and other expenses - - 1,243,085
Proceeds from sale of marketable securities 390,941 1,120,161 -
Purchase of fixed assets (61,649)
- -
----------- ----------- -------------
Net cash provided by (used in) investing activities 392,246 1,151,907 (3,576,791)
----------- ---------- --------------
Financing activities:
Cash proceeds from sale of
common stock less expenses - - 26,342,205
Shares issued upon exercise of options - - 884,249
Compensation recognized for stock option grants 75,000 - 75,000
Sale of shares by subsidiary - - 750,000
Sale of subsidiary shares - - 3,720,000
---------------- ---------------- ------------
Net cash provided by financing activities 75,000 - 31,771,454
---------------- ---------------- ------------
Net increase in cash and cash equivalents 169,894 938,274 821,018
Cash and cash equivalents at beginning of period 651,124 52,480 -
----------- ------------ ----------
Cash and cash equivalents at end of period $ 821,018 $ 990,754 $ 821,018
========== ========== =============
</TABLE>
See accompanying notes.
<PAGE>
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART I - FINANCIAL INFORMATION
March 31, 2000
ITEM 1 - 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 periods ended March 31, 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 March 31, 2000, Coastal Caribbean had cash and cash equivalents of
approximately $820,000. The Company has a limited amount of working capital, has
incurred recurring losses and has an accumulated deficit. Furthermore, the
Company believes the State of Florida has taken its working interest properties.
In the event that the Court of Appeal affirms its October 1999 decision and
Coastal Petroleum commences an inverse condemnation action in the Circuit Court
to be compensated for the value of its properties, the cost of that litigation
would be substantial and would require the Company to obtain additional capital.
There can be no assurances that funds on hand and any additional capital which
may be realized through sales of the Company's shares or otherwise will be
sufficient to allow the Company to survive until the Florida litigation is
concluded. These situations raise substantial doubt about the Company's ability
to continue as a going concern.
Note 3. Common Stock
On May 10, 2000, the Company filed a registration statement with the
Securities and Exchange Commission for a proposed offering of its common stock
to its shareholders. The Company has not yet determined the amount of additional
capital that it will seek to raise through the proposed offering.
On March 6, 2000, five year 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 were vested and exercisableThe
Company recorded a charge to legal expense in the amount of $75,000 for the
issuance of the grant to legal counsel
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operation
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;
2. the substantial cost of continuing the litigation;
3. the uncertainty of obtaining the financing necessary to fund
the litigation against the State of Florida.
The Company's principal assets are oil, gas, and mineral leases, the
costs of which total $4.8 million at March 31, 2000. The Company has a limited
amount of working capital, has incurred recurring losses and has an accumulated
deficit. The Company has been and continues to be involved in several legal
proceedings 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 raise substantial doubt about the Company's ability to continue
as a going concern. 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.
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
- ------ ---------------------------------------------------------------
Results of Operation (Cont'd)
-----------------------------
Short Term Liquidity
At March 31, 2000, Coastal Caribbean had cash and cash equivalents of
approximately $820,000. This amount should be sufficient to fund the Company's
operations through December 31, 2000. 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.
Long Term Liquidity
The Company is currently spending approximately $400,000 annually on
the Florida Litigation. In order to continue the litigation and operate the
Company beyond the year 2000, the Company believes it will be necessary for the
Company to obtain additional capital either from Coastal Caribbean's or Coastal
Petroleum's shareholders.
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. A decision by the Court of
Appeal on that motion is pending. In the event that the Court of Appeal affirms
its decision and Coastal Petroleum commences an inverse condemnation action in
the Circuit Court to be compensated for the value of Lease 224A, the cost of the
litigation would be substantial and would require the Company to obtain
additional capital.
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
- ------ ---------------------------------------------------------------
Results of Operation (Cont'd)
-----------------------------
The Company does not currently have assets sufficient to fund
expenditures to drill an 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.
On May 10, 2000, the Company filed a registration statement with the
Securities and Exchange Commission for a proposed offering of its common stock
to its shareholders. The Company has not yet determined the amount of additional
capital that it will seek to raise through the proposed offering.
Results of Operations
Three month period ended March 31, 2000 vs. March 31, 1999
The Company incurred a loss of $300,000 for the 2000 quarter, compared
to a loss of $289,000 for the comparable 1999 quarter.
Interest income and other income decreased 62% from $25,000 in the 1999
quarter to $10,000 in the 2000 quarter because less funds were available for
investment during the 2000 period.
Legal fees and costs increased 56% to $167,000 for the 2000 quarter,
compared to $107,000 in the prior period. Legal fees and costs increased in the
2000 period because the Company recorded a charge to legal expense in the amount
of $75,000 for the issuance of a stock option grant to legal counsel. During the
2000 period, the level of legal activity decreased. The Company has been waiting
for a decision of the Florida Court of Appeal regarding the State of Florida's
motion for a rehearing.
Salaries decreased 13% during the 2000 quarter to $38,000 compared to
$44,000 in the 1999 quarter. An employee who has not been replaced left the
Company during the 1999 period.
Administrative expenses increased 12% during the 2000 quarter to
$150,000 compared to $133,000 in the 1999 quarter. During December 1999, the
Company ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operation (Cont'd)
increased its Directors and Officers liability insurance coverage from $6.2
million to $12.2 million.
Shareholder communications did not change between the periods and
remained at $27,000.
Exploration costs decreased from $3,300 in the 1999 quarter to $2,500
in the 2000 quarter. These miscellaneous exploration expenses do not include
exploration expenditures totaling $1,300 that were capitalized in 2000 ($32,000
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 March 31, 2000, the carrying value of such investments (including
those classified as cash and cash equivalents) was approximately $691,000, the
fair value was $693,000 and the face value was $700,000. 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
March 31, 2000
ITEM 5 - Other Information
On March 6, 2000, five year 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 were vested and exercisable. The
Company recorded a charge to legal expense in the amount of $75,000 for the
issuance of the grant to legal counsel.
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
March 31, 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: May 11, 2000 By /s/ James R. Joyce
----------------------------------------
James R. Joyce
Treasurer and Chief Accounting and
Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 821,018
<SECURITIES> 0
<RECEIVABLES> 5,248
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,127,436
<PP&E> 4,758,227
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,913,276
<CURRENT-LIABILITIES> 75,334
<BONDS> 0
0
0
<COMMON> 4,806,763
<OTHER-SE> 1,031,179
<TOTAL-LIABILITY-AND-EQUITY> 5,913,276
<SALES> 0
<TOTAL-REVENUES> 9,547
<CGS> 0
<TOTAL-COSTS> 384,895
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (375,348)
<INCOME-TAX> 0
<INCOME-CONTINUING> (375,348)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (375,348)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
