<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to __________________
Commission file number 0-14334
XPLOR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3299127
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
16800 GREENSPOINT PARK DR, SUITE 300 SOUTH, HOUSTON, TEXAS 77060
(Address of principal executive offices)
(281) 875-2780
(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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at May 1, 1997
Common Stock $.01 par value 2,037,171 shares
Page 1 of 11 Pages
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XPLOR CORPORATION AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
PART I. - FINANCIAL INFORMATION
Item 1. - Financial Statements (Unaudited)
(a) Consolidated Balance Sheets as of March
31, 1997, and December 31, 1996 3-4
(b) Consolidated Statements of Operations for
the three-month periods ended March 31,
1997, and March 31, 1996 5
(C) Consolidated Statements of Cash Flows for
the three-month periods ended March 31,
1997, and March 31, 1996 6
(d) Notes to Consolidated Financial State-
ments 7
Item 2. - Management's Discussion and Analysis of Financial
Condition and Results of Operation 8-9
Item 3. - Quantitative and Qualitative Disclosures About
Market Risk 9
PART II. - OTHER INFORMATION 10
Item 1. - Legal Proceedings 10
Item 6. - Exhibits and Reports on Form 8-K 10
Signatures 11
</TABLE>
Page 2 of 11 Pages
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XPLOR CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
(In thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,824 $ 2,755
Accounts receivable and other 149 185
------- --------
TOTAL CURRENT ASSETS 2,973 2,940
OIL AND GAS PROPERTIES AND EQUIPMENT (successful
efforts method), at cost 18,776 18,843
Less-accumulated depreciation, depletion,
amortization and impairment (16,571) (16,592)
------- --------
2,205 2,251
INVESTMENT IN EQUITY SECURITIES 83 118
OTHER ASSETS, less accumulated depreciation of
$139 and $138 at March 31, 1997 and
December 31, 1996 respectively 172 173
------- --------
TOTAL ASSETS $ 5,433 $ 5,482
======= ========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 3 of 11 Pages
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XPLOR CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
(In thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 238 $ 221
Accrued liabilities
Suspended revenues and settlements 167 167
Other 18 54
-------- --------
TOTAL CURRENT LIABILITIES 423 442
DEFERRED INCOME TAXES 287 287
-------- --------
TOTAL LIABILITIES 710 729
STOCKHOLDERS' EQUITY
Preferred Stock, par value $.01 per share--
authorized 1,000,000 shares; none issued
Common Stock, par value $.01 per share--
authorized 15,000,000 shares; 2,595,673
shares issued and outstanding 26 26
Additional paid-in capital 20,678 20,678
Accumulated deficit (13,248) (13,253)
Unrealized gains on equity securities 28 63
-------- --------
7,484 7,514
Less cost of Common Stock in treasury--558,502
shares at March 31, 1997 and December 31,
1996 (2,761) (2,761)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 4,723 4,753
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,433 $ 5,482
======== ========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 4 of 11 Pages
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XPLOR CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1996
-------------- --------------
(In thousands, except per share data)
<S> <C> <C>
REVENUES
Oil and gas sales $ 121 $ 102
Pipeline sales and fees 2 2
Oil field operation fees 27 29
Management fees 3 3
Interest income and other 38 37
------ -------
Total Revenues 191 173
------ -------
EXPENSES
Cost of oil and gas sales 34 59
Depreciation, depletion and amortization 36 38
General and administrative 107 138
Loss on sale of property 9 --
------ -------
Total Expenses 186 235
------ -------
Net Income (loss) before income taxes 5 (62)
PROVISION FOR INCOME TAXES -- --
------ -------
Net income (loss) $ 5 $ (62)
====== =======
Net income (loss) per common share and common
share equivalents $ .00 $ (.03)
====== =======
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 2,151 2,061
====== =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 5 of 11 Pages
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XPLOR CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1996
-------------- --------------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 5 $ (62)
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation, depletion and amortization 36 38
Change in operating assets and liabilities:
Decrease in accounts receivable and other 36 59
Increase (decrease) in accounts payable 17 (102)
Decrease in accrued liabilities (36) (70)
Loss on sale of property 9 -
-------- -------
Net cash provided by (used in)
operating activities 67 (137)
-------- -------
INVESTING ACTIVITIES
Proceeds from disposition of other assets 2 35
-------- -------
Net cash provided by
investing activities 2 35
-------- -------
FINANCING ACTIVITIES - -
-------- -----
DECREASE IN CASH & CASH EQUIVALENTS 69 (102)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,755 2,864
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,824 $ 2,762
======== =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 6 of 11 Pages
<PAGE> 7
XPLOR CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Preparation of Financial Statements
The consolidated balance sheet as of March 31, 1997, and December
31, 1996, and the consolidated statements of operations and cash
flows for the three months ended March 31, 1997 and 1996, have been
prepared by the Company without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments)
considered necessary for a fair presentation have been included. The
results of operations for the three-month periods ended March 31,
1997 and 1996, are not necessarily indicative of the operating
results for a full year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is
suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto in the
Company's Annual Report on Form 10-K for the year ended December 31,
1996.
2. Accounting for Income Taxes
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (SFAS 109). Under SFAS 109, a deferred tax liability or asset
is created when temporary differences arise between the financial
reporting basis and tax basis of the Company's liabilities and
assets, as measured by the statutory tax rates in effect when such
differences are expected to reverse. In addition, deferred tax
assets may result where the Company reasonably expects to utilize
existing tax net operating losses or tax credit carryforwards. A
valuation allowance must be established against any portion of a
deferred tax asset for which the Company believes it is more likely
than not the related tax benefit will not be realized. Components of
the Company's deferred tax assets and (liabilities) at December 31,
1996, were as follows:
<TABLE>
<S> <C> <C>
Loss carryforwards $ 293,000
Alternative minimum tax credit 30,000
Depreciation, depletion and amortization (610,000)
Net deferred tax liability $ (287,000)
==========
</TABLE>
The Company has net operating loss carryforwards available at
December 31, 1996, aggregating $869,000 which expire in years 2006
through 2009.
Page 7 of 11 Pages
<PAGE> 8
Item 2. XPLOR CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(a) Liquidity
At March 31, 1997, the Company had working capital of $2,550,000
compared with $2,498,000 at December 31, 1996, an increase of
$52,000. This increase is primarily attributable to the increase in
gas prices received during the first quarter offset by a reduction
in accounts receivable. The ratio of current assets to current
liabilities at March 31, 1997, was 7.02 to 1 as compared with 6.65
to 1 at December 31, 1996.
Net cash provided by operating activities during the three months
ending March 31, 1997, was $67,000, whereas $137,000 was used in
operating activities for the same three month period in 1996. During
the first quarter of 1997, the company realized $5,000 in net
income. The reduction of $36,000 in accounts receivable was
primarily the result of the timing of revenue receipts. Accounts
payable increased by $17,000 and accrued liabilities decreased by
$36,000. The sale of an out-of-service pipeline resulted in the loss
of $9,000.
For the three months ended March 31, 1997, $2,000 was provided by
investing activities. These funds were received from the sale of the
pipeline.
No funds were used for or provided by financing activities during
the first quarter of 1997.
On May 5, 1997 the Company announced that it signed a definitive
agreement to acquire substantially all of the assets and liabilities
of Venus Exploration, Inc. and a group of producing oil and gas
properties from Lomak Petroleum, Inc.(the Acquisition). Venus is a
private exploration and production company based in San Antonio,
Texas. Lomak is an independent oil and gas company whose shares are
listed on the New York Stock Exchange.
The Acquisition agreement calls for the Company to issue at closing
an aggregate of 7,663,644 shares of its common stock. Upon
completion of the Acquisition, the current stockholders of the
Company will own 20% of the outstanding shares, the former
stockholders of Venus 58% and Lomak 22%, and the Board of Directors
will consist of four designees of Venus, one designee of Lomak and
two current directors of the Company. The company will also issue to
the Venus stockholders and Lomak warrants to purchase an additional
54,706 shares in the aggregate. Upon closing, the Company's
estimated proved oil and gas reserves will increase from 2.73 Bcfe
at year end 1996 to approximately 12.0 Bcfe. Additionally, pro forma
at March 31, 1997, the Company will have approximately $2.5 million
in cash, net of long-term debt, and a significant inventory of
development and exploratory projects.
Page 8 of 11 Pages
<PAGE> 9
(b) Capital Resources
As of March 31, 1997, the Company did not have any material
commitments for capital expenditures. However, when the acquisition
is consummated, it is expected that the Company will assume
significant commitments for development and exploration.
(c) Results of Operations
For the quarter ended March 31, 1997, net income of $5,000
represented an improvement of $67,000 compared to the $62,000 loss
for the quarter ended March 31, 1996. The increase was primarily
attributable to the net effect of a $19,000 increase in oil and gas
sales revenues, a $25,000 reduction in oil and gas operating
expenses and $31,000 decrease in general and administrative expense.
During the first quarter of 1997 oil and gas sales of $121,000 were
comparable with last year's sales of $102,000. Production from the
Company's owned and operated wells in West Virginia increased by 14%
and the average price increased by $.28 per MCF. This resulted in an
increase in gross revenues for these wells. Revenue from the
Company's non-operated wells also increased over last year's first
quarter. For the quarter ended March 31, 1997, the cost of oil and
gas sales of 28% relative to sales decreased by 30% as compared with
the same period last year due to increased production and lower
expenses. The depletion rate of 30%, as a percentage of sales, was
comparable with a rate of 36% for the first quarter of 1996.
General and administrative expenses decreased by $31,000, or 22%, as
compared with last year, primarily due to decreases in insurance and
legal costs as a result of downsizing the Company in 1996 and
outsourcing accounting activities.
During the first quarter of 1997, the Company recognized a $9,000
loss on the sale of a pipeline system located in Texas which was no
longer in service.
Item 3. Quantitative and Qualitative
Disclosure About Market Risk
Not Applicable
Page 9 of 11 Pages
<PAGE> 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any material litigation.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none.
(b) During the quarter ended March 31, 1997, the Company did not file any
reports on Form 8-K.
Page 10 of 11 Pages
<PAGE> 11
S I G N A T U R E S
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 under-
signed thereunto duly authorized.
XPLOR CORPORATION
Dated: May 12, 1997 BY: /s/ James E. Gayle
---------------------------
James E. Gayle
(Chief Executive Officer)
Dated: May 12, 1997 BY: /s/ James E. Gayle
--------------------------
James E. Gayle
(Principal Accounting Officer)
Page 11 of 11 Pages
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,824
<SECURITIES> 0
<RECEIVABLES> 149
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,973
<PP&E> 18,776
<DEPRECIATION> 16,571
<TOTAL-ASSETS> 5,433
<CURRENT-LIABILITIES> 423
<BONDS> 0
0
0
<COMMON> 26
<OTHER-SE> 4,697
<TOTAL-LIABILITY-AND-EQUITY> 5,433
<SALES> 123
<TOTAL-REVENUES> 191
<CGS> 34
<TOTAL-COSTS> 34
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5
<INCOME-TAX> 0
<INCOME-CONTINUING> 5
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
