2
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 June 30, 1999
[ ] 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)
(661) 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 June 30, 1999
was 19,088,248.
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 June 30 1999 and
December 31, 1998 3
Consolidated Statements of Operations for the six
months ended June 30, 1999 and 1998 5
Consolidated Statements of Cash Flows for the six
months ended June 30, 1999 and 1998 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
5
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PART I - FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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TRI-VALLEY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
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June 30, 1999 Dec. 31, 1998
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Current Assets
Cash $ 163,436 $ 191,226
Accounts receivable, trade 202,209 307,573
A/R Related Parties 3,750 -
Prepaid expenses 2,029 2,029
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Total Current Assets 371,424 625,828
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Property and Equipment, Net 1,066,223 1,038,237
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Other Assets
Deposits 100,000 100,000
Note Receivable 125,000 125,000
Acquisition Costs 192,279 183,342
Investments in partnerships 10,686 10,686
Other 13,913 13,913
Well Database (net of accumulated
amortization of $32,320 at
June 30, 1999 and $31,550
at December 31, 1998 60,791 61,561
Goodwill (net of accumulated
amortization of $194,324 at
June 30, 1999 and $188,901
at December 31, 1998 239,529 244,952
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Total Other Assets 742,198 614,454
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Total Assets $ 2,179,845 $ 2,278,519
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LIABILITIES AND SHAREHOLDERS' EQUITY
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June 30, 1999 Dec. 31, 1998
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CURRENT LIABILITIES
Notes and contracts payable $ 8,335 $ 9,641
Trade accounts payable 459,882 582,533
Amounts payable to joint venture
participants 159,215 244,664
Advances from joint venture
participants 615,789 135,032
Due to related parties - 5,712
Accrued expenses and
other liabilities - -
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Total Current Liabilities 1,243,221 977,582
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Long-term Portion of Notes and
Contracts Payable 7,303 8,527
Investor Payable - -
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Commitments
Shareholders' Equity
Common stock, $.001 par value:
50,000,000 shares authorized;
19,088,248 and 19,088,248 issued
and outstanding at June 30, 1999
and Dec. 31, 1998, respectively 19,088 19,088
Less: Common stock in treasury,
at cost, 173,825 shares (44,369) (41,061)
Capital in excess of par value 8,177,655 8,177,655
Accumulated deficit (7,223,053) (6,863,272)
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Total Shareholders' Equity 929,321 1,292,410
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Total Liabilities and
Shareholders' Equity $ 2,179,845 $ 2,278,519
=============== ===============
The accompanying notes are an integral part of these
condensed financial statements.
7
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TRI-VALLEY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Six Months
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Ended June 30,
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1999 1998
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Cash Flows from Operating Activities
Net loss $(359,783) $ (575,893)
Adjustments to reconcile net income
to net cash used from operating activities:
Depreciation, depletion and amortization 77,701 76,583
Changes in operating capital:
Amounts receivable 101,614 316,315
Deposits - -
Trade accounts payable (122,651) 121,419
Amounts payable to joint venture
participants and related parties (85,449) (325,069)
Advances from joint venture
participants 480,757 (1,167,856)
Accrued expenses and other liabilities - -
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Net Cash Used by Operating Activities (92,189) (1,707,667)
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Cash Flows from Investing Activities
Capital expenditures (116,671) (68,591)
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Cash Flows from Financing Activities
Investor payable - (103,000)
Principal payments on long-term debt - (55,790)
Proceeds from issuance of common stock (3,308) 107,243
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Net Cash Provided by Financing Activities (3,308) (51,547)
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Net Increase in Cash and Cash Equivalents (27,790) (1,824,805)
Cash and Cash Equivalents at Beginning
Of Period 191,226 2,778,592
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Cash and Cash Equivalents at
End of Period $ 163,436 $ 950,787
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10
TRI-VALLEY CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
JUNE 30, 1999 AND 1998
(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
six months period ended June 30, 1999, 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, 1998.
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.
Computer Issues for the Year 2000
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The Company is aware of the issues associated with the programming code in
existing systems as the millennium (Year 2000) approaches. The Company has
examined the computer software and is confident it will accommodate the Year
2000 issue. Additionally, the company is contacting its appropriate vendors to
determine if they are equipped to handle the Year 2000 issue. The company has
received responses from all of its vendors affirming that they are compliant
with the Y2K issue. The funds spent to make this determination were less than
fifty dollars.
Petroleum Activities
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Tri-Valley Oil & Gas (TVOG) received a letter of intent from Halliburton Energy
Services proposing an alliance on Project Ekho our deep exploration play in the
South San Joaquin Valley of California. Halliburton is the world's largest
oilfield service firm. The alliance allows TVOG to receive technical service
and support on a preferred basis.
TVOG has entered into letters of intent with a consortium of Canadian companies
to participate in our Project Ekho. Pursuant to the terms of the Joint
Operating Agreement and the Participation Agreement, the Canadians and other
partners will drill up to three wells free of cost to the Company to test
formations below 15,000 feet. Canaccord Capital Corporation, one of Canada's
largest brokerage houses, assembled this consortium for TVOG. The Company is
planning to commence operations on the first well before the end of the third
quarter of this year.
Precious Metals Activities
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In March we entered into an agreement with Placer Dome U.S., Inc. (PDUS) to
explore, develop and mine 36 square miles of our 50.5 square mile claim block at
Richardson, Alaska. In late May PDUS sent 7 geologists and technicians to the
site, they will work the area this summer season as long as the weather allows.
We believe that their work this summer will encourage them to continue their
agreement with us even though the gold mining industry is going through the
lowest gold price in over 20 years.
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)
Additionally, three geoscientists from TsNIGRI, which is based in Moscow,
Russia, arrived in early June to continue exploring the 14.5 square mile claim
block that we retained for our own account. This is the fifth time we have
invited the TsNIGRI team to our claim block. Each time their exploration
efforts have contributed results and advanced the status of the property by
better defining the claim block.
Telecommunications
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The Company has decided not to go forward with the effort to acquire the
telecommunication general partnerships. We are using every effort to recoup the
$125,000 plus interest from one of the partnerships we loaned money to. The
Company believes there is sufficient asset collateral to allow us to recover
these amounts. We expect to have a conclusion to this no later than end of the
fourth quarter.
Three Months Ended June 30, 1999 as compared with Three Months ended June 30,
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1998
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For the quarter ended June 30, 1999 revenue was $115,214 less than for the same
quarter in 1998. Gas revenue was $81,499 less due to declining production.
Interest income was $21,780 less this period compared to the same period last
year.
Costs and expenses were reduced $257,664 this quarter due to decreased General
and Administrative expenses primarily due to reduced legal expenses, which were
related to the lawsuit. See: Item 1. Legal Proceedings
The net loss for this quarter was $159,607 compared to a net loss of $302,057
for the same quarter in 1998.
PART II - OTHER INFORMATION
13
ITEM 1. LEGAL PROCEEDINGS
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Tri-Valley Oil and Gas Co. v. ABA Energy Corporation et al, No. C97-02561
(Superior Court of Contra Costa County, California). In July of 1998 the
Company filed a lawsuit against a consulting geologist and a former officer of
Tri-Valley Oil & Gas Company for fraud and theft of trade secrets. The case was
tried before a judge in early 1999. In June 1999, the Company was informed that
the judge had issued a judgement denying the Company's complaint.
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)
July 30, 1999 /s/ F. Lynn Blystone
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F. Lynn Blystone
President and Chief Executive Officer
