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FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[X] SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 No. 0-9617
TERRITORIAL RESOURCES, INC.
(Formerly Egret Energy Corporation)
(Exact name of small business issuer as specified in its charter)
STATE OF COLORADO 84-0821158
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
450 NORTH SAM HOUSTON PARKWAY EAST, SUITE 140
HOUSTON, TEXAS 77060
(Address of Principal Executive Offices)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: 713/447-3200
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
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As of August 12, 1996, the issuer had approximately 28,084,854 shares of
Common Stock issued and outstanding.
Transitional Small Business Disclosure Format Yes No X
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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TERRITORIAL RESOURCES, INC.
Income Statements - Unaudited
June 30, 1996 and 1995
($1,000)
Three Months Ended June 30,
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1996 1995
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REVENUES:
Oil & Gas Sales $ 9 $ 8
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Total Revenues 9 8
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COSTS AND EXPENSES:
Production Costs 1 1
Depreciation, Depletion
and Amortization 5 6
General and Administrative 10 13
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Total Costs & Expenses 16 20
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NET INCOME (LOSS) BEFORE INCOME TAXES (7) (12)
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Income Tax Provision - -
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NET INCOME (LOSS) $ (7) $ (12)
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NET INCOME (LOSS) PER SHARE (.0003) (.0006)
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Average Common Shares Outstanding 26,066,112 20,570,656
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See notes to condensed financial statements.
2
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PART I. FINANCIAL INFORMATION - continued
TERRITORIAL RESOURCES, INC.
Balance Sheets
Assets
($1,000)
Unaudited
June March
30, 1996 31, 1996
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CURRENT ASSETS:
Cash $ 87 $ 39
Accounts Receivable:
Oil and Gas Sales 6 10
Other - -
Prepaids 7 -
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Total Current Assets 100 49
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NOTE RECEIVABLE 10 10
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INVESTMENT IN SOCO TAMTSAG
MONGOLIA, INC. 1,978 1,744
PROPERTY AND EQUIPMENT, AT COST:
Oil and Gas (full cost
accounting) 7,934 7,934
Less: Accumulated depreciation,
depletion & amortization (7,797) (7,792)
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Total Property & Equipment 137 142
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TOTAL ASSETS $ 2,225 $ 1,945
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See notes to condensed financial statements.
3
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PART I. FINANCIAL INFORMATION - continued
TERRITORIAL RESOURCES, INC.
Balance Sheets
Liabilities and Stockholders' Equity
($1,000)
Unaudited
June 30 March 31
1996 1996
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CURRENT LIABILITIES:
Accounts payable $ 7 15
Accrued liabilities and other 95 49
Due to affiliated party 250 -
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Total Current Liabilities 352 64
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Total Liabilities 352 64
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STOCKHOLDERS' EQUITY:
Common stock, no par value, $.001
stated value; 30,000,000 shares
authorized; 26,066,112 shares
issued at June 30, 1996 and
March 31, 1996, 26 26
Additional paid-in capital 5,399 5,399
Accumulated deficit, $5,121 deficit
eliminated in quasi-reorganization
effective March 31, 1986 (3,535) (3,527)
Treasury stock, 5,456 shares, at cost (17) (17)
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TOTAL STOCKHOLDERS' EQUITY 1,873 1,881
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TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 2,225 $ 1,945
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See notes to condensed financial statements.
4
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PART I. FINANCIAL INFORMATION - continued
TERRITORIAL RESOURCES, INC.
Statements of Cash Flows - Unaudited
For the Three Months Ended June 30, 1996 and 1995
($1,000)
Three Months Ended June 30,
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1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (7) $(12)
Adjustments to reconcile net income to
cash provided (used) by operations:
Depreciation, depletion and
amortization 5 6
Changes in operating assets
and liabilities:
Accounts receivable 4 16
Prepaid Expenses (7) (3)
Accounts payable (8) (15)
Accrued liabilities 45 (2)
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Cash provided by (used in) operations 32 (10)
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CASH FLOW FROM INVESTMENT ACTIVITIES:
Additional Investment in
SOCO Tamtsag Mongolia, Inc. (234) -
Additions to property and equipment - -
Proceeds from sales of oil and gas property - 7
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Cash provided (used in) from
investment activities (234) 7
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CASH FLOW FROM FINANCING ACTIVITIES:
Repayment of Debt - -
Advances from affiliate - -
Issuance of debt - -
Issuance of common stock - -
Advance from affiliated party 250 -
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Cash provided by (used in)
financing activities 250 -
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Change in cash balance 48 (3)
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Cash balance - beginning 39 50
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Cash balance - ending $ 87 $ 47
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See notes to condensed financial statements.
5
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PART I. FINANCIAL INFORMATION - continued
TERRITORIAL RESOURCES, INC.
Notes to Condensed Financial Statements
June 30, 1996 (Unaudited)
(1) The information presented in this report on Form 10-QSB is condensed from
what would appear in annual financial statements. Accordingly, the
financial statements included herein should be read in conjunction with
the consolidated financial statements and notes thereto contained in the
Territorial Resources, Inc., March 31, 1996 Form 10-KSB. The financial
statements included herein include all adjustments that in the opinion of
management are necessary in order to make the financial statements not
misleading.
(2) The results for the interim period are not necessarily indicative of
results to be expected of the Company for the fiscal year ended March 31,
1997, due to seasonal or other factors. The Company believes that the
interim period reports filed on Form 10-Q are representative of its
financial position, changes in financial position and results of operations
for the periods covered thereby.
(3) There is no provision for income taxes for the three-month period ended
June 30, 1996.
Item 2. Management's Discussion and Analysis or Plan of Operation
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Plan of Operation
On March 31, 1996, Territorial Resources, Inc. ("Territorial" or the
"Company") entered into an Option Agreement (the "Option Agreement") with
its largest shareholder, Asia Energy Ltd. ("AEL"). The Option Agreement,
as later amended, granted AEL the right to purchase up to 29 of the 119
shares of SOCO Tamtsag Mongolia, Inc., a Delaware close corporation
("SOTAMO"), then owned by Territorial at a per share price of $50,000. On
May 9, 1996, AEL purchased five SOTAMO shares from Territorial for $250,000
cash pursuant to the Option Agreement. The sale of such five SOTAMO shares
to AEL is reflected on Territorial's interim balance sheet as of June 30,
1996, as a payable to AEL since (as described below) such shares were in
fact repurchased by Territorial on July 19, 1996.
As disclosed in its Report on Form 8-K filed with the Securities and
Exchange Commission on or about August 1, 1996, Territorial re-acquired the
above-described five SOTAMO shares from AEL on July 19, 1996, together with
certain other assets of AEL (including certain cash and the cancellation of
the Option Agreement). Territorial issued 1,198,750 shares of its common
stock, no par value, to AEL in connection with such transactions. These
transactions resulted in the Company receiving approximately $267,000 in
cash, the elimination of a payable to AEL and the issuance of Territorial
common stock valued at approximately $530,000.
Management currently estimates that Territorial's minimum working capital
commitments through the end of the current fiscal year will require it to
secure an additional approximately $300,000. Such estimate is subject to
change based on a number of factors, including among others additional
costs that may be incurred in connection with its investment in SOTAMO.
Such additional working capital funds may be sought through the sale of
direct or indirect interests in Territorial's projects and assets, the sale
of Territorial securities or, when appropriate, borrowing (or a combination
of one or more of the foregoing). There can be no assurance, however, that
such additional funds will be
6
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available to the Company upon terms deemed acceptable to management. In the
event such funds are not secured, Territorial may be required to forfeit
all or a potion of its share of SOTAMO.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
There were no material variations in revenue and expenses from operations
for the quarter ended June 30, 1996 versus June 30, 1995. See "Plan of
Operation" above.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibit 27 - Financial Data Schedule
(b) Report on Form 8-K
On August 1, 1996, a Report on Form 8-K reporting under item 5 thereof the
issuance to Asia Energy Ltd. of the 1,918,750 shares of Territorial common
stock on July 19, 1996, and the related transactions, was filed with the
Securities and Exchange Commission.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TERRITORIAL RESOURCES, INC.
[Signature of Daniel A. Mercier
Dated: August 13, 1996 By: appears here]
--------------------------
Daniel A. Mercier
Chairman of the Board and
Chief Executive Officer
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<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Quarter
Ended June 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
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<RECEIVABLES> 13
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<INVENTORY> 0
<CURRENT-ASSETS> 100
<PP&E> 7,934
<DEPRECIATION> (7,797)
<TOTAL-ASSETS> 2,225
<CURRENT-LIABILITIES> 352
<BONDS> 0
0
0
<COMMON> 26
<OTHER-SE> 2,199
<TOTAL-LIABILITY-AND-EQUITY> 2,225
<SALES> 9
<TOTAL-REVENUES> 9
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<INCOME-PRETAX> (7)
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