1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000 Commission File No.0-6119
TRI-VALLEY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 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
(Address of principal executive offices)
(661) 837-9300
(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. Yes [X ] No [ ]
The number of shares of Registrant's common stock outstanding at March 31, 2000
was 19,345,248.
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TRI-VALLEY CORPORATION
INDEX
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Page
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PART I - FINANCIAL INFORMATION . . . . . . . . . . . . . . . . 3
Item 1. Consolidated Financial Statements . . . . . . . . 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . 7
PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . 10
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . 10
Item 2. Changes in Securities . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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3
PART I - FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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TRI-VALLEY CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
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March 31, 2000 Dec.31,1999
(Unaudited) (Audited)
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Current Assets
Cash. . . . . . . . . . . . . . . $ 7,205,215 $ 8,050,469
Accounts receivable, trade. . . . 175,477 155,184
A/R Related Parties . . . . . . . 3,750 -0-
Prepaid expenses. . . . . . . . . 2,029 2,029
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Total Current Assets. . . . . . 7,386,471 8,207,682
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Property and Equipment, Net . . . . 1,082,801 1,059,755
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Other Assets
Deposits. . . . . . . . . . . . . 100,105 100,000
Note Receivable . . . . . . . . . 125,000 125,000
Acquisition Costs . . . . . . . . 51,002 50,000
Investments in partnerships . . . 12,006 12,006
Other . . . . . . . . . . . . . . 13,914 13,914
Well Database (net of accumulated
amortization of $38,140 at
March 31, 2000 and $37,755
at December 31, 1999. . . . . . 70,510 70,895
Goodwill (net of accumulated
amortization of $202,459 at
March 31, 2000 and $199,747
at December 31, 1999. . . . . . 231,394 234,106
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Total Other Assets. . . . . . 603,931 605,921
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Total Assets. . . . . . . . . $ 9,073,203 $ 9,873,358
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The accompanying notes are an integral part of these
condensed financial statements.
6
LIABILITIES AND SHAREHOLDERS' EQUITY
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March 31, 2000 Dec. 31, 1999
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CURRENT LIABILITIES
Notes and contracts payable. . . . . $ 10,554 $ 10,554
Trade accounts payable . . . . . . . 1,056,895 391,104
Amounts payable to joint venture
participants . . . . . . . . . . . 131,057 95,986
Advances from joint venture
participants . . . . . . . . . . . 6,278,376 7,877,600
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Total Current Liabilities. . . . . 7,476,882 8,375,244
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Long-term Portion of Notes and
Contracts Payable. . . . . . . . . . 18,893 21,055
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Commitments
Shareholders' Equity
Common stock, $.001 par value:
50,000,000 shares authorized;
19,345,248 and 19,301,248 issued
and outstanding at March 31, 2000
and Dec. 31, 1999, respectively. . 19,365 19,281
Less: Common stock in treasury,
at cost, 178,425 shares . . . . . . (45,163) (45,163)
Capital in excess of par value . . . 8,427,338 8,344,462
Accumulated deficit. . . . . . . . . (6,824,112) (6,841,521)
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Total Shareholders' Equity . . . . 1,577,428 1,477,059
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Total Liabilities and
Shareholders' Equity . . . . . . $ 9,073,203 $ 9,873,358
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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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2000 1999
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Revenues
Sale of oil and gas. . . . . . . $ 134,180 $ 152,136
Other income . . . . . . . . . . 356,545 84,758
Interest income. . . . . . . . . 15,331 2,747
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Total Revenues . . . . . . . . 506,056 239,641
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Cost and Expenses
Oil and gas lease expense. . . . 23,801 30,362
Mining exploration expense . . . 35,424 57,812
Ekho geology, geophysics,
Land & administration. . . . . 14,173 -0-
Sunrise geology, geophysics,
Land & administration. . . . . 111,470 -0-
Depletion, depreciation and
amortization . . . . . . . . . 19,861 38,851
Interest . . . . . . . . . . . . 2,669 790
General and administrative . . . 281,249 312,002
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Total Cost and Expenses. . . . 488,647 439,817
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Net (Loss)/Profit. . . . . . . . . $ 17,409 $ (200,176)
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Net (Loss)/Profit per Common Share $ .00 $ (.01)
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Weighted Average Number of Shares. 19,335,915 19,088,248
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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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2000 1999
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Cash Flows from Operating Activities
Net loss/profit . . . . . . . . . . . . . . . $ 17,409 $ (200,176)
Adjustments to reconcile net income
to net cash used from operating activities:
Depreciation, depletion and amortization. 19,861 38,851
Changes in operating capital:
Amounts receivable. . . . . . . . . . . . (24,043) 63,171
Deposits. . . . . . . . . . . . . . . . . (105) -
Trade accounts payable. . . . . . . . . . 665,791 (8,412)
Amounts payable to joint venture
participants and related parties. . . . 35,071 (55,984)
Advances from joint venture
participants. . . . . . . . . . . . . . (1,599,224) 419,687
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Net Cash Used by Operating Activities . . . . . (885,240) 257,137
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Cash Flows from Investing Activities
Capital expenditures. . . . . . . . . . . . . (40,806) (45,684)
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Cash Flows from Financing Activities
Principal payments on long-term debt. . . . (2,168) 0
Proceeds from issuance of common stock. . . . 82,960 (2,817)
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Net Cash Provided by Financing Activities 80,792 (2,817)
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Net Increase in Cash and Cash Equivalents . . . (845,254) 208,636
Cash and Cash Equivalents at Beginning
Of Period . . . . . . . . . . . . . . . . . . 8,050,469 191,226
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Cash and Cash Equivalents at
End of Period . . . . . . . . . . . . . . . . $ 7,205,215 $ 399,862
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Supplemental Information:
Cash paid for interest. . . . . . . . . . . . $ 2,669 $ 790
Cash paid for taxes . . . . . . . . . . . . . $ 5,958 $ 1,330
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8
TRI-VALLEY CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 2000 AND 1999
(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, 2000, 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, 1999.
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.
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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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We finalized funding the Project Ekho the end of the third quarter 1999 and
began the process of contracting for the drilling of this well. On February 7,
2000 we began drilling the well and reached our total depth objective of just
over 19,000 feet in 80 drilling days. We do not have the final numbers on this
yet but we are anticipating that it will be under budget by a considerable
amount. We ran various logs to gather data as to the commercial ability of the
well. Target zones of interest appear as anticipated. The Company is currently
completing the well in anticipation of putting it into production.
Additionally, we have put together another drilling project, the Sunrise
project. This has been funded and we are in the process of contracting and
permitting, to enable us to begin drilling in the second quarter of this year.
Precious Metals
- ----------------
During 1999, Placer Dome USA under its contractual obligations expended
approximately $799,689, which included their option fee for continuing for the
year 2000. For the first quarter of 2000, due to weather conditions there was
no exploration activity for the Alaska project. Placer Dome crews are scheduled
to enter the field on May 15, 2000 to begin their second season of exploration.
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9
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS
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Three Months Ended March 31, 2000 as compared with Three Months ended March 31,
- --------------------------------------------------------------------------------
1999
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The Company had revenues of $506,056 for the three months ended March 31, 2000.
This was $266,415 more than the same period in 1999. This increase was due to
the recognition of revenue generated from the sale of our Sunrise prospect. Our
Oil and Gas revenue decreased by $17,956 due to declining production. Interest
income increased due to revenue recognized from the sale of prospects. DD&A
decreased 49% due to the level of depletion of producing wells.
One of our Hanson wells was recompleted and is currently producing. It had been
shut in for a number of years. Recompletions are planned for two other Hanson
wells. The Pimental #1-15 well was also recompleted and is currently producing.
It had been shut-in for a number of months.
Costs and expenses were $488,647 for the quarter ended March 31, 2000, compared
to $439,817 for the same period in 1999. This $48,830 increase was related to
expenses for the Sunrise Prospect. These costs included lease acquisition and
geological costs.
General and Administrative costs decreased $30,753 for this quarter compared to
the same quarter in 1999. This decrease was due to reduced legal expenses.
Capital Resources and Liquidity
- ----------------------------------
At March 31, 2000, we had current assets totaling $7,386,471 and current
liabilities totaling $7,476,882. This was a decrease of current assets of
$821,211 from December 31, 1999. This decrease was from expenses incurred and
paid related to the drilling of the Ekho #1 well.
Operating Activities. For the three months ended March 31, 2000, cash provided
by operating activities is a deficit of $885,240 compared to an increase of
$257,137 at March 31, 1999. This was due to the drilling operations related to
Ekho #1.
Financing Activities. For the three months ended March 31, 2000, the Company
generated $80,792 from selling its' common stock in private transactions. This
is compared to a deficit of $2,817 for the same period in 1999, which was due to
the Company buying back its common stock on the open market.
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11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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We are still proceeding with the foreclosure proceedings regarding Third Mobile
of Central New York. A third party, who has filed Chapter 11 bankruptcy, is
claiming ownership of the assets securing our Promissory Note and Security
Agreement. We are defending our claim to these assets and believe their
allegations are without merit and we are confident that we will prevail in our
efforts.
ITEM 1. CHANGES IN SECURITIES
-----------------------
During the first quarter of 2000, we issued 44,000 shares of our common stock to
3 individuals in private transactions pursuant to the exemption contained in
Section 4(2) of the Securities Act of 1933, for aggregate consideration of
$61,250. The shares sold are restricted securities which bear a legend
restricting transfer of the shares unless registered or sold under an exemption
from registration requirements under the Securities Act.
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
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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 10, 2000 /s/ F. Lynn Blystone
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F. Lynn Blystone
President and Chief Executive Officer
May 10, 2000 /s/ Thomas J. Cunningham
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Thomas J. Cunningham
Secretary, Treasurer, Chief Financial Officer
