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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 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
incorporation or organization) Identification No.)
1801 BROADWAY, SUITE 600
DENVER, COLORADO 80202
(Address of principal executive offices) (Zip Code)
(303) 296-1908
(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 December 31, 1997.
Transitional Small Business Disclosure: Yes / / No /X /
<PAGE>
COLORADO WYOMING RESERVE COMPANY
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 530,026 $ 748,459
Receivables:
Trade 12,884 3,918
Related party 5,577 11,095
----------- -----------
18,461 15,013
Assets held for sale 53,132 37,000
Prepaids 8,081 850
----------- -----------
Total current assets 609,700 801,322
PROPERTY AND EQUIPMENT:
Unproved oil and gas properties 26,979 --
Proved oil and gas properties, net of
accumulated impairments of $157,509 at
June 30, 1997 -- 127,513
Other property and equipment 13,646 11,346
----------- -----------
40,625 138,859
Less accumulated depreciation, depletion and
amortization:
Proved properties -- (72,301)
Other property and equipment (4,244) (2,421)
----------- -----------
(4,244) (74,722)
----------- -----------
Net property and equipment 36,381 64,137
----------- -----------
$ 646,081 $ 865,459
=========== ===========
CURRENT LIABILITIES:
Payables:
Trade $ 71,329 $ 11,815
Accrued payroll taxes -- 11,309
Accrued liabilities 9,572 25,250
----------- -----------
80,901 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 3,334,545 3,175,545
Accumulated deficit (2,785,316) (2,374,411)
----------- -----------
565,180 817,085
----------- -----------
$ 646,081 $ 865,459
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
COLORADO WYOMING RESERVE COMPANY
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
-------------------------- ---------------------------
1997 1996 1997 1996
-------------------------- ---------------------------
<S> <C> <C> <C> <C>
Revenues
Oil and gas sales $ 7,377 23,259 $ 22,094 $ 35,331
Management and consulting fees -- 1,050 -- 2,100
----------- ----------- ----------- -----------
Total revenues 7,377 24,309 22,094 37,431
Expenses
Operation of producing properties 8,540 17,278 18,098 33,411
Depreciation, depletion and amortization 1,676 6,000 3,903 12,000
Equity issued as compensation 159,000 147,672 159,000 147,672
General and administrative 108,972 34,687 275,402 48,897
----------- ----------- ----------- -----------
Total expenses 278,180 205,637 456,403 241,980
----------- ----------- ----------- -----------
Operating (loss) (270,811) (181,328) (434,309) (204,549)
OTHER INCOME
Interest income 7,556 90 15,722 161
Gain on sale of assets -- -- 7,682 --
----------- ----------- ----------- -----------
(Loss) before income taxes (263,255) (181,238) (410,905) (204,388)
=========== =========== =========== ===========
Provision for income taxes -- -- -- --
----------- ----------- ----------- -----------
Net (loss) $ (263,255) $ (181,238) $ (410,905) $ (204,388)
=========== =========== =========== ===========
Basic (loss) per share $ (.17) $ (.20) $ (.17) $ (.28)
=========== =========== =========== ===========
Weighted average common shares
outstanding 1,595,076 925,130 1,595,076 1,620,076
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
COLORADO WYOMING RESERVE COMPANY
STATEMENT OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
---------------------------
1997 1996
---------------------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $(410,905) $(204,388)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion, depreciation and amortization 3,903 12,000
(Gain) on asset sale (7,682) --
Equity issued as compensation 159,000 147,672
Changes in current assets and liabilities:
Receivables (3,448) 11,553
Payables 32,527 (21,873)
Other (7,231) (2,888)
--------- ---------
Net cash (used in) operating activities (233,836) (57,924)
Cash flows from investing activities:
Additions to unproved properties (26,979)
Asset purchases (2,300) (24,971)
Proceeds from asset sales 44,682 --
--------- ---------
Net cash provided by (used in) investing activities 15,403 (24,971)
Cash flows from financing activities:
Sale of common stock -- 974,128
--------- ---------
Net cash provided by financing activities -- 974,128
--------- ---------
Net (decrease) increase in cash and equivalents (218,433) 891,233
Cash and equivalents at beginning of period 748,459 24,971
--------- ---------
Cash and equivalents at end of period $ 530,026 $ 916,204
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
COLORADO WYOMING RESERVE COMPANY
(the "Company")
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
PERIODS ENDED DECEMBER 31, 1997 AND 1996 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 was for an initial term of six months, and has continued 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) BASIC LOSS PER SHARE
Warrants and options have been excluded from the basic loss per share
calculation since their effect is antidilutive.
-5-
<PAGE>
(4) SUBSEQUENT EVENT
In order to acquire the stock of Shoreline Resource Company, Inc., a
closely-held Colorado corporation ("Shorco"), the Company effected a merger on
February 6, 1998, whereby CWSub, Inc., a wholly-owned subsidiary of the Company
("CWSub"), was merged with and into Shorco, with Shorco surviving the merger and
becoming a wholly-owned subsidiary of the Company. Pursuant to the Agreement and
Plan of Merger, dated February 6, 1998, by and between the Company, Shorco,
CWSub and the shareholders of Shorco, the Company issued 797,618 shares of its
common stock, $.01 par value per share, in exchange for all of the issued and
outstanding shares of common stock of Shorco.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
During the fiscal year ended June 30, 1997, the Company pursued a strategy of
identifying and acquiring Rocky Mountain natural gas producing properties with
development potential. 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.
While 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. Although management
has identified potential capital sources, no firm commitment from a capital
source presently exists.
Pursuant to the February 1998 merger described in Note 4 to the Financial
Statements, the Company committed $300,000 to acquire and develop 3-D seismic
controlled oil and gas prospects in a targeted project area in southern Utah.
Acreage acquisition is currently under way.
Additionally, it is anticipated that another $49,000 will be expended during the
quarter ending March 31, 1998 on a shut-in property having exploitation
potential. This project was identified under the exploration agreement described
above.
OPERATIONS. Increases in general and administrative expense during the six
months ended December 31, 1997 versus the same period in 1996, combined with
lower 1997 revenues, resulted in the significant 1997 deficit.
-6-
<PAGE>
INVESTING. The asset sale proceeds realized during the six months ended December
31, 1997 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.
RESULT OF OPERATIONS
OIL AND GAS OPERATIONS. Although the Company's properties were marginally
profitable during the three and six months ended December 31, 1997 (no material
change from the comparable 1996 periods), the properties are not projected to
achieve profitability on a regular basis going forward.
Hence, the decision 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, the Company's
shares began trading on a limited basis. Additionally, the Company hired a full
time president and began actively pursuing its business strategy of developing
3-D seismic projects in the Rocky Mountain region.
The effect of running a more active company is reflected in the increase in
general and administrative expense during the first six months of fiscal 1998
versus the same six month period of fiscal 1997. Specifically, salary expense,
professional fees and management fees all were significantly higher during the
first two quarters of fiscal 1998. Additionally, the Company printed and
distributed its June 30, 1997 annual report to shareholders in conjunction with
its annual meeting held in October 1997; no comparable costs were incurred
during the six months ended December 31, 1996.
Equity issued as compensation totaled $159,000 and $148,000 during fiscal 1998
and 1997, respectively. The expense consisted of non-cash items of $159,000 and
$90,000 during the quarters ended December 31, 1997 and 1996, respectively, made
pursuant to Statement of Financial Accounting Standard 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION. An additional amount of $58,000 (also non-cash) during
the quarter ended December 31, 1996 is included in equity issued as
compensation expense. This amount represents the fair market value of shares of
the Company's common stock issued for services rendered by consultants.
OTHER. Interest income derives from the investment of the proceeds of the
private equity offering.
-7-
<PAGE>
PART II
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.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27 Financial Data Schedule filed herewith
electronically.
(b) Reports on Form 8-K.
None.
-8-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Issuer caused this
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
COLORADO WYOMING RESERVE COMPANY
Dated: May 13, 1998 By: /s/ Kim M. Fuerst
--------------------------------------
Kim M. Fuerst, President
-9-
<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/A 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> OCT-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 530,026
<SECURITIES> 0
<RECEIVABLES> 18,461
<ALLOWANCES> 0
<INVENTORY> 61,263
<CURRENT-ASSETS> 609,700
<PP&E> 36,381
<DEPRECIATION> 0
<TOTAL-ASSETS> 646,081
<CURRENT-LIABILITIES> 80,901
<BONDS> 0
0
0
<COMMON> 15,951
<OTHER-SE> 549,229
<TOTAL-LIABILITY-AND-EQUITY> 646,081
<SALES> 45,489
<TOTAL-REVENUES> 45,489
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 456,403
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (410,905)
<INCOME-TAX> 0
<INCOME-CONTINUING> (410,905)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (410,905)
<EPS-PRIMARY> (.26)
<EPS-DILUTED> (.26)
</TABLE>
