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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act
of 1934
For the Quarterly Period Ended March 31, 1999
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the transition period from ____________ to _____________
Commission File Number 0-9355
ROSELAND OIL AND GAS, INC.
(Exact name of registrant as specified in its charter)
Oklahoma 87-0352095
(State or other jurisdiction of incorporation) (IRS Employer Identification No.)
1720 Northwest Highway, Suite 320
Garland, TX 75041
(Address of principal executive offices)
(972) 686-0369
(Issuer's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act 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 [ ] No [ X ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common Stock, $.05 Par Value - 18,238,347 shares as of June 15, 1999.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
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ROSELAND OIL AND GAS, INC.
TABLE OF CONTENTS
PART I -- Financial Information
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ITEM 1. Financial Statements
Balance Sheets, Unaudited
As of March 31, 1999 3
Statements of Operations, Unaudited
For the three and nine months ended March 31, 1999 and 1998 5
Statement of Cash Flows, Unaudited
For the three and nine months ended March 31, 1999 7
Notes to Unaudited Financial Statements 8
ITEM 2. Management's Discussion and Analysis 8
PART II -- Other Information
ITEM 1. Legal Proceedings 9
ITEM 2. Changes in Securities 9
ITEM 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 10
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROSELAND OIL AND GAS, INC.
BALANCE SHEET
March 31, 1999 and June 30, 1998
(Unaudited)
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ASSETS
March 31, 1999 June 30, 1998
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Current Assets:
Cash and cash equivalents $ 9,611 $ 303
Accounts receivable 25,536 56,930
Marketable securities 111,290 0
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Current Assets 146,437 57,233
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Property and equipment, at cost:
Oil and gas properties 1,202,867 2,314,466
Office and other equipment 909 910
Less accumulated depreciation,
depletion, and amortization 223,018 1,020,503
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Net Property and Equipment 980,758 1,294,873
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Other Assets:
Other 0 34,959
Marketable securities 0 96,875
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Total Other Assets 0 131,834
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TOTAL ASSETS $1,127,195 $1,483,940
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THE ACCOMPANYING NOTES ARE PART OF THESE FINANCIAL STATEMENTS
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ROSELAND OIL AND GAS,INC.
BALANCE SHEET
March 31, 1999 and June 30, 1998
(Unaudited)
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LIABILITIES & STOCKHOLDERS EQUITY
March 31, 1999 June 30, 1998
<S> <C> <C>
Current Liabilities:
Accounts payable 61,687 188,554
Due to affiliates 376,643 196,628
Accrued liabilities 21,744 12,820
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Total Current Liabilities 460,074 398,002
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Notes Payable 118,760 118,760
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Total Long-term Liabilities 118,760 118,760
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Stockholders' Equity
Common stock, $.05 par value, authorized
50,000,000 shares, issued 18,428,347 and 17,730,847 909,518 886,543
Additional paid-in capital 2,868,587 2,636,812
Stock subscribed and paid - to be issued 0 110,000
Accumulated retained deficit (3,205,409) (2,627,427)
Unrealized loss on securities (24,335) (38,750)
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Total Stockholders' Equity 548,361 967,178
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Total Liability & Stockholders' Equity $ 1,127,195 $ 1,483,940
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THE ACCOMPANYING NOTES ARE PART OF THESE FINANCIAL STATEMENTS
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ROSELAND OIL AND GAS, INC.
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1999 and 1998
(Unaudited)
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<CAPTION>
For the Period For the Period
From January 1, 1999 From January 1, 1998
to March 31, 1999 to March 31, 1998
<S> <C> <C>
REVENUE:
Oil and gas sales $ 10,505 $ 70,337
Rental income from operating leases 0 2,007
Overhead recovery fees 0 26,355
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Total Revenues 10,505 98,699
COSTS AND EXPENSES:
Oil and gas production, operating
and development costs 12,444
35,943
Selling, general and administrative expenses 60,745 30,205
Depreciation, depletion and amortization 8,184 20,405
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Total Costs and Expenses 81,373 86,553
OPERATING INCOME (LOSS) $ (70,868) $ 12,146
Non-operating Income (Expenses):
Interest income 0 87
Gain (loss) on sale of assets 0 (69,473)
Other income (loss) 0 (357)
Interest expense (3,088) (3,377)
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Total Non-Operating Income (Expense) (3,088) (73,120)
Income (Loss) before provision for income taxes $ ( 73,956) $ (60,974)
(Provision) benefit for income taxes 0 0
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Net Income (loss) $ (73,956) $ (60,974)
EARNINGS (LOSS) PER COMMON SHARE: $ 0 $ 0
</TABLE>
THE ACCOMPANYING NOTES ARE PART OF THESE FINANCIAL STATEMENTS
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ROSELAND OIL AND GAS, INC.
STATEMENTS OF OPERATIONS
For the Nine Months Ended March 31, 1999 and 1998
(Unaudited)
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<CAPTION>
For the Period For the Period
From July 1, 1998 to From July 1, 1997 to
March 31, 1999 March 31, 1998
<S> <C> <C>
REVENUE:
Oil and gas sales $ 45,419 $ 211,011
Rental income from operating leases 0 6,021
Overhead recovery fees 0 79,065
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Total Revenues 45,419 296,097
COSTS AND EXPENSES:
Oil and gas production, operating
and development costs 67,682 107,829
Selling, general and administrative expenses 367,449 90,615
Depreciation, depletion and amortization 24,504 61,215
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Total Costs and Expenses 459,635 259,659
OPERATING INCOME (LOSS) $ (414,216) $ 36,438
Non-operating Income (Expenses):
Interest income 0 261
Gain (loss) on sale of assets (346,848) (208,419)
Other income (loss) 196,491 (1,071)
Interest expense (9,825) (10,131)
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Total Non-Operating Income (Expense) (160,182) (219,360)
Income (Loss) before provision for income taxes $ (574,398) $ (182,922)
(Provision) benefit for income taxes 0 0
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Net Income (loss) $ (574,398) $ (182,922)
EARNINGS (LOSS) PER COMMON SHARE: $ 0 $ 0
</TABLE>
THE ACCOMPANYING NOTES ARE PART OF THESE FINANCIAL STATEMENTS
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ROSELAND OIL AND GAS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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For the Nine For the Nine
Months Ended Months Ended
March 31, 1999 March 31, 1998
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Cash Flows From Operating Activities:
Net income (loss) $(574,398) $(112,000)
Adjustments to reconcile net income (loss)
to cash provided (used) by operating activities:
Depreciation, depletion and amortization 24,504 72,000
(Gain) loss on sale of assets 346,848
Benefit for deferred income tax (40,000)
Net Change in assets and liabilities:
(Increase) decrease in accounts receivable 31,394 6,000
(Increase) decrease in notes receivable 0 2,000
(Increase) decrease in other assets (111,290) (14,000)
Increase (decrease) in accounts payable (126,867) 31,000
Increase (decrease) in other accounts payable 188,939 46,000
Net Cash Provided (Used) By Operating Activities (220,870) (9,000)
Cash flows from investing activities:
Changes to oil & gas properties (1,671) (170,000)
Changes in other assets 131,834 122,000
Net Cash Provided (Used) By Investing Activities 130,163 (48,000)
Cash flows from financing activities:
Changes in common stock 0 663,000
Subscription Payable (110,000) 0
Loan from affiliate 180,015 0
Exercise of warrants 30,000 0
Increase (decrease) in paid-in-capital 0 (504,000)
Changes in long term debt 0 (122,000)
Net Cash Provided (Used) By Financing Activities 100,015 37,000
Net increase (decrease) in cash and cash equivalents 9,308 (20,000)
Cash beginning of period 303 19,000
Cash at end of period 9,611 (1,000)
</TABLE>
THE ACCOMPANYING NOTES ARE PART OF THESE FINANCIAL STATEMENTS
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ROSELAND OIL AND GAS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
AS OF MARCH 31, 1999
Unaudited
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies followed by Roseland Oil and Gas, Inc. (the
"Company" or "Roseland") are set forth in Note 2 to the Company's financial
statements in its June 30, 1998 Form 10-KSB and should be read in conjunction
with the financial statements for the three and nine months ended March 31,
1999, contained herein.
The financial statements included herein as of March 31, 1999, and the
three and nine month periods ended March 31, 1998 have been prepared by the
Company, without an audit, pursuant to generally accepted accounting principles
for interim financial information and the rules and regulations of the
Securities and Exchange Commission. The Company believes that the disclosures
are adequate to make the information presented not misleading. The information
presented reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the period.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998.
Gross revenues for the three months ended March 31 decreased from $98,699
in 1998 to $10,500 in 1999 primarily due to the disposal of oil and gas wells
and decreased oil and gas prices.
Oil and gas production, operating and development costs decreased from
$35,943 (51% of oil and gas sales) in the three months ended March 31, 1998 to
$12,444 (118% of oil and gas sales) in the three months ended March 31, 1999.
The decrease in costs was attributable to the reduced number of producing wells.
Selling, general and administrative expenses increased from $30,205 in the three
months ended March 31, 1998 to $60,745 in the three months ended March 31, 1999
due to increased legal, accounting and audit costs resulting from the
restatement of prior period financials.
Operating income decreased from $12,146 in the three months ended March 31,
1998 to a loss of $70,868 in the three months ended March 31, 1999 due to the
reduced production resulting from the disposal of several wells and decreased
oil and gas prices.
8
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NINE MONTHS ENDED MARCH 31, 1999 COMPARED TO NINE MONTHS ENDED MARCH 31, 1998.
Gross revenues for the nine months ended March 31 decreased from $211,011
in 1998 to $45,419 in 1999 primarily due to the reduction of producing wells and
decreased oil and gas prices.
Oil and gas production, operating and development costs decreased from
$107,829 (51% of oil and gas sales) in the nine months ended December 1998 to
$67,682 (149% of oil and gas sales) in the nine months ended March 31, 1999. The
reduction in costs was attributable to the reduced number of wells in operation.
Selling, general and administrative expenses increased from $90,615 in the nine
months ended March 31, 1998 to $367,449 in the nine months ended March 31, 1999
due to increased costs associated with the restatement of prior period
adjustments.
Operating income decreased from $36,438 in the nine months ended March 31,
1998 to a loss of $414,216 in the nine months ended March 31, 1999 due to the
reduced production as a result of the disposal of several wells and lower oil
and gas prices as discussed above.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1999, long term debt was $118,760 of which none was classified
as current. This compares to total long term debt of $118,760 as of June 30,
1998 of which none was classified as current. See the Company's June 30, 1998
Form 10-KSB, Footnote 4.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the spring of 1999, the Company became aware of the claim of Clifford Kees,
Jr. ("Kees"), a geologist, to a 1% overriding royalty interest in Reagan
Sections 11 and 12, Palo Pinto County, Texas. Kees filed an assignment in Palo
Pinto County, Texas, after December 1, 1997, upon which Kees bases his claim.
The Company, after its initial investigation, disputes Kees' legal rights to the
overriding royalty and has filed suit to challenge this royalty as described
below.
William Vandever, during the period of time in which he served as the
President and Chief Executive Officer of the Company, purportedly granted
some preferential rights with respect to 75% of the Reagan leases in Section
11, Palo Pinto County, Texas, to participants (including Kees and Vandever
himself) in the re-work of the Reagan #2-11 well. Mr. Vandever also
purportedly granted the same rights to himself as a participant. The Company
discovered this in March, 1999. Claims related to preferential rights with
regard to the Reagan lease in Section 11 could materially and adversely
affect the financial condition and the outlook of the Company. Based upon
information obtained by the Company, the Company has filed suit in the 29th
Judicial District Court in Palo Pinto County, Texas, styled "Roseland Oil and
Gas, Inc. v. William Vandever, et al.", against Kees, Vandever and various
persons, seeking a judicial determination that all grants of preferential
rights in the Reagan Section 11 are void. This suit also seeks monetary
damages against the named defendants. This lawsuit was filed on April 26,
1999. The Company plans to vigorously pursue this action.
ITEM 2. CHANGES IN SECURITIES
In January, 1999, existing stock holders elected to exercise warrants for 60,000
shares of the Company's common stock for $30,000. See the Company's June 30,
1998, Form 10-KSB, Footnote 5.
9
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Safe Harbor Statements Under The Private Securities Litigation Reform Act Of
1995
This report contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1993, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking statements are
based on current expectations that involve a number of risks and uncertainties
that could cause actual results to differ materially from the results discussed
in the forward-looking statements. Generally, forward-looking statements include
words or phrases such as "management anticipates", the Company believes", "the
Company anticipates" and words and phrases of similar impact. The
forward-looking statements are made pursuant to safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The factors that could cause
actual results to differ materially from the forward-looking statements include,
but are not limited to: (I) industry conditions and competition, (ii) the
cyclical nature of the industry, (iii) domestic and worldwide supplies and
demand for oil and gas, (iv) operational risks and insurance, (v) environmental
liabilities which may arise in the future which are not covered by insurance or
indemnity, (vi) the impact of current and future laws and government
regulations, as well as repeal or modification of same, affecting the oil and
gas industry and the Company's operations in particular, (vii) production levels
and other activities of OPEC and other oil and gas producers, and the impact
that the above factors and other events have on the current and expected future
pricing of oil and natural gas, and (viii) the risks described from time to time
in the Company's reports to the Securities and Exchange Commission.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule.
(b) Reports on Form 8-K
In March, 1999 the Company filed an 8-K relating to the merging of the
Company's certifying accountants into Weaver and Tidwell L.L.C.
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.
ROSELAND OIL AND GAS, INC.
DATE: July 16, 1999 BY: /s/ Calvin A. Wallen III
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Calvin A. Wallen III, President
(Principal Executive, Financial and
Accounting Officer)
10
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 9,611
<SECURITIES> 111,290
<RECEIVABLES> 25,536
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 146,437
<PP&E> 1,202,867
<DEPRECIATION> 223,018
<TOTAL-ASSETS> 1,127,195
<CURRENT-LIABILITIES> 460,074
<BONDS> 0
0
0
<COMMON> 909,518
<OTHER-SE> (361,157)
<TOTAL-LIABILITY-AND-EQUITY> 1,127,195
<SALES> 45,419
<TOTAL-REVENUES> 45,419
<CGS> 67,682
<TOTAL-COSTS> 459,635
<OTHER-EXPENSES> 346,848
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,825
<INCOME-PRETAX> (574,398)
<INCOME-TAX> 0
<INCOME-CONTINUING> (574,398)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (574,398)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
