1
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 March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the transition period from to.
Commission File No. 0-6119
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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 April 30,
1998 was 19,061,248.
TRI-VALLEY CORPORATION
INDEX
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Page
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PART I - FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements
Consolidated Balance Sheets March 31, 1998 and
December 31, 1997. . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the three
months ended March 31, 1998 and 1997 . . . . . . . . . 5
Consolidated Statements of Cash Flows for the three
months ended March 31, 1998 and 1997 . . . . . . . . . 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
3
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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TRI-VALLEY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
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March 31, 1998 Dec. 31, 1997
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Current Assets
Cash. . . . . . . . . . . . . . . $ 2,066,727 $ 2,778,592
Accounts receivable, trade. . . . 437,655 696,758
Note Receivable . . . . . . . . . 125,000 125,000
Prepaid expenses. . . . . . . . . 2,029 2,029
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Total Current Assets. . . . . . 2,631,411 3,602,379
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Property and Equipment, Net . . . . 837,148 821,614
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Other Assets
Deposits. . . . . . . . . . . . . 100,000 100,000
Acquisition Costs . . . . . . . . 169,085 119,007
Investments in partnerships . . . 8,421 8,421
Other . . . . . . . . . . . . . . 13,908 13,908
Well Database (net of accumulated
amortization of $1,924 at
March 31, 1998 and $1,539
at December 31, 1997. . . . . . 92,726 93,111
Goodwill (net of accumulated
amortization of $180,767 at
March 31, 1998 and $178,055
at December 31, 1997. . . . . . 253,086 255,798
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Total Other Assets. . . . . . 637,226 590,245
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Total Assets. . . . . . . . . $ 4,105,785 $ 5,014,238
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The accompanying notes are an integral part of these
condensed financial statements.
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LIABILITIES AND SHAREHOLDERS' EQUITY
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March 31, 1998 Dec. 31, 1997
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CURRENT LIABILITIES
Notes and contracts payable. . . . . $ 63,079 $ 90,667
Trade accounts payable . . . . . . . 127,362 74,796
Amounts payable to joint venture
participants . . . . . . . . . . . 368,058 605,431
Advances from joint venture
participants . . . . . . . . . . . 1,435,609 1,845,064
Due to related parties . . . . . . . 81,028 96,532
Accrued expenses and
other liabilities . . . . . . . . . 0 0
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Total Current Liabilities. . . . . 2,075,136 2,712,490
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Long-term Portion of Notes and
Contracts Payable. . . . . . . . . . 13,950 13,950
Investor Payable . . . . . . . . . . - 103,000
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Commitments
Shareholders' Equity
Common stock, $.001 par value:
50,000,000 shares authorized;
19,060,248 and 18,922,248 issued
and outstanding at March 31, 1998
and Dec. 31, 1997, respectively. . 19,055 18,922
Less: Common stock in treasury,
at cost, 156,925 shares . . . . . . (28,639) (28,639)
Capital in excess of par value . . . 8,161,438 8,048,331
Accumulated deficit. . . . . . . . . (6,135,155) (5,853,816)
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Total Shareholders' Equity . . . . 2,016,699 2,184,798
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Total Liabilities and
Shareholders' Equity . . . . . . $ 4,105,785 $ 5,014,238
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TRI-VALLEY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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For the Three Months
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Ended March 31,
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1998 1997
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Revenues
Sale of oil and gas . . . . . . $ 219,483 $ 155,932
Other income. . . . . . . . . . 38,466 11,085
Interest income . . . . . . . . 24,912 8,542
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Total Revenues. . . . . . . . 282,861 175,559
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Cost and Expenses
Oil and gas lease expense . . . 43,630 49,481
Mining exploration expense. . . 111,633 -0-
Depletion, depreciation and
amortization. . . . . . . . . 38,291 17,580
Interest. . . . . . . . . . . . 2,027 28,789
General and administrative. . . 361,116 345,303
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Total Cost and Expenses . . . 556,697 441,153
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Net Loss. . . . . . . . . . . . . $ (273,836) $ (265,594)
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Net Loss per Common Share . . . . $ (.01) $ (.01)
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Weighted Average Number of Shares 19,060,248 14,257,861
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TRI-VALLEY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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For the Three Months
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Ended March 31,
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1998 1997
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Cash Flows from Operating Activities
Net loss. . . . . . . . . . . . . . . . . . . $ (273,836) $ (265,594)
Adjustments to reconcile net income
to net cash used from operating activities:
Depreciation, depletion and amortization. 38,291 17,580
Changes in operating capital:
Amounts receivable. . . . . . . . . . . . 251,604 (196,401)
Deposits. . . . . . . . . . . . . . . . . 0 -
Trade accounts payable. . . . . . . . . . 52,566 86,249
Amounts payable to joint venture
participants and related parties. . . . (252,877) 707,534
Advances from joint venture
participants. . . . . . . . . . . . . . (409,455) 305,605
Accrued expenses and other liabilities. . 0 0
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Net Cash Used by Operating Activities . . . . . (593,707) 654,973
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Cash Flows from Investing Activities
Capital expenditures. . . . . . . . . . . . . (100,810) (122,684)
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Cash Flows from Financing Activities
Investor payable. . . . . . . . . . . . . . . (103,000) (662,680)
Principal payments on long-term debt. . . . . (27,588) (827)
Proceeds from issuance of common stock. . . . 113,240 2,307,575
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Net Cash Provided by Financing Activities (17,348) 1,644,068
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Net Increase in Cash and Cash Equivalents . . . (711,865) 2,176,357
Cash and Cash Equivalents at Beginning
Of Period . . . . . . . . . . . . . . . . . . 2,778,592 894,365
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Cash and Cash Equivalents at
End of Period . . . . . . . . . . . . . . . . $2,066,727 $3,070,722
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8
TRI-VALLEY CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1997
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
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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 March 31, 1998, 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 December 31, 1997.
NOTE 2 - PER SHARE COMPUTATIONS
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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.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS
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BUSINESS REVIEW
Notice Regarding Forward-Looking Statements
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This report contains forward-looking statements. The words, "anticipate,"
"believe," "expect," "plan," "intend," "estimate," "project," "could," "may,"
"foresee," and similar expressions are intended to identify forward-looking
statements. These statements include information regarding expected
development of the Company's business, lending activities, relationship with
customers, and development in the oil and gas industry. Should one or more of
these risks or uncertainties occur, or should underlying assumptions prove
incorrect, actual results may vary materially and adversely from those
anticipated, believed, estimated or otherwise indicated.
Petroleum Activities
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In 1997 the Company drilled and completed the Pimentel 1-15 in the city of
Tracy, CA. Due to delays in the acquisition of a section of pipeline and
permitting, the pipeline has not been constructed. However, the Company
expects to begin construction of the pipeline in the near term, weather
permitting. Bids for the construction have been solicited and received back
by the Company. The Company expects to have the Pimentel 1-15 connected and
to begin production within the next few months.
In 1998 the Company drilled the Holly Sugar No. 1. The data from the well was
exactly what the Company had anticipated. However, the sands appear to be not
of reservoir quality. Therefore the company is still evaluating the results
of this well.
The Company began drilling a well in the Santa Maria area of the central coast
of California. This well marks the entrance for the Company back into the oil
exploration and production side of the Industry. The company has not been
exploring for oil in a number of years.
Precious Metals Activities
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Discussions are continuing between the Company and several major mining
companies and also with some junior mining companies. These discussions are
related to a proposed joint venture of the gold mining claims the Company has
on approximately 44 square miles not far from Fairbanks, Alaska. The Company
hired an independent mining geologist to analyze the claim block. The results
are extremely encouraging to the Company as to the potential of this claim.
Therefore this summer season, the Company is proceeding with its own
exploration and development of a portion of this claim by processing a large
portion of the 100,000 ton pre-crushed ore body that was previously extracted
in years past. The company has contracts in place with sub-contractors to
perform these activities.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS (Continued)
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BUSINESS REVIEW (continued)
Telecommunications
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For over a year the Company has been trying to complete its due diligence to
enable it to acquire the assets of five telecommunication partnerships. The
Company is expecting to make a final decision within the next few months
whether it will go forward with this acquisition or to terminate it.
Three Months Ended March 31, 1998 as compared with Three Months ended March
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31, 1997
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Revenues increased $107,302 this quarter over the same period in 1997 due to
additional production from two wells that were drilled in mid 1997. Total
revenue was $282,861 for the quarter ended March 31, 1998 compared to $175,559
for the period ending March 31, 1997.
Costs and expenses were higher this quarter due to the expenses incurred
related to our mining activity. The expenses related to the mining operations
are being expensed. In prior years these costs were capitalized. The company
is preparing for additional exploration work on its gold mining claim and
believes the revenue generated will more than offset any expenditures.
PART II - OTHER INFORMATION
12
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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K: none were filed for the period.
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)
May 22, 1998 /s/ F. Lynn Blystone
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F. Lynn Blystone
President and Chief Executive Officer
