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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from...............to...............
Commission file number 0-9378
ENEX RESOURCES CORPORATION
(Name of small business issuer in its charter)
Delaware 93-0747806
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 Rockmead Drive
Three Kingwood Place
Kingwood, Texas 77339
(Address of principal executive offices)(Zip Code)
Issuer's telephone number: (713) 358-8401
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the
Exchange Act:
Common Stock, $.05 par value
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[x]
State issuer's revenues for its most recent fiscal year. $6,391,769
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days (See definition of affiliate in Rule 12b-2 of the Exchange Act)
$6,639,844 at March 1, 1996.
Applicable Only to Corporate Registrants
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: At March 1, 1996 -
1,372,297.
Documents Incorporated by Reference:
NONE
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<PAGE>
Prepaid expenses and other current assets increased to $505,206 at December 31,
1995 from $257,386 at December 31, 1994. This represents an increase of
$247,820. This increase is primarily the result of prepaid expenses related to
the liquidation of six managed limited partnerships and the consolidation of 34
managed limited partnerships, which were both in progress at December 31, 1995.
As a result of the higher net income and reduction of debt, working capital
increased to $3,165,669 at December 31, 1995, from $2,333,517 at December 31,
1994. At December 31, 1995, the Company's current ratio was 3.01 and it had no
long-term debt.
Results of Operations
Net income in 1995 increased to $1,269,400, from $1,051,476 in 1994 and $931,874
in 1993. This represents earnings per share of $.90 in 1995 as compared to $.75
in 1994 and $.69 in 1993. The increase in net income in 1995 as compared to 1994
was primarily the result of lower general and administrative expenses and a
larger gain from the sale of properties. The increase from 1993 to 1994 was
primarily attributable to lower income tax expense and higher revenues produced
in 1994.
Oil, gas and gas plant sales were $5,255,726 in 1995, $5,959,395 in 1994 and
$5,604,624 in 1993. Sales decreased by $703,669 or 12% in 1995 from 1994. Oil
sales decreased by $108,875. A 10% decrease in oil production reduced sales by
$282,905. This decrease was partially offset by a 7% increase in the average oil
sales price. Gas sales decreased by $557,262 or 20%. A 5% decrease in gas
production reduced sales by $128,450. A 16% decrease in the average gas sales
price reduced sales by an additional $428,812. Gas plant sales decreased by
$37,532. A 10% decrease in gas plant production reduced sales by $40,777. This
decrease was partially offset by a 1% increase in the average gas plant products
sales price. The decreases in production were primarily the result of natural
production declines. The changes in average sales prices correspond with changes
in the overall market for the sale of oil, gas and gas plant products.
Oil sales increased $400,049 or 17% in 1994 from 1993. A 22% increase in
production increased sales by $523,954. This increase was partially offset by a
4% decrease in average oil prices. Gas sales decreased by $87,550 or 3% in 1994
from 1993. This decrease was primarily the result of an 11% decrease in average
prices, which reduced sales by $356,125. The lower prices were partially offset
by a 9% increase in gas production. Gas plant sales increased by 10% or $34,770.
A 21% increase in gas plant production increased sales by $74,425. This increase
was partially offset by a 9% decrease in average gas plant prices. The increases
in production were primarily a result of the acquisition of additional interests
in managed limited partnerships and oil and gas properties purchased in 1994, as
noted above.
Other revenues were $681,746 in 1995 as compared with $757,832 in 1994 and
$560,854 in 1993. Such revenues included rig rental revenues of $106,144,
$24,885 and $189,947 in 1995, 1994 and 1993, respectively, and gain recognized
from the early receipt of notes receivable of $393,980, $201,000 and $175,660 in
1995, 1994 and 1993, respectively. Also included in the 1995 amount is mineral
lease rental income of $105,686 to lease 2,113.73 acres in San Augustine County,
Texas. Commission fee income of $45,089 was recorded in 1994. The decrease in
other revenues from 1994 to 1995 and the increase in other revenues from 1993 to
1994 was primarily due to the reversal of a litigation contingency accrual,
which was initially recorded in 1993, and the recognition of a related
receivable, plus accrued interest, from an appellate court verdict which was
rendered in December 1994 in favor of one of the Company's managed limited
partnerships. The Company's share of the contingency reversal and receivable
increased other income by $421,065 in 1994. See Note 8 of the Notes to
Consolidated Financial Statements for further information. The receipt of
unrecognized notes receivable was accelerated in 1995 as a result of the
liquidation of four managed limited partnerships. As a result, there is no
longer an unrecognized notes receivable.
II-4
<PAGE>
Item 7. Financial Statements and Supplementary Data
INDEPENDENT AUDITORS' REPORT
Enex Resources Corporation:
We have audited the accompanying consolidated balance sheets of Enex Resources
Corporation and its subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of Enex Resources
Corporation's management. Our responsibility is to express an opinion on the
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Enex Resources Corporation and
subsidiaries at December 31, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1995 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Houston, Texas
March 18, 1996
II-7
<PAGE>
foregone net revenues will be allocated to the limited partners
until such time as no Deficiency exists. During 1993, 1994 and
1995, the general partner's 10% share of Program II net
revenues, totaling $37,122, $41,119 and $64,046, respectively,
was allocated to the limited partners. During 1994 and 1995, the
general partner's 10% share of Program I net revenues, totaling
$31,830 and $99,154, respectively, was allocated to the limited
partners.
In addition to the above, the Company is reimbursed for direct
expenditures made on behalf of the partnership operations.
Overhead billed to the managed limited partnerships, which is
treated as a reduction in general and administrative expenses,
was $1,783,373, $2,240,194, and $1,953,176 in 1995, 1994 and
1993, respectively.
Income Taxes - The Company uses the assetn and liability method
to account for deferred income taxes, which focuses on the
future tax return consequences of temporary differences in
determining the deferred tax balances. Under this method, the
deferred tax expense is calculated as the change in the deferred
tax balance sheet accounts during the period. Temporary
differences are measured at the balance sheet date and are
valued in accordance with current tax laws. See Note 4 for more
information.
Cash Flows - The Company presents its cash flows using the
indirect method and considers all highly liquid investments with
a maturity of three months or less to be cash equivalents.
Reclassifications - Certain reclassifications have been made to
the prior year balances to conform to current year presentation.
2. COSTS REIMBURSABLE BY AND RECEIVABLE FROM
MANAGED LIMITED PARTNERSHIPS
Certain startup and ongoing general and administrative costs are incurred
by the Company on behalf of its managed limited partnerships. These
costs are allocated to the partnerships in accordance with the
Partnership Agreements and are reimbursed to the Company over a period
generally not to exceed five years. The anticipated receipt of such
receivables have been scheduled in accordance with projected future
net revenues and based upon historical collections. The receivables
have been classified as current or non-current in accordance with such
projections. The Company's balance sheet at December 31, 1995, also
reflects a note receivable from a managed limited partnership. This
note was a result of the company partially financing the purchase of
an oil and gas interest made by the limited partnership. The resulting
note is subject to a formal agreement with terms as discussed in Note
5, below.
3. DEBT
The long-term debt at December 31, 1995 consisted of a $850,000
loan from a bank under a $2.8 million revolving line of credit
collaterized by substantially all of the assets of the Company.
The bank loan bore interest at an average rate of 9.63% in 1995.
The Company plans to repay the remaining portion of the
outstanding debt in the first half of 1996.
The long-term debt at December 31, 1994 consisted of a
$1,924,000 loan from a bank under a $5.925 million revolving
line of credit collaterized by substantially all of the assets
of the Company. The bank loan bore interest at an average rate
of 8.16% in 1994. In 1995, the Company repaid a net $1,074,000.
II-15
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Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amount
used for income tax purposes. The tax effects of significant
items comprising the Company's net deferred tax asset as of
December 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
----------------- -----------------
Difference between tax and book net property
<S> <C> <C>
basis $ 4,613 $ 27,591
Difference between basis in managed limited
partnerships for financial reporting purposes and
income tax purposes 3,796,403 4,229,761
Intangible drilling costs which remain
capitalized for financial reporting
purposes which were deducted for federal income tax
purposes (74,483) (53,836)
Net operating loss carryforward 478,565 293,772
(expires 2009-2010)
Timing difference from lawsuit contingency (50,683) (45,281)
---------- -----------
Gross deferred tax asset 4,154,415 4,452,007
Valuation allowance (3,505,985) (4,203,254)
------------ ------------
Net deferred tax asset recognized $ 648,430 $ 248,753
============ =============
</TABLE>
The valuation allowance reserves the net deferred tax asset due to uncertainties
inherent in the oil and gas market. The Company estimated the amount of future
tax benefit to be received from the deferred tax asset using estimated future
net revenues and future tax expenses. The remaining amount of the gross deferred
tax asset is reserved by a valuation allowance. The valuation allowance
decreased by $697,269 and $640,091 in 1995 and 1994, respectively.
II-17
<PAGE>
9. COMMITMENTS AND CONTINGENT LIABILITIES
The Company is committed to offer to repurchase the limited
partners' interests in its managed limited partnerships
formed under the Programs (except for Programs I,V and VI) at
annual intervals. The purchase price is based primarily on
reserve reports prepared by independent petroleum engineers,
reduced by a risk factor. Generally, for the first three
annual purchase offers after the formation of a partnership,
the Company's annual repurchase obligation is limited to the
lesser of 10% to 25% of initial partnership subscriptions or
$1,000,000 per partnership. As of December 31, 1995, such
commitments totaled $3,952,698. During 1995, 1994 and 1993,
the Company paid cash to repurchase limited partner interests
as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Program I $ 43,409 $ 750,019 $ 469,369
Program II 23,607 130,441 88,710
Program III 8,544 66,061 70,901
Program IV 7,847 98,351 17,899
Program V 13,875 63,730 58,424
Program VI 393 7,222 -
Income and Retirement Fund 12,232 73,264 11,044
88-89 Income and Retirement Fund 5,987 43,022 2,014
90-91 Income and Retirement Fund 10,653 39,267 3,848
----------- ------------- ------------
TOTAL $ 126,547 $ 1,271,377 $ 722,209
========= =========== ==========
</TABLE>
As general partner, the Company is contingently liable for
all debts and actions of the managed limited partnerships.
However, in management's opinion, the existing assets of the
limited partnerships are sufficient to satisfy any such
partnership indebtedness.
The Company has an employment agreement with its founder and
President, Gerald B. Eckley. The agreement, which was amended
on May 19, 1992, provides that Mr. Eckley will be paid a
minimum salary of $240,000 per year for a five year term. As
long as Mr. Eckley is employed by the Company, the agreement
will be automatically extended every May 19th for an
additional year. The agreement provides for compensation
continuation benefits in the event of Mr. Eckley's death or
disability. If Mr. Eckley terminates the agreement following
a change of control of the Company or because of a breach of
the material provisions of the agreement or because
performance of his duties becomes hazardous to his health, he
will remain entitled to the full base compensation then in
effect as severance pay until the normal expiration of the
agreement.
II-20
<PAGE>
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ENEX RESOURCES CORPORATION
By: ENEX RESOURCES CORPORATION
November 7, 1996 By: /s/ G. B. Eckley
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G. B. Eckley, President
In accordance with the Exchange Act, this report has been
signed below on November 7, 1996, by the following persons in the capacities
indicated.
ENEX RESOURCES CORPORATION
By: /s/ G. B. Eckley
President, Chief Executive
------------------ Officer and Director
G. B. Eckley
/s/ R. E. Densford Vice President, Secretary, Treasurer,
Chief Financial Officer and Director
-------------------
R. E. Densford
/s/ James A. Klein Controller and Chief Accounting Officer
-----------------
James A. Klein
S-1
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/s/ Robert D. Carl, III
--------------------------
Robert D. Carl, III Director
/s/ Martin J. Freedman
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Martin J. Freedman Director
/s/ William C. Hooper, Jr.
--------------------------
William C. Hooper, Jr. Director
/s/ Tom Shorney
--------------------------
Tom Shorney Director
/s/ Stuart Strasner
--------------------------
Stuart Strasner Director
S-2
