SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(X) Annual report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended June 30, 1996 or
( ) Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number 0-8536
_____________________
THE NEW PARAHO CORPORATION
(Exact name of registrant as specified in its charter)
Colorado 84-1034362
(State or other Jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
5387 Manhattan Circle, Suite 104, Boulder, CO 80303
(Address of principal executive offices)
Registrant's telephone number, including area code (303) 543-8900
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.01 Par Value
(Title of Class)
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. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K (s.229.405 of this chapter) is not
contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. X
Aggregate market value of the voting stock held by nonaffiliates of
the registrant (9,988,662 shares) based upon the most recent
average bid and asked prices of such stock which are as of August
31, 1996.
$ 0
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes X No ___
Number of shares outstanding of each of the registrant's classes of
common stock, as of September 28, 1996.
50,772,982 shares of registrant's
common stock, $0.01 par value
Registrant's definitive proxy statement filed pursuant to
Regulation 14A, for the annual meeting to be held in December, 1996
is incorporated into Part III by reference.
<PAGE>
PART I
Item 1. BUSINESS
Introduction - The New Paraho Corporation and
its subsidiaries (the "Company" or "New Paraho") hold patents
and proprietary rights applicable to the retorting of oil from
shale by use of an aboveground, vertical shaft retort. The
Company also has rights to use certain intellectual properties
to test and to commercially develop the use of shale oil in the
production of asphalt. In addition, the Company owns interests
in oil shale lands and holds a note receivable from the sale of
certain property and mineral rights.
History - On July 23, 1986 Paraho Development
Corporation merged with New Paraho, which was a wholly-owned
subsidiary of Energy Resources Technology Land, Inc. ("ERTL"),
pursuant to a plan of reorganization under Chapter 11 of the
Bankruptcy Code. Following the merger, shareholders of Paraho
Development Corporation received 5% of the outstanding common
stock of New Paraho. Former creditors of Paraho Development
Corporation received 15% of the common stock of New Paraho and
income certificates (the "Income Certificates") representing
rights in oil shale mineral properties located in Rio Blanco
County, Colorado which were previously owned by ERTL (all of
ERTL's interest in such properties before it transferred 50% of
such interest to the Company is hereinafter defined as the "Rio
Blanco Properties"). After the merger, ERTL owned 80% of the
outstanding common stock of New Paraho.
New Paraho was incorporated in December 1985 as a wholly-
owned subsidiary of ERTL. ERTL capitalized New Paraho with
$1,000 and contributed 50% of its interest in the Rio Blanco
Properties. ERTL accounted for the acquisition of Paraho
Development Corporation as a purchase.
Based upon the current control by ERTL of New Paraho, the
Company is included for Federal income tax purposes as part of
the ERTL consolidated group of corporations and the results of
its operations are reported in the consolidated Federal income
tax returns filed by ERTL from the date of the confirmation of
reorganization, July 23, 1986, forward. Accordingly, and as
long as such controlling interest is maintained, losses and/or
tax credits, if any, for Federal income tax purposes generated
by New Paraho may be applied against the income and/or income
tax for Federal income tax purposes of members of the ERTL
group.
The group has established a tax allocation policy which
requires the Federal income tax liability to be computed on a
separate return basis. Any losses or other credits directly
attributable to the Company which result in a reduction of the
consolidated tax liability will be reimbursed by the parent.
Likewise, the Company will be charged for its share of the
consolidated tax liability.
Asphalt Feasibility Program - The activities of
the Company have been devoted to developing, testing and test
marketing shale oil-derived asphalt paving materials. There is
no established market for these materials, and they are not
produced in commercial quantities, although the Company has sold
small quantities of these materials to customers on an isolated
basis. The Company's current activities and sales are not
sufficient to sustain the Company on an ongoing basis without
either substantial additional outside funding or the financing
and development of a commercial plant. The Company's recent
activities have been designed to establish the feasibility of
constructing and operating such a plant. Even if the
feasibility of such a plant can be established, a number of
events or circumstances could prevent the Company from
establishing commercial production of shale oil-derived asphalt
paving materials. These include changes in technology, changes
in government regulations, and the inability to obtain financing
for a commercial facility.
To establish the commercial economics of producing
shale oil-derived asphalt, the Company initiated the Asphalt
Feasibility Program which included the construction and
evaluation of field test strips and a more thorough evaluation
of the economic viability of producing and marketing commercial
quantities of shale oil-derived asphalt paving materials.
The Company expended approximately $880,000 in 1994,
$743,000 in 1995, and $373,000 in 1996 on direct research and
development of this shale oil-derived asphalt product. The
Company does not have funding for any additional research and
development or commercial production efforts. Although the
Company is seeking additional financing to fund these efforts,
it currently appears unlikely that the Company will succeed in
obtaining this financing.
Based on the results of the test strip evaluations, the
Asphalt Feasibility Program has determined that this product is
technically feasible. Since 1989, the Company has been
attempting to finance, design, and construct a retorting and
SOMAT production facility suitable for asphalt operations. This
has included efforts to seek funding to construct and operate a
commercial-scale production facility with an initial capacity of
275 BPSD (barrels per stream day) of shale oil (Phase I) and
subsequent expansion by an additional 275 BPSD (Phase II). A
preliminary estimate for the construction of Phase I of the
project, modernization and expansion of the mine, pilot and
start-up operating losses, working capital and financing costs
is $42.5 million. The estimated cost for Phase II is $15.8
million, with expected positive cash flow from operations
reducing costs by $4.1 million in the fourth year of the
project. Total estimated net costs for Phase I and II are $54.2
million. Although the Company has been aggressively seeking
financial commitments for the construction of a commercial
retorting facility since 1989, to date the Company has not
received any commitments or serious indications of interest from
any potential financial partner. Although the Company is
continuing to seek financial commitments, it appears unlikely it
will succeed in obtaining this financing.
Asphalt Feasibility Program Financing - Most of
the financing for the Asphalt Feasibility Program has been
provided by the Tell Ertl Family Trust (the "Trust") under a
line of credit. As of June 30, 1995, the Company owed the Trust
$5,497,119 in principal plus accrued interest on the line of
credit. At that time, the Trust determined it would not advance
further funds under the line of credit. Effective July 1, 1995,
in recognition of the Company's inability to repay the line of
credit, the Trust agreed to waive the repayment of interest
accrued to date and to eliminate future interest accruals. On
June 1, 1996, the Trust approved an extension of the due date of
the line of credit to July 1, 1997 in order to allow the Company
to finalize plans for the orderly repayment of the Trust.
The Company also has funds available resulting from the
exercise by Tosco Corporation's wholly-owned subsidiary, The Oil
Shale Corporation, of its option to purchase the Rio Blanco
Properties (the "Purchase Option"). The total purchase price
was $12,711,700, of which the Company received half. On
closing, the Company received $575,000 and a 50% interest in a
note receivable in the amount of $11,561,700, payable in fifteen
equal annual installments of $770,780 commencing December 17,
1990 with interest at 5% payable quarterly. Due to its lack of
success in obtaining financing for a commercial facility, this
note comprises the Company's primary source of funds available
to repay its obligations under the note to the Trust.
Paraho Technology - The Company, directly and
through its subsidiaries, owns the Paraho Process which consists
of patents and proprietary rights applicable to the retorting of
oil from shale by use of an above ground, vertical shaft retort.
In connection with the Asphalt Feasibility Program, the Company
has continued its research and development activities on the
Paraho Process. The Company has already successfully
demonstrated the Paraho Process on a semi-works scale. Paraho
Development Corporation, predecessor to the Company, produced
approximately 110,000 barrels of shale oil. Of these,
approximately 98,000 barrels were refined into gasoline, jet
fuel, heavy fuel oil and other products. These products were
tested by several government agencies and private companies
under the direction of the U.S. Navy, and met specifications set
by the U.S. Navy. There can be no assurance, however, that any
commercial oil shale facility will be constructed or that, if
such a facility is constructed, it will use the Paraho Process.
The Company will not be able to generate revenues from the
Paraho Process unless it succeeds in financing the construction
of a commercial facility, or is able to license the technology
to third parties for construction of such a facility. Due to
the Company's inability to obtain financing to date, and the
lack of any interest by third parties in licensing the
technology, the Company does not expect it will realize any
revenues from the Paraho Process in the foreseeable future.
Even if it succeeds in financing a facility or licensing the
technology to third parties, due to the lengthy lead time
necessary to engineer and construct a commercial oil shale
facility, as well as the constraints imposed by governmental
regulations, at best, it will be a number of years before any
royalties may be earned by New Paraho under any licenses it may
grant for the use of the Paraho Process.
The Paraho Process includes an entire system for the
processing of oil shale, including mining, crushing, retorting
and disposing of the shale. Protection of the Paraho Process is
based upon several patents covering equipment, process
conditions and methods of operating a retort, many of which have
expired. The Company expended resources in prior years to apply
for new patents as a result of the Department of Energy
sponsored PON Commercial design project initiated by Paraho
Development Corporation. As a result of these efforts, on
August 14, 1990, the U.S. Patent Office issued this patent as
#4,948,468. Management believes that the interrelation of the
remaining patents, in addition to this new patent should provide
adequate protection of the Paraho Process through the year 2007.
Along with the patent protection, New Paraho has developed
proprietary know-how and technical data and experience regarding
the design, construction and operation of retorts and related
facilities. Such technology and know-how are protected by
confidentiality and patent assignment agreements. The
agreements generally require the maintenance of the
confidentiality of all Paraho Process technology and trade
secrets and require assignment to the Company of all patents
relating to its business or products. New Paraho also has
rights received from ERTL to use certain rights in patents,
patent applications and other intellectual properties that ERTL
has acquired from Western Research Institute regrading the use
of shale oil-derived asphalt material (the "WRI Technology") for
the Asphalt Feasibility Program.
SOMAT Technology - While proceeding with the
Asphalt Feasibility Program, the Company developed the SOMAT
(Shale Oil Modified Asphalt Technology) process to further
process crude shale oil into shale oil asphalt modifiers. This
process is proprietary information and the Company seeks to
protect it under patent and trade secrets law. In furtherance
of this objective, in March 1996, the Company made application
to the U.S. Patent Office for a patent on the use of SOMAT in
recycled asphalt applications.
Governmental Regulation - Environment -
Federal, state and local laws and regulations have a substantial
impact on the development of an oil shale industry.
Environmental concerns include air quality, water usage and
pollution, dust problems, spent shale disposal and land
reclamation. Numerous governmental permits are required in
connection with the construction and operation of one or more
commercial-size retorts and related facilities (including the
mine from which oil shale is extracted). Mining of the oil
shale, which is accomplished using conventional room and pillar
or surface mining methods, presents the usual difficulties
associated with mining methods, including safety considerations.
The Company believes that it and its subsidiaries have received
all permits necessary for them to mine oil shale and to process
it at the Pilot Plant Lease site in support of the Asphalt
Feasibility Program.
Employees - The Company currently has no paid
employees. The Company has no plans to add employees unless
financing for a commercial facility is obtained.
Competition - New Paraho is only one of many
companies that has attempted to develop a workable, economical
process for recovering oil from shale. The adverse conditions
which now exist for the commercial development of oil shale,
when coupled with the absence of federal government incentives,
have caused many of these companies to abandon or to defer
further research and development of their competing technologies
as well as development of their oil shale mineral resource
holdings. Nonetheless, many of the Company's future competitors
may have far greater resources than the Company. If any one of
these companies is successful, its success may significantly
reduce the value of the Paraho Process. Further, it is possible
that new technologies, which could require lower capital costs
or present other advantages, could reduce the value of the
Paraho Process. New Paraho is unable, at this time, to assess
accurately the status of the development or economics of
competing processes, and no assurance can be given that the
Paraho Process will be able to compete effectively with other
processes.
At present, management believes that the Company is the
only producer of a shale oil-derived asphalt material for
testing purposes. The Company's exclusive right to use the WRI
Technology provides protection against competitors using that
technology to produce the material without first obtaining a
license from New Paraho. In addition, the Company believes that
shale oil produced by the Paraho Process used in connection with
the SOMAT Process produces a higher quality and a higher yield
of asphalt modifier than shale oil produced by other processes.
With respect to competing asphalt modifiers, a Federal
program focused on the development of improved asphalt testing
systems and on the development of improved asphalt binders has
led to a greater demand for improved asphalt quality. Among the
products used to improve the asphalt binder, lime, liquid anti-
strip additives, and polymer modified asphalts are the most
popular and widely used. Based on the results of the laboratory
and actual road tests to date, Paraho believes that SOMAT will
be able to compete effectively with these products. In the case
of lime and liquid anti-strips, SOMAT's competitive advantage
will come through a technically superior product that is priced
comparable to the best performing anti-strip products, and in
the case of the polymer modified products, SOMAT's advantage
will come through comparable, if not superior, technical
performance at a lower price. However, there is no assurance
that competitors will not develop products with performance
characteristics superior to SOMAT.<PAGE>
Item 2. PROPERTIES
Rio Blanco Properties - On December 17, 1987,
The Oil Shale Corporation, a wholly-owned subsidiary of Tosco
Corporation exercised the Purchase Option on the Rio Blanco
Properties. Details of the transaction are as described in the
discussion of the Asphalt Feasibility Program.
Pilot Plant Lease - On October 15, 1982, Paraho
Development leased 200 acres of private land near Rifle,
Colorado from an individual for an initial term of ten years
with provisions for extensions. The leased land provides a
location for the Company to operate its pilot oil shale retort
facility, and management considers the land to be adequate space
to enable New Paraho to carry out research operations. As
renegotiated on October 8, 1992, the lease calls for an annual
minimum rent of $6,000 and an operational rate of $28,296 per
year. The new lease expires in October, 2002. The rent for the
land at the operational rate for the twelve months ended June
30, 1996 was prorated on a daily basis.
Utah Oil Shale Lands - New Paraho has acquired
rights to approximately 10,432 acres of oil shale lands in
Uintah County, Utah. Of the total, New Paraho owns an undivided
80% interest in 160 acres in fee. The remaining 10,272 acres
are controlled by New Paraho under State of Utah Leases for oil
shale or under agreements with third parties.
Item 3. LEGAL PROCEEDINGS
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCK HOLDER MATTERS
The Company's common stock is traded over-the-counter. The
reported high and low bid prices for each quarterly period since
July 1, 1994 are as follows:
FROM THE NATIONAL DAILY QUOTATION SERVICE
<TABLE>
Bid Prices Asked Prices
High Low High Low
<S> <C> <C> <C> <C>
1994
July 1 through
September 30 .06 .03 .28 .19
October 3 through
December 30 .06 .02 .28 .13
1995
January 3 through
March 31 .06 .02 .28 .12
April 3 through
June 30 .03 .02 .28 .12
July 3 through
September 29 .03125 .03125 .12 .10
October 2 through
December 29 .03125 .001 .20 .05
1996
January 2 through
March 29 .001 .001 .05 .05
April 1 through
June 28 .001 .001 .05 .05
</TABLE>
<PAGE>
The high and low prices specified above represent prices
between broker-dealers. They do not include retail mark-ups and
mark-downs or any commissions to the broker-dealer and may not
reflect prices in actual transactions.
As of July 14, 1992, the Company's stock was deleted from
the NASDAQ Small-Cap Market, because the Company failed to meet
the new bid price requirement. The stock has been only thinly
and sporadically traded, and is now listed on an electronic
bulletin board system.
As of September 1, 1996, the approximate number of
shareholders of record of The New Paraho common stock was 1,100.
New Paraho has never paid dividends on its common stock and
there is no prospect that dividends will be paid in the
foreseeable future. The Company intends to follow its policy of
retaining any earnings to provide funds to offset current
obligations, for additional research and development and for
expansion.<PAGE>
Item 6. SELECTED FINANCIAL DATA
<TABLE>
Statement of
Operations Year Ended Year Ended Year Ended Year Ended Year Ended
Data 6/30/92 6/30/93 6/30/94 6/30/95 6/30/96
__________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Revenues $ 287,196 $ 282,028 $ 291,710 $ 495,319 $ 370,362
Net Income (Loss) (567,879) (1,352,930) (1,297,216) (1,068,172) 1,121,268
Net Income (Loss)
per Share (.01) (.03) (.03) (.02) .02
Cash Dividend per
Common Share -- -- -- -- --
Balance Sheet As of As of As of As of As of
Data 6/30/92 6/30/93 6/30/94 6/30/95 6/30/96
_________________________________________________________________________________________________
Total Assets $5,250,183 $4,930,698 $4,937,652 $4,469,950 $4,274,440
Long Term Debt 3,716,874 4,653,181 6,070,155 6,792,078 5,497,119
</TABLE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Pursuant To Safe Harbor
Provisions Of The Private Securities Litigation Reform Act Of
1995 - In this report, periodic reports filed with the
Securities and Exchange Commission, press releases and other
communications from time to time, the Company sometimes makes
"forward-looking statements" within the meaning of the federal
securities laws. These forward-looking statements include,
among others, statements concerning the Company's outlook for
the future and information about its future plans, such as plans
with respect to commercializing the asphalt technology;
continued research and development; the costs and feasibility of
constructing a commercial retorting plant; the Company's plans
and expectations as to funding of capital expenditures and
operations; and other statements of expectations, beliefs,
future plans and strategies, anticipated events or trends and
similar expressions concerning matters that are not historical
facts. Such forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ
materially from those expressed in or implied by such
statements. Many of these risks and uncertainties have been
discussed in the Company's prior filings with the Securities and
Exchange Commission.
The Company's strategy is (i) to continue to seek
opportunities to fund the Asphalt Feasibility Program, including
the construction of a commercial plant, and (ii) to look for
other opportunities to commercialize the Company's oil shale
technology. It will pursue these strategies without employees
or significant operational or capital resources. The most
important factors that could prevent the Company from achieving
these goals, and cause actual results to differ materially from
those expressed in the forward-looking statements, include, but
not limited to, the following:
- A reduced demand for or interest in the Company's
asphalt product, for example, resulting from the
failure of government agencies to require that asphalt
used in highway construction projects have
characteristics like the Company's asphalt product.
- The development of alternative or competing asphalt
modifiers.
- As the Company operates in a capital-intensive
industry, the inability to secure adequate capital to
fund ongoing operations or a commercial plant.
- Risks inherent in construction, including delays and
cost overruns.
- Changes in government regulations.
Liquidity - Due to the inability to obtain
financing for a commercial project, the exhaustion of the
Company's existing financial resources, and the fact that the
Company's line of credit will mature on July 1, 1997, the
Company expects that it will not have the funds to continue
operations, and may be required to sell assets or liquidate to
meet its obligations.
The Company realized an increase in working capital of
$256,219 in the fiscal year ended June 30, 1996. Funds were
primarily obtained from sales of asphalt paving material and
from interest and principal payments on the promissory note from
The Oil Shale Corporation. Funds were used primarily for
operating expenses, and research and development related to the
Asphalt Feasibility Program.
On May 1, 1994, the Company was granted an increase in its
line of credit to $5,500,000 by the Trust. Borrowings under
this note are at the discretion of the trustees of the Trust.
The note is due on July 1, 1997. The Company had borrowed
$5,497,119 on this note as of June 30, 1996. In recognition of
the Company's inability to repay the interest on this note, the
Trust waived unpaid interest accrued to date and eliminated
further interest accruals.
The Trust has notified the Company that it does not intend
to increase the line of credit, and it is unlikely that the
Trust will agree to extend the maturity date. Accordingly, the
Company will not have any funds to continue operations unless it
succeeds in obtaining additional financing. Since 1989, the
Company has been seeking to obtain financial commitments to
design, construct, and operate a commercial facility to produce
asphalt. To date, the Company has not received significant
indications of interest, and it currently appears unlikely that
it will succeed in obtaining such financial commitments.
Possible future sources of cash include sales of oil shale-
derived asphalt paving materials and payments on The Oil Shale
Corporation's Promissory Note. Additional future sources of
cash may include revenues from the performance of further
research services or from the use of the Company's pilot plant
retort facility. Management presently does not expect that
significant revenues from these sources will be obtained.
The Company has reduced operating expenses by laying off
all employees and discontinuing operations related to the
Asphalt Feasibility Program. In order to maintain the
facilities and remaining assets of the Company, minimum
operating expenses of approximately $100,000 annually must be
met. Management believes that the Company's share of payments
on The Oil Shale Corporation's Promissory Note will be
sufficient to cover projected costs for the year ending June 30,
1997.
If the Company is required to repay the promissory note to
the Trust in full, any source of cash available to meet these
expenses would be depleted. The Company does not believe it
will have sufficient revenues to pay operating costs at a level
needed to continue the Asphalt Feasibility Program. Further, if
the Trust does not agree to extend the maturity date of its note
beyond July 1, 1997, unless the Company obtains additional
financing (which currently appears unlikely), the Company will
be required to sell or transfer assets to repay the note, and
may be required to terminate operations and liquidate. The
Company may negotiate with the Trust to retain some portion of
The Oil Shale Company's promissory note as a source of cash flow
to meet these expenses, however there is no assurance that these
negotiations will be successful.
Capital Resources - New Paraho's current long-term
objectives include finding third-party funding for the research
and development related to the Asphalt Feasibility Program and
the Paraho Process, licensing of the Paraho Process and
commercialization of shale oil and shale oil-derived products.
In pursuit of these objectives, New Paraho incurred costs and
expenses of $544,049 in fiscal 1996. The Company does not have
the resources to commit significant funds for these objectives
in 1997 and later years. At the present time, New Paraho
believes that the most viable option for the continued pursuit
of these aforementioned objectives is the successful completion
of the Asphalt Feasibility Program and subsequent
commercialization efforts. Management has estimated that such
a commercial project would require capital of $54 million.
While the Company has been attempting to seek commitments for
such financing, it has been unable to do so to date, and it
currently appears unlikely that it will succeed in doing so.
Results of Operations
1996 - Revenues in fiscal 1996 consisted
primarily of sales of SOMAT and interest payments on the
promissory note from The Oil Shale Corporation. In addition, an
extraordinary gain was incurred when the Tell Ertl Family Trust
relieved and discharged the Company of all obligations to pay
accrued interest on its line of credit with the Trust. Costs
and expenses related to research and development of the Asphalt
Feasibility Program.
1995 - Revenues in fiscal 1995 consisted
primarily of sales of SOMAT and interest received on the
promissory note from The Oil Shale Corporation. Costs and
expenses related to research and development of the Asphalt
Feasibility Program.
1994 - Revenues in fiscal 1994 consisted mainly
of interest received on the promissory note from The Oil Shale
Corporation and sales of SOMAT. Costs and expenses related
primarily to research and development of the Asphalt Feasibility
Program. <PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements Page
Report of Independent Auditors 25
Consolidated Balance Sheets at June 30, 26
1996 and June 30, 1995
Consolidated Statements of Operations for 28
the years ended June 30, 1996, 1995
and 1994
Consolidated Statements of 29
Stockholders' Equity for the years
ended June 30, 1996, 1995 and 1994
Consolidated Statements of Cash flows for 30
the years ended June 30, 1996, 1995
and 1994
Notes to Consolidated Financial Statements 31
<PAGE>
Consolidated Financial Statements
THE NEW PARAHO CORPORATION
Years ended June 30, 1996, 1995 and 1994
with Report of Independent Auditors
<PAGE>
Report of Independent Auditors
The Board of Directors
The New Paraho Corporation
We have audited the accompanying consolidated balance sheets of The New Paraho
Corporation as of June 30, 1996 and 1995, and the related consolidated
statments of operations stockholders equity (deficit), and cash flows for each
fo the three years in the period ended June 30, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The New Paraho
Corporation at June 30, 1996 and 1995, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
June 30, 1996, in conformity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, the Companys recurring
losses from operations, net capital deficiency and inability to obtain financing
to construct a commercially feasible oil shale retort facility raise substantial
doubt about its ability to continue as a going concern. Managements plans as to
these matters are also described in Note 2. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
EY
August 7, 1996<PAGE>
The New Paraho Corporation
Consolidated Balance Sheets
<TABLE>
June 30
1996 1995
<S> <C> <C>
Assets
Current assets:
Cash $ 491,164 $ 130,908
Accounts receivable 28,246 1,717
Short-term investments - 20,000
Inventory 67,105 195,394
Note receivable (Note 4) 385,390 385,390
Interest receivable (Note 4) 14,452 16,190
Prepaid expenses 14,413 16,771
Total current assets 1,000,770 766,370
Plant, furniture and equipment (net)
at cost (Note 3) 87,920 130,408
Oil shale mineral properties, at
cost (Note 3) 40,525 40,525
Patent (net of accumulated amortization
of $12,186 and $10,154 in 1996 and
1995, respectively) 22,336 24,368
Supplies 12,044 12,044
Note receivable (Note 4) 3,083,120 3,468,510
Certificates of deposit, restricted
(Note 5) 27,000 27,000
Deposits 725 725
Total Assets $4,274,440 $4,469,950
</TABLE>
<PAGE>
<TABLE>
June 30
1996 1995
<S> <C> <C>
Liabilities and stockholders' equity
(deficit)
Current liabilities:
Accounts payable $ 20,456 $ 37,214
Accrued liabilities 10,547 15,608
Total current liabilities 31,003 52,822
Long-term liabilities:
Note payable, related party, includ-
ing interest of $0 and $1,294,959
in 1996 and 1995, respectively
(Note 9) 5,497,119 6,792,078
Commitment (Note 10)
Stockholders' equity (deficit)
(Notes 2 and 11):
Common stock, $.01 par value;
authorized 75,000,000 shares;
issued and outstanding 50,772,982
shares 507,730 507,730
Par value of common stock issued in
excess of the fair market value of
assets acquired (368,538) (368,538)
Retained earnings (deficit) (1,392,874) (2,514,142)
Total stockholders' equity (deficit) (1,253,682) (2,374,950)
Total liabilities and stockholders'
equity (deficit) $4,274,440 $4,469,950
</TABLE>
See accompanying notes.
<PAGE>
The New Paraho Corporation
Consolidated Statements of Operations
<TABLE>
Year ended June 30
1996 1995 1994
<S> <C> <C> <C>
Revenues:
Asphalt sales $ 137,452 $ 283,969 $ 71,527
Research and contract services 30,598 778 -
Interest income 193,778 207,128 221,678
Other 8,534 3,444 (1,495)
370,362 495,319 291,710
Costs and expenses:
Asphalt research 373,387 743,482 880,191
General and administrative 170,662 249,522 317,664
Interest expense 4 570,487 391,071
544,053 1,563,491 1,588,926
Net loss before extraordinary item (173,691) (1,068,172) (1,297,216)
Extraordinary gain or early extinguish-
ment of debt 1,294,959 - -
Net income (loss) $1,121,268 $(1,068,172) $(1,297,216)
Net income (loss) per share:
Loss before extraordinary item $ (.01) $ (.02) $ (.03)
Extraordinary item .03 - -
Net income (loss) per share $ .02 $ (.02) $ (.03)
Weighted average shares 50,772,982 50,772,982 50,876,691
</TABLE>
See accompanying notes.
<PAGE>
THE NEW PARAHO CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
Par Value
of Common
Stock Issued
in Excess of the Retained
Common Stock Fair Market Value Earnings
Shares Amount of Assets Acquired (Deficit)
<S> <C> <C> <C> <C>
Balance at June 30, 1993 50,980,400 $ 509,804 $ (358,167) $ (148,754)
Net loss - - - (1,297,216)
Reclassification of
treasury stock (207,418) (2,074) (10,371) -
Balance at June 30, 1994 50,772,982 507,730 (368,538) (1,445,970)
Net loss - - - (1,068,172)
Balance at June 30, 1995 50,772,982 507,730 (368,538) (2,514,142)
Net income - - - 1,121,268
Balance at June 30, 1996 50,772,982 $507,730 $(368,538) $(1,392,874)
Total
Stockholders'
Treasury Stock Equity
Shares Amount (Deficit)
<S> <C> <C> <C>
Balance at June 30, 1993 207,418 $(12,445) $ (9,562)
Net loss - - (1,297,216)
Reclassification of
treasury stock (207,418) 12,445 -
Balance at June 30, 1994 - - (1,306,778)
Net loss - - (1,068,172)
Balance at June 30, 1995 - - (2,374,950)
Net income - - 1,121,268
Balance at June 30, 1996 - - (1,253,682)
</TABLE>
See accompanying notes.
<PAGE>
The New Paraho Corporation
Consolidated Statement of Cash Flows
<TABLE>
Year ended June 30
1996 1995 1994
<S> <C> <C> <C>
Operating activities
Net income (loss) $1,121,268 $(1,068,172) $(1,297,216)
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Depreciation and amortization 42,280 45,684 26,987
Forgiveness of debt (1,294,959) - -
Gain on disposal of assets (3,629) - -
Changes in operating assets
and liabilities:
Receivables (24,791) 24,431 (2,136)
Inventory 128,289 136,276 (331,670)
Prepaid expenses 2,358 268 (2,143)
Accounts payable (16,758) (109,795) (38,191)
Accrued liabilities (5,061) (11,658) 12,539
Accrued interest and discount on
payable to income certificate
holders - 569,923 78,974
Net cash used in operating activities (51,003) (413,043) (1,552,856)
Investing activities
Purchase of plant, furniture & equipment (3,131) - (105,507)
Proceeds from disposal of fixed assets 9,000 - -
Payment received on note receivable 385,390 385,390 385,390
Short-term investments 20,000 - -
Net cash provided by investing
activities 411,259 385,390 279,883
Financing activities
Borrowing under line-of-credit agreement - 152,000 1,338,000
Payments to income certificate holders - - (87,152)
Net cash provided by financing activities - 152,000 1,250,848
Net increase (decrease) in cash 360,256 124,347 (22,125)
Cash at beginning of year 130,908 6,561 28,686
Cash at end of year $ 491,164 $ 130,908 $ 6,561
Supplemental disclosure of cash flow
information:
Interest paid $ - $ - $ 308,000
</TABLE>
See accompanying notes.<PAGE>
The New Paraho Corporation
Notes to Consolidated Financial Statements
June 30, 1996
1. Description of Business and Summary of Accounting Policies
Description of Business
The New Paraho Corporation (the Company) was incorporated in December 1985 as
a wholly-owned subsidiary of Energy Resources Technology Land, Inc. (ERTL).
ERTL capitalized the Company with $1,000 and contributed 50% of its interest in
oil shale mineral properties located in Rio Blanco County, Colorado. Operations
of the Company commenced on July 23, 1986.
On July 23, 1986, the Company merged with Paraho Development Corporation
pursuant to Paraho Development Corporations Plan of Reorganization (Plan of
Reorganization) under Chapter 11 of the United States Bankruptcy Code.
Shareholders of Paraho Development Corporation received 5% of the outstanding
common stock of the Company and former creditors of Paraho Development
Corporation received 15% of the common stock of the Company and income
certificates representing a right to a specified percentage of certain income
received by the Company from oil shale mineral properties located in Rio Blanco
County, Colorado.
Following the merger, ERTL holds 80% of the outstanding common stock of the
Company and, accordingly, the Company accounted for the acquisition of Paraho
Development Corporation as a purchase.
The Company, directly and through its subsidiaries, holds patents and
proprietary rights applicable to the retorting of oil from shale by use of an
above-ground, vertical shaft retort. The Company also has rights to use certain
intellectual properties to test the suitability of shale oil in the production
of asphalt. In addition, the Company owns interests in oil shale lands.
Principles of Consolidation
The consolidated financial statements of the Company include the accounts of
wholly-owned subsidiaries. All significant intercompany transactions have been
eliminated.
Plant, Furniture and Equipment, Oil Shale Mineral Properties, and Patent
Depreciation is provided on a straight-line basis over the estimated useful
lives of the assets, which range from three to ten years. Amortization is
provided on straight-line basis over seventeen years, the estimated useful life
of the patent.
<PAGE>
The New Paraho Corporation
Notes to Consolidated Financial Statements (continued)
1. Description of Business and Summary of Accounting Policies (continued)
Inventory
Inventory consists of shale oil asphaltic cement and is stated at the lower of
cost or estimated net realizable value.
Net Income (Loss) Per Share
Net income (loss) per share is computed based on the weighted average number of
common shares outstanding during the period.
Income Taxes
The Company has elected to file a consolidated federal income tax return with
its parent, ERTL. The consolidating companies have implemented a tax allocation
policy. Under this policy, the federal income tax provision is computed on a
separate return basis and the companies receive reimbursement to the extent
their losses and other credits result in a reduction of the consolidated tax
liability, or are charged for their share of the consolidated tax liability.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with an initial maturity of three months or
less to be cash equivalents.
Concentration of Credit Risk
The Companys note receivable is the result of a sale of certain property and
mineral rights in fiscal year 1988 (Note 4). The note is secured by the assets
sold.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
<PAGE>
The New Paraho Corporation
Notes to Consolidated Financial Statements (continued)
1. Description of Business and Summary of Accounting Policies (continued)
Reclassifications
Certain amounts in 1995 and 1994 have been reclassified to conform to the 1996
presentation.
New Accounting Standard
In March 1995, the Financial Accounting Standards Board issued Statement No. 121
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of. The Statement prescribes the accounting for the impairment of
long-lived assets, such as property, plant, and equipment, and requires assets
to be recorded at the lower of the assets' carrying amount or fair value when
events or circumstances indicate an impairment may exist. The Statement is
effective for fiscal year 1997, the Company does not expect the effect of
implementing the Statement wil be material.
2. Ability to Continue As a Going Concern
As of June 30, 1996, the Company has an accumulated deficit of $1,392,874 and a
net capital deficiency of $1,253,682. Ultimately, the Company's ability to
continue as a going concern is dependent on obtaining sufficient financing to
construct a commercially feasible oil shale retort facility. Management will
continue to seek sources for this financing. Management believes the cash on
hand at June 30, 1996 and proceeds from the note receivable (see Note 4) and the
sale of inventory will be sufficient to fund operations through June 30, 1997.
These financial statements do not include any adjustments to reflect the
possible effects on the recoverability and classification of assets or the
amount and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
<PAGE>
The New Paraho Corporation
Notes to Consolidated Financial Statements (continued)
3. Plant, Furniture and Equipment and Oil Shale Mineral Properties
Plant, furniture and equipment at June 30, 1996 and 1995 consist of:
<TABLE>
1996 1995
<S> <C> <C>
Retort facility and related equipment $ 235,818 $244,502
Other equipment 37,603 37,603
Office Furniture and equipment 42,088 42,085
315,509 324,190
Less accumulated depreciation (227,589) (193,782)
$ 87,920 $130,408
</TABLE>
Oil shale mineral properties at June 30, 1996 and 1995 consist of:
<TABLE>
1996 1995
<S> <C> <C>
Paraho Ute Project:
Utah state leasehold rights $ 24,525 $ 24,525
Utah fee land 16,000 16,000
$ 40,525 $ 40,525
</TABLE>
Oil shale mineral properties consist of approximately 10,272 acres of Utah state
leases and an 80% undivided interest in 160 acres of Utah fee land. Annual
renewal and rental payments of $10,272 are required on the Utah state leases.
4. Note Receivable and Sale of Property and Mineral Rights
On December 17, 1987, Tosco Corporation's wholly-owned subsidiary, The Oil Shale
Company, exercised its option, granted in 1963 by the Company's parent, to
acquire from the Company its 50% ownership interest in certain property and
mineral rights for $6,355,850. The Company received $575,000 cash and a note
receivable in the amount of $5,780,850 on closing. The note is receivable in
fifteen equall annual installments of $385,390 which commenced December 17,
1990. The principal balance bears interest at 5% receivable quarterly.
<PAGE>
The New Paraho Corporation
Notes to Consolidated Financial Statements (continued)
5. Certificates of Deposit
The Company has $27,000 in certificates of deposit which are restricted under
terms of a reclamation performance bond and will be released following
completion of mining activities and restoration of mining sites. Management
believes the certificates of deposit are sufficient to provide for required
reclamation costs.
6. Troubled Debt Restructuring
During fiscal year 1996, Tell Ertl Family Trust, the holder of the note payable
(see Note 9) forgave all accrued interest owed by the Company and will cease to
charge interest in the future. This resulted in an extraordinary gain to the
Company of $1,294,959.
7. Income Taxes
The Company accounts for income taxes in conformity with FAS No. 109. Under the
provisions of FAS No. 109, a deferred tax liability or asset (net of a valuation
allowance is provided in the financial statements by applying the provisions of
applicable tax laws to measure the deferred tax consequences of temporary
differnces which result in net taxable or deductible amounts in future years as
a result of events recognized in the financial statements in the current or
preceding years.
<PAGE>
The New Paraho Corporation
Notes to Consolidated Financial Statements (continued)
7. Income Taxes (continued)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets are as follows:
<TABLE>
June 30
1996 1995
<S> <C> <C>
Deferred tax liabilities:
Tax over book depreciation $ 318,991 $ 293,614
Total deferred tax liabilities 318,991 293,614
Deferred tax assets:
Tax net operating loss
carryforwards 3,291,212 3,708,153
Business credits and other 133,188 153,876
Tax basis of property and
equipment greater than book 800,459 800,459
Total deferred tax assets 4,224,859 4,662,488
Valuation allowance for deferred
tax assets (3,905,868) (4,368,874)
Net deferred tax assets 318,991 293,614
Net deferred tax
assets/liabilities $ - $ -
</TABLE>
The Company has operating loss carryforwards for income tax purposes of
approximately $8,895,000, which expire in varying amounts from 2002 to 2010. In
addition, the Company has general business credit carryovers for income tax
purposes of approximately $131,000, which expire in varying amounts from 1997 to
2004.
The Company is included, for federal income tax purposes, in the consolidated
income tax return filed by ERTL. General business credit carryovers of
approximately $87,000 are a result of the pre-acquisition operations of Paraho
Development Corporation and may only be applied against future taxable income of
the Company.
<PAGE>
The New Paraho Corporation
Notes to Consolidated Financial Statements (continued)
8. Financial Instruments
The following table lists the financial instruments held by the Company at June
30, 1996 for which the carrying and fair values differ.
<TABLE>
Carrying
Amount of Fair Value of
Asset (Liability) Asset (Liability)
<S> <C> <C>
Note receivable $3,468,510 $3,077,743
Note payable (5,497,119) (5,078,170)
</TABLE>
The fair values of these instruments were estimated by discounting their
respective cash flows using the prime (8.25%) and Treasury bond rates (7.88%) at
June 30, 1996 for the note payable and note receivable, respectively, which are
assumed to approximate market rates.
9. Related Party Transactions
In June 1987, the Company obtained a $2,500,000 unsecured line of credit from
the Tell Ertl Family Trust, which holds 47% of the outstanding common stock of
ERTL. This line was increased to $5,500,000 in May 1994 and amended in June 1996
to reflect a maturity date of July 1, 1997. The note provides that the Trust
reserves the right to approve activities and budgets of the Company during the
term of the promissory note. Effective July 1, 1995, the Company was relieved
and discharged of all obligations to pay accrued interest on the line. In
addition the line shall no longer accrue interest as of July 1, 1995. The
forgiveness of debt is shown as an extraordinary gain on the statement of
operations.
For the year ended June 30, 1995, the Company paid professional fees totaling
$36,000 to an affiliate of a director.
<PAGE>
The New Paraho Corporation
Notes to Consolidated Financial Statements (continued)
10. Operating Lease
The lease for land upon which the pilot plant is located was renegotiated and
extended to October 1, 2002. Future minimum lease payments for this land are as
follows:
<TABLE>
<S> <C>
1997 $6,000
1998 6,000
1999 6,000
2000 6,000
2001 6,000
Thereafter 7,500
$ 37,500
</TABLE>
The lease provides for fixed payments of $28,296 per year prorated on a daily
basis for periods when the pilot plant is in operation. The pilot plant
commenced operations on November 10, 1992. Total lease payments relating to
this lease were $6,000, $6,000 and $26,521 for 1996, 1995 and 1994,
respectively. The Company has the option to extend the lease upon expiration.
Upon expiration of the lease the Company is required to reclaim the land to the
condition before use by the Company. The cost of reclamation was determined by
the county in which the land is located and the Company has provided for this
amount with certificates of deposit as described in Note 5.
11. Stock Option
On January 1, 1991, the Company granted an officer of the Company an option to
purchase up to 1,150,000 shares of Common Stock for $.05 per share. Of the
1,150,000 shares included in the grant, 150,000 shares became exercisable on
July 1, 1991. The remaining 1,000,000 shares are exercisable in increments of
250,000 shares to 500,000 shares upon the occurrence of specified events. The
option expires ten years from the date of grant. Effective December 21, 1995,
the officer assigned all right, title, and interest in the stock option
agreement dated January 1, 1991 to ERTL, Inc.
<PAGE>
The New Paraho Corporation
Notes to Consolidated Financial Statements (continued)
12. Significant Customers
One customer accounted for approximately 37% of net revenues for the year ended
June 30, 1996. Two customers accounted for approximately 56% of net revenues
for the year ended June 30, 1995, and one customer accounted for approximately
15% of net revenues for the year ended June 30, 1994.
13. Subsequent Event (Unaudited)
Management continues to evaluate the ability of the Company to meet its
obligations existing at June 30, 1996. Management is considering a plan by
which the Company would assign its interest in the Tosco note receivable (see
Note 4) and possibly other assets to the Tell Ertl Family Trust in satisfaction
of the note payable (see Note 9).
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
<PAGE>
PART III
ITEMS 10 THROUGH 13
Items 10 through 13 are incorporated by reference
from the sections entitled "Election of Directors and
Officers", "Amount and Nature of Beneficial Ownership", and
"Remuneration and Other Transactions with Management and
Others" in the Registrant's definitive proxy statement for its
annual meeting to be held in December, 1996 which proxy
statement shall be filed no later than 120 days after the end
of the Company's most recent fiscal year.
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
The Index to Financial Statements is at Page 23. No
financial statements or financial statement schedules are
incorporated by reference. All schedules are omitted since
the required information is not present or is not present in
amounts sufficient to require submission of the schedules, or
because the information required is included in the
consolidated financial statements and notes thereto.
There were no reports on Form 8-K during the last quarter
of the period covered by this Annual Report.
Exhibit Index
Exhibit No. Description
(3) Articles of Incorporation and By-Laws.
Reference is made to Exhibits 4 and 5 to
Registrant's Form 8-K filed on July 23, 1986
(file number 0-8536) that is incorporated
herein by reference.
(10) (k) Promissory Note from The Oil Shale Corporation
in the principal sum of $11,561,699.50, dated
December 17, 1987. Reference is made of
Exhibit 10(k) to Registrant's Annual Report on
Form 10-K for the Fiscal Year Ended June 30,
1988 that is incorporated herein by reference.
(10) (l) Promissory Note to the Tell Ertl Family Trust
in the principal sum of $3,000,000 dated
August 29, 1989. Reference is made of Exhibit
10(l) to Registrant's Annual Report on Form
10-K for the Fiscal Year ended June 30, 1989
that is incorporated herein by reference.
(10)(l)(i) Amendment to the Promissory Note to the Tell
Ertl Family Trust, dated September 19, 1990.
Reference is made of Exhibit 10(l)(i) to
Registrant's Annual Report on Form 10-K for
the Fiscal Year Ended June 30, 1991 that is
incorporated herein by reference.
(10)(l)(ii) Amendment to the Promissory Note to the Tell
Ertl Family Trust, dated August 26, 1992.
Reference is made of Exhibit (10)(l)(ii) to
Registrant's Annual Report on Form 10-K for
the Fiscal Year ended June 30, 1992, that is
incorporated herein by reference.
(10)(l)(iii) Amendment to the Promissory Note to the Tell
Ertl Family Trust, dated August 20, 1993.
Reference is made of Exhibit (10)(l)(iii) to
Registrant's Annual Report on Form 10-K for
the Fiscal Year ended June 30, 1993, that is
incorporated herein by reference.
(10)(l)(iv) Amendment to the Promissory Note to the Tell
Ertl Family Trust, dated May 1, 1994.
Reference is made of Exhibit (10)(l)(iv) to
Registrant's Annual Report on Form 10-K for
the Fiscal Year ended June 30, 1994, that is
incorporated herein by reference.
(10)(l)(v) Amendment to the Promissory Note to Tell Ertl
Family Trust, dated June 1, 1995. Reference
is made of Exhibit (10)(l)(v) to Registrant's
Annual Report on Form 10-K for the Fiscal Year
ended June 30, 1995, that is incorporated
herein by reference.
(10)(l)(vi) Amendment to the Promissory Note to Tell Ertl
Family Trust, dated July 1, 1995.
(10)(l)(vii) Amendment to the Promissory Note to Tell Ertl
Family Trust, dated June 1, 1996.
The Company will furnish to shareholders a copy of any exhibit
upon request and the payment of five cents per page for
copying costs.<PAGE>
Pursuant to the requirements of Section 13 or 15(d) 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.
THE NEW PARAHO CORPORATION
(Registrant)
By: /s/Joseph L. Fox
Joseph L. Fox
President
Date: 9/30/96
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
/s/Joseph L. Fox Principal Executive 9/30/96
Joseph L. Fox Officer and Director
/s/Theo Ertl Chairman of the 9/30/96
Theo Ertl Board of Directors
/s/Jann Ertl Director 9/30/96
Jann Ertl
/s/Jill Ertl Director 9/30/96
Jill Ertl
/s/Buff Ertl Palm Director 9/30/96
Buff Ertl Palm
/s/Twig Ertl Director 9/30/96
Twig Ertl
/s/Larry A. Lukens Director 9/30/96
Larry A. Lukens
/s/William Murray, Jr. Director 9/30/96
William Murray, Jr.
/s/Adam A. Reeves Director 9/30/96
Adam A. Reeves
/s/Peter L. Richard Director 9/30/96
Peter L. Richard
/s/Anne M. Smith Controller 9/30/96
Anne M. Smith
<PAGE>
Exhibit No.
(10) (l) (vi)
AMENDMENT TO PROMISSORY NOTE
July 1, 1995
This is an agreement to the Promissory Note, dated August 29, 1989,
between The New Paraho Corporation as Borrower and the Tell Ertl
Family Trust as Lender, in the original principal amount of
$3,000,000 and increased by the amendments to a principal amount of
$5,500,000 (the "Note"). The undersigned agree that the Note shall
be modified as follows, effective July 1, 1995:
1. Effective the date set forth above, Borrower shall be relieved
and discharged of all obligations to pay accrued interest on
the Note.
2. Effective the date set forth above, the Note shall no longer
accrue any interest, and the Borrower shall have no obligation
to pay any interest on the Note after such date.
Executed to be effective as of the date set forth above.
THE TELL ERTL FAMILY TRUST
By: /s/Theo Ertl
Theo Ertl, Co-Trustee
THE NEW PARAHO CORPORATION
By: /s/Joseph L. Fox
Joseph L. Fox, President
<PAGE>
Exhibit No.
(10) (l) (vii)
June 1, 1996
WE, THE UNDERSIGNED, agree that the Promissory Note, between
The New Paraho Corporation and the Tell Ertl Family Trust dated
August 29, 1989, and attached hereto, has been amended to state a
due date of July 1, 1997.
TELL ERTL FAMILY TRUST THE NEW PARAHO CORPORATION
By: /s/Theo Ertl By: /s/Joseph L. Fox
Theo Ertl Joseph L. Fox
Co-Trustee President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 491,164
<SECURITIES> 0
<RECEIVABLES> 428,088
<ALLOWANCES> 0
<INVENTORY> 67,105
<CURRENT-ASSETS> 1,000,770
<PP&E> 315,520
<DEPRECIATION> (227,590)
<TOTAL-ASSETS> 4,274,440
<CURRENT-LIABILITIES> 31,003
<BONDS> 5,497,119
0
0
<COMMON> 139,192
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,274,440
<SALES> 137,452
<TOTAL-REVENUES> 370,362
<CGS> 373,387
<TOTAL-COSTS> 373,387
<OTHER-EXPENSES> 170,666
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4
<INCOME-PRETAX> (173,691)
<INCOME-TAX> 0
<INCOME-CONTINUING> (173,691)
<DISCONTINUED> 0
<EXTRAORDINARY> 1,294,959
<CHANGES> 0
<NET-INCOME> 1,121,268
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
