VINEYARD OIL & GAS COMPANY
10299 West Main Road
North East, PA 16428
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
Pursuant to the requirements of the Securities Exchange Act of 1934, we are
transmitting herewith the attached Form 10-QSB.
Sincerely,
Vineyard Oil & Gas Company
James J. Concilla
President
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1998
Commission File Number 0-13871
Pennsylvania 25-1349204
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10299 West Main Road, North East, Pennsylvania 16428-0391
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (814) 725-8742
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 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 [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical
date:
Common Stock, No Par Value - 5,125,562.50 shares as of June 30, 1998
<PAGE>
<TABLE>
PART 1 - FINANCIAL INFORMATION
BALANCE SHEETS (UNAUDITED)
VINEYARD OIL & GAS COMPANY
<CAPTION>
June 30, December 31,
1998 1997
<S> <C> <C>
ASSETS
Current Assets
Cash $ 652,010 $ 680,464
Accounts receivable 2,085,057 2,426,739
Inventories 173,828 174,659
Prepaid Expenses 34,562 42,986
__________ __________
Total Current Assets 2,945,457 3,324,848
Property, Plant and Equipment 8,584,112 8,584,977
Accumulated depreciation (8,110,717) (8,076,530)
__________ __________
473,395 508,447
Deferred Costs and Other Assets
Cash restricted for plugging 446,161 382,057
Investment at equity 250,410 234,959
__________ __________
696,571 617,016
__________ __________
TOTAL ASSETS (NOTE) $ 4,115,423 $ 4,450,311
__________ __________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 2,252,555 $ 2,605,660
Other accrued liabilities 37,333 27,387
__________ __________
Total Current Liabilities 2,289,888 2,633,047
Deferred revenue 401,709 394,572
Shareholder's Equity Common Stock, authorized
15,000,000 shares without par value, issued
5,125,562.5 shares at June 30, 1997,
at stated value of $.05 256,278 256,278
Additional paid-in capital 4,935,430 4,935,430
__________ __________
5,191,708 5,191,708
Retained earnings (deficit) (3,542,962) (3,544,096)
__________ __________
1,648,746 1,647,612
Less: cost of 67,944 shares held in treasury ( 224,920) ( 224,920)
__________ __________
1,423,826 1,422,692
__________ __________
$ 4,115,423 $ 4,450,311
__________ __________
See notes to condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
FOR THE THREE MONTHS AND SIX MONTHS
ENDED JUNE 30, 1998 AND 1997
VINEYARD OIL & GAS COMPANY
<CAPTION>
3 Months 3 Months 6 Months 6 Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Earned revenues $ 2,732,173 $ 2,036,062 $ 5,602,246 $4,908,462
Other Income 18,840 19,317 39,239 45,007
__________ __________ ___________ ___________
2,751,013 2,055,379 5,641,485 4,953,469
Cost of Earned Revenues 2,663,125 1,959,242 5,396,135 4,677,626
Selling, general and
administrative expenses 136,349 111,869 243,747 207,759
Interest 469 751 469 2,240
__________ __________ ___________ ___________
2,799,943 2,071,862 5,640,351 4,887,625
__________ __________ ___________ ___________
Income before income taxes (48,930) (16,483) 1,134 65,844
Income taxes 0 0 0 0
__________ __________ ___________ ___________
Net Income (48,930) (16,483) 1,134 65,844
Retained Earnings (Deficit)
Beginning of period (3,494,032) (3,654,705) (3,544,096) (3,737,032)
Retained Earnings (Deficit)
End of period (3,542,962) (3,671,188) (3,542,962) (3,671,188)
__________ __________ ___________ ___________
Income per common share (.0098) (.003) .0002 .0128
__________ __________ ___________ ___________
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
STATEMENTS OF CASH FLOWS (UNAUDITED)
VINEYARD OIL & GAS COMPANY
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
<CAPTION>
3 Months 3 Months 6 Months 6 Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Cash flow from operating
activities:
Income (loss) from operations $ (48,930) $ (16,483) $ 1,134 $ 65,844
Adjustments To Reconcile Net
Income to Net Cash Provided by
Operating Activities:
Depreciation and amortization 18,199 21,557 35,926 43,740
Provision for losses on
accounts receivable and
inventories 6,000 6,000 12,000 12,000
Gain on sale of property (1,459) 0 (1,459) 0
Changes in operating assets
and liabilities providing
(using cash):
Accounts receivable (85,299) 906,660 329,682 1,655,297
Inventories 1,375 12,704 831 24,615
Prepaid expenses 10,350 (2,758) 8,424 (17,396)
Other assets (7,794) (17,609) (15,451) (37,426)
Accounts payable (283,496) (909,527) (353,105) 1,638,387
Other current liabilities (10,218) 2,828 9,946 (31,041)
Deferred revenue 4,068 3,113 7,137 5,175
__________ __________ __________ _________
Net cash provided by (used in)
operating activities (397,204) 6,485 35,065 82,421
__________ __________ __________ _________
Cash flow from investing
activities:Capital expenditures 0 0 (2,500) 0
Proceeds from asset sale 3,085 3,085
__________ __________ __________ _________
Net cash used in investing
activities 3,085 0 585 0
__________ __________ __________ _________
Cash flow from financing
activities:Principal payments
on borrowings 0 (21,870) 0 (36,136)
__________ __________ __________ __________
Net cash (used in) financing
activities 0 (21,870) 0 (36,136)
__________ __________ __________ __________
Increase (Decrease) in cash (394,119) (15,385) 35,650 46,285
Cash at beginning of period 1,492,290 668,593 1,062,521 606,923
__________ __________ __________ __________
Cash at end of period $1,098,171 $653,208 $1,098,171 $ 653,208
__________ __________ __________ __________
</TABLE>
See notes to condensed financial statements.
<PAGE>
VINEYARD OIL & GAS COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1998
1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of
only normal recurring accruals) necessary to present fairly the results for
the three months ended June 30, 1998, and are not necessarily indicative of
the results to be expected for the full year.
2. Primary earnings per share are determined by dividing net income by the
weighted average number of common equivalent shares outstanding (5,125,562.50
in 1997 and 1996).
3. No federal income tax was due or paid during the periods ending June 30
1997, due to available operating loss carry forwards.
<TABLE>
4. Long-term debt
Long-term debt is summarized as follows:
<CAPTION>
June 30, 1998 June 30, 1997
<S> <C> <C>
Mortgage payable individual,
secured by all assets of the
Company, payable in monthly
payments of $7,523, including
interest at 10.5%, through
July, 1997. $ 0 $ 11,996
__________ __________
0 11,996
Current portion long-term debt 0 (11,996)
__________ __________
0 0
__________ __________
</TABLE>
5. Cash Flow Information
For purposes of the statement of cash flows, cash includes demand
deposits, certificates of deposit, and short term investments with
original maturities of three months or less.
Cash is classified as follows, for financial statement reporting
purposes:
June 30, 1998
Unrestricted cash $ 652,010
Cash restricted for well
plugging 446,161
__________
$1,098,171
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
IN THE QUARTER ENDED JUNE 30, 1998
Material Changes in Financial Conditions
Vineyard Oil & Gas Company's cash position increased $35,650, or 3%, in
the six month period and decreased $394,119, or 26%, for the three month
period ended June 30, 1998. Accounts receivable decreased $329,682 and
accounts payable decreased $353,105 for the six month period causing a net
decrease in cash of $23,423. For the three month period, accounts receivable
increased $85,299 and accounts payable decreased $283,496, resulting in a net
decrease in cash of $368,795. Inventories remained substantially the same
during these periods. Prepaid expenses decreased $8,424 for the six month
period and $10,350 for the three month period due principally to periodic
write-offs to operations. Other assets, excluding restricted cash, increased
$15,451 and $7,794 for the six and three month periods ended June 30, 1998,
such amounts representing an increase in investments. Fixed assets increased
by $2,500 for equipment purchases and was reduced by $3,365 for a vehicle
which was sold. The increase in accumulated depreciation was the result of
depreciation charges of $35,926 and $18,199 for the six and three month
periods and decreased by the write-off of accumulated depreciation for an
asset that was sold.
Current liabilities decreased $343,149 for the six month period and
$293,713 for the three month period ended June 30, 1998. Accounts payable
accounted for substantially all of the decreases.
The Company incurred no additional long-term debt during this six month
period. Deferred revenue increased $7,137 and $4,068 for the six and three
month periods, such amounts representing interest earned on moneys held
for future plugging activities.
Shareholders' equity increased $1,134 for the six month period ended
June 30, 1998, the amount of net income for the period.
Material Changes and Results of Operations
Earned revenues increased $693,784 for the six month period and $696,111
over the three month period ended June 30, 1998, as compared to the same
periods in 1997. Of these amounts, gas marketing accounted for $683,118 of
the six month increase and $664,581 of the three month increase. Gas
purchases increased $690,349 and $696,470 for the same periods which
accounted for substantially all of the increase in cost of earned revenues -
$718,509 and $703,883 for the six and three month periods as compared to 1997.
General and administrative expenses increased $35,988 and $24,480 for the
six and three month periods ended June 30, 1998, as compared to the same
periods in 1997. Net income decreased $64,710 for the six month period and
$32,477 for the three month period ended June 30, 1998, as compared to similar
periods in 1997. The $64,710 decrease in income for the six month period is
due to decreased revenues and certain increased costs. Gas marketing income
decreased $8,260 due to lower margins in spot deals. Production income
decreased $43,570 due to lower volumes produced and lower pool average prices.
Production expenses included well plugging costs of $19,400 which contributed
to the overall income decrease. General and administrative expenses included
approximately $17,000 of increased consulting and other fees.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
____________________________
NOT APPLICABLE
ITEM 2. CHANGES IN SECURITIES
________________________________
NOT APPLICABLE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
__________________________________________
NOT APPLICABLE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
______________________________________________________________
NOT APPLICABLE
ITEM 5. OTHER INFORMATION
____________________________
NOT APPLICABLE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
___________________________________________
(a) EXHIBITS
________
NONE
(b) REPORTS ON FORM 8-K
___________________
NONE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<EXCHANGE-RATE> 1
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 652,010
<SECURITIES> 0
<RECEIVABLES> 2,187,896
<ALLOWANCES> 102,839
<INVENTORY> 173,828
<CURRENT-ASSETS> 2,945,457
<PP&E> 8,584,112
<DEPRECIATION> 8,110,717
<TOTAL-ASSETS> 4,115,423
<CURRENT-LIABILITIES> 2,289,888
<BONDS> 0
<COMMON> 256,278
0
0
<OTHER-SE> 1,167,548
<TOTAL-LIABILITY-AND-EQUITY> 4,115,423
<SALES> 5,602,246
<TOTAL-REVENUES> 5,641,485
<CGS> 5,396,135
<TOTAL-COSTS> 5,396,135
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 469
<INCOME-PRETAX> 1,134
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,134
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,134
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
