SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
Commission File No. 0-09482
COLORADO WYOMING RESERVE COMPANY
-------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
WYOMING 83-0246080
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1820 South Elena Avenue, Suite B, Redondo Beach, California 90277
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(Address of Principal Executive Office including Zip Code)
(310) 546-5741
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(Issuer's telephone number)
Check whether the issuer (1) has 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 / /
There were 1,595,076 shares of the Registrant's $.01 par value common stock
outstanding as of September 30, 1997.
Transitional Small Business Disclosure: Yes / / No / X /
<PAGE>
COLORADO WYOMING RESERVE COMPANY
BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1997 1997
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<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 652,129 $ 748,459
Receivables:
Trade 8,764 3,918
Related party 5,577 11,095
----------- -----------
14,341 15,013
Assets held for sale (Note 7) 53,863 37,000
Prepaids 2,850 850
----------- -----------
Total current assets 723,183 801,322
PROPERTY AND EQUIPMENT:
Proved oil and gas properties, net of accumulated impairments of
$157,509 at June 30, 1996 -- 127,513
Other property and equipment 11,346 11,346
----------- -----------
11,346 138,859
Less accumulated depreciation, depletion and amortization:
Proved properties -- (72,301)
Other property and equipment (3,299) (2,421)
----------- -----------
(3,299) (74,722)
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Net property and equipment 8,047 64,137
----------- -----------
$ 731,230 $ 865,459
=========== ===========
CURRENT LIABILITIES:
Payables:
Trade $ 28,794 $ 11,815
Accrued payroll taxes -- 11,309
Accrued liabilities 33,000 25,250
----------- -----------
61,794 48,374
EQUITY:
Common stock, $.01 par value: authorized - 75,000,000 shares;
issued and outstanding - 1,595,076 shares 15,951 15,951
Additional paid-in capital 3,175,546 3,175,545
Accumulated deficit (2,522,061) (2,374,411)
----------- -----------
669,436 817,085
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$ 731,230 $ 865,459
=========== ===========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
COLORADO WYOMING RESERVE COMPANY
STATEMENT OF OPERATIONS
(UNAUDITED)
YEAR-TO-DATE
SEPTEMBER 30,
--------------------------
1997 1996
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Revenues
Oil and gas sales $ 14,717 $ 12,072
Other -- 1,050
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Total revenues 14,717 13,122
Expenses
Operation of producing properties 8,700 16,133
Production taxes 858 --
Depreciation, depletion and amortization 2,227 6,000
General and administrative 166,430 14,209
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Total expenses 178,215 36,342
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Operating (loss) (163,498) (23,220)
OTHER INCOME
Interest income 8,166 71
Gain on sale of assets 7,682 --
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(Loss) before income taxes (147,650) (23,149)
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Provision for income taxes -- --
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Net (loss) $ (147,650) $ (23,149)
=========== ===========
Net (loss) per share $ (0.09) $ (0.04)
=========== ===========
Weighted average common shares outstanding 1,595,076 560,076
=========== ===========
See accompanying notes to financial statements.
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<PAGE>
COLORADO WYOMING RESERVE COMPANY
STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
YEAR-TO-DATE
SEPTEMBER 30,
----------------------
1997 1996
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<S> <C> <C>
Cash flows from operating activities:
Net (loss) $(147,650) $ (23,149)
Adjustments to reconcile net income to net cash provided by
operating activities:
Depletion, depreciation and amortization 2,227 6,000
(Gain) on asset sale (7,682) --
Change in current assets and liabilities:
Receivables 672 6,178
Payables 13,420 (10,709)
Other (1,999) --
--------- ---------
Net cash (used in) operating activities (141,012) (21,680)
Cash flows from investing activities:
Proceeds from asset sales 44,682 1,750
--------- ---------
Net cash provided by investing activities 44,682 1,750
Cash flows from financing activities -- --
Net (decrease) in cash and equivalents (96,330) (19,930)
Cash and equivalents at beginning of period 748,459 24,971
--------- ---------
Cash and equivalents at end of period $ 652,129 $ 5,041
========= =========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
COLORADO WYOMING RESERVE COMPANY
("the Company")
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
PERIODS ENDED SEPTEMBER 30, 1997 AND JUNE 30, 1997
(1) FINANCIAL STATEMENT ADJUSTMENTS AND FOOTNOTE DISCLOSURES
The accompanying financial statements are unaudited. However, in the opinion of
management, the accompanying financial statements reflect all adjustments
necessary for a fair presentation.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the Securities and Exchange
Commission's rules and regulations. Management believes the disclosures made are
adequate to make the information not misleading and suggests that these
financial statements be read in conjunction with the Company's June 30, 1997
Form 10-KSB.
(2) COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS
On March 15, 1997, the Company entered into an Agreement for Administrative
Services (the "Trinity Agreement") with Trinity Petroleum Management LLC, a
Colorado limited liability company ("Trinity"). Pursuant to the terms of the
Trinity Agreement, Trinity will perform certain management functions for the
Company for a fee of $2,000 per month and reimbursement of third party expenses.
In addition to the $2,000 per month, the Company pays Trinity fees for certain
professional services provided by Trinity on a per-hour basis. The Trinity
Agreement is for an initial term of six months, continuing thereafter on a
month-to-month basis, terminable upon 30 days written notice by either party.
During October, 1997, the Company entered into an agreement with Trinity
Exploration Company, Inc. ("Exploration"), the terms of which provide for
Exploration to pursue oil and gas property leads and to generate drilling
prospects for the Company. Should the Company acquire an Exploration prospect,
Exploration will be assigned a ten percent leasehold working interest in the
prospect. The cost of drilling and completing Exploration's ten percent interest
will be borne by the Company and Exploration's interest will increase to twenty
percent when the Company recoups all of the net costs incurred on the prospect
and the well(s) drilled thereon.
(3) NET LOSS PER SHARE
Warrants and options have been excluded from the net loss per share calculation
since their effect is antidilutive.
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<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
During the preceding fiscal year, the Company pursued a strategy of identifying
and acquiring producing properties in the Rocky Mountain region. However,
relatively high Rocky Mountain natural gas prices, together with perceptions of
a strong future pricing environment, created a situation that precluded the
Company from consummating a producing property purchase on terms which would
allow for an adequate return on the Company's capital.
Given the preceding, the Company recently revised its strategy and, as described
in Note 2 of the financial statements, has entered into an agreement with a
geologic/geophysical consulting company. It is anticipated that the consulting
company will identify and develop drilling prospects in the Rocky Mountains and
the northern plains states for acquisition by the Company.
Although the Company's existing capital is sufficient to cover certain prospect
acquisition costs, fully exploiting any such prospects will require capital
significantly in excess of what the Company currently has. While management has
identified potential capital sources and is confident that a solid prospect will
allow it to raise additional capital, no firm commitment from a capital source
presently exists.
No capital commitments exist at present and the Company's capital position is
adequate to fund its deficit cash flow from operations.
OPERATIONS Increases in general and administrative expense during the quarter
ended September 30, 1997, versus the same quarter in 1996, combined with
virtually identical revenues in both quarters, resulted in the significant
change from 1996 to 1997.
INVESTING The 1997 proceeds are from the sale of the Company's undeveloped
Canadian property. Given the relatively minor net oil and gas sales generated by
the Company's existing production and the change in strategy described above,
the Company is seeking to dispose of its remaining properties. However, proceeds
from the disposition are not expected to be significant.
RESULTS OF OPERATIONS
OIL AND GAS OPERATIONS Although the Company's properties were marginally
profitable during the quarter ended September 30, 1997 (versus a deficit in the
1996 quarter), the properties are not projected to achieve profitability on a
regular basis. Hence, the decision was reached by management to dispose of them.
GENERAL AND ADMINISTRATIVE EXPENSE Prior to the quarter ended December 31, 1996
(the second quarter of fiscal 1997), the Company's common stock had not traded
for a number of years. During fiscal 1997's second quarter, the Company raised
private equity capital and the Company's new management undertook to increase
awareness of the Company in the investment community. As a result, there has
been certain limited trading of the Company's shares. Additionally, the Company
hired a full time president and began actively pursuing its business strategy.
The effect of running a more active company is reflected in general and
administrative expense for the quarter ended September 30, 1997, versus the
quarter ended September 30, 1996. Specifically, salary expense, professional
fees and management fees all were significantly higher during 1997.
Additionally, the Company printed and distributed an annual report to
shareholders in conjunction with its annual meeting held October 17, 1997; no
comparable costs were incurred during 1996.
OTHER Interest income derives from the investment of the proceeds of the private
equity offering.
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<PAGE>
PART TWO
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
a. The Company's Annual Meeting of Shareholders was held at 1801
Broadway, Suite 600, Denver, Colorado at 10:30 a.m., on Friday,
October 17, 1997.
b. Matters voted upon at the meeting and the results of the vote are as
follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
(1) To elect the following three directors to
hold office until the next Annual Meeting
of Stockholders and until their successors
are elected and qualified:
Kim M. Fuerst 851,037 887 1,224
Faisal Chaudhary 851,037 876 1,235
J. Samuel Butler 851,037 876 1,235
(2) To approve an Equity Incentive Plan; 813,716 37,793 1,639
(3) To approve an Incentive Stock Option
Plan; 813,711 37,868 1,669
(4) To ratify previously granted stock options; 813,666 37,828 1,654
(5) To approve the appointment of Coopers &
Lybrand L.L.P. as the Company's
independent auditors; 851,472 550 1,126
(6) To amend and restate the Company's 834,859 16,847 1,442
Articles of Incorporation to change the name
of the Company to Colorado Wyoming Reserve
Company and to delete the provisions permitting
cumulative voting in the election of directors.
</TABLE>
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<PAGE>
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. EXHIBITS
Exhibit 27 Financial Data Schedule Filed herewith electronically
b. REPORTS ON FORM 8-K
None.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Issuer caused
this Form 10-QSB to be signed on its behalf by the undersigned, thereunto duly
authorized.
COLORADO WYOMING RESERVE COMPANY
Dated: November 13, 1997 By /S/ KIM M. FUERST
---------------------------------
Kim M. Fuerst, Chief Financial
Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheets and statements of operations found on pages 2 and 3 of the Company's Form
10-QSB for the year to date, and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000318852
<NAME> Colorado Wyoming Reserve Company
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 652,129
<SECURITIES> 0
<RECEIVABLES> 14,341
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 723,183
<PP&E> 11,346
<DEPRECIATION> 0
<TOTAL-ASSETS> 731,230
<CURRENT-LIABILITIES> 61,794
<BONDS> 0
0
0
<COMMON> 15,951
<OTHER-SE> 3,175,546
<TOTAL-LIABILITY-AND-EQUITY> 731,230
<SALES> 14,717
<TOTAL-REVENUES> 14,717
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 178,215
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (147,650)
<INCOME-TAX> 0
<INCOME-CONTINUING> (147,650)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (147,650)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
