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 June 30, 1997 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)
(940) 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 of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock - $.01 par value 1,289,286
(Title of Class) (Number of shares Outstanding
on June 30, 1997)
1
<PAGE>
Rigler, Hess and Rohmer
P.O. Box 877
Gainesville, Texas 76241
(940)665-0738
ACCOUNTANTS' COMPILATION REPORT
Loch Exploration, Inc.
Gainesville, Texas
We have compiled the accompanying balance sheet of Loch Exploration, Inc. as of
June 30, 1997 and December 31, 1996, and the related statements of operations
and cash flows for the six months ended June 30, 1997 and 1996, and the related
statements of operations for the three months ended June 30, 1997 and June 30,
1996, 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 and
statement of changes in shareholders' equity required by generally accepted
accounting principles. If the omitted disclosures and statement of changes in
shareholders' equity 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
August 6, 1997
2
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LOCH EXPLORATION, INC.
Balance Sheets
As of June 30, 1997 and December 31, 1996
<TABLE>
<CAPTION>
1997 1996
--------- ---------
ASSETS
Current assets
<S> <C> <C>
Cash $ 106,871 $ 119,721
Trade accounts receivable 13,591 17,054
Accounts receivable, related parties 24,007 40,349
--------- ---------
Total current assets 144,469 177,124
Property and equipment - at cost
Oil and gas properties (full cost method) 245,862 245,862
Equipment 72,391 72,391
Accumulated depreciation and depletion (112,181) (100,631)
--------- ---------
Total property and equipment 206,072 217,622
--------- ---------
Total assets $ 350,541 $ 394,746
========= =========
</TABLE>
Unaudited - see accountants' compilation report
3
<PAGE>
LOCH EXPLORATION, INC.
Balance Sheets
As of June 30, 1997 and December 31, 1996
<TABLE>
<CAPTION>
1997 1996
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
<S> <C> <C>
Accounts payable and accrued liabilities $ 4,644 $ 8,038
Accounts payable, related parties 17,277 20,495
Current portion of long term debt 10,923 29,734
--------- ---------
Total current liabilities 32,844 58,267
Long term debt, less current portion 34,261 32,327
--------- ---------
Total liabilities 67,105 90,594
Shareholders' equity
Common stock,$.01 par value;50,000,000
shares authorized;1,289,286 and 1,288,951 shares
issued and outstanding at June 30, 1997 and
December 31, 1996 12,890 12,890
Additional paid in capital 320,544 320,544
Retained earnings (49,998) (29,282)
--------- ---------
Total shareholders' equity 283,436 304,152
--------- ---------
Total liabilities and shareholders' equity $ 350,541 $ 394,746
========= =========
</TABLE>
Unaudited - see accountants' compilation report
4
<PAGE>
LOCH EXPLORATION, INC.
Statements of Operations
For the six months ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
--------- ---------
Revenues
<S> <C> <C>
Oil and gas revenue $ 78,325 $ 96,631
Equipment rental 14,364 15,060
Revenue from lease operations 3,424 --
Reimbursements 1,156 6,000
Dividend income 2,434 --
Interest income -- 1,591
--------- ---------
99,703 119,282
--------- ---------
Expenses
Lease operations 50,495 55,477
Depreciation and depletion 11,550 11,334
General and administrative 53,708 52,001
Interest expense 4,666 5,533
--------- ---------
120,419 124,345
--------- ---------
Net earnings (loss) before taxes ($ 20,716) ($ 5,063)
Income taxes -- --
--------- ---------
Net earnings (loss) ($ 20,716) ($ 5,063)
========= =========
Net earnings (loss) per share of common stock --- ---
========= =========
Weighted average shares outstanding 1,289,286 1,287,776
========== ==========
</TABLE>
Unaudited- see accountants' compilation report
5
<PAGE>
LOCH EXPLORATION, INC.
Statements of Operations
For the three months ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
-------- --------
Revenues
<S> <C> <C>
Oil and gas revenue $ 30,930 $ 53,507
Equipment rental 5,640 7,530
Revenue from lease operations 1,957 --
Reimbursements -- 6,000
Dividend income 1,207 --
Interest income -- 538
-------- --------
39,734 67,575
-------- --------
Expenses
Lease operations 25,082 35,678
Depreciation and depletion 5,775 5,667
General and administrative 28,367 26,231
Interest expense 2,277 2,598
-------- --------
61,501 70,174
-------- --------
Net earnings (loss) before taxes ($21,767) ($ 2,599)
Income taxes -- --
-------- --------
Net earnings (loss) ($21,767) ($ 2,599)
========= ========
Net earnings (loss) per share of common stock --- ---
========= =========
Weighted average shares outstanding 1,289,286 1,287,776
========= =========
</TABLE>
Unaudited - see accountants' compilation report
6
<PAGE>
LOCH EXPLORATION, INC.
Statements of Cash Flows
For the six months ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
--------- ---------
Cash flows from operating activities
<S> <C> <C>
Net earnings (loss) ($ 20,716) ($ 5,063)
Reconciliation of net earnings (loss) to net cash
provided (used) by operating activities:
Depreciation and depletion 11,550 11,334
(Increase) decrease in accounts receivable 19,805 (9,067)
Increase (decrease) in accounts payable (6,612) 6,722
--------- ---------
Net cash provided (used) by operating activities 4,027 3,926
--------- ---------
Cash flows from investing activities
Purchased marketable securities -- (100,000)
--------- ---------
Net cash provided (used) by investing activities -- (100,000)
--------- ---------
Cash flows from financing activities
Repayment of debt (16,877) (13,673)
--------- ---------
Net cash provided (used) by financing activities (16,877) (13,673)
--------- ---------
Increase (decrease) in cash (12,850) (109,747)
Cash at beginning of period 119,721 139,285
--------- ---------
Cash at end of period $ 106,871 $ 29,538
========= =========
Supplemental cash flow information:
Income tax paid $ 0 $ 0
Interest paid 4,745 5,820
========= =========
</TABLE>
Unaudited - see accountants' compilation report
7
<PAGE>
Management's Discussion and Analysis of Financial Conditions
and Results of Operations:
In February, 1997, the Board of Directors declared a 1-for-50 reverse stock
split in the Company's common stock, effective February 28, 1997. The Company
also changed the par value from $.001 per share to $.01 per share and reduced
the authorized shares from 150,000,000 to 50,000,000. All share and per share
data, as appropriate, reflect this split. The effect of the split is presented
retroactively within stockholders' equity at June 30, 1996 by transferring the
excess state capital to the paid-in-capital account.
Revenues and Operating Expenses:
During the second quarter of 1997, the Company's oil and gas revenue and lease
operation expenses both decreased. Oil and gas revenue decreased more than the
lease operation expenses, thus creating a net loss for the three months and six
months ending June 30, 1997. The decrease in oil and gas revenue is mainly due
to a decrease in second quarter oil and gas market prices.
8
<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
9
<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: August 6, 1997 Glenn L. Loch, President
------------------------
s/ Glenn L. Loch, President
10
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-1-1997
<PERIOD-END> Jun-30-1997
<EXCHANGE-RATE> 1
<CASH> 106,871
<SECURITIES> 0
<RECEIVABLES> 37,598
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 144,469
<PP&E> 318,253
<DEPRECIATION> 112,181
<TOTAL-ASSETS> 350,541
<CURRENT-LIABILITIES> 32,844
<BONDS> 0
0
0
<COMMON> 12,890
<OTHER-SE> 270,546
<TOTAL-LIABILITY-AND-EQUITY> 350,541
<SALES> 78,325
<TOTAL-REVENUES> 99,703
<CGS> 0
<TOTAL-COSTS> 115,753
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,666
<INCOME-PRETAX> (20,716)
<INCOME-TAX> 0
<INCOME-CONTINUING> (20,716)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,716)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
