SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-11498
SARATOGA RESOURCES, INC.
(Exact name of small business issuer in its charter)
Delaware 76-0453392
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2000 Dairy Ashford South, Suite 410 Houston, Texas 77077
(Address of principal executive offices, including Zip Code)
(713) 531-0022
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to distribution of securities under a plan
confirmed by a court.
Yes No
As of July 19, 1996, there were 6,809,400 issued and outstanding shares
of Registrant's common stock, $.001 par value.
-1-
SARATOGA RESOURCES, INC.
QUARTERLY REPORT ON FORM 10-QSB
INDEX
Page No.
PART I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - 3
June 30, 1996 and December 31, 1995
Consolidated Statements of Operations - 5
Three months ended June 30, 1996 and 1995
Six Months ended June 30, 1996 and 1995
Consolidated Statements of Cash Flows - 6
Six months ended June 30, 1996 and 1995
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of 10
Financial Condition and Results of Operations
PART II. Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
-2-
SARATOGA RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
ASSETS
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
Current assets:
Cash .......................................... $ 1,659 $ 604
Accounts Receivable ........................... -- 399
Prepaid expenses .............................. 84 105
Other ......................................... 15 15
------- --------
Total current assets .................................. $ 1,758 $ 1,123
Property and equipment:
Oil and gas properties (full cost method) ..... -- $ 17,582
Equipment ..................................... 256 255
Less accumulated depletion,
depreciation and amortization ................ (82) (10,847)
------- --------
$ 174 $ 6,990
Other assets, net of accumulated amortization
of $117 ....................................... 236 254
------- --------
Total Assets .......................................... $ 2,168 $ 8,367
======= ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-3-
SARATOGA RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In Thousands)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
Current liabilities:
Accounts payable and accrued liabilities .... $ 290 $ 2,800
Legal suspense .............................. 18 288
Royalties Payable ........................... -- 237
Interest payable ............................ -- 685
Advance from partners ....................... -- 73
Current maturities of debt .................. -- 13,698
------- --------
Total current liabilities ................... 308 $ 17,781
Stockholders' Equity (Deficit)
Common stock ................................ 7 7
Treasury stock .............................. (2) (2)
Additional paid in capital .................. 2,909 2,909
Accumulated deficit ......................... (1,054) (12,328)
------- --------
Total Stockholders' Equity (Deficit) ................ 1,860 (9,414)
Total Liabilities and
Stockholders' Equity (Deficit) .................. $ 2,168 $ 8,367
======= ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-4-
SARATOGA RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -----------------
1996 1995 1996 1995
------- -------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Oil and gas ............................. $ -- $ 840 $ 684 $ 1,264
Other ................................... 7 23 8 34
Gain on Foreclosure Sale ........................ 12,201 -- 12,201 --
------- -------- ------- -------
$12,208 $ 863 $12,893 $ 1,298
Costs and Expenses:
Production .............................. 7 433 278 740
Severance tax ........................... -- 46 43 67
Depletion, depreciation and amortization -- 444 362 689
General and administrative .............. 231 218 499 389
Interest expense ........................ 3 435 437 669
------- -------- ------- -------
241 1,576 1,619 2,554
------- -------- ------- -------
Net income (loss) before taxes .................. 11,967 (713) 11,274 (1,256)
Income tax benefit .............................. -- -- -- 199
------- -------- ------- -------
Net income (loss) ............................... $11,967 $ (713) $11,274 $(1,057)
======= ======== ======= =======
Net income (loss) per share ..................... $ 1.79 $ (.11) $ 1.68 $ (.16)
======= ======== ======= =======
Weighted average number of common
shares outstanding ............................ 6,699 6,680 6,699 6,680
======= ======== ======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-5-
SARATOGA RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ........................................................... $ 11,274 $(1,057)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation, depletion and amortization .................................... 362 689
Deferred income taxes ....................................................... -- (199)
Amortization of debt discount ............................................... 23 58
Gain on Foreclosure Sale .................................................... (12,201) --
Changes in operating assets and liabilities:
Decrease in accounts receivable ............................................. 1,046 (406)
Decrease in prepaid expenses ................................................ 21 --
Increase (decrease) in accounts payable and accrued liabilities ............. (21) 729
Other, net .................................................................. -- (143)
-------- -------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ........................... 504 (329)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions ............................................ (38) (969)
Acquisition of oil and gas properties ....................................... -- (4,642)
-------- -------
NET CASH USED IN INVESTING ACTIVITIES ......................................... (38) (5,611)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Proceeds from Foreclosure Sale .......................................... 668 --
Proceeds from borrowings .................................................... -- 5,363
Payments on borrowings ...................................................... (79) --
-------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES ..................................... 589 5,363
-------- -------
NET (DECREASE) INCREASE IN CASH ............................................... 1,055 (577)
CASH AT BEGINNING OF PERIOD ................................................... 604 670
-------- -------
CASH AT END OF PERIOD ......................................................... $ 1,659 $ 93
======== =======
SUPPLEMENT DISCLOSURE OF CASH FLOW INFORMATION
AND NONCASH ACTIVITIES:
Cash paid during period for interest ......................................... $ 3 $ 128
Retire common stock for operating rights ..................................... -- (300)
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-6-
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
ORGANIZATION: Saratoga Resources, Inc., a Delaware corporation, (the "Company",
"Saratoga", or the "Registrant") was merged with Sterling Resources Corporation
("Sterling") in February 1994. Sterling, formerly Primo Corporation, had been
incorporated in Utah on September 21, 1972.
The Company has been engaged in oil and gas exploration and development
of properties located in far Southwest and East Texas and in Louisiana. Sterling
had been a passive organization with no assets nor liabilities until September
8, 1993. At that time, Sterling acquired all of the outstanding shares of
Saratoga Resources, Inc., a Texas corporation ("Saratoga-Texas"). The
stockholders of Saratoga-Texas received 1,000,000 shares of Sterling preferred
stock and 100,000 shares of Sterling common stock. Shares belonging to various
Sterling stockholders were placed in a voting trust which, along with voting
rights of the stock issued to former Saratoga-Texas stockholders, resulted in
the former Saratoga-Texas stockholders exercising voting control over 90% of the
votes of Sterling's security holders. The acquisition resulted in a complete
reorganization of the Company and a change in management. On January 22, 1994
the stockholders of the Company voted to (1) change the name of the Company to
Saratoga Resources, Inc.; (2) relocate the domicile of the Company from Utah to
Delaware; and (3) institute a 1 for 30 reverse stock split on the Company's
common stock. In addition, the preferred stock of Sterling was converted into
common stock.
On May 25, 1994, under the terms of a Stock Purchase Agreement,
Saratoga-Texas acquired 5,715 shares of common stock of Lobo Energy, Inc., a
Texas corporation ("LEI"). The shares acquired by Saratoga-Texas gave the
Company 57.15% of the common stock of LEI in exchange for a purchase price of
$6,000,375 cash.
On March 31, 1995, Saratoga-Texas acquired the remaining 42.85% (4,285
shares) of the common stock of LEI from Peter P. Pickup. The total price paid by
Saratoga-Texas for the purchase was approximately $5,401,000. As a result of
this acquisition, Saratoga-Texas controlled 100% of the common stock outstanding
of LEI.
These LEI acquisitions were accounted for on the purchase method of
accounting. The Company's consolidated statements of operations through March
31, 1995 reflect Saratoga-Texas' proportional consolidation of LEI's assets,
liabilities, revenues and costs. With the acquisition of the remaining 42.85% of
the common stock of LEI, the Company's consolidated statement of operations for
periods subsequent to March 31, 1995 reflects 100% of LEI's revenues and costs.
GENERAL: The unaudited consolidated financial statements included herein have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission and include all adjustments which, in the opinion of
management, are necessary in order to make the financial statements not
misleading. The unaudited consolidated financial statements included herein are
those of the Company and its subsidiaries, all of which are wholly owned. All
significant intercompany accounts and transactions have been eliminated in
consolidation. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on Form
10-KSB for the period ended December 31, 1995.
-7-
NOTE 2 - DEBT
On March 30, 1995, the Company, Saratoga-Texas and LEI executed a Credit
Agreement ("Credit Agreement") with Internationale Nederlanden (U.S.) Capital
Corporation, a Delaware corporation ("ING") which, in part, refinanced the
existing LEI debt to ING. The cash portion of the purchase price for the
acquisition of LEI described in Note 1 was paid out of the proceeds of the loan
evidenced by the Credit Agreement. In the Credit Agreement, ING established two
credit facilities in favor of Saratoga-Texas in the combined maximum principal
amount of $19,000,000, subject to the borrowing base limitations set forth
therein. At March 31, 1996 an aggregate of $15,500,000 was available under these
facilities; $13,765,721 was advanced; and $13,397,410 was outstanding, net of
unamortized loan commitment fees of $368,311. All oil and gas properties owned
by the Company were pledged as collateral under the Credit Agreement and all
obligations to ING were also guaranteed by the Company and all of its
subsidiaries.
The Credit Agreement contained numerous covenants with respect to the
operation of the Company. One of the covenants provided that at no time shall
the Company's current liabilities, without including payments required under the
Credit Agreement, exceed the Company's current assets. Additionally, the
Company's net worth, (essentially defined as total tangible assets less total
liabilities, minus half of the net proceeds of an equity transaction), was not
to fall below $1,500,000. Also, the Company's general and administrative
expenses actually incurred and paid during any fiscal year was not to exceed
$1,600,000. At December 31, 1995 and May 7, 1996, the Company was in default of
numerous covenants associated with this Credit Agreement.
As discussed in Note 4, on May 7, 1996 in connection with a Foreclosure
Sale and Compromise and Settlement Agreement, a majority of the assets (the
"Interests") of Saratoga-Texas, Lobo Operating, Inc., a Texas corporation
("LOI"), and LEI were sold to ING in exchange for ING's forgiveness of all debt
owed by the Company to ING. The remainder of the Company's debt, consisting of a
note payable to a stockholder, note payable to an individual, and other note
payable, will be settled with each lender by the Trustee from the cash proceeds
of the Foreclosure Sale, pursuant to the Disbursement Agreement dated May 7,
1996, also discussed in Note 4.
NOTE 3 - LITIGATION
On May 13, 1996, the Company, along with two of its three directors,
Thomas F. Cooke ("Cooke") and Randall F. Dryer ("Dryer"), filed a lawsuit (the
"Company Lawsuit"), as amended, against the remaining director, Joseph T.
Kaminski ("Kaminski") [Cause No. 96-05540, SARATOGA RESOURCES, INC., THOMAS F.
COOKE AND RANDALL F. DRYER V. JOSEPH T. KAMINSKI, 261st Judicial District Court,
Travis County, Texas]. The Company has filed this lawsuit against Kaminski
alleging fraud, breach of fiduciary duty, intentional and negligent
misrepresentation, and other claims. This lawsuit involves the assignment of
certain seismic data and seismic license agreements by Kaminski to the Company
in exchange for the forgiveness of $320,000 in debt owed by the Company to
Kaminski, and the issuance of additional Common Stock of the Company to
Kaminski. The lawsuit further alleges intentional and negligent
misrepresentation of oil and gas reserves by Kaminski while serving as President
and Chief Executive Officer of the Company. Actual and exemplary damages are
being sought from Kaminski.
On May 15, 1996, Kaminski filed a lawsuit (the "Kaminski Lawsuit"), as
amended, against Cooke, Dryer, Dryer, Ltd. and the Company [Cause No. 96-24469,
JOSEPH T. KAMINSKI V. THOMAS F. COOKE, RANDALL F. DRYER, SARATOGA RESOURCES,
INC., AND DRYER, LTD., A TEXAS FAMILY PARTNERSHIP, 113th Judicial District
Court, Harris County, Texas]. Kaminski has filed this lawsuit individually
-8-
and derivatively as a shareholder of the Company and has alleged fraud, breach
of fiduciary duty, gross negligence, slander, libel per se, and other claims on
the part of Cooke and Dryer individually and as directors of the Company. This
lawsuit involves further allegations of mismanagement and waste of corporate
assets by Cooke and Dryer. Kaminski had requested the Court to remove Cooke and
Dryer as directors and to appoint a receiver to conduct the affairs of the
Company and preserve the assets of the Company, which request has been denied by
the Court. Actual and exemplary damages are being sought from Cooke and Dryer.
With respect to an "Agreement" dated effective May 31, 1996 (the "Voting
Agreement") which had been circulated by Cooke to certain shareholders of the
Company whereby shareholders signing said Voting Agreement were agreeing to
remove Kaminski as director of the Company, the Court has declared such Voting
Agreement to be void and unenforceable, and has further ordered that all
shareholders signing said Voting Agreement be informed of the Court's ruling
with respect to same. Additionally, the Court has ordered that the Company may
not pay the attorneys' fees for Cooke or Dryer in this or any other lawsuit,
unless otherwise provided under Delaware law.
The Company continues to conduct its affairs in the ordinary course of
business pursuant to the terms and provisions of an Agreed Temporary Injunction
presented to the Court in the "Kaminski Lawsuit" on May 20, 1996, and a
Supplemental Temporary Injunction Order dated July 23, 1996.
The "Company Lawsuit" and "Kaminski Lawsuit" are both in the early
stages of development. While management of the Company believes at this time
that neither lawsuit will have a material adverse effect on the Company, it is
too early to make an accurate evaluation of potentially adverse effects, if any.
NOTE 4 - FORECLOSURE SALE
As of May 7, 1996, The Company owed $13,765,721 plus accrued interest to
ING under the Credit Agreement described in Note 2. The Company was in default
under the Credit Agreement and all obligations were due and payable in full.
In connection with a Foreclosure Sale and pursuant to the terms and
provisions of a Compromise and Settlement Agreement dated May 7, 1996, a
majority of the assets (the "Interests") of Saratoga-Texas, LOI and LEI were
sold to ING in exchange for ING's forgiveness of all amounts owed under the
Credit Agreement.
Upon completion of the Foreclosure Sale on May 7, 1996, at which ING was
the highest bidder, ING concurrently sold the Interests to PrimeEnergy for cash
consideration in the amount of $7,180,000 less an adjustment for net revenue due
the purchaser from the effective date of the purchase (January 1, 1996) through
May 7, 1996, not to exceed $372,000, plus additional consideration as provided
in that certain Purchase and Sale Agreement dated May 7, 1996, by and between
ING and PrimeEnergy.
Upon receipt of the cash proceeds from the sale of the Interests by ING
to PrimeEnergy, ING deposited approximately $5,500,000 with the Trustee, of
which approximately $4,000,000 was set aside under that certain Disbursement
Agreement dated May 7, 1996, for the settlement of outstanding vendor claims and
other related liabilities of the Saratoga Companies. The remaining $1,500,000
has been paid to the Company and will be available for the Company to pursue
other business opportunities. [The Company and Saratoga-Texas, LOI and LEI, its
direct or indirect subsidiaries, are sometimes collectively referred to herein
as the "Saratoga Companies".]
-9-
The Foreclosure Sale and Compromise and Settlement Agreement resulted in
a gain of approximately $12.2 million. No tax liability was generated from the
transaction; however the Company's net operating loss and other tax attributes
were eliminated.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
On March 30, 1995, the Company, Saratoga-Texas, LEI and ING entered into
the Credit Agreement to facilitate the settlement of a lawsuit brought by Pickup
against the Company and ING, and fund the acquisition by Saratoga-Texas of the
LEI assets previously owned by Pickup. Under the terms of the Credit Agreement,
ING established two credit facilities in favor of Saratoga-Texas in the combined
maximum principal amount of $19,000,000, subject to the borrowing base
limitations set forth therein. All of the Properties owned by the "Saratoga
Entities" were pledged as collateral under the Credit Agreement and all
obligations to ING were also guaranteed by the Company and all of its
subsidiaries. Funds obtained from these credit facilities were anticipated to be
used for the development of the Properties by the Company. [Saratoga-Texas, LOI
and LEI are sometimes collectively referred to herein as the "Saratoga
Entities".]
Subsequent to entering into the Credit Agreement, the Company engaged
ING Securities, a subsidiary of ING, to assist the Company in a private
placement of Company stock. It was anticipated that funds raised from such
private placement would enable the Company to meet its financial obligations
under the Credit Agreement. The private placement efforts were not successful.
Additionally, funds necessary for the development of the Properties were not
provided by ING under the Credit Agreement.
The failure of the private placement efforts combined with the lack of
availability of funds necessary for the development of its Properties placed the
Company in a severe financial crisis. In an attempt to salvage the maximum value
of the Saratoga Companies for the benefit of the other creditors (the "Other
Creditors") and the Company and its shareholders, the Saratoga Companies spent
several months examining and pursuing various alternatives with respect to (i)
the possible refinancing and/or restructuring of the debt of the Saratoga
Companies, (ii) the sale of the Saratoga Companies or their underlying assets,
and (iii) the prosecution or settlement of certain potential claims against ING
and ING Securities.
Unable to meet its financial obligations under the Credit Agreement, the
Company received notices of default from ING, whereupon ING threatened to
foreclose its perfected first lien security interests in the Properties and
Interests. At the same time the Company was receiving notices of default from
ING, the Company was attempting to negotiate a transaction with PrimeEnergy
involving either a merger of the two entities or a sale of the assets of the
Saratoga Entities to PrimeEnergy. The situation with ING obviously complicated
the Company's efforts with PrimeEnergy, as it had with other companies with
which the Company had been involved in similar negotiations.
Facing what the Company believed to be an eminent foreclosure action by
ING which would restrict the Company's objectives and its ability to consummate
negotiations with PrimeEnergy, in April of 1996, the Saratoga Companies filed an
Original Petition and Application for Injunctive Relief against ING and ING
Securities, C96-399-D3 in the 341st Judicial District Court of Webb County,
Texas. Subsequently, the Company and ING entered into discussions in an
attempt to reach a final resolution of ING's rights under the Credit Agreement
and the Company's asserted claims.
-10-
In reviewing its options, the Company believed that the proceeds from a
contested foreclosure by ING would be substantially less than the debt owed ING
under the Credit Agreement, and that the Saratoga Companies would have no, or
virtually no, assets, the Other Creditors of the Saratoga Companies would not be
paid, and the stock of the Company would be worthless. Accordingly, exercising
its best business judgment, the Company determined that the best (and in all
probability the only) alternative available to the Saratoga Companies to
preserve value for the Other Creditors, the Company and its shareholders was to
consent, on its own behalf and as sole shareholder (directly or indirectly) of
the Saratoga Entities, to the compromise and settlement of the claims against
ING and ING Securities, and in connection therewith, the foreclosure by ING with
respect to all of the assets of the Saratoga Entities, all in accordance with
the terms and provisions of the Agreement dated May 7, 1996.
The Agreement provided for a Foreclosure Sale of a majority of the
assets (the "Interests") of the Saratoga Entities to ING pursuant to ING's
rights under the Credit Agreement. Upon completion of the Foreclosure Sale on
May 7, 1996, at which ING was the highest bidder, ING concurrently sold the
Interests to PrimeEnergy for $7,180,000 in cash and additional consideration as
provided in that certain Purchase and Sale Agreement dated May 7, 1996, by and
between ING and PrimeEnergy.
Upon receipt of the cash proceeds from the sale of the Interests by ING
to PrimeEnergy, ING deposited approximately $5,500,000 with the Trustee, of
which approximately $4,000,000 was set aside under the Disbursement Agreement
for the settlement of outstanding vendor debt and other related liabilities of
the Saratoga Companies. Upon the settlement of all such debt and liabilities,
the Company anticipates that there will be no material debt or liabilities going
forward, other than those incurred since May 7, 1996, in the ordinary course of
business and certain liabilities with respect to prior matters which the Company
does not believe are material (See "Note 4 to Consolidated Financial
Statements"). The Company was paid the remaining $1,500,000 by ING, which amount
is available to pursue new business opportunities or for other proper corporate
purposes.
The Board of Directors of the Company is in the process of
re-evaluating its business plan going forward. Among the alternatives being
considered are: (i) rebuilding the management team and continuing in the oil and
gas business; (ii) entering into a business combination with one or more
businesses, some of which are oil and gas companies and the remainder of which
are in unrelated businesses; or (iii) any other potential alternative which the
Board of Directors may deem to be in the best interest of the Company and its
shareholders, including but not limited to (a) the sale of one or more
subsidiaries, (b) a divisive reorganization of the Company pursuant to which the
Company or a subsidiary would register the issuance and sale of any securities
to be issued in such reorganization or (c) the sale and liquidation of all hard
assets of the Company and disposition to the shareholders. The Company has
already begun a search for suitable business combination candidates. The Board
intends to carefully evaluate all such alternatives before making a final
recommendation of its business plan.
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 3 to Consolidated Financial Statements.
-11-
ITEM 2. CHANGES IN SECURITIES
See Notes 2, 3 and 4 to Consolidated Financial Statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS.
NO. EXHIBIT DESCRIPTION
(3) ARTICLES OF INCORPORATION AND BY-LAWS:
3.1 Certificate of Incorporation of Registrant, Saratoga
Resources, Inc., filed with the Office of the Secretary of
the State of Delaware on January 19, 1994. Incorporated by
reference to the Form 10-KSB filed February 3, 1995, filed
as Exhibit 3.1 thereto.
3.2 By-Laws of Registrant, Saratoga Resources, Inc., a
Delaware Corporation, adopted January 20, 1994.
Incorporated by reference to the Form 10-KSB filed
February 3, 1995 and filed as Exhibit 3.2 thereto.
(10) MATERIAL CONTRACTS:
10.1 Compromise and Settlement Agreement dated May 7, 1996, by
and between Saratoga Resources, Inc. a Delaware
corporation, Saratoga Resources, Inc., a Texas
corporation, LOI, a Texas corporation, LEI, a Texas
corporation, Thomas F. Cooke, Joseph T. Kaminski, Randall
F. Dryer, and Internationale Nederlanden (U.S.) Capital
Corporation, filed as Exhibit 1 to the Company's Report on
8-K dated May 7, 1996 and incorporated herein by
reference.
10.2 Purchase and Sale Agreement dated May 7, 1996, by and
between Internationale Nederlanden (U.S.) Capital
Corporation and PrimeEnergy Corporation, filed as Exhibit
2 to the Company's Report on 8-K dated May 7, 1996 and
incorporated herein by reference.
10.3 Assignment and Bill of Sale dated May 7, 1996, by and
between Saratoga Resources, Inc., a Delaware corporation
and PrimeEnergy Corporation, filed as Exhibit 3 to the
Company's Report on 8-K dated May 7, 1996 and incorporated
herein by reference.
(B) REPORTS ON FORM 8-K
(1) A Form 8-K dated May 7, 1996 was filed with the Securities and
Exchange Commission on July 16, 1996, reporting Item
2-Acquisition or Disposition of Assets, Item 4 - Change in
Registrant's Certifying Accountant , and Item 5-Other Events-
Pending Litigation.
-12-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SARATOGA RESOURCES, INC.
By: \s\ THOMAS F.COOKE
Thomas F. Cooke
Chairman of the Board
Chief Executive Officer and
Principal Accounting and Financial Officer
Date: August 21, 1996
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FINANCIAL STATEMENTS IN THE 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,659
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 99
<CURRENT-ASSETS> 1,758
<PP&E> 256
<DEPRECIATION> (82)
<TOTAL-ASSETS> 2,168
<CURRENT-LIABILITIES> 308
<BONDS> 0
0
0
<COMMON> 7
<OTHER-SE> 1,853
<TOTAL-LIABILITY-AND-EQUITY> 2,168
<SALES> 0
<TOTAL-REVENUES> 12,893
<CGS> 0
<TOTAL-COSTS> 1,619
<OTHER-EXPENSES> 1,182
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 437
<INCOME-PRETAX> 11,274
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 12,201
<CHANGES> 0
<NET-INCOME> 11,274
<EPS-PRIMARY> 1.68
<EPS-DILUTED> 1.68
</TABLE>
