UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the transition period from to.
Commission File No. 1-6336
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Tri-Valley Corporation
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(Exact name of registrant as specified in its charter)
Delaware No. 84-0617433
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
230 South Montclair Street, Suite 101, Bakersfield, California 93309
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(Address of principal executive offices)
(805) 837-9300
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[X] [ ]
No Yes
The number of shares of Registrant's common stock outstanding at December 26,
1996 was 14,102,043.
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TRI-VALLEY CORPORATION
INDEX
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<CAPTION>
Page
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PART I - FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements
Consolidated Balance Sheets October 31, 1996 and
July 31, 1996. . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the three
months ended October 31, 1996 and 1995 5
Consolidated Statements of Cash Flows for the three
months ended October 31, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II - OTHER INFORMATION 11
SIGNATURES 12
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PART I - FINANCIAL INFORMATION
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ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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TRI-VALLEY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
. . . . . . . . . . . . . . . . October 31, 1996. July 31, 1996
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<S> <C> <C>
Current Assets
Cash $ 653,504 $ 258,924
Accounts receivable, trade 293,224 277,586
Prepaid expenses 2,029 2,029
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Total Current Assets 948,757 538,539
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Property and Equipment, Net 3,214,359 3,085,825
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Other Assets
Deposits 121,000 61,000
Investments in partnerships (7,152) (7,152)
Goodwill (net of accumulated
amortization of $165,402 at
October 31, 1996 and $162690
at July 31, 1996 268,451 271,163
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Total Other Assets 382,299 325,011
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Total Assets $ 4,545,415 $ 3,949,375
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The accompanying notes are an integral part of these
condensed financial statements.
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
October 31, 1996 July 31, 1996
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<S> <C> <C>
CURRENT LIABILITIES
Notes and contracts payable $ 50,503 $ 77,992
Trade accounts payable 65,238 226,057
Amounts payable to joint venture
participants 483,655 505,690
Advances from joint venture
participants 636,362 483,413
Due to related parties 204,392 204,392
Accrued expenses and
other liabilities 51,158 134,908
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Total Current Liabilities 1,491,308 1,632,452
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Long-term Portion of Notes and
Contracts Payable 16,757 16,757
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Convertible Notes Payable - 900,000
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Commitments
Shareholders' Equity
Common stock, $.01 par value:
25,000,000 shares authorized;
11,257,248 and 8,027,248 issued
and outstanding at October 31, 1995
and July 31, 1995, respectively 99,072 80,272
Less: Common stock in treasury,
at cost, 156,925 shares (28,639) (28,639)
Capital in excess of par value 5,514,590 3,772,753
Accumulated deficit (2,547,673) (2,424,220)
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Total Shareholders' Equity 3,037,350 1,400,166
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Total Liabilities and
Shareholders' Equity $ 4,545,415 $ 3,949,375
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TRI-VALLEY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended October 31,
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1996 1995
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<S> <C> <C>
Revenues
Sale of oil and gas $ 179,458 $ 138,933
Other income 9,583 10,749
Interest income 1,149 3,061
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Total Revenues 190,190 152,743
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Cost and Expenses
Oil and gas lease expense 47,628 78,634
Depletion, depreciation and
amortization 13,431 10,134
Interest 30,152 -
General and administrative 222,433 82,401
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Total Cost and Expenses 313,644 171,169
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Net Loss $ (123,454) $ (18,426)
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Net Loss per Common Share $ (.01) $ -
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Weighted Average Number of Shares 11,257,248 7,071,126
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TRI-VALLEY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended October 31,
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1996 1995
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<S> <C> <C>
Cash Flows from Operating Activities
Net loss $(123,454) $ (18,426)
Adjustments to reconcile net income
to net cash used from operating activities:
Depreciation, depletion and amortization 13,431 10,134
Changes in operating capital:
Amounts receivable (15,638) (141,770)
Deposits (60,000) -
Trade accounts payable (160,819) (17,132)
Amounts payable to joint venture
participants and related parties (22,035) 143,592
Advances from joint venture
participants 152,949 (40,040)
Accrued expenses and other liabilities (83,750) (1,661)
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Net Cash Used by Operating Activities (299,316) (65,303)
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Cash Flows from Investing Activities
Capital expenditures (139,253) (51,527)
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Cash Flows from Financing Activities
Long-term debt borrowed - 138,000
Principal payments on long-term debt (27,489) -
Proceeds from issuance of common stock 980,000 -
Stock offering costs (119,362) -
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Net Cash Provided by Financing Activities 833,149 138,000
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Net Increase in Cash and Cash Equivalents 394,580 21,170
Cash and Cash Equivalents at Beginning
Of Period 258,924 228,704
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Cash and Cash Equivalents at
End of Period $ 653,504 $ 249,874
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TRI-VALLEY CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
OCTOBER 31, 1996 AND 1995
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
-----------------------
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods. The results of operations for
the three month period ended October 31, 1996, are not necessarily indicative
of the results to be expected for the full year.
The accompanying consolidated financial statements do not include footnotes
and certain financial presentations normally required under generally accepted
accounting principles; and, therefore, should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended July 31, 1996.
Certain reclassifications have been made to the 1995 financial statements to
conform to the presentation used in 1996.
NOTE 2 - PER SHARE COMPUTATIONS
------------------------
Per share computations are based upon the weighted average number of common
shares outstanding during each year. Common stock equivalents are not included
in the computations since their effect would be anti-dilutive.
NOTE 3 - SUBSEQUENT EVENTS
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During November, 1996, investors exercised 1,144,502 "A" warrants at 30 cents
per share and 1000 "A" warrants at 50 cents per share. Out of a possible
2,730,000 warrants available, 1,584,498 warrants still remain unexercised.
The money raised, $343,850, was used to pay off various accounts payable and
oil and gas drilling costs.
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS
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BUSINESS REVIEW
Natural Gas Activities
- ------------------------
Natural gas prices continued to firm which provided additional revenue to the
Company and stimulated investor support for the Company's projects and the
market price of its stock.
During the quarter, the Company was able to resume the process of hooking up
the Webb Tract No. 1 well which had been delayed for two years due to
permitting and pipeline right-of-way problems. (The well was hooked up and
began selling gas on January 2, 1997 and is presently flowing approximately 5
million cubic feet per day from two zones).
The Company has also commenced permitting for two more Webb Tract wells and a
development well on its Martins-Severin property. The Company is presently
drilling the Pimental No. 1-15 test well in the City of Tracy.
Precious Metal Activities
- ---------------------------
The Company is in discussions with a major mining company over a proposed
joint venture of its Richardson, Alaska gold project. Additional, the Company
has been approached by several smaller mining concerns and it is also
discussing continuing exploration using internally generated funds.
FINANCIAL CONDITION
The financial condition of the Company strengthened substantially in the first
quarter as the Company completed the private placement of unregistered stock
and paid off its creditors 100 cents on the dollar. Only certain term
contracts ere left to be service din accordance with their terms. Accordingly,
Tri-Valley Corporation and its subsidiary, Tri-Valley Oil & Gas Co. were
dismissed from Chapter 11 on November 1, 1996.
Further, gas prices continued to firm which increased revenue. The Company
expects its sales contracts coupled with new production coming on line to
restore its operating revenues to secure levels.
The Company is still servicing the pay off of the administrative, legal, and
accounting costs of its Chapter 11 and this offsets any net income despite
increased revenues. However, the balance sheet is greatly enhanced with
healthy cash and receivables balances. Further, the Company's stock is
enjoying substantial gains as recognition of its accomplishments, natural gas
prices and potential grow.
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS (Continued)
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FINANCIAL CONDITION (continued)
Tri-Valley expects substantially increased capital infusion to continue from
the exercise of warrants issued to the private placement investors.
RESULTS OF OPERATIONS
Three Months Ended October 31, 1996, as Compared with Three Months Ended
- ------------------------------------------------------------------------------
October 31, 1995
- ------------------
Revenues continued to increase as natural gas prices firmed so that gas sales
in the first quarter ending October 31, 1996 generated $179,458 versus
$138,933 for the same period in 1995. Overall revenue was $190,190 for the
first quarter ending October 31, 1996 versus $152,743 for the same period in
1995.
Costs and expenses were significantly greater in the first quarter ending
October 31,1996, due to substantial legal and accounting expenses of $222,433
in the general and administrative section versus $82,401 for the same period
in that category the previous year. This resulted in a net loss of $123,454
for the first quarter ending October 31,1996, versus a loss of $18,426 for the
same period the previous year.
The Company expects the legal and accounting costs to begin to reduce in
subsequent quarters while prices appear to remain firm as it aims for
profitable operations.
The balance sheet showed dramatic improvement as the Company paid off its
obligations with proceeds from private placements of its unregistered stock.
Gross assets increased $516,028 from $4,029,387 October 31,1995, to $4,545,415
October 31, 1996. Further, stockholder equity increased $1,342,150 from
$1,695,200 in the first quarter ending October 31,1996. Additional capital to
increase the net worth is forthcoming from the exercise of warrants attached
to the private placement stock./
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PART II - OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
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The Company is not a party to nor is its property the subject of any material
legal proceedings other than ordinary routine litigation incidental to its
business, or which is covered by insurance, except as previously disclosed in
the Company's Annual Report on Form 10-K for the year ended July 31, 1996.
ITEM 2. CHANGES IN SECURITIES
-----------------------
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
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None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None.
ITEM 5. OTHER INFORMATION
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None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
-------------------------------------
(a) Exhibits - None.
(b) Reports on Form 8-K: none were filed for the period.
<PAGE>
SIGNATURES
Pursuant to the requirement 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.
TRI-VALLEY CORPORATION
--------------------------------
(Registrant)
January 25, 1996 F. Lynn Blystone
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President and
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 653,504
<SECURITIES> 0
<RECEIVABLES> 293,224
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 948,757
<PP&E> 3,214,359
<DEPRECIATION> 13,431
<TOTAL-ASSETS> 4,545,415
<CURRENT-LIABILITIES> 1,491,308
<BONDS> 0
0
0
<COMMON> 99,072
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,545,415
<SALES> 179,458
<TOTAL-REVENUES> 190,190
<CGS> 47,628
<TOTAL-COSTS> 47,628
<OTHER-EXPENSES> 235,864
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,152
<INCOME-PRETAX> (123,454)
<INCOME-TAX> (123,454)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (123,454)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
