SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
Amendment No. 1
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 2000
Commission file Number 0-10337
OKLAHOMA ENERGY CORPORATION
(Formerly Cayman Resources Corporation)
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(Exact name of registrant as specified in its charter)
Oklahoma 73-1129531
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(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation
or organization)
2 West Main Street, Cyril, OK 73029-0579
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(Address of principal executive offices) (Zip Code)
(580) 464-3751
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Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ] N/A [ X ]
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:
Common stock, par value $.05 per share
47,530,755 outstanding shares as of June 30, 2000
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OKLAHOMA ENERGY CORPORATION
(Formerly Cayman Resources Corporation)
Table of Contents
PART I - FINANCIAL INFORMATION
Page No.
Item 1. OKLAHOMA ENERGY CORPORATION 1
Balance Sheet as of June 30, 2000
Statement of Operations for the three
and six months ended June 30, 2000 and 1999
Statement of Cash Flows for the three
and six ended June 30, 2000 and 1999
Notes to Financial Statements
Item 2. Management's Discussion and Analysis 1
PART II - OTHER INFORMATION 3
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE PAGE 4
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OKLAHOMA ENERGY CORPORATION
FORM 10-Q
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial statements as of June 30, 2000 are incorporated herein by
reference as Exhibit 1.
ITEM 2. MANANGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTSOF OPERATIONS
Liquidity and Capital Resources
Presently, the Company has no working capital. The Company lacks necessary
capital to meet its obligations. The Company has not been able to meet its
current obligations.
Results of Operations - Operating Revenues
The Company has no revenues during the six months ended June 30, 2000.
Operating Costs and Expenses
Since the Company is not currently conducting operations, it incurred no
operating expenses related to its refinery. It has incurred various
administrative expenses relating to its continuing environmental remediation
efforts and general corporate matters.
SIGNIFICANT EVENTS
Reactivation of Cyril Refinery
In January of 1994, the Company began its Cyril Refinery operations. The
Company shut down refinery operations in April of 1995. During the sixteen
months of operations, the Company experienced substantial mechanical problems
and was unable to meet product specifications demanded by its customers. As a
result, the Company realized significant losses from its operation of the Cyril
Refinery which caused the loss of its crude oil credit lines and the ultimate
shut down of refinery operations.
Although the Company is now pursuing financing which will enable it to
renew its financing arrangements and allow it to start up operations of the
Cyril Refinery again, there is absolutely no assurance that the Company will be
successful.
Sale of Company's Oil and Gas Assets to Satisfy Working Capital Debt
Effective January 1, 1995, the Company assigned substantially all its oil
and gas production to the Cayman Lenders Limited Liability Corporation in
exchange for a release of indebtedness and in lieu of foreclosure on the
$1,600,000 in debt loaned to it by a group of individuals known as the Capital
Investors. Such funds were borrowed by the Company in 1993 to finance the Cyril
Refinery.
Cyril Refinery Vendor Payables
The Company and its subsidiary have a substantial amount of past-due vendor
payables for which the Company is currently developing a plan to offer such
vendors a settlement plan on a case by case basis.
Oklahoma Industrial Finance Authority $750,000 Loan
On November 10, 1993, the Company secured a $750,000 loan from the Oklahoma
Industrial Finance Authority (OIFA), which funds were used to satisfy a portion
of the Company's start-up working capital needs. The OIFA loan was for one year
and is now in default with interest accruing at eight percent (8%). The OIFA may
decide to foreclose at any time.
On June 30, 2000, OKOK entered into an "Option Contract to Purchase Cyril
Petrochemical Corporation's Promissory Note, Mortgage and Security Agreement,
and all Additional Collateral" with the Oklahoma Industrial Financial Authority
("OIFA"). A copy of this contract is attached as Exhibit 4 (the "Exhibit 4
Contract"). The original loan was dated November 10, 1993. According to the
Exhibit A Contract, as part of the collateral subject to the Exhibit A Contract,
is Share Certificate No. 25, which was pledged to OIFA and continues to be
pledged to OIFA, in the amount of 1000 shares of all outstanding common stock of
Cyril Petrochemical Corporation, owned by Cayman Resources Corporation,
presently doing business as Oklahoma Energy Corporation. Additionally, according
to the terms of the OIFA loan, OIFA holds the first mortgage and has a security
interest pursuant to a Uniform Commercial Code Financing Statement as to all of
OKOK's present and future equipment, filed on November 10, 1993. As further
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stated in the Exhibit A Contract, another lien in the original amount of
$321,692, is asserted to be held by GEO American, Inc. for labor and material
supplied to the site. The mortgage, promissory note, the pledged stock, the
UCC-1 security interest and the lien can be purchased under the Exhibit A
Contract for the aggregate sum of $950,000, less option payments which are to be
applied to the purchase price. Management of the Company believes it to be in
the best interest of the Company to cause the exercise of the Exhibit A
Contract.
Environmental Considerations
In 1988, the property formerly owned by Oklahoma Refinery Corporation (ORC
site) in Cyril, Oklahoma, including that portion of the Cyril Refinery owned by
CPC was placed on the National Priority List (NPL). This action was taken by the
EPA in accordance with the Comprehensive Environmental Response Compensation
Liability Act of 1980 (CERCLA), as amended by the Superfund and Reauthorization
Act of 1986 (SARA). In 1991, the EPA concluded a Remedial
Investigation/Feasibility Study (RIFS) of the Cyril Refinery site. The RIFS
identified certain areas where contamination and hazardous chemicals exist. The
RIFS conclusion was that the contaminants found at the ORC site did not pose an
immediate hazard of significant risk to human health at off-site testing
locations used by the study. It was therefore determined that the contaminants
contained within the ORC site could be remediated over a period of time. In
1991, the EPA issued a Proposed Plan of Action (PPA) which outlined several
alternative actions which could be taken to either contain, remediate or remove
the identified contaminated material. Following public hearings, the EPA issued
its Record of Decision (ROD) which together with the PPA outlines in general the
EPA's plan to clean up the entire ORC site.
In April 1997, the Oklahoma Department of Environmental Quality (ODEQ)
filed an announcement of changes to the CRC site remediation plan which greatly
reduced the scope and cost of the "clean-up" work. They announced that rather
than building a bioremediation plant, they plan to isolate the remaining soil
into one location on the ORC property (not on the Company's property) where they
will "encapsulate" the material with concrete. The ODEQ and EPA have informed
the Company that they will transport approximately 1,500 cubic yards of soil
from the Company's property to the EPA/ODEQ-controlled property to be
encapsulated.
The Company is aware of the need to cooperate with State and Federal
agencies to provide a plan and implement that plan to clean up any and all
identifiable hazards on its property. In January 1992, the Company executed a
Consent Agreement and Final Order with the Oklahoma State Department of Health.
All of the work required by such Consent Order has now been completed by the
Company. In addition to the requirements made of the Company in accordance with
the Oklahoma State Department of Health (OSDH) and the EPA to complete the
remediation of all hazardous areas located on the CPC property. The Company has
developed a plan to achieve this goal and believes that those plans are
feasible. Management estimates, based upon review and evaluation of the above
studies, that the cost to transport the remaining soil to the EPA encapsulation
site is approximately $100,000. This will substantially complete the Company's
requirement under the Consent Order Dated January 1, 1992.
Strategic Alliance
On July 5, 2000, OKOK entered into a letter of intent with Camtraco
Enterprises, Inc. ("Camtraco") of Houston, Texas. The transaction is scheduled
to be consummated about August 15, 2000. The letter of intent is not effective
until a definitive Strategic Alliance Agreement is executed. The transaction
envisions a long-term strategic alliance with Camtraco and OKOK in the storage
and blending of crude oil and jet fuel under a Mentor-Protege program
established by the Department of Defense, together with feedstock supply
necessary to operation the program. Two major oil refinery companies are
participants in the strategic alliance. After the launch of the storage tank
facility, it is anticipated that the refinery will be reactivated so as to
dedicate OKOK's strategic plan for storage, manufacture and distribution of
energy to the marketplace, including hydrogen.
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PART II OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
During the week of July 5, 2000, the Company received a letter dated June 29,
2000 from John A. Rayll, Jr. concerning a judgment in his favor against Cayman
Resources Corporation, filed in Tulsa County, Oklahoma's District Court on May
28, 1997. Mr. Rayll claims that he is owed the sum of $119,363 as of June 30,
2000. Mr. Rayll further claims that he had purchased at a sheriff's sale all of
Cayman Resources' right, title and interest in Stock Certificate No. 25
representing 1,000 common stock shares of the Company. It has been independently
confirmed that the Oklahoma Industrial Financial Authority (OIFA) has physical
possession of Certificate No. 25 as part of its security interests under the
OIFA loan, and that the Notice of Sale which was caused to be published by John
Whetsel, Sheriff of Oklahoma County by D.R. Williams on July 15, 1997, provided
in pertinent part that the 1,000 shares represented by Share Certificate No. 25
is in the possession of OIFA and any such sale was and is subject to the prior
possessory lien of OIFA, among other matters. Management is diligently pursuing
Mr. Rayll's claim. It is Management's position that this claim will be
vigorously defended and contested on several grounds; and that Mr. Rayll has no
position superior to that of OIFA.
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Resignation and Appointment of New Director
On June 2, 2000, Fred Konigsberg resigned as a Director and Officer of Oklahoma
Energy Corporation. Mr. Konigsberg's resignation was accepted, with regret. Jan
H. Schutze, after his appointment as President and Chief Executive Officer, was
nominated to and accepted OKOK's appointment as a new Director. Jan H. Schutze
M.Sc., R.G., has over 20 years of experience as a professional consulting
geologist, and has previously managed public companies in the mining sector. He
has performed work in Canada, Mexico, Costa Rica, Guyana, Germany, Austria,
Cyprus, Tanzania and Australia, as well as in the United States. He is an
economic geologist who commenced his career in the mining industry before
becoming an expert in environmental investigations.
ITEM 5: OTHER INFORMATION
None
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a) The following exhibits are included herein:
(1) Financial Statements:
a. Independent accountant's review report covering financial
statements contained in Exhibit 2 below.
b. Financial statements at June 30, 2000.
c. Statement re: computation of earnings per share.
(2) Option contract.
b) No reports on Form 8-K have been filed by the Company during the quarter
for which this report is filed.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
OKLAHOMA ENERGY CORPORATION
Dated: July 28, 2000 By: /s/ Jan Schutze
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Jan Schutze
President and Chief Executive Officer
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