SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 1-10437
TEXAS VANGUARD OIL COMPANY
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(Exact name of registrant as specified in its charter)
Texas 74-2075344
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
9811 Anderson Mill Rd., Suite 202
Austin, Texas 78750
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (512) 331-6781
Not Applicable
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Former name, address and 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 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 or No .
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Outstanding at September 30, 1995
--------------------- ---------------------------------
$.05 par value 1,427,087 shares
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TEXAS VANGUARD OIL COMPANY
QUARTERLY REPORT FORM 10-Q
INDEX
<CAPTION>
Page No.
<S> <C> <C>
Part I. Financial Information
Condensed Balance Sheets,
September 1995 and December 31, 1994 4
Condensed Statements of Operations,
Three and nine months ended
September 30, 1995 and 1994 5
Condensed Statements of Cash Flows,
Nine months ended September 30, 1995 and 1994 5
Notes to the Condensed Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Part II. Other Information 8
Signatures 9
<FN>
In the opinion of the Registrant, all adjustments (consisting of normal
recurring accruals) necessary to a fair statement of the results of the
interim periods have been included.
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<PAGE> 3
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TEXAS VANGUARD OIL COMPANY
Condensed Balance Sheets
(Unaudited)
<CAPTION>
Assets
September 30, December 31,
1995 1994
[PERIOD-END] 09/30/95 12/31/94
<S> <C> <C>
Current assets:
Cash and temporary investments $ 292,233 403,794
Trade accounts receivable 46,024 44,332
--------- ---------
Total current assets 338,257 448,126
--------- ---------
Property and equipment, at cost:
Oil and gas properties - successful
efforts method of accounting 1,990,393 1,578,038
Office furniture and vehicles 89,922 89,922
--------- ---------
2,080,315 1,667,960
Less accumulated depreciation,
depletion and amortization (202,153) (166,197)
----------- ----------
Total property and equipment 1,878,162 1,501,763
----------- ----------
Other assets 22,721 16,539
----------- ----------
Deferred tax asset 60,505 87,495
----------- ----------
TOTAL ASSETS $ 2,299,645 2,053,923
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<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
<S> <C> <C>
Current liabilities:
Trade accounts payable $ 26,130 107,752
Notes payable 787,352 793,459
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Total current liabilities 813,482 901,211
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Notes payable, long-term 281,060 ---
----------- ----------
Stockholders' equity:
Common stock 71,354 71,354
Additional paid-in capital 1,901,468 1,901,468
Retained deficit (767,719) (820,110)
----------- ----------
Total stockholders' equity 1,205,103 1,152,712
----------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2,299,645 2,053,923
----------- ----------
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
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<TABLE>
TEXAS VANGUARD OIL COMPANY
Condensed Statements of Operations
(Unaudited)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
[PERIOD-END] 9/30/95 9/30/94 9/30/95 9/30/94
<S> <C> <C> <C> <C>
Revenue:
Operating revenue $ 234,133 197,242 613,479 547,655
Other income 2,712 1,603 6,464 4,742
--------- ------- ------- -------
Total revenue 236,845 198,845 619,943 552,397
--------- ------- ------- -------
Costs and expenses:
Production cost 114,304 121,072 293,488 333,386
Exploration cost 384 157 936 667
Depreciation, depletion
and amortization 14,754 12,547 39,165 32,346
Interest 21,676 15,971 57,778 41,411
General and
administrative 56,939 49,245 149,196 154,518
Abandonment/Impairment
of leaseholds --- 31,100 --- 31,100
Loss on asset disposal --- 227,277 --- 227,277
--------- --------- --------- ---------
Total costs and expenses 208,057 457,369 540,563 820,705
--------- --------- --------- ---------
Income (loss) before
federal income taxes 28,788 (258,524) 79,380 (268,308)
--------- --------- --------- ---------
Deferred federal income
tax (benefit) 9,788 --- 26,989 (3,327)
--------- --------- --------- ---------
Net income (loss) $ 19,000 (258,524) 52,391 (264,981)
--------- --------- --------- ---------
Weighted average number
of shares outstanding 1,427,087 1,397,087 1,427,087 1,397,087
--------- --------- --------- ---------
Income per common share .01 (.185) .04 (.19)
--------- --------- --------- ---------
</TABLE>
<TABLE>
TEXAS VANGUARD OIL COMPANY
Condensed Statements of Cash Flows
(Unaudited)
<CAPTION>
Nine months ended
September 30,
1995 1994
<S> <C> <C>
[PERIOD-END] 9/30/95 9/30/94
Net cash flows from operating activities $ 40,771 335,090
Net cash flows from investing activities (427,284) (434,897)
Net cash flows from financing activities 274,953 158,313
----------- --------
Net change in cash
and temporary investments (111,560) 58,506
Cash and temporary investments at
beginning of period 403,794 228,191
---------- --------
Cash and temporary investments at
end of period $ 292,234 286,697
--------- --------
<FN>
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE> 5
TEXAS VANGUARD OIL COMPANY
Notes to Condensed Financial Statements
(Unaudited)
September 30, 1995
Note 1: Oil and Gas Properties
Texas Vanguard Oil Company (the Company) follows the "successful efforts"
method of accounting for oil and gas exploration and production operations.
Accordingly, costs incurred in the acquisition and exploratory drilling of
oil and gas properties are initially capitalized and either subsequently
expensed if the properties are determined not to have proved reserves, or
reclassified as a proven property if proved reserves are discovered.
Costs of drilling development wells are capitalized. Geological,
geophysical, carrying and production costs are charged to expense as incurred.
Costs related to acquiring unproved lease and royalty acreage are
periodically assessed for possible impairment of value. If the assessment
indicates impairment, the costs are charged to expense.
Depreciation, depletion and amortization of proved oil and gas property
costs, including related equipment and facilities, is provided using the
units-of-production method.
Note 2: Income Taxes
Effective January 1, 1993, the company adopted Statement No. 109. Under
the asset and liability method of Statement No. 109, deferred tax assets and
liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates in effect for
the year in which those temporary differences are expected to be
recovered or settled. Under Statement No. 109, the effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
The federal income tax expense of $9,788 and $26,989 for the three and
nine-months ended September 30, 1995, reduce the deferred tax asset on the
balance sheet and do not result in cash outflows.
In addition, the Company has approximately $1,000,000 of unused net
operating loss carryforwards for federal income tax purposes at September
30, 1995.
Note 3: Statement of Cash Flows
Cash and cash equivalents as used in the Condensed Statements of Cash
Flows include cash in banks and certificates of deposit owned.
<PAGE> 6
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition.
The following information is provided in compliance with SEC guidelines to
explain financial information shown in the Condensed Financial Statements.
RESULTS OF OPERATIONS
Operating revenues increased by $36,891 (19%) and $65,824 (12%) for the
three-month and nine-month periods ended September 30, 1995 from the
comparable prior-year periods primarily due to a change in management's
philosophy regarding the type of properties purchased by the Company.
Gas wells now represent 50% of the total properties owned by the Company
and the majority of oil wells now produce sweet oil instead of sour oil
which generally have higher sales prices per barrel.
The $6,768 (6%) and $39,898 (12%) decrease in production cost for the
three-month and nine-month periods ended September 30, 1995 as compared
to 1994 is primarily attributable to the efforts of the Company to reduce
these type of expenses and to purchase properties which generally have a
lower cost of operations associated with them. Interest expense increased
approximately $5,705 and $16,367 for the three-month and nine-month periods
ended September 30, 1995 from the comparable 1994 periods primarily as a
result of higher interest rates in 1995 as compared to 1994 as well as an
increase in notes payable.
LIQUIDITY AND CAPITAL RESOURCES
Since December 31, 1994, the deficit in working capital has increased by
approximately $22,140 to a total of $475,225. Since December 31, 1994, the
Company has entered into a new bank note payable maturing in April 1999, which
has allowed for classification of $281,060 of the bank note payable in the
long term category. The primary cause of the remaining deficit is short term
notes payable which are financing long term assets. Cash flow from operations
was $40,771 for the nine months ended September 30, 1995. Notes payable have
increased by $274,953 as a result of the purchases of producing properties and
equipment.
The worldwide crude oil prices continue to fluctuate in 1995. The depressed
state of oil and gas prices have had tremendously negative impacts on the
Company's profitability. The Company cannot predict how prices will vary
during the remainder of 1995 and what effect they will ultimately have on
the Company, but management believes that the Company will be able to generate
sufficient cash from operations to service its bank debt and provide for
maintaining current production of its oil and gas properties.
<PAGE> 7
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
FORM 10-Q
PART II OF TWO PARTS
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits: None.
b) Reports on Form 8-K: Report filed on August 15, 1995. Acquisition of
assets which represented more than ten percent of the total assets of
of the registrant.
<PAGE> 8
SIGNATURES
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
undersigned thereunto duly authorized.
TEXAS VANGUARD OIL COMPANY
--------------------------
(Registrant)
Robert N. Watson, Jr., President
--------------------------------
Robert N. Watson, Jr., President
(Principal Financial and
(Accounting Officer)
Date: November 10, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 292,233
<SECURITIES> 0
<RECEIVABLES> 46,024
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 338,257
<PP&E> 2,080,315
<DEPRECIATION> 202,153
<TOTAL-ASSETS> 2,299,645
<CURRENT-LIABILITIES> 813,482
<BONDS> 0
<COMMON> 1,427,087
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,299,645
<SALES> 613,479
<TOTAL-REVENUES> 619,943
<CGS> 293,488
<TOTAL-COSTS> 293,488
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57,778
<INCOME-PRETAX> 79,380
<INCOME-TAX> (26,989)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,391
<EPS-PRIMARY> .04
<EPS-DILUTED> 0
<PAGE>
</TABLE>
