<PAGE>
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended February 28, 1999.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from _______, 19___ to _______, 19___.
Commission File Number: 0-10157
ALFA RESOURCES, INC.
---------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
COLORADO 84-0846529
------------------------------ -----------------------
(State or Other Jurisdiction of (I.R.S. Employer Identi-
Incorporation or Organization) fication Number)
216 SIXTEENTH STREET, SUITE 730
DENVER, COLORADO 80202
--------------------------------------
Address of Principal Executive Offices
(303) 572-1135
--------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
--------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the Issuer (1) has 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 Issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
X Yes No
_____ _____
There were 99,000,000 shares of the Registrant's $.001 par value common stock
outstanding as of February 28, 1999.
<PAGE>
<PAGE>
ALFA RESOURCES, INC.
BALANCE SHEET
ASSETS
February 28 May 31
1998 1998
CURRENT ASSETS
Cash and cash equivalents $ 20,828 $ 10,830
Accounts Receivable-trade 805,700 1,054
Prepaid expense - 2,900
Total current assets 826,528 14,784
Oil and gas properties using
the full cost method 1,482,289 1,430,126
Less: depletion, depreciation, amortization
and valuation allowance (1,444,695) (1,422,132)
37,594 7,994
Other assets 3,000 3,000
TOTAL ASSETS $ 867,122 $ 25,778
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts Payable $ 20,196 $ 14,727
Dividends Payable 26,673 26,673
Accrued Expenses - 336
Total current liabilities 46,869 41,736
Commitments and contingencies
SHAREHOLDERS' EQUITY (Deficit)
Preferred Stock, $1.00 par value;
authorized 10,000,000 shares, 292,947
shares issued & outstanding 292,947 292,947
Common stock, $.001 par value; authorized
150,000,000 shares; 99,000,000 shares
issued and outstanding 99,000 44,865
Additional paid-in capital 2,422,976 2,421,976
Accumulated deficit (1,994,670) (2,775,746)
Total shareholders' equity (Deficit) 820,253 (15,958)
TOTAL LIABILITIES AND SHARE-
HOLDERS' EQUITY (DEFICIT) $ 867,122 $ 25,778
The accompanying notes are an integral part of the financial statements.
-2-
<PAGE>
<PAGE>
ALFA RESOURCES, INC.
STATEMENTS OF OPERATIONS
For the Three Months Ended February 28, 1999 and 1998
1999 1998
REVENUES
Oil and gas sales $ 4,131 $ 5,721
Management Fees 805,000 --
Interest and other income 57 182
Total revenues 809,188 5,903
EXPENSES
Production 3,371 4,251
General and Administrative 2,056 3,094
Depletion, depreciation, amortization,
and valuation allowance 1,800 1,800
Total expenses 7,227 9,145
Net Income (Loss) $801,961 $ (3,242)
Net (Loss) per share $ .01 $ *
Weighted average shares
outstanding 99,000,000 44,865,212
The accompanying notes are an integral part of the financial statements.
-3-
<PAGE>
<PAGE>
ALFA RESOURCES, INC.
STATEMENTS OF OPERATIONS
For the Nine Months Ended February 28, 1999 and 1998
1999 1998
REVENUES
Oil and gas sales $ 11,768 $ 19,196
Management Fees 805,000 -
Interest and other income 204 685
Total revenues 816,972 19,881
EXPENSES
Production 10,843 15,776
General and Administrative 19,655 21,718
Depletion, depreciation, amortization,
and valuation allowance 5,400 5,400
Total expenses 35,898 42,894
Net Income (Loss) before discontinued
operations $781,074 $ (23,013)
Loss from discontinued operations $ - $ -
Net Income (Loss) $781,074 $ (23,013)
Net (Loss) per share $ .01 $ *
Weighted average shares
outstanding 63,480,673 44,865,212
The accompanying notes are an integral part of the financial statements.
-4-
<PAGE>
<PAGE>
ALFA RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended February 28, 1999 and 1998
1999 1998
Cash provided by (used in) operations:
Net Income (Loss) $ 781,074 $(23,013)
Adjustments:
Depletion, depreciation and amortization 5,400 5,400
(Increase) decrease in accounts receivable (804,644) 280
(Increase) decrease in other assets 2,900 --
Increase (decrease) in accounts payable 5,469 8,981
Increase (decrease) in dividends payable -- --
Increase (decrease) in accrued expenses (336) --
Cash provided by (used in) operations (10,137) (8,352)
Cash flows from financing activities:
Stock issued for services 5,135 --
Sale of common stock 50,000 --
Net cash provided by financing activities 55,135 --
Cash used in investing activities:
Purchase of oil and gas properties (35,000) --
Net cash provided by investing activities (35,000) --
Net increase (decrease) in cash 9,998 (8,352)
Cash, beginning of period 10,830 37,143
Cash, end of period $ 20,828 $ 28,791
The accompanying notes are an integral part of the financial statements.
-5-
<PAGE>
<PAGE>
ALFA RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION AND BASIS OF ACCOUNTING
The accompanying financial statements have been prepared on the basis of a
going concern. However, the Company has depleted its working capital because
of past operating losses, and has experienced the loss of production income
because most of its oil and gas properties have been sold. Management intends
to use unencumbered production revenue and possibly other sources to meet
reduced administrative costs and continue in operation, but this cannot be
assured. A decrease in the price of oil or other unexpected circumstances
could cause operations to cease within a short period of time.
OIL AND GAS ACCOUNTING
The Company accounts for oil and gas properties using the "full cost" method.
Under this method, all costs associated with property acquisition, exploration
and development activities are capitalized, including costs of unsuccessful
activities. Oil and gas properties are depleted using the units-of-production
method based on the ratio of current period production to estimated proved oil
and gas reserve quantities. No gain or loss resulting from the disposition of
oil and gas properties is recognized unless the relationship between
capitalized costs and reserves in the cost center is significantly changed.
In addition to normal depletion, net capitalized costs are subject to a
ceiling limitation required by the Securities and Exchange Commission (SEC).
Such costs are limited to the present value (discounted at 10%) of the future
net revenues from proved oil and gas properties, using year end costs and
prices, after considering potential future income tax effects. There were no
charges related to the ceiling limitation during the quarter ending February
28, 1999.
Revenue from oil and gas production is recognized upon sale to unaffiliated
purchasers.
CASH EQUIVALENTS
Cash equivalents include money-market accounts or other highly-liquid debt
instruments with an original maturity of three months or less.
USE OF ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires the use of estimates. The unaudited oil and
gas reserve estimates prepared by management should be considered as
reasonably possible to change, which can affect depletion and the net carrying
value of oil and gas properties.
INCOME (LOSS) PER SHARE
Income (loss) per share is computed by dividing the net income (loss) by the
weighted average number of common shares outstanding during the period.
Shares issued to insiders are considered to be outstanding from the beginning
-6-
<PAGE>
<PAGE>
of the period issued. Common stock equivalents represented by options are
not included as shares outstanding if their effect is antidilutive, or if
estimated market value has not exceeded exercise price.
2. ADJUSTMENTS
In the opinion of the Company, the accompanying unaudited financial statements
contain all adjustments (consisting of normal recurring accruals only)
necessary to present fairly, the Balance Sheet as of February 28, 1999, and
the Statement of Operations and the Statement of Cash flow for the nine months
then ended.
3. ADDITIONAL DETAILS
For additional details of the Company's financial condition, refer to the
notes to the Company's annual financial statements for the year ended May 31,
1998, filed in the Company's Form 10-KSB annual report.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash flows provided (used) in operations for the nine months ended February
28, 1999, and 1998, were $9,998 and $(8,352) respectively. The increase in
cash provided during the last period is principally due the sale of stock.
Alfa sells most of its oil production to three major oil companies. However,
in the event these purchasers discontinued oil purchases, Alfa has made
contact with other purchasers who would purchase the oil.
Alfa's past strategy has been the merger with or acquisition of other small
independent oil and gas production companies and the acquisition of interests
in producing oil and gas properties in exchange for cash and shares of Alfa's
equity securities. Alfa's current financial position makes it extremely
difficult to accomplish this business plan. Alfa's long-term needs, if it is
able to overcome its current financial deficit, will continue to depend on
many outside factors beyond its control, such as the demand for oil and
natural gas, the price of oil and gas, the general economic climate and Alfa's
ability to raise additional capital and to find a merger candidate.
YEAR 2000
Alfa has no proprietary software. The Company has checked with the manu-
facturers of it's software package and has been informed that a new version
addressing the Year 2000 problem will be available mid-1999. Alfa does not
expect to incur any significant costs related to the Year 2000 problem.
RESULTS OF OPERATIONS
THREE MONTHS ENDED FEBRUARY 28, 1999 COMPARED TO FEBRUARY 28, 1999
Alfa's oil and gas sales decreased 28% to $4,131 in 1999 from $5,721 in 1998.
This decrease is primarily due to decreased production. Management fees
increased to $805,000 in 1999 from $-0- in 1998. This increase is due to
providing services related to acquisitions made by others. Interest and other
income decreased to $57% in 1999 from $182 in 1998.
-7-
<PAGE>
<PAGE>
Production expenses decreased 20% to $3,371 in 1999 from $4,251 in 1998. This
decrease was a result of lower production. General and Administrative
expenses decreased to $2,056 in 1999 from $3,094 in 1998. This decrease is
due cost reduction measures.
Since net operating revenues from Alfa's oil production are very sensitive to
changes in the price of oil, it is difficult for management to predict whether
or not the Company will be profitable in the future. Unless oil prices
increase, the Company will not be able to produce its marginal properties and
since management has reduced its services, total revenues will continue to
decline.
NINE MONTHS ENDED FEBRUARY 28, 1999 COMPARED TO FEBRUARY 28, 1998
Alfa's oil and gas sales decreased 39% to $11,768 in 1999 from $19,196 in
1998. This decrease is primarily due to loss of production. Management fees
increased to $805,000 in 1999 from $-0- in 1998. This increase is due to
providing services related to acquisitions by others. Interest and other
income decreased to $204 in 1999 from $685 in 1998.
Production expenses decreased 31% to $10,843 in 1999 from $15,776 in 1998.
This decrease was a result of lower production. General and Administrative
expenses decreased 10% to $19,655 in 1999 from $21,718 in 1998. This increase
is due to audit and professional fees.
Since net operating revenues from Alfa's oil production are very sensitive to
changes in the price of oil, it is difficult for management to predict whether
or not the Company will be profitable in the future. Unless oil prices
increase, the Company will not be able to produce its marginal properties and
since management has reduced its services, total revenues will continue to
decline.
EFFECT OF CHANGES IN PRICES
Changes in prices during the past few years have been a significant factor in
the oil and gas industry. The price received for the oil and gas produced by
Alfa has fluctuated significantly during the last year. Changes in the price
that Alfa receives for its oil and gas is set by market forces beyond Alfa's
control. That uncertainty in oil and gas prices make it more difficult for a
company like Alfa to increase its oil and gas asset base and become a
significant participant in the oil and gas industry.
-8-
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults 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.
None.
-9-
<PAGE>
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Issuer caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ALFA RESOURCES, INC.
Dated: April 13, 1999 By: /s/ Dennis R. Staal
Dennis R. Staal, Chief
Financial and Accounting Officer
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of operations found on
page 2, 3 and 4 of the Company's Form 10-QSB for the quarter ended February
28, 1999, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-END> FEB-28-1999
<CASH> 20,828
<SECURITIES> 0
<RECEIVABLES> 805,700
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 826,528
<PP&E> 1,482,289
<DEPRECIATION> (1,444,695)
<TOTAL-ASSETS> 867,122
<CURRENT-LIABILITIES> 46,869
<BONDS> 0
<COMMON> 99,000
0
292,947
<OTHER-SE> 428,306
<TOTAL-LIABILITY-AND-EQUITY> 867,122
<SALES> 11,768
<TOTAL-REVENUES> 816,972
<CGS> 10,843
<TOTAL-COSTS> 10,843
<OTHER-EXPENSES> 25,055
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 781,074
<INCOME-TAX> 0
<INCOME-CONTINUING> 781,074
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 781,074
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
