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 DECEMBER 31, 1997
-----------------
[ ] 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
-----------------------------
(Exact Name of Registrant as Specified in its Charter)
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 [ ] No [ X ]
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 March 16, 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
December 31, June 30,
1997 1997
----------- -----------
(Unaudited) (Audited)
Assets
- ------
Current assets:
Cash and equivalents ....................... $ 66,982 $ 238,465
Precious metals ............................ 18,823 18,823
Accounts receivable net of allowance
for doubtful accounts of $12,495 .......... 1,491,076 46,870
Prepaid expenses and other ................. 1,968 3,732
----------- -----------
Total current assets ..................... 1,578,849 307,890
----------- -----------
Investment in oil and gas properties,
at cost (full cost method of
accounting) ................................ 1,512,642 1,315,458
Less accumulated depreciation,
depletion, amortization and
valuation allowance ...................... (914,694) (899,694)
----------- -----------
Net oil and gas properties ............... 597,948 415,764
----------- -----------
Property and equipment, at cost:
Furniture, fixtures and vehicles ........... 143,559 143,559
Less accumulated depreciation and
amortization ............................. (114,245) (108,098)
----------- -----------
Net property and equipment ............... 29,314 35,461
----------- -----------
Undeveloped mining properties, at cost ....... 156,450 134,354
----------- -----------
Cash Surrender Value, life insurance ......... 226,958 217,471
----------- -----------
TOTAL ASSETS ............................. $ 2,589,519 $ 1,110,940
=========== ===========
(Statement Continues)
See notes to Consolidated Financial Statements
2
<PAGE>
ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
December 31, June 30,
1997 1997
------------ -----------
(Unaudited) (Audited)
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable & accrued expenses ........ $ 66,830 $ 118,220
Advances from joint owners ................. 1,496,463 230,624
Notes payable - current .................... 45,693 -0-
Due to related parties ..................... 105,784 72,391
----------- -----------
Total liabilities ............................ 1,714,770 421,235
----------- -----------
Notes payable - long term .................... 281,056 185,000
----------- -----------
Stockholders' equity:
Common stock, $.005 par value:
Authorized: 50,000,000 shares
Issued: At December 31, 1997:
5,019,922 and 4,559,922 at June
30, 1997
Outstanding: At December 31, 1997
4,916,322 and 4,556,322 at
June 30, 1997 ......................... 25,099 22,799
Capital in excess of par value ............. 5,696,459 5,609,359
Accumulated deficit ........................ (5,127,865) (5,127,453)
----------- -----------
Total stockholders' equity ................. 593,693 504,705
----------- -----------
Total liabilities and stockholders'
equity ....................................... $ 2,589,519 $ 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 Six Months Ended
December 31, December 31,
-------------------------------- ---------------------------------
1997 1996 1997 1996
---- ---- ---- ----
Revenues:
<S> <C> <C> <C> <C>
Oil and gas ......................... $ 244,922 $ 87,380 $ 346,282 $ 163,437
Mineral ............................. -0- 2,771 -0- 2,771
Interest and other, net ............. 6,118 4,338 11,888 8,578
----------- ----------- ----------- -----------
Total Revenues ........................ 251,040 94,489 358,170 174,786
----------- ----------- ----------- -----------
Costs and expenses:
Oil & gas production ................ 27,312 15,540 33,169 24,626
Loss on sale of
precious metals .................... -0- 10,002 -0- 10,002
Depreciation, depletion
and amortization ................... 10,574 14,519 21,147 49,038
Selling, general and
administrative ..................... 186,146 185,810 300,710 359,871
Interest expense .................... 3,556 -0- 3,556 -0-
----------- ----------- ----------- -----------
Total Costs & Expenses ................ 227,588 225,871 358,582 443,537
----------- ----------- ----------- -----------
NET INCOME (LOSS) ..................... $ 23,452 $ (131,382) $ (412) $ (268,751)
=========== =========== =========== ===========
Basic earnings (loss) per
common share ........................ $ (.- ) (.03) $ (.- ) (.06)
=========== =========== =========== ===========
Weighted average number of
common shares outstanding ............ 4,877,920 4,321,322 4,877,920 4,321,322
=========== =========== =========== ===========
The accompanying notes are an integral
part of these statements.
4
</TABLE>
<PAGE>
ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six months ended December 31,
1997 1996
----------- -----------
Cash flows from operating activities:
Net income (loss) ............................ $ (412) $ (268,751)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Services rendered for stock and
options .................................... 69,900 -0-
Depreciation, depletion & amortization ....... 21,147 49,038
Decrease in precious metals .................. -0- 203,042
Decrease (increase) in accounts
receivable ................................. (1,444,206) 4,299
Increase (decrease) in prepaid
expenses ................................... 1,764 (3,011)
Increase (Decrease) in accounts
payable and accrued expenses ............... 1,214,449 (150,628)
Increase in payable to related parties ....... 33,393 31,637
----------- -----------
Net cash provided by (used in)
operating activities ....................... (103,965) (134,374)
----------- -----------
(Statement Continues)
5
<PAGE>
ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Continued)
Six months
ended December 31,
1997 1996
--------- ---------
Cash flows from investing activities:
Additions to undeveloped mining
properties ............................ (2,596) (82,760)
Sale of oil & gas properties ............ -0- 100,000
Development of oil & gas properties ..... (283,684) (119,632)
Proceeds - prospect fees ................ 86,500 77,826
Investment in subsidiaries "Aspen
Recursos de Mexico" and "ISL
Resources Corporation" ................ -0- (4,654)
Additions to office equipment and
vehicles .............................. -0- (2,396)
Proceeds - return of equipment .......... -0- 4,100
Additions to cash surrender value ....... (9,487) (21,676)
--------- ---------
Net cash used in investing activities ... (209,267) (49,192)
--------- ---------
Cash flows from financing activities:
Note from officer ....................... 6,000 -0-
Note from consultant .................... 130,000 -0-
Note from insurance company ............. 15,000 125,000
Repayment of note ....................... (9,251) -0-
--------- ---------
Net cash from financing activities ...... 141,749 125,000
--------- ---------
Net (decrease) in cash .................. (171,483) (58,566)
--------- ---------
Cash and cash equivalents,
at beginning of period ................ 238,465 102,223
--------- ---------
Cash and cash equivalents,
at end of period ...................... $ 66,982 $ 43,657
========= =========
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)
December 31, 1997
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
six months ended December 31, 1997 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.
Through November 1996, the Company had oil and gas operations in Wyoming,
Montana, North Dakota, Colorado and California, after November 1996, principally
in California. The Company's primary mineral projects and targets of exploration
are in central Wyoming.
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, 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 December 31, 1997 or 1996.
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
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.
8
<PAGE>
Note 1 - Basis of Presentation (Continued)
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 December 31, 1997 and December 31, 1996.
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. The Company's pro rata share of costs incurred by the Nome Gold
Joint Venture that are associated with finding joint venture partners to explore
and develop mining properties are expensed as incurred, and are included in
selling, general and administrative expenses. Gains or losses on sale or
abandonment of mining properties are charged to current operations.
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 260,000 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 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.
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.
10
<PAGE>
Note 2 Commitments and Contingencies
At December 31, 1997 the Company was committed to the following drilling and
development projects in California:
1. Drill, complete and equip the Emigh 2-1 well.
2. Drill, complete and equip the Brandt 26X-27 well.
3. Drill, complete and equip the Compton Landing 97-1 well.
4. Install a pipeline and put the Arco 46X well on production.
Total costs for these projects was estimated to be $1,789,000, of which $270,000
was to be paid by the Company. As of December 31, 1997, the Company had received
approximately $1,496,000 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, 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 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.
11
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
December 31, 1997 as compared to December 31, 1996
- --------------------------------------------------
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 December 31, 1997
current liabilities exceeded current assets by $135,921. Consequently,
Registrant has been required to defer payment of certain accounts payable which
were otherwise due.
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 $106,000 at December 31, 1997. At the time of this
filing, Registrant owed its officers approximately $122,000.
In view of its working capital deficit, realization of a major portion of the
assets in the accompanying balance sheet is dependent upon continued operations
of Registrant, which in turn is dependent upon Registrant's ability to meet its
financing requirements, and the success of future operations. 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 should reduce or eliminate the working capital
deficit and contribute considerably to the Registrant's cash flow in the coming
year.
From December 31, 1996 to December 31, 1997, Registrant's working capital
decreased by $37,044 to a negative $135,921. The decrease was due to the
expenditure of funds by Registrant for its necessary continuing operations and
an increase in current liabilities as officers agreed to defer salaries and
expense reimbursements. 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
12
<PAGE>
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, although since that decision was
made the market for uranium has not improved as management had anticipated.
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
1998 received a non-refundable $50,000 payment 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 further.
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 $50,000 cash
payment and a commitment to receive an additional $200,000 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
---------------------
December 31, 1997 Compared to December 31, 1996
- -----------------------------------------------
For the six months ended December 31, 1997 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.
13
<PAGE>
Effective November 1, 1996 Registrant sold its interest in all of its
non-California properties for $100,000. Proceeds from the sale were used to
reduce the basis of its full cost pool and no gain or loss was recognized on the
transaction.
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 six
months ended December 31, 1997 increased $182,845, from $163,437 to $346,282, a
112% improvement. This increase reflects increased emphasis on operations
conducted in California and the initial production from the Emigh lease 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 $8,543 from $24,626 to $33,169, a 35%
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 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 $49,038
to $21,147, a $27,891 reduction or 57%. 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 year.
Selling, general and administrative expenses remained fairly constant during the
three months ended December 31, 1997 when compared to December 31, 1996.
However, the six months expenses decreased by approximately $59,000 from
September 30, 1996 to September 30, 1997 from $359,871 to $300,710, a 16%
decrease 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. As a result of Registrant's operations
for the three and six months ended December 31, 1997. Registrant ended the three
and six month period with a gain of $23,452 and a loss of $412, respectively.
This compares to a loss of $131,382 and $268,751 a year earlier. This net income
and minor loss for the three and six months ended December 31, 1997 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 and the reduction of legal fees during the first
quarter of fiscal 1998.
14
<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,
March 16, 1998 Chief Executive Officer,
Principal Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 12-MOS
<FISCAL-YEAR-END> JUN-30-1998 JUN-30-1997
<PERIOD-END> DEC-31-1997 JUN-30-1997
<CASH> 66,982 238,465
<SECURITIES> 1,968<F1> 3,732
<RECEIVABLES> 1,491,076 46,870
<ALLOWANCES> 0 0
<INVENTORY> 18,823 18,823
<CURRENT-ASSETS> 1,578,849 307,890
<PP&E> 1,656,201 1,459,017
<DEPRECIATION> (1,028,939) (1,007,792)
<TOTAL-ASSETS> 2,589,519 1,110,940
<CURRENT-LIABILITIES> (1,714,770) (421,235)
<BONDS> 0 0
0 0
0 0
<COMMON> (5,721,558) (5,632,158)
<OTHER-SE> (5,127,865)<F2> 5,127,453
<TOTAL-LIABILITY-AND-EQUITY> 2,589,519 1,110,940
<SALES> (346,282) (163,437)
<TOTAL-REVENUES> (358,170) 174,786
<CGS> 33,169 24,626
<TOTAL-COSTS> 358,582 443,537
<OTHER-EXPENSES> 325,413 418,911
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (412) (268,751)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (412) (268,751)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (412) (268,751)
<EPS-PRIMARY> 0 (.06)
<EPS-DILUTED> 0 0
<FN>
<F1>Prepaids
<F2>Retained Earnings
</FN>
</TABLE>
