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 March 31, 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
--------------------------
Tri-Valley Corporation
----------------------
(Exact name of registrant as specified in its charter)
Delaware No. 84-0617433
- ----------------- ---------------
(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 April 30, 1999
was 19,088,248.
TRI-VALLEY CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements
Consolidated Balance Sheets March 31, 1999 and
December 31, 1998 3
Consolidated Statements of Operations for the three
months ended March 31, 1999 and 1998 5
Consolidated Statements of Cash Flows for the three
months ended March 31, 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
</TABLE>
PART I - FINANCIAL INFORMATION
3
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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TRI-VALLEY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
March 31, 1999 Dec. 31, 1998
--------------- --------------
<S> <C> <C>
Current Assets
Cash $ 399,862 $ 191,226
Accounts receivable, trade 240,652 307,573
Note Receivable - 125,000
A/R Related Parties 3,750
Prepaid expenses 2,029 2,029
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Total Current Assets 586,293 625,828
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Property and Equipment, Net 1,040,042 1,038,237
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Other Assets
Deposits 100,000 100,000
Note Receivable 125,000
Acquisition Costs 184,534 183,342
Investments in partnerships 10,686 10,686
Other 13,913 13,913
Well Database (net of accumulated
amortization of $31,935 at
March 31, 1999 and $31,550
at December 31, 1998 61,176 61,561
Goodwill (net of accumulated
amortization of $191,613 at
March 31, 1999 and $188,901
at December 31, 1998 242,240 244,952
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Total Other Assets 737,549 614,454
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Total Assets $ 2,423,884 $ 2,278,519
=============== ==============
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
6
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, 1999 Dec. 31, 1998
---------------- ---------------
<S> <C> <C>
CURRENT LIABILITIES
Notes and contracts payable $ 9,641 $ 9,641
Trade accounts payable 574,121 582,533
Amounts payable to joint venture
participants 188,680 244,664
Advances from joint venture
participants 554,719 135,032
Due to related parties 0 5,712
Accrued expenses and
other liabilities 0 0
---------------- ---------------
Total Current Liabilities 1,327,161 977,582
---------------- ---------------
Long-term Portion of Notes and
Contracts Payable 7,303 8,527
Investor Payable - -
---------------- ---------------
Commitments
Shareholders' Equity
Common stock, $.001 par value:
50,000,000 shares authorized;
19,088,248 and 19,088,248 issued
and outstanding at March 31, 1999
and Dec. 31, 1998, respectively 19,088 19,088
Less: Common stock in treasury,
at cost, 178,425 shares (43,878) (41,061)
Capital in excess of par value 8,177,655 8,177,655
Accumulated deficit (7,063,445) (6,863,272)
---------------- ---------------
Total Shareholders' Equity 1,089,420 1,292,410
---------------- ---------------
Total Liabilities and
Shareholders' Equity $ 2,423,884 $ 2,278,519
================ ===============
</TABLE>
TRI-VALLEY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
-----------------------
Ended March 31,
-----------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues
Sale of oil and gas $ 152,136 $ 219,483
Other income 84,758 38,466
Interest income 2,747 24,912
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Total Revenues 239,641 282,861
------------ ------------
Cost and Expenses
Oil and gas lease expense 30,362 43,630
Mining exploration expense 57,812 111,633
Depletion, depreciation and
amortization 38,851 38,291
Interest 790 2,027
General and administrative 312,002 361,116
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Total Cost and Expenses 439,817 556,697
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Net Loss $ (200,176) $ (273,836)
============ ============
Net Loss per Common Share $ (.01) $ (.01)
============ ============
Weighted Average Number of Shares 19,088,248 19,060,248
============ ============
</TABLE>
TRI-VALLEY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
-----------------------
Ended March 31,
-----------------
1999 1998
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities
Net loss $ (200,176) $ (273,836)
Adjustments to reconcile net income
to net cash used from operating activities:
Depreciation, depletion and amortization 38,851 38,291
Changes in operating capital:
Amounts receivable 63,171 251,604
Deposits 0 -
Trade accounts payable (8,412) 52,566
Amounts payable to joint venture
participants and related parties (55,984) (252,877)
Advances from joint venture
participants 419,687 (409,455)
Accrued expenses and other liabilities 0 0
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Net Cash Used by Operating Activities 257,137 (593,707)
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Cash Flows from Investing Activities
Capital expenditures (45,684) (100,810)
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Cash Flows from Financing Activities
Investor payable 0 (103,000)
Principal payments on long-term debt 0 (27,588)
Proceeds from issuance of common stock (2,817) 113,240
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Net Cash Provided by Financing Activities (2,817) (17,348)
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Net Increase in Cash and Cash Equivalents 208,636 (711,865)
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 $ 399,862 $2,066,727
=========== ===========
</TABLE>
9
TRI-VALLEY CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 1999 AND 1998
(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 March 31, 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
------------------------
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
- ----------------------------------------------
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
- --------------------------------------
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 funds spent
to make this determination are less than fifty dollars.
Petroleum Activities
- ---------------------
One of the wells the Company participates in was shut in for a period of time
this quarter as the Company was performing a rework of this well. It was
returned to production in March.
The Company is continuing to pursue one of the largest onshore oil and gas
targets in the United States. Capital formation is continuing at an escalated
rate. Tri-Valley Oil & Gas Company has taken leases in 26 sections along trend.
Precious Metals
- ----------------
On March 22, 1999, Tri-Valley and Placer Dome U.S., Inc., executed a definitive
agreement for PDUS to explore, develop and mine approximately 36 square miles of
Tri-Valley's 50.5-square mile claim block at Richardson, Alaska.
Terms of the agreement called for PDUS to expend a minimum of US$6.5 million in
work on the property and partially reimburse Tri-Valley for some of is previous
exploration, all within five years, in order for PDUS to earn 51% interest in
the property. PDUS may earn an additional 29% interest by completing a bankable
feasibility study on no less than 750,000 ounces of gold and enacting a positive
production decision on same. Tri-Valley estimates such a study could cost in
excess of US$10 million.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS
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Tri-Valley believes the PDUS exploration acreage hosts a massive gold-bearing
zone system related to the pluton underlying Buck Mountain and the Buckeye Creek
on the flank where samples grading high values of gold (1.5 opt), tellurium,
bismuth and tungsten with weaker arsenic values were found.
Tri-Valley retained approximately 14.5 square miles for its own account,
including a potentially high grade dike system and high grade creek as well as
placer rights over the entire 51.5 square miles of claims and prospecting sites.
Tri-Valley will continue exploring this area in the 1999 field season with a
team of geoscientific specialists from TsNIGRI, the principal Russian mineral
research institute based in Moscow. It is the TsNIGRI specialists who
discovered the samples that brought Placer Dome to the table on the other block
of Tri-Valley claims.
Telecommunications
- ------------------
The Company has been doing due diligence on five telecommunication partnerships
in an effort to acquire them. In May of 1997 the Company loaned one partnership
$125,000 dollars on a 6 month note which was subsequently extended for an
additional period of time. This note is now in default and the Company is
pursuing all avenues to recover these funds. The Company believes there is
sufficient asset collateral to allow us to recover these amounts.
Three Months Ended March 31, 1999 as compared with Three Months ended March 31,
- --------------------------------------------------------------------------------
1998
- ----
Revenues decreased $43,220 this quarter over the same period in 1998 due to one
well being worked on for part of this period. Total revenue was $239,641 for
the quarter ended March 31, 1999 compared to $282,861 for the period ending
March 31, 1998.
Costs and expenses were lower this quarter by $116,880. This was due to mining
expenditures being reduced $53,821, and General and Administrative costs reduced
by $49,114. The reduction in the mining expenses was the result of decreased
activity this quarter compared to the same quarter in 1998. General and
administrative costs were lower because of lower legal expenses related to our
lawsuit.-See Lawsuit.
PART II - OTHER INFORMATION
12
ITEM 1. LEGAL PROCEEDINGS
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The Company is engaged in an on-going lawsuit in the Contra Costa County
Superior Court. Company, as plaintiff, is seeking to recover damages incurred
from a breech of contract and fiduciary responsibilities by a former officer of
the company and a consulting geologist. The evidentiary portion is concluded
and the Company is awaiting the ruling from the judge.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
-------------------------------------
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K:
On March 23, 1999, the Company filed an 8-K announcing the execution
of a definitive agreement with Placer Dome U.S., Inc.
On April 21, 1999, the Company filed an 8-K announcing the closing of
its office in Carpinteria, California.
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 13, 1999 /s/ F. Lynn Blystone
------------------------
F. Lynn Blystone
President and Chief Executive Officer
May 13, 1999 /s/ Thomas J. Cunningham
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Thomas J. Cunningham
Secretary, Treasurer, Chief Financial Officer
