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 March 31, 1998 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 1,295,286
(Title of Class) (Number of shares Outstanding
on May 7, 1998)
1
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Hess & Rohmer, P.C.
316 W. Broadway
Gainesville, Texas 76240
(940)665-0738
ACCOUNTANTS' COMPILATION REPORT
Loch Exploration, Inc.
Gainesville, Texas
We have compiled the accompanying balance sheet of Loch Exploration, Inc. as of
March 31, 1998 and December 31, 1997, and the related statements of operations
and cash flows for the three months ended March 31, 1998 and 1997, 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.
Hess & Rohmer, P.C.
A Professional Corporation
Certified Public Accountants
May 8, 1998
2
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LOCH EXPLORATION, INC.
Balance Sheets
As of March 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
1998 1997
-------- --------
ASSETS
Current assets
<S> <C> <C>
Cash $ 102,501 $ 80,457
Trade accounts receivable 8,393 12,067
Accounts receivable, related parties 18,024 33,449
Other accounts receivable - 45,000
Other current assets - 501
---------- ----------
Total current assets 128,918 171,474
Property and equipment - at cost
Oil and gas properties (full cost method) 125,777 125,777
Equipment 78,891 78,891
Accumulated depreciation and depletion (87,495) (84,306)
---------- ----------
Total property and equipment 117,173 120,362
---------- ----------
Total assets $ 246,091 $ 291,836
========== ==========
</TABLE>
Unaudited - see accountants' compilation report
3
<PAGE>
LOCH EXPLORATION, INC.
Balance Sheets
As of March 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
1998 1997
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
<S> <C> <C>
Accounts payable and accrued liabilities $ 5,915 $ 11,322
Accounts payable, related parties 12,519 19,912
Current portion of long term debt 17,380 22,172
----------- ---------
Total current liabilities 35,814 53,406
----------- ---------
Long term debt, less current portion 10,655 10,153
----------- ---------
Shareholders' equity
Common stock,$.01 par value; 50,000,000
shares authorized; 1,295,286 and 1,295,286
shares issued and outstanding at
March 31, 1998 and December 31, 1997 12,896 12,896
Additional paid in capital 326,538 326,538
Retained earnings (139,812) (111,157)
----------- ----------
Total shareholders' equity 199,622 228,277
----------- ----------
Total liabilities and shareholders' equity $ 246,091 $ 291,836
=========== ==========
</TABLE>
Unaudited - see accountants' compilation report
4
<PAGE>
LOCH EXPLORATION, INC.
Statements of Operations
For the three months ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
-------- --------
Revenues
<S> <C> <C>
Oil and gas revenue $ 11,145 $ 47,396
Equipment rental 843 8,724
Revenue from lease operations 2,072 1,467
Reimbursements - 1,156
Dividend income 1,201 1,226
---------- ----------
15,261 59,969
---------- ----------
Expenses
Lease operations 12,611 25,413
Depreciation and depletion 3,189 5,775
General and administrative 25,946 25,342
Interest expense 2,170 2,388
---------- ----------
43,916 58,918
---------- ----------
Net earnings (loss) before taxes (28,655) 1,051
Income taxes - -
---------- ----------
Net earnings (loss) $ (28,655) $ 1,051
=========== =========
Net earnings (loss) per share of common stock $ - -
=========== =========
Weighted average shares outstanding 1,295,286 1,289,796
=========== ==========
</TABLE>
Unaudited - see accountants' compilation report
5
<PAGE>
LOCH EXPLORATION, INC.
Statements of Cash Flows
For the three months ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
-------- -------
Cash flows from operating activities
<S> <C> <C>
Net earnings (loss) $ (28,655) $ 1,051
Reconciliation of net earnings (loss) to
net cash provided (used) by operating
activities:
Depreciation and depletion 3,189 5,775
(Increase) decrease in accounts receivable 64,600 9,797
Increase (decrease) in accounts payable (12,800) (6,949)
----------- ----------
Net cash provided (used) by operating activities 26,334 9,674
----------- ----------
Cash flows from investing activities
Net cash provided (used) by investing activities - -
Cash flows from financing activities
Repayment of debt (4,290) (8,381)
---------- ----------
Net cash provided (used) by financing activities (4,290) (8,381)
---------- ----------
Increase (decrease) in cash 22,044 1,293
Cash at beginning of period 80,457 119,721
---------- ----------
Cash at end of period $ 102,501 $ 121,014
========== ==========
Supplemental cash flow information:
Income tax paid $ - $ -
Interest paid 2,187 2,429
========== ==========
</TABLE>
Unaudited - see accountants' compilation report
6
<PAGE>
Management's Discussion and Analysis of Financial Conditions
and Results of Operations:
During the first quarter of 1998, the assets of the Company amounted to $246,091
showing a decrease of $134,376 from the first quarter 1997 assets. The decrease
in assets is mainly due to the sale of the New York properties at 12/31/97.
Revenues and Operating Expenses:
Total revenue for the first quarter of 1998 was $15,261 compared to $59,969 for
the first quarter of 1997, with a 1998 first quarter net loss of $28,655
compared to a net earnings of $1,051 in the 1997 first quarter. This decrease in
revenue and net earnings is primarily due to a decrease in oil and gas prices, a
decrease in equipment rental and to the sale of the New York properties on
12/31/97.
Lease operating expenses in the first quarter 1998 decreased $12,802 from the
first quarter 1997 lease operating expenses because of the sale of the New York
properties on 12/31/97.
7
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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
8
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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: May 8, 1998 s/ Glenn L. Loch, President
-------------------------
Glenn L. Loch, President
9
<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-31-1998
<PERIOD-START> Jan-1-1998
<PERIOD-END> Mar-31-1998
<EXCHANGE-RATE> 1
<CASH> 102,501
<SECURITIES> 0
<RECEIVABLES> 26,417
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 128,918
<PP&E> 204,668
<DEPRECIATION> 87,495
<TOTAL-ASSETS> 246,091
<CURRENT-LIABILITIES> 35,814
<BONDS> 0
0
0
<COMMON> 12,896
<OTHER-SE> 186,726
<TOTAL-LIABILITY-AND-EQUITY> 246,091
<SALES> 11,145
<TOTAL-REVENUES> 15,261
<CGS> 0
<TOTAL-COSTS> 12,611
<OTHER-EXPENSES> 31305
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,170
<INCOME-PRETAX> (28,655)
<INCOME-TAX> 0
<INCOME-CONTINUING> (28,655)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (28,655)
<EPS-PRIMARY> 0.000
<EPS-DILUTED> 0
</TABLE>
