U. S. 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, 1998
--------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO_______
Commission File Number 0-9494
ASPEN EXPLORATION CORPORATION
- --------------------------------------------------------------------------------
Delaware 84-0811316
- ------------------------------- -----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) I.D. Number)
Suite 208, 2050 S. Oneida Street, Denver, Colorado, 80224
---------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(303) 639-9860
- --------------------------------------------------------------------------------
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 [ ]
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock as of the latest practicable date.
Class Outstanding at May 15, 1998
- ----------------- ---------------------------
Common stock,
$.005 par value 4,916,322
1
<PAGE>
Part One. FINANCIAL INFORMATION
Item 1. Financial Statements
ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, June 30,
1998 1997
---------- -----------
(Unaudited) (Audited)
Assets
- ------
Current assets:
Cash and equivalents ....................... $ 572,823 $ 238,465
Precious metals ............................ 18,823 18,823
Accounts receivable ........................ 156,584 46,870
Prepaid expenses ........................... 1,968 3,732
----------- -----------
Total current assets ..................... 750,198 307,890
----------- -----------
Investment in oil and gas properties,
at cost (full cost method of
accounting) ................................ 1,544,379 1,315,458
Less accumulated depreciation,
depletion, amortization and
valuation allowance ...................... (922,194) (899,694)
----------- -----------
Net oil and gas properties ............... 622,185 415,764
----------- -----------
Property and equipment, at cost:
Furniture, fixtures and vehicles ........... 143,559 143,559
Less accumulated depreciation and
amortization ............................. (117,319) (108,098)
----------- -----------
Net property and equipment ............... 26,240 35,461
----------- -----------
Undeveloped mining properties, at cost
less reserve for impairment of
$193,495 ................................... 31,450 134,354
----------- -----------
Cash Surrender Value, life insurance ......... 226,958 217,471
----------- -----------
TOTAL ASSETS ............................. $ 1,657,031 $ 1,110,940
=========== ===========
(Statement Continues)
See notes to Consolidated Financial Statements
2
<PAGE>
ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
March 31, June 30,
1998 1997
------------ -----------
(Unaudited) (Audited)
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable & accrued expenses ........ $ 452,325 $ 118,220
Advances from joint owners ................. 103,237 230,624
Notes payable - current .................... 40,438 -0-
Due to related parties ..................... 64,118 72,391
----------- -----------
Total liabilities ............................ 660,118 421,235
----------- -----------
Notes Payable - long term .................... 270,799 185,000
----------- -----------
Stockholders' equity:
Common stock, $.005 par value:
Authorized: 50,000,000 shares
Issued: At March 31, 1998:
5,019,922 and 4,559,922 at June
30, 1997 .............................. 25,099 22,799
Outstanding: At March 31, 1998
4,916,322 and 4,456,322 at
June 30, 1997
Capital in excess of par value ............. 5,696,459 5,609,359
Accumulated deficit ........................ (4,995,444) (5,127,453)
----------- -----------
Total stockholders' equity ................. 726,114 504,705
----------- -----------
Total liabilities and stockholders'
equity ....................................... $ 1,657,031 $ 1,110,940
=========== ===========
The accompanying notes are an integral
part of these statements.
3
<PAGE>
<TABLE>
<CAPTION>
ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
-------------------------------- --------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Oil and gas............ $ 239,659 $ 121,470 $ 585,941 $ 284,907
Mineral................ -0- 204 -0- 2,975
Interest and other, net 1,495 1,308 13,383 9,886
---------- ---------- --------- ---------
Total Revenues........... 241,154 122,982 599,324 297,768
---------- ---------- --------- ---------
Costs and expenses:
Oil & gas production... 13,985 8,830 47,154 33,456
Loss on sale of
precious metals....... -0- -0- -0- 10,002
Depreciation, depletion
and amortization...... 10,573 30,510 31,720 79,548
Selling, general and
administrative........ 80,603 111,346 381,313 471,217
Interest expense....... 3,572 -0- 7,128 -0-
---------- --------- --------- --------
Total Costs & Expenses... 108,733 150,686 467,315 594,223
---------- --------- --------- ---------
Net income before income
taxes.................. $ 132,421 $ (27,704) $ 132,009 $(296,455)
Provision for income taxes 23,250 -0- 23,034 -0-
Net operating loss
carryforward applied... (23,250) -0- (23,034) -0-
---------- --------- ---------- --------
Net income after income
taxes.................. $ 132,421 $ (27,704) $ 132,009 $(296,455)
========= ========== ========= ==========
Per share amounts:
Basic.................. $ .03 $ (.01) $ .03 $ (.07)
=========== ========= ========= =======
Diluted................ $ .03 $ (.01) $ .03 $ (.07)
=========== ========= ========= =======
Weighted average number of
common shares outstanding 5,016,322 4,356,322 4,806,468 4,356,322
========= ========= ========= =========
The accompanying notes are an integral
part of these statements.
4
</TABLE>
<PAGE>
ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine months ended March 31,
1998 1997
--------- ---------
Cash flows from operating activities:
Net income (loss) .............................. $ 132,009 $(296,455)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Services rendered for stock .................... 69,900 -0-
Depreciation, depletion & amortization ......... 31,721 79,598
Decrease in precious metals .................... -0- 203,042
Increase in accounts receivable ................ (109,714) (30,126)
Increase (decrease) in prepaid
expenses ..................................... 1,764 (3,011)
Increase in accounts payable and
accrued expenses ............................. 206,718 20,103
Increase (decrease) in payable to
related parties .............................. (8,273) 49,406
--------- ---------
Net cash provided by operating
activities ................................... 324,125 22,557
--------- ---------
(Statement Continues)
5
<PAGE>
ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Continued)
Nine months ended March 31,
1998 1997
--------- --------
Cash flows from investing activities:
Additions to undeveloped mining
properties ....................................... (2,596) (86,853)
Sale of oil & gas properties ....................... -0- 100,000
Additions to oil & gas properties .................. (315,421) (180,677)
Proceeds - prospect fees ........................... 86,500 77,826
Investment in subsidiaries "Aspen
Recursos de Mexico" and "ISL
Resources Corporation" ........................... -0- (6,664)
Additions to office equipment and
vehicles ......................................... -0- (3,050)
Proceeds - sale of mining data ..................... 125,000 -0-
Proceeds - return of equipment ..................... -0- 4,100
Additions to cash surrender value .................. (9,487) (27,189)
--------- ---------
Net cash used in investing activities .............. (116,004) (122,507)
--------- ---------
Cash flows from financing activities:
Note from officer .................................. 6,000 -0-
Note from consultant ............................... 130,000 -0-
Note from insurance company ........................ 15,000 150,000
Repayment of note .................................. (24,763) -0-
--------- ---------
Net cash from financing activities ................. 126,237 150,000
--------- ---------
Net (decrease) increase in cash .................... 334,358 50,050
--------- ---------
Cash and cash equivalents,
at beginning of period ........................... 238,465 102,223
--------- ---------
Cash and cash equivalents, at end of
period ........................................... $ 572,823 $ 152,273
========= =========
Non-cash transactions .............................. $ 19,500 $ -0-
========= =========
The accompanying notes are an integral
part of these statements.
6
<PAGE>
ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 1998
Note 1 - Basis of Presentation
The accompanying unaudited, consolidated financial statements have been prepared
in accordance with Item 310 of Regulation S-B and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete consolidated financial statements. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating results for the
nine months ended March 31, 1998 are not necessarily indicative of the results
that may be expected for the fiscal year ending June 30, 1998. These statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in Form 10-KSB for the fiscal year ended June 30, 1997,
which is available without cost from Aspen Exploration Corporation upon request.
Summary of Significant Accounting Policies
- ------------------------------------------
Aspen Exploration Corporation ("the Company") was incorporated on February 28,
1980 and is engaged in the business of acquiring and developing interests in
domestic oil and gas properties and gold and other mineral properties.
The Company has two wholly owned subsidiaries and owns a 50% interest in another
company. None of the subsidiaries have any assets, liabilities or operations.
During fiscal year 1997 and the first two quarters of fiscal year 1998, the
Company experienced cash flow and liquidity problems; however, subsequently cash
flow has substantially increased, due to the drilling of two gas wells and one
oil well, which has allowed the Company to pay creditors and resume more normal
operations.
A summary of the Company's significant accounting policies follows:
Consolidated financial statements
- ---------------------------------
The consolidated financial statements include the Company and its wholly-owned
subsidiaries, Aspen Gold Mining Company and Aspen Recursos de Mexico.
Significant intercompany accounts and transactions, if any, have been
eliminated.
7
<PAGE>
Note 1 - Basis of Presentation (Continued)
Statement of cash flows
- -----------------------
For statement of cash flow purposes, the Company considers short-term
investments with original maturities of three months or less to be cash
equivalents. Cash restricted from use in operations beyond three months is not
considered a cash equivalent.
Management's Use of Estimates
- -----------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.
The mining and oil and gas industries are subject, by their nature, to
environmental hazards and cleanup costs for which the Company carries
catastrophe insurance. At this time, management knows of no substantial costs
from environmental accidents or events for which it may be currently liable. In
addition, the Company's oil and gas business makes it vulnerable to changes in
wellhead prices of crude oil and natural gas. Such prices have been volatile in
the past and can be expected to be volatile in the future. By definition, proved
reserves are based on current oil and gas prices. Price declines reduce the
estimated quantity of proved reserves and increase annual amortization expense
(which is based on proved reserves).
Financial Instruments
- ---------------------
The carrying value of current assets and liabilities reasonably approximates
their fair value due to their short maturity periods. The carrying value of the
Company's debt obligations reasonably approximates their fair value as the
stated interest rate approximates current market interest rates of debt with
similar terms.
Precious metals
- ---------------
Precious metals inventories are valued at the lower of cost (specific
identification method) or market. There was no allowance for unrealized losses
against inventories due to market decline at March 31, 1998 or 1997.
Oil and gas properties
- ----------------------
The Company follows the "full-cost" method of accounting for oil and gas
properties. Under this method, all costs associated with property acquisition,
exploration and development activities, including internal costs that can be
directly identified with those activities, are capitalized within one cost
8
<PAGE>
Note 1 - Basis of Presentation (Continued)
center. No gains or losses are recognized on the sale or abandonment of oil and
gas properties, unless the disposition of significant reserves is involved.
Depletion and amortization of the full-cost pool is computed using a
unit-of-production method based on proved reserves as determined annually by the
Company and independent engineers. An additional depletion provision in the form
of a valuation allowance is made if the costs incurred on oil and gas
properties, or revisions in reserve estimates, cause the total capitalized costs
of oil and gas properties in the cost center to exceed the capitalization
ceiling. The capitalization ceiling is the sum of (1) the present value of
future net revenues from estimated production of proved oil and gas reserves
applicable to the cost center plus (2) the lower of cost or estimated fair value
of the cost center's unproved properties less (3) applicable income tax effects.
The valuation allowance was $281,720 at March 31, 1998 and March 31, 1997.
Property and equipment
- ----------------------
Depreciation and amortization of property and equipment are expensed in amounts
sufficient to relate the expiring costs of depreciable assets to operations over
estimated service lives, principally using the straight-line method. Estimated
service lives range from three to eight years. When assets are sold or otherwise
disposed of, the cost and accumulated depreciation are removed from the accounts
and any resulting gain or loss is reflected in operations in the period
realized.
Investment in mining joint ventures
- -----------------------------------
The Company accounts for its investments in joint ventures using the equity
method. Under the equity method, the investment is accounted for at cost,
adjusted for the Company's proportionate share of earnings and losses.
Undeveloped mining properties
- -----------------------------
The Company capitalizes all costs associated with acquiring, exploring and
developing mineral properties, including certain internal costs which
specifically relate to each mining property area ("cost center"). Capitalized
costs are deferred until the area of interest to which they relate is put into
operation, sold, abandoned or impaired. The Company's pro rata share of advance
mineral royalties, bonuses and other cash payments received by the Company from
joint venture or other exploration participants reduce the amount of a cost
center as a recovery of capitalized costs. The excess of the Company's pro rata
share of advance mineral royalties, bonuses and other cash payments received by
the Company from joint venture or other exploration participants over
capitalized costs in a specific cost center are recognized as revenue in the
period received.
9
<PAGE>
Note 1 - Basis of Presentation (Continued)
Net income (loss) per common share
- ----------------------------------
Net income (loss) per common share is based on the weighted average number of
shares of common stock outstanding during the period.
Adoption of stock based compensation plan
- -----------------------------------------
The Company utilizes APB 25 in accounting for its stock based compensation plan.
In November 1997 the Company adopted an employee stock based compensation plan
whereby certain key employees, directors and consultants were granted stock
options. The exercise price of the option was determined at the date of the
grant and approximates the fair market value of the stock on that date. Options
were granted for 760,000 shares of common stock on November 1, 1997 and are
exercisable in 25% increments over four years at $0.20 per share, $0.24 per
share, $0.28 per share and $0.32 per share. At the measurement date of the stock
option grant, the average exercisable price of the option exceeded the
discounted bid price and no employee compensation was recorded.
Adoption of new accounting procedure
- ------------------------------------
Earnings per share
- ------------------
In February 1997, the Financial Accounting Standards Board issued Financial
Accounting Standard No. 128 ("SFAS No. 128"), addressing earnings per share.
SFAS No. 128 changed the methodology of calculating earnings per share and
renamed the two calculations basic earnings per share (currently primary) and
diluted earnings per share (currently fully diluted). The calculations differ by
eliminating any common stock equivalents (such as stock options, warrants, and
convertible preferred stock) from basic earnings per share and changes certain
calculations when computing diluted earnings per share. SFAS No. 128 is
effective for reporting periods ending after December 15, 1997. The Company has
adopted SFAS No. 128 in fiscal year 1998.
10
<PAGE>
Note 1 - Basis of Presentation (Continued)
The following is a reconciliation of the numerators and denominators used in the
calculation of basic and diluted earnings per share for the three and nine
months ended March 31, 1998:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, 1998 March 31, 1998
------------------- ------------------
Per Per
Net Share Net Share
Income Shares Amount Income Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Net income and
share amounts $ 132,241 5,016,322 $ .03 $ 132,009 4,806,468 $ .03
--------- --------- ------- --------- --------- -------
Dilutive Securities:
Stock options 161,212 300,465
--------- --------- ------- --------- --------- -------
Diluted EPS:
Net income and assumed
share conversions $ 132,241 5,177,534 $ .03 $ 132,009 5,106,933 $ .03
========= ========= ======= ========= ========= =======
</TABLE>
Year 2000 Issue
- ---------------
The Company is aware of the issues associated with the programming code in
existing computer systems as the millennium (Year 2000) approaches. Accordingly,
as of December 31, 1997, the Company has converted all of its computer software
to accommodate the "Year 2000" issue. The amount expensed in 1997 was
immaterial.
Note 2 Commitments and Contingencies
At March 31, 1998 the Company was committed to the following drilling and
development projects in California:
1. Drill, complete and equip the Emigh 35-1 well.
2. Drill, complete and equip the Brocchini 4-1 well.
Total costs for these projects is estimated to be $1,655,000, of which $158,000
is to be paid by the Company. As of March 31, 1998, the Company had received
approximately $73,500 in prepayments from third party investors for their share
of the projects outlined above.
The Company has an employment agreement with its President which provides for
compensation of $125,000 per year (reduced voluntarily to $100,000 effective
February 1 through March 31, 1998) to be paid, plus reimbursement of travel,
entertainment, and medical expenses, health insurance, and other benefits,
including a split dollar life insurance plan. The agreement provides for a two
11
<PAGE>
Note 2 - Commitments and Contingencies (Continued)
year term which is automatically renewable for two additional two year terms
(through November 8, 1999) at the president's option. The Company is only
entitled to terminate this agreement upon the president's death, disability, or
for "cause" (as defined in the agreement).
The president may terminate the agreement if his duties for the Company change
substantially from those he is currently performing, or in the event there is a
"change of control" in the Company as defined in the agreement. If the president
terminates the agreement for either of the foregoing reasons, the Company will
be obligated to pay the president severance pay in an amount equal to the
remaining amount due under the agreement, but not less than two years' salary.
This payment must be made in a lump sum to the president within thirty days of
his termination of the agreement.
The Company entered into an employment agreement with Robert Cohan on April 16,
1997, which provides for the payment of $85,000 for the first year of
employment, plus reimbursement of travel, entertainment, medical expenses and
certain office costs, including health insurance and the payments on a truck. If
the Company wishes to employ Mr. Cohan for an additional 12 months and Mr. Cohan
wishes to continue his employment with the Company, the renewal employment
agreement is effective April 16, 1998 to April 15, 1999 at the rate of $90,000
per year.
12
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
March 31, 1998 as compared to March 31, 1997
- --------------------------------------------
Registrant has sustained operating losses in recent years. In addition,
Registrant has used substantial amounts of working capital in its operations. At
June 30, 1997 current liabilities exceeded current assets by $113,345 and
Registrant had a working capital deficit to that extent. At March 31, 1998
Registrant had cash of $572,823 and working capital of $90,080.
In order to provide interim financing, Registrant has withdrawn $185,000 during
fiscal 1997 and an additional $15,000 in September, 1997 against a split dollar
insurance plan and borrowed $6,000 from an officer. Further, during August and
October of 1997, Registrant has borrowed an additional $130,000 to finance its
share of drilling an offset well on the Emigh property from an affiliate. In
addition, officers of the Registrant have elected to defer a portion of their
salary and expense reimbursements. At June 30, 1997, the amount due to officers
was approximately $72,000 and $64,000 at March 31, 1998. At the time of this
filing, Registrant had paid down loans to its officers and affiliated by $24,763
as well as reduced amounts due related parties by $8,273.
Management believes that actions presently being taken to revise Registrant's
operations and financial requirements provide the opportunity for Registrant to
continue as a going concern. In light of successful drilling operations by the
Registrant in recent months, increased revenues have eliminated the working
capital deficit and will contribute considerably to the Registrant's cash flow
in the coming year.
From March 31, 1997 to March 31, 1998, Registrant's working capital increased by
$234,416 to $90,080. The increase was due to the increased revenue produced by
oil and gas wells drilled in the first and second quarters of this fiscal year
and put on stream during the quarter ended December 31, 1997. Registrant
received no additional revenues from the sale of gold following October 1995 to
compensate for the expenditures and increased current liabilities. Therefore,
commencing in fiscal 1996 Registrant reviewed all aspects of its operations in
an effort to reduce expenditures as much as possible while making efforts to
preserve Registrant's assets and build up cash flow. These decisions included:
the sale of Registrant's oil and gas assets in Montana, North Dakota, Oklahoma
and Texas; the decision to defer the payment of portions of salaries and expense
reimbursements; the decision to defer compliance with Registrant's reporting
obligations under the Securities Exchange Act of 1934, as amended, and the
decision to concentrate on the development of cash flow from oil and gas
operations in California, in which a former (now current) officer of Registrant
has significant experience. Based on Registrant's view of the uranium industry,
Registrant also believed that the market would be receptive to an attractive
uranium prospect.
13
<PAGE>
These decisions resulted in Registrant sharing certain oil and gas drilling
opportunities with third party investors (including some affiliated investors)
and taking a reduced interest until after payout to the third party investors.
Payout in several of the wells has occurred, and consequently Registrant is now
receiving increased revenues from its oil and gas operations. This commenced in
the first quarter of calendar year 1998. In addition, Registrant in February and
April 1998 received non-refundable $50,000 and $75,000 payments from an
unaffiliated investor interested in pursuing Registrant's uranium prospects. In
addition, this investor has made non-binding commitments to advance additional
funds if it chooses to pursue this project.
Due to the cessation of royalties from the Valdez Creek gold mine in Alaska,
Registrant does not have sufficient cash flow to fully carry on all activities
as was done previously. Management made a decision to enter into uranium
exploration and promotion by acquiring certain uranium properties in calendar
1995 and 1996. Registrant was financially unable to acquire the substantial land
positions needed to control a major part of the mineral rights on the Kaycee and
Shamrock prospects, but Registrant has reached an agreement with a newly-formed
Toronto, Ontario-based company whereby Registrant has received a $125,000 cash
payment and a commitment to receive an additional $125,000 as financing can be
arranged in Canada. Management of the newly-formed company will likely be based
in Toronto. Under the terms of the revised agreement reached in March, 1998,
Registrant will also own approximately 25% (2,000,000 shares) of the common
stock of the newly-formed company.
Registrant knows of no market for the stock of this company and does not know if
any market will ever develop; thus the stock may prove to be of no value. The
president of Registrant is expected to provide geological and logistical
consulting services to the newly-formed company and Registrant will bill the
newly-formed company for those services as well as out-of-pocket expenses
related to the effort.
Management of Registrant believes that both uranium prospects are prospective
for the production of uranium by in situ methods, although there is no assurance
such deposits will be found or may be exploited.
Results of Operations
---------------------
March 31, 1998 Compared to March 31, 1997
- -----------------------------------------
For the nine months ended March 31, 1998 Registrant's operations continued to be
focused on the production of oil and gas, and the investigation for possible
acquisition of producing oil and gas properties and properties prospective for
uranium production.
14
<PAGE>
During 1997, Registrant wrote off its remaining investment in the Nome Gold
Joint Venture and Echo Canyon of approximately $13,000. Registrant also wrote
off $30,500 in organizational costs relating to Aspen Recursos de Mexico and ISL
Resources Corporation.
Oil and gas revenues, which includes income from management fees, for the nine
months ended March 31, 1998 increased $301,034, from $284,907 to $585,941, a
106% improvement. This increase reflects increased emphasis on operations
conducted in California and the initial production from the Emigh 34-1 well
which came on stream in November, 1996, as well as the Emigh 2-1 and the Brandt
26X-27 wells which came on line during November, 1997.
Oil and gas production expenses increased $13,698 from $33,456 to $47,154, a 41%
increase. This increase was due in large part to extensive repair work performed
on the Brandt 16X-27 well in the second quarter of fiscal 1998, bringing the
Emigh 2-1 and Brandt 26X-27 wells on production in November, 1997, and was
offset somewhat by the sale of all non-California properties which had
relatively high operating costs and higher production tax rates in November of
1996. Also, Registrant had a higher percentage of gas wells than oil wells which
typically have much lower operating costs.
Depletion, depreciation and amortization decreased significantly, from $79,548
to $31,720, a $47,828 reduction or 60%. This reduction was due primarily because
of the sale of marginal short lived properties in November of 1996 and the
addition of longer lived gas reserves during the nine months ended March 31,
1998.
Selling, general and administrative expenses declined during the three months
ended March 31, 1998 from $111,346 to $80,603, a $30,743 decrease or 28%. The
nine month general and administrative expense declined $89,904, or 19%, from
$471,217 to $381,313. Both the three and nine month reductions were primarily
because Registrant was no longer incurring legal expenses associated with the
Newmont lawsuit which was settled in October 1997. After preliminary decisions
adverse to Registrant, plaintiff and defendant agreed to a stipulation whereby
the litigation, including all claims, was terminated with each party paying its
own legal costs. Registrant ended the three and nine month periods with a gain
of $132,421 and $132,009, respectively. This compares to a loss of $27,704 and
$296,455 a year earlier. This net income for the three and nine months ended
March 31, 1998 is the result of increased revenues generated by new wells put on
line during the past twelve months, the reduction of depletion expense due to
the sale of marginal properties in November 1996, the reduction of legal fees
during the first quarter of fiscal 1998, and the voluntary 20% reduction of
salary by an officer of Registrant for the months February and March, 1998.
15
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
ASPEN EXPLORATION CORPORATION
(Registrant)
/s/ R. V. Bailey
---------------------------------------
By: R. V. Bailey,
May 15, 1998 Chief Executive Officer,
Principal Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 12-MOS
<FISCAL-YEAR-END> JUN-30-1998 JUN-30-1997
<PERIOD-END> MAR-31-1998 JUN-30-1997
<CASH> 572,823 238,465
<SECURITIES> 0 0
<RECEIVABLES> 156,584 46,870
<ALLOWANCES> 1,968<F1> 3,732
<INVENTORY> 18,823 18,823
<CURRENT-ASSETS> 750,198 307,890
<PP&E> 1,719,388 1,593,371
<DEPRECIATION> 1,039,513 1,007,792
<TOTAL-ASSETS> 1,657,031 1,110,940
<CURRENT-LIABILITIES> 660,118 421,235
<BONDS> 270,799<F2> 185,000
0 0
0 0
<COMMON> 5,721,558 5,632,158
<OTHER-SE> (4,995,444)<F3> (5,127,453)
<TOTAL-LIABILITY-AND-EQUITY> 1,657,031 1,110,940
<SALES> 585,941 284,907
<TOTAL-REVENUES> 599,324 297,768
<CGS> 47,154 33,456
<TOTAL-COSTS> 467,315 594,223
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 7,128 0
<INCOME-PRETAX> 132,009 (296,455)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 132,009 (296,455)
<EPS-PRIMARY> .03 (.07)
<EPS-DILUTED> .03 (.07)
<FN>
<F1>Prepaid Expenses
<F2>Long Term Notes Payable
<F3>Retained Earnings (Deficit)
</FN>
</TABLE>
