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 PERIOD ENDED 6/30/97
Commission File Number: 33 - 509 - D
SUNRAY MINERALS, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0210772
(State or other jurisdiction (IRS Employer
of incorporation or organization) identification number)
Box 814653, Dallas, TX 75381
(Address of principal executive offices) (Zip Code)
972/650-1612
(Registrant's telephone number, including area code)
NA
(Former name, former address and former fiscal year, if changed from last
report)
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. (x) yes ( ) no
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the lates practicable date. As of August 16, 1997, there
were 936,280 shares of the Registrant's Common Stock outstanding.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
SUNRAY MINERALS, INC.
BALANCE SHEETS
(UNAUDITED)
ASSETS
June 30, December 31,
1997 1996
--------- -----------
CURRENT ASSETS:
Cash $ 1,578 $ 608
Accounts receivable-trade 4,146 3,997
Accounts receivable-related party (2,022) 33,948
Interest receivable 0 0
--------- ---------
Total Current Assets 3,702 38,553
PROPERTY AND EQUIPMENT:
Oil and gas property 407,546 386,829
Less: Accumulated depreciation,
depletion and amortization (146,039) (122,638)
--------- ---------
Total Property and Equipment 261,507 264,191
OTHER ASSETS:
Investment in Great Western 190,500 190,500
--------- ---------
Total Other Assets 190,500 190,500
--------- ---------
TOTAL ASSETS $ 455,709 $ 493,244
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 13,963 $ 3,675
Payroll taxes payable 474 707
--------- ---------
Total Current Liabilities 14,437 4,382
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;
1,000,000 authorized; no shares
issued
Common stock, $.01 par value;
20,000,000 shares authorized;
936,280 and 886,280 shares issued
and outstanding at March 31, 1997
and December 31, 1996, respectively 9,363 8,863
Additional paid-in-capital 2,959,053 2,957,553
Accumulated deficit (2,527,144) (2,477,554)
Total Stockholders' Equity 441,272 488,862
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY $ 455,709 $ 493,244
<PAGE>
SUNRAY MINERALS, INC
STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended June
June 30, 30,
------------------- ---------------------
1997 1996 1997 1996
-------- ------- --------- ---------
REVENUES:
Sales from oil and gas $14,028 $ 5,146 $32,697 $ 9,551
Interest 0 2,978 1 7,518
Other income 0 238 0 1,310
------- ------- ------- -------
Total Revenue 14,028 8,362 32,698 18,379
OPERATING EXPENSE:
Lease operating 4,241 0 6,257 0
Lease operating-related
parties 5,570 5,247 9,325 9,167
Depreciation and depletion 11,147 4,400 23,402 6,650
Leased prospects expired 0 48,563 0 74,866
Dry hole costs 0 0 0 0
General and administrative 20,402 39,179 40,679 70,755
General and admini-
strative-related party 375 2,250 2,625 4,500
------- ------- ------- -------
Total Operating Expenses 41,735 99,639 82,288 165,938
OTHER INCOME AND EXPENSE:
Loss on sale of property 0 0 0 0
Loss on mortgage note
receivable 0 0 0 0
------- ------- ------- -------
NET INCOME (LOSS) (27,707) (91,277) (49,590) (147,559)
Weighted average shares
outstanding 936,280 886,280 919,613 886,280
LOSS PER SHARE:
Loss per share ($.03) ($.10) ($.05) ($.17)
<PAGE>
SUNRAY MINERALS, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
--------------------------
1997 1996
---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $( 49,590) $(147,559)
Adjustments to reconcile net loss
to net cash (used) by operating
activities:
Depreciation and depletion 23,401 6,650
Issuance of stock for services 2,000 250
Loss on leased prospects expired 0 74,866
Changes in working capital:
(Increase) decrease in
Accounts receivable (149) 1,824
Accounts receivable-related party 35,971 (15,567)
Interest Receivable 0 114
Increase (decrease) in
Accounts payable 10,288 (1,646)
Payroll taxes payable (233) (1,016)
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 21,688 (82,084)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of Properties (20,718) (148,175)
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES (20,718) (148,175)
NET INCREASE (DECREASE) IN CASH: 970 (230,259)
CASH AT BEGINNING OF PERIOD 608 415,809
CASH AT END OF PERIOD 1,578 185,550
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Summary of Significant Accounting Policies
The accompanying unaudited financial statements have been prepared in accordance
with instructions to Form 10-Q and, therefore, do not include all disclosures
required by generally accepted accounting principles. However, in the opinion
of management, these statements include all adjustments, which are of a normal
recurring nature, necessary to present fairly the financial position at June 30,
1997 and December 31, 1996 and the results of operations and changes in cash
flows for the periods ended June 30, 1997 and 1996. These financial statements
should be read in conjunction with the financial statements and notes to the
financial statements in the 1996 Form 10-K of Sunray Minerals, Inc. (the
"Company") that was filed with the Securities and Exchange Commission.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Sunray Minerals, Inc., formerly Tarragon Corporation, was organized under the
laws of the state of Nevada in August 1985 for the purpose of searching,
investigating and acquiring business opportunities. Oil and gas operations were
commenced in December 1993. The Company is currently engaged in oil and gas
exploration, development and acquisitions in the State of Oklahoma. All of
the Company's oil and gas properties are located within the State of Oklahoma.
The Company's business strategy has been to increase production, cash flow
and reserves through the acquisition and development of mature properties along
with acquiring oil and gas prospects located in Oklahoma and Texas. These
properties have characteristics that include an established production
history, proved undeveloped reserves and at times multiple prospective
reservoirs that provide significant development opportunities. Prior to
acquiring a property, the Company performs a thorough geological and
engineering analysis of the property to formulate a comprehensive development
plan. Development activities seek to increase cash flow from existing proved
reserves and to establish additional proved reserves. These activities
typically involve the drilling of new wells, workovers and recompletions
of existing wells, and the application of other techniques designed to
increase production.
RESULTS OF OPERATIONS
The Company suffered a loss of $27,707 for the quarter ended June 30, 1997 as
compared to 1996's second quarter loss of $91,277. Overall production
quantities for the second quarter of 1997 were significantly higher to levels
achieved in the second quarter of 1996, as new production from acquisitions and
successfull development activities offset production declines.
Total oil and gas revenues for the second quarter of 1997 were $14,028 which
were comprised of $12,939 of oil revenues and $1,089 of gas revenues. This was
an increase from total oil and gas revenues received in the second quarter of
1996 which was $5,146. Average oil and gas prices received in the second
quarter of 1997 were $19.34 per barrel and $.71 per Mcf.
Lease operating expenses for the second quarter of 1997 totaled $9,811 compared
to $5,247 for the second quarter of 1996. This increase was due to new
production from acquisition and development activities. Lease operating
expenses per barrel of oil equivalent (BOE) for the second quarter of 1997 was
$10.88. Depletion and depreciation expense totaled $11,147 for the second
quarter of 1997 compared to $4,400 for the second quarter of 1996. This
increase was also the result of new production added during 1996.
For the second quarter of 1997, general and administrative expenses decreased to
$20,777 from $41,429 in the second quarter of 1996. This was a result of
reductions in general and administrative expenses being implemented during the
first quarter of 1997.
Management of the Company plans to continue an acquisition, exploration and
development program. New opportuninies and leads will continue to be
investigated and sought out.
LIQUIDITY AND CAPITAL RESOURCES
During the fourth quarter of 1996, the Company paid $78,500 to Las Colinas Oil
Corp. on a "turnkey" bases for a 50% interest in a well to be drilled and
completed. Mechanical problems occurred during the drilling which caused a
delay in operations. Operations resumed in the third quarter of 1997 in which
mechanical problems occurred again. The Company is currently awaiting a
substitute well to be drilled by Legacy Oil Corp. successor in interest to Las
Colinas Oil Corp.
FORWARD LOOKING STATEMENTS
This document includes "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934 ("Exchange Act"). All
statements other than statements of historical facts included in this document,
including without limitation, statements under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, estimated quantities and net present values of
reserves, business strategy, plans and objectives of management of the Company
for future operations and covenant compliance, are forward-looking statements.
Although the Company believes that the assumptions upon which such forward-
looking statements are based are reasonable, it can give no assurances that such
assumptions will prove to have been correct. Important factors that could cause
actual results to differ materially from the Company's expectations ("Cautionary
Statements") are disclosed within this document. All subsequent written and
oral forward-looking statements attributable to the Company or persons acting
on its behalf are expressly qualified by the Cautionary Statements.
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, hereunto duly authorized.
SUNRAY MINERALS, INC.
Date: July 27, 1998 By: /s/ Michael P. O'Brien
President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF JUNE 30, 1997, AND THE RELATED STATEMENT OF
OPERATIONS FOR THE THREE MONTH ENDED JUNE 30, 1997, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,578
<SECURITIES> 0
<RECEIVABLES> 2,124
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,702
<PP&E> 407,546
<DEPRECIATION> 146,039
<TOTAL-ASSETS> 455,709
<CURRENT-LIABILITIES> 14,437
<BONDS> 0
<COMMON> 9,363
0
0
<OTHER-SE> 2,959,053
<TOTAL-LIABILITY-AND-EQUITY> 455,709
<SALES> 32,697
<TOTAL-REVENUES> 32,698
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 82,288
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (49,590)
<INCOME-TAX> 0
<INCOME-CONTINUING> (49,590)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (49,590)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
