FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1996 Commission File # 0-9129
LOCH EXPLORATION, INC.
(Exact Name of Registrant as Specified in its Charter)
TEXAS 75-1657943
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
414 E. Elm, Gainesville, Texas 76240
Address of principal executive offices) (Zip Code)
(817) 668-1271
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15 (d) of the Securities Exchange Act of 1934
during the preceding twelve 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 ninety (90) days.
YES X NO
Indicate the number os shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock - $.001 par value 64,388,802
(Title of Class) (Number of shares Outstanding
on September 30, 1996)
1
<PAGE>
Rigler, Hess and Rohmer
316 W. Broadway
Gainesville, Texas 76240
(817) 665-0738
ACCOUNTANTS' COMPILATION REPORT
Loch Exploration, Inc.
Gainesville, Texas
We have compiled the accompanying balance sheet of Loch Exploration, Inc. as of
September 30, 1996 and December 31, 1995, and the related statements of
operations, changes in shareholders' equity and cash flows for the nine months
ended September 30, 1996 and 1995, and the related statements of operations for
the three months ended September 30, 1996 and September 30, 1995, in accordance
with Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the company's financial position, results of operations and
cash flows. Accordingly, these financial statements are not designed for those
who are not informed about such matters.
Rigler, Hess and Rohmer
A Professional Corporation
Certified Public Accountants
November 7, 1996
2
<PAGE>
LOCH EXPLORATION, INC.
Balance Sheets
As of September 30, 1996 and December 31, 1995
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
ASSETS
Current assets
Cash $ 17,718 $ 139,285
Trade accounts receivable 11,484 14,304
Accounts receivable, related parties 28,729 27,795
Marketable securities 101,869 --
--------- ---------
Total current assets 159,800 181,384
--------- ---------
Property and equipment - at cost
Oil and gas properties (full cost method) 250,567 250,567
Equipment 72,391 72,391
Accumulated depreciation and depletion (94,535) (77,534)
--------- ---------
Total property and equipment 228,423 245,424
--------- ---------
Total assets $ 388,223 $ 426,808
========= =========
</TABLE>
Unaudited - see accountants' compilation report
3
<PAGE>
LOCH EXPLORATION, INC.
Balance Sheets
As of September 30, 1996 and December 31, 1995
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 9,998 $ 11,681
Accounts payable, related parties 14,484 10,143
Current portion of long term debt 32,220 33,428
--------- ---------
Total current liabilities 56,702 55,252
--------- ---------
Long term debt, less current portion 38,399 59,911
--------- ---------
Total liabilities 95,101 115,163
Shareholders' equity
Common stock,$.001 par value;150,000,000
shares authorized;64,388,802 and
64,388,376 shares issued and outstanding
at September 30, 1996 and December 31, 1995 64,388 64,388
Additional paid in capital 269,046 269,046
Retained earnings (40,312) (21,789)
--------- --------
Total shareholders' equity 293,122 311,645
--------- --------
Total liabilities and shareholders' equity $ 388,223 $ 426,808
========= =========
</TABLE>
Unaudited - see accountants' compilation report
4
<PAGE>
LOCH EXPLORATION, INC.
Statements of Operations
For the nine months ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Revenues
Oil and gas revenue $ 135,157 $ 143,068
Equipment rental 23,763 29,876
Revenue from lease operations - 4,102
Reimbursements 6,000 -
Interest income 1,591 -
Dividend income 1,869 -
Sale of assets - 124,500
--------- ---------
168,380 301,546
--------- ---------
Expenses
Cost of assets sold - 64,409
Lease operations 84,157 60,495
Depreciation and depletion 17,001 22,528
General and administrative 77,552 63,731
Interest expense 8,193 11,541
--------- ---------
186,903 222,704
--------- ---------
earnings (loss) before taxes (18,523) 78,842
Income taxes - 14,172
--------- ---------
Net earnings (loss) $ (18,523) $ 64,670
========= =========
Net earnings (loss) per share of common stock $ - $ -
========= =========
Weighted average shares outstanding 64,388,802 61,099,614
=========== ==========
</TABLE>
Unaudited - see accountants' compilation report
5
<PAGE>
LOCH EXPLORATION, INC.
Statements of Operations
For the three months ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Revenues
Oil and gas revenue $ 38,526 $ 31,462
Equipment rental 8,703 9,092
Revenue from lease operations - 1,700
Oil lease sales - 124,500
Dividend income 1,869 -
--------- ---------
49,098 166,754
--------- ---------
Expenses
Cost of assets sold - 46,602
Lease operations 28,679 16,223
Depreciation and depletion 5,667 6,540
General and administrative 25,552 22,400
Interest expense 2,660 3,840
--------- ---------
62,558 95,605
--------- ---------
Net earnings (loss) before taxes (13,460) 71,149
Income taxes - 14,172
--------- ---------
Net earnings (loss) $(13,460) $ 56,977
========= =========
Net earnings (loss) per share of common stock $ - $ -
========= =========
Weighted average shares outstanding 64,388,802 64,388,376
========== ==========
</TABLE>
Unaudited - see accountants' compilation report
6
<PAGE>
LOCH EXPLORATION, INC.
Statements of Changes in Shareholders' Equity
For the year ended December 31, 1995 and
the nine months ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
Common Stock Additional Retained
--------------------- Paid in Earnings
Shares Amount Capital (Deficit)
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance January 1, 1995 64,388,376 $ 64,388 $269,046 $(64,759)
Net earnings September 30, 1995 - - - 64,670
Common stock issued to former
shareholders 426 - - -
Net earnings (loss) October 1 to
December 31, 1995 - - - (21,700)
---------- -------- --------- --------
Balance December 31, 1995 64,388,802 64,388 269,046 (21,789)
Net earnings(loss)
September 30, 1996 - - - (18,523)
---------- -------- --------- --------
Balance September 30, 1996 64,388,802 $ 64,388 $ 269,046 $(40,312)
========== ======== ========= =========
</TABLE>
Unaudited - see accountants' compilation report
7
<PAGE>
LOCH EXPLORATION, INC.
Statements of Cash Flows
For the nine months ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities
Net earnings (loss) $(18,523) $ 64,670
Reconciliation of net earnings (loss) to net
cash provided (used) by operating activities:
Depreciation and depletion 17,001 22,528
(Increase) decrease in accounts receivable 1,886 (195,587)
Increase (decrease) in accounts payable 2,658 68,060
--------- ---------
Net cash provided (used) by operating activities 3,022 (40,329)
--------- ---------
Cash flows from investing activities
Purchased marketable securities (101,869) -
Sale of leaseholds - 98,352
Purchased leaseholds and workovers - (49,710)
--------- ---------
Net cash provided (used) by investing activities (101,869) 48,642
--------- ---------
Cash flows from financing activities
Advances of debt - 31,000
Repayment of debt (22,720) (24,970)
--------- ---------
Net cash provided (used) by financing activities (22,720) 6,030
--------- ---------
Increase (decrease) in cash (121,567) 14,343
Cash at beginning of period 139,285 21,744
--------- ---------
Cash at end of period $ 17,718 $ 36,087
========= =========
Supplemental cash flow information:
Income tax paid $ - $ -
Interest paid 8,480 7,680
========= =========
</TABLE>
Unaudited - see accountants' compilation report
8
<PAGE>
Management's Discussion and Analysis of Financial Conditions
and Results of Operations:
During the third quarter of 1996, the assets of the Company amounted to $388,223
showing a decrease of $163,480 from the third quarter 1995 assets. This decrease
is primarily due to the Company's repayment of debt.
Revenues and Operating Expenses:
Total revenue for the third quarter of 1996 was $49,098 compared to $166,754 for
the third quarter of 1995, with a 1996 third quarter net loss of $13,460
compared to a net income of $56,977 in the 1995 third quarter. The decrease in
total revenue and net income is due to sale of oil property during the third
quarter of 1995. No oil property was sold during the third quarter of 1996.
9
<PAGE>
Part 11 - Other Information
Item 6
Exhibits and Reports on Form 8-K:
---------------------------------
(A) Exhibits
27 Financial Data Schedule
(B) Reports on Form 8-K -
None
10
<PAGE>
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Loch Exploration, Inc.
Date: November 11, 1996 s/ Glenn L. Loch, President
-------------------------
Glenn L. Loch, President
11
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 119,587
<SECURITIES> 0
<RECEIVABLES> 40,213
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 159,800
<PP&E> 322,958
<DEPRECIATION> (94,535)
<TOTAL-ASSETS> 388,223
<CURRENT-LIABILITIES> 56,702
<BONDS> 0
0
0
<COMMON> 64,388
<OTHER-SE> 228,734
<TOTAL-LIABILITY-AND-EQUITY> 388,223
<SALES> 135,157
<TOTAL-REVENUES> 168,380
<CGS> 0
<TOTAL-COSTS> 84,157
<OTHER-EXPENSES> 92,350
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,193
<INCOME-PRETAX> (18,523)
<INCOME-TAX> 0
<INCOME-CONTINUING> (18,523)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,523)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
