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 September 30, 1999
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Transition Period from __________ to _________
Commission file number 0-10006
AMERICAN RIVERS OIL COMPANYr
----------------------------
(Exact name of small business issuer as specified in its charter)
Wyoming 84-0839926
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 East Ninth Avenue, Suite 106, Denver, CO 80203
- ----------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(303) 832-1117
--------------
(Issuer's telephone number)
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
----- -----
The number of shares outstanding as of September 30, 1999 of the issuer's $.01
par value Common Stock and $.01 par value Class B Common Stock were 3,565,770
and 7,267,820, respectively.
Transitional Small Business Disclosure Format
(Check one):
Yes No X
----- -----
<PAGE>
<TABLE>
<CAPTION>
American Rivers Oil Company and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
September 30, 1999
Assets
<S> <C> <C>
Current assets:
Cash and equivalents $ 853
Oil and gas properties held for sale 93,376
------------------
Total current assets $ 94,229
Other assets 3,237
===============
Total assets $ 97,466
===============
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 75,824
Note payable, bank
80,500
Accounts payable and accrued expenses 41,267
Payable to related parties 4,475
------------------
Total current liabilities $ 202,066
---------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.50 par value 5,000,000 shares
authorized, no shares issued
Common stock $.01 par value, 20,000,000 shares
authorized, 4,713,004 shares issued 47,130
Class B common stock $.01 par value, 8,000,000
shares authorized, 7,267,820 shares issued and
outstanding 72,678
Related party note receivable, net of origination
fee of $12,500 and allowance for
doubtful accounts of $150,000 0
Additional paid-in capital 6,193,893
Accumulated deficit (4,687,496)
Less treasury stock at cost, 1,147,234 common shares (1,730,805)
------------------
Total stockholders' equity (104,600)
---------------
Total liabilities and stockholders' equity $ 97,466
===============
See accompanying notes to these consolidated financial statements.
2
<PAGE>
American Rivers Oil Company and Subsidiaries
Consolidated Statement of Operations
(Unaudited)
For the Three For the Six
Months Ended Months Ended
September 30, September 30,
1999 1998 1999 1998
-----------------------------------------------------
REVENUE:
Oil and gas sales $ - $ 3,503 $ - $ 22,374
-----------------------------------------------------
Total revenue
------------------------------------------------------
EXPENSES:
Oil and gas production costs 15,258 36,301
Exploration costs 0 972
General and administrative 59,757 59,657 89,336 145,930
Depreciation, depletion and amortization 145 1,331 290 8,587
-------------------------------------------------------
Total expenses 59,902 76,246 89,626 191,790
-------------------------------------------------------
LOSS FROM OPERATIONS (59,902) (72,743) (89,626) (169,416)
-------------------------------------------------------
OTHER INCOME (EXPENSE)
Gain on sale of oil and gas properties 66,067 271,241
Interest expense (2,357) (27) (2,357) (9,911)
--------------------------------------------------------
Total other income (expense) (2,357) 66,040 (2,357) 26,330
-------------------------------------------------------
LOSS BEFORE INCOME TAXES (62,259) (6,703) (91,983) 91,914
-------------------------------------------------------
INCOME TAXES
Income taxes 0 0 0 (33,500)
Tax benefit of net operating
loss carryforward 0 0 0 33,500
-------------------------------------------------------
0 0 0 0
-------------------------------------------------------
NET INCOME (LOSS) $ (62,259) $(6,703) $(91,983) $ 91,914
=======================================================
NET INCOME (LOSS) PER SHARE:
Common stock $ (0.00) $ (0.00) $ (0.00) $ 0.00
=======================================================
Class B common stock $ (0.00) $ (0.00) $ (0.01) $ 0.01
=======================================================
See accompanying notes to these consolidated financial statements.
3
<PAGE>
American Rivers Oil Company and Subsidiaries
Consolidated Statement of Cash Flows
For the Six Months Ended September 30,
(Unaudited)
1999 1998
-------------------------------------
Cash Flow from operating activities
Net Income (Loss) $ (91,983) $ 91,914
Adjustments to reconcile net loss to net cas
used in operating activities:
Depreciation, depletion and amortization 289 8,732
Gain on sale of oil and gas properties (271,241)
Changes in operating assets & liabilities:
(Increase) Decrease in:
Oil and gas sales receivable 80,877
Prepaid expenses 1,077 2,620
Accounts receivable, affiliates (150,000)
Increase (Decrease) in:
Accounts payable, class B shareholder 4,475 (55,319)
Accounts payable and accrued expenses 3,521 (122,161)
------------------------------------
Net cash used in operating activities (82,621) (414,578)
Cash flows from Investing:
Proceeds from sale of oil and gas properties 0 1,027,434
------------------------------------
Net cash provided by investing activities 0 1,027,434
------------------------------------
Cash flows from financing activities:
Proceeds form borrowings 80,500
Principal payments on borrowings 0 (565,000)
------------------------------------
Net cash (used in) Investing activities 80,500 (565,000)
------------------------------------
Net increase (decrease) in cash and equivalents (2,121) 47,856
Cash Beginning 2,974 80
====================================
Cash Ending $ 853 $ 47,936
====================================
See accompanying notes to these consolidated financial statements
4
</TABLE>
<PAGE>
AMERICAN RIVERS OIL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
In the opinion of management, all adjustments, consisting of normal
recurring accruals, have been made which are necessary for a fair
presentation of the financial position of the Company at September 30, 1999
and the results of operations and cash flows for the three and six months
ended September 30, 1999 and 1998. Quarterly results are not necessarily
indicative of expected annual results. For a more complete understanding of
the Company's operations and financial position, reference is made to the
consolidated financial statements of the Company, and related notes
thereto, filed with the Company's annual report on Form 10-KSB for the year
ended March 31, 1999, previously filed with the Securities and Exchange
Commission.
Certain reclassifications have been made to the 1998 financial statements
to conform to the presentation in 1999. The reclassifications had no effect
on the 1998 results of operations.
2. Sale of Oil and Gas Properties
On June 4, 1998, Company entered into an agreement to sell the Company's
Colorado oil and gas properties with an effective date of March 1, 1998, in
order to provide liquidity and to repay short-term bank debt. The Company
realized proceeds from the disposition of these properties in the amount of
$900,327. The proceeds were used as follows:
Bank debt $ 540,000
Payables to related parties 42,894
Advances to affiliates 150,000
Accounts payable and working capital 167,434
---------
$ 900,327
=========
On September 22, 1998 the Company sold its Ohio River #1 well for $125,000.
The proceeds were used as follows:
Accounts payable $ 26,000
Debt to Class B Shareholder 25,000
Working capital and operations 74,000
--------
$125,000
========
In fiscal 1999 the Company sold all of its producing properties.
3. Net Loss Per Share
The computation of net loss per share is based on the rights of each class
of common stock. Each class was allocated its pro rata percentage of the
consolidated net income (loss) based on the ratio of common shares
outstanding to total common and Class B shares outstanding.
4. Note Payable
On September 17,1999, the Company executed a promissory note to a bank in
the amount of $110,000.00, due March 1, 2000, bearing interest at 1% over
Wall Street Journal prime. The proceeds from the note were used to fund
current trade obligations and provide working capital. The Company's
president, Karlton Terry, also executed the note as a co-maker.
5
<PAGE>
AMERICAN RIVERS OIL COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Company's unaudited consolidated financial statements and notes thereto.
Forward-Looking Statements
The Company believes that this report contains certain forward-looking
statements, as defined in the Private Securities Litigation Reform Act of 1995,
including, without limitation, statements containing the words "believes,"
"anticipates," "estimates," "expects," "may" and words of similar import, or
statements of management's opinion. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements.
Significant Events
------------------
On November 18, 1999 the shareholders of the Company approved a merger with
AROC Acquisition, Inc. (a Delaware Corporation and a subsidiary of American
Rivers). As soon as the merger is completed, the Company will become a
wholly-owned subsidiary of American Rivers Oil Company (a Delaware Corporation).
Results of Operations
---------------------
Three Months Ended September 30, 1999 Compared to 1998
------------------------------------------------------
The Company's oil and gas sales revenue decreased by $3,500 or 100% in the
quarter ended September 30, 1999 compared to the corresponding quarter in 1998.
The primary factor in the decrease is attributed to the sale of the properties
referred to in note 2 to the financial statements.
The production volumes and average sales prices during the periods were as
follows:
Three Months Ended
September 30,
1999 1998
---- ----
Oil production (barrels) - 0 - - 0-
Average sales price per barrel $ n/a $ n/a
Natural gas production (mcf) - 0 - 2,095
Average sales price per mcf $ n/a $ 2.10
Oil and gas production costs decreased by $15,000 compared to the corresponding
quarter ended September 30, 1998 because certain producing properties were sold
in 1998 (see note 2 to the financial statements). The BOE basis (BOE means
barrel of oil equivalent, using a conversion ratio of six mcf of natural gas to
one barrel of oil), of comparing production costs per BOE were not applicable
for the quarter ended September 30, 1999 and were $43.69 for the comparable
quarter of 1998.
General and administrative expenses increased by $100 for the quarter ended
September 30, 1999 compared to the corresponding quarter in 1998 and is
considered be normal fluctuations in corporate overhead.
Depreciation, depletion and amortization expense decreased by $1,200, 89% in the
current quarter compared to the corresponding quarter in 1998 due to the sale of
the producing properties referred to in note 2.
Interest expense decreased by $2,300 or 77% in the current quarter of 1999 over
the corresponding quarter of 1998 due to increased bank debt in 1999.
6
<PAGE>
Six Months Ended September 30, 1999 Compared to 1998
----------------------------------------------------
The Company's oil and gas sales revenue decreased by $22,500 or 100% in the
period ended September 30, 1999 compared to the corresponding period in 1998.
The primary factor in the decrease is attributed to the sale of the properties
referred to in note 2 to the financial statements.
The production volumes and average sales prices during the periods were as
follows:
Six Months Ended
September 30,
1999 1998
---- ----
Oil production (barrels) - 0 - 145-
Average sales price per barrel $ n/a $ 11.50
Natural gas production (mcf) - 0 - 10,517
Average sales price per mcf $ n/a $ 2.10
Oil and gas production costs decreased by $36,000 compared to the corresponding
period ended September 30, 1998 because certain producing properties were sold
in 1998 (see note 2 to the financial statements). The BOE basis (BOE means
barrel of oil equivalent, using a conversion ratio of six mcf of natural gas to
one barrel of oil), of comparing production costs per BOE were not applicable
for the six month period ended September 30, 1999 and were $19.13 for the
comparable period in 1998.
General and administrative expenses decreased by $56,000 or 38% for the six
month period ended September 30, 1999 compared to the corresponding period in
1998 and is due primarily to decreases in corporate overhead arising from
curtailed operations.
Depreciation, depletion and amortization expense decreased by $8,300, 96% in the
current six month period compared to the corresponding period in 1998 due to the
sale of the producing properties referred to in note 2.
Interest expense decreased by $7,500 or 77% for the current six month period of
1999 over the corresponding period of 1998 due to decreased debt in 1999.
7
<PAGE>
FINANCIAL CONDITION
At September 30, 1999, the Company had a working capital deficiency of $107,800.
The following summary table reflects the Company's cash flows for the nine
months ended September 30, 1999, and 1998:
Six Months Ended
<TABLE>
<CAPTION>
September 30,
1999 1998
---- ----
<S> <C> <C> <C> <C>
Net cash used in operating activities $ ( 82,600) $( 414,000)
Net cash provided by (used in) investing activities $ 0 $ 1,027,000
Net cash provided (used in) by financing activities $ 80,500 $( 565,000)
</TABLE>
Net cash used in operating activities decreased $332,000 for the three months
ended September 30, 1999 compared to the six months ended September 30, 1998 is
due primarily to a decrease in operating activities. The Company utilized the
proceeds from the sale of certain properties in 1998 to repay its bank
obligations and currently has no significant operations which accounts for the
changes in investing and financing activities
Operating Strategy
In the fiscal year ended March 31, 1999, the Company has sold a significant
portion of its producing properties to meet its current obligations including
its then maturing indebtedness. The Company's operating objective is to increase
value through pursuing merger or acquisition opportunities with another company.
The Company cannot predict whether any agreement may be reached if they are, the
timing of the contemplated transaction or the results of the transaction if any
agreement is reached
Pursuant to this strategy, the Company executed an exchange and merger agreement
dated July 22, 1999 with Alliance Resources, PLC, as amended on October 13, 1999
(incorporated by reference from exhibit 2.1 and 2.2 to the registration
statement on Form S-1, Reg.: No. 333-85237).
General
Many of the factors which may affect the Company's future operating performance
and long-term liquidity are beyond the Company's control, including, but not
limited to, oil and natural gas prices, the availability and attractiveness of
properties for acquisition, the adequacy and attractiveness of financing and
operational results. The Company is examining alternative sources of long-term
capital, including bank borrowing, the issuance of debt instruments and the sale
of equity securities of the Company. Availability of these sources of capital
and, therefore, the Company's ability to execute its operating strategy will
depend upon a number of factors, some of which are beyond the control of the
Company.
Year 2000 Issues
"Year 2000 problems" result primarily from the inability of some computer
software to property store, recall or use data after December 31, 1999. These
problems may affect may computers and other devices that contain "embedded"
computer chips. The Company's operations, however, do not rely extensively on
information technology ("IT") systems. The IT software and hardware systems the
Company operates are all publicly available, pre-packaged systems that are
readily replaceable with other functionally similar systems. Accordingly, the
Company does not believe that it will be materially affected by Year 2000
problems in its IT software and hardware systems.
The Company relies on non-IT systems that may suffer from Year 2000 problems
including telephone systems and facsimile and other office machines. Moreover,
the Company relies on third parties that may suffer from Year 2000 problems that
could affect the Company's operations, including banks and utilities. In light
of the Company's substantially reduced operations, the Company does not believe
that such non-IT systems or third-party Year 2000 problems will affect the
Company in a manner that is different or more substantial than such problems
8
<PAGE>
affect other similarly situated companies generally. Consequently, the Company
does not currently intend to conduct a readiness assessment of Year 2000
problems or to develop a detailed contingency plan with respect to Year 2000
problems that may affect the Company's IT and non-IT systems or third-parties.
The foregoing is a "Year 2000 Readiness Disclosure" within the meaning of the
Year 2000 Information and Readiness Disclosure Act of 1998.
9
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
No change
Item 2. Changes in Securities
None
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27. Financial Data Schedule (submitted only in
electronic format)
b. Reports on Form 8-K
None
10
<PAGE>
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.
AMERICAN RIVERS OIL COMPANY
(Registrant)
Date: November 19, 1999 By: /s/ Karlton Terry
--------------------------------
Karlton Terry
President
(Principal Executive Officer)
Date: November 19, 1999 By: /s/ Karlton Terry
--------------------------------
Karlton Terry
President and Acting Chief
Financial Officer
(Principal Financial Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> SEP-30-1999
<CASH> 853
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 94,229
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 97,466
<CURRENT-LIABILITIES> 202,066
<BONDS> 0
<COMMON> 119,808
0
0
<OTHER-SE> (224,408)
<TOTAL-LIABILITY-AND-EQUITY> 97,466
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 59,902
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,357
<INCOME-PRETAX> (62,259)
<INCOME-TAX> 0
<INCOME-CONTINUING> (62,259)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (62,259)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
