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 3/31/97
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 identification number)
of incorporation or organization)
P.O. 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 May 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
March 31, 1997 December 31, 1996
CURRENT ASSETS: -------------- -----------------
Cash $ 1,700 $ 608
Accounts receivable-trade 6,398 3,997
Accounts receivable-related party 7,087 33,948
Interest receivable 0 0
-------- --------
Total Current Assets 15,185 38,553
PROPERTY AND EQUIPMENT:
Oil and gas property 406,862 386,829
Less:
Accumulated
depreciation,
depletion and amortization (134,892) (122,638)
-------- --------
Total Property and Equipment 271,970 264,191
OTHER ASSETS:
Investment in Great Western 190,500 190,500
-------- --------
Total Other Assets 190,500 190,500
TOTAL ASSETS $477,655 $493,244
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 7,905 $ 3,675
Payroll taxes payable 474 707
-------- --------
Total Current Liabilities 8,379 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 (2,499,437) (2,477,554)
Total Stockholders' Equity 468,979 488,862
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $477,359 $493,244
<PAGE>
SUNRAY MINERALS, INC
STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
---------------------------------
1997 1996
-------- ---------
REVENUES:
Sales from oil and gas $ 18,578 $ 5,292
Interest 1 5,332
Other income 92 1,072
-------- --------
Total Revenue 18,671 11,696
OPERATING EXPENSE:
Lease operating 2,186 0
Lease operating-related party 3,586 3,984
Depreciation and depletion 12,255 2,250
Leased Prospects Expired 0 26,303
Dry hole costs 0 0
General and administrative 20,277 31,826
General and admin-
istrative--related party 2,250 2,250
-------- --------
Total Operating Expenses 40,554 66,613
OTHER INCOME AND EXPENSE:
Loss on sale of property 0 0
Loss on mortgage note receivable 0 0
NET INCOME (LOSS) (21,883) (54,917)
Weighted average shares outstanding 902,946 886,280
LOSS PER SHARE:
Loss per share ($.02) ($.06)
<PAGE>
SUNRAY MINERALS, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
---------------------------------
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(21,883) (54,917)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Depreciation and depletion 12,255 2,250
Issuance of stock for services 2,000 250
Loss on leased prospects expired 0 26,303
Changes in working capital:
(Increase) decrease in
Accounts receivable (2,401) 1,251
Accounts
receivable--related party 26,861 8,100
Interest receivable 0 114
Increase (decrease) in
Accounts payable 4,230 (2,595)
Payroll taxes payable (233) (1,016)
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 20,829 (20,260)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Properties (19,737) (120,759)
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES (19,737) (120,759)
NET INCREASE (DECREASE) IN CASH: 1,092 (141,019)
CASH AT BEGINNING OF PERIOD 608 415,809
CASH AT END OF PERIOD 1,700 274,790
<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 March
31, 1997 and December 31, 1996 and the results of operations and changes in cash
flows for the periods ended March 31, 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.
Note 2 - Issuance of Securities
The Company issued 25,000 shares of common stock to Michael P. O'Brien,
President and Board of Director along with 25,000 shares of common stock to S.
Randell Wyatt, Secretary/Treasurer and Board of Director. After issuance of
these shares, the Company has 936,280 shares of common stock outstanding.
The securities issued in the transactions described above were issued in
reliance on the exemption from the registration and prospectus delivery
requirements of the Securities Act provided in S 4(2) thereof. Each purchaser
was provided with business and financial information respecting the Company and
was provided with the opportunity to obtain additional information in order to
verify the information provided or to further inform themselves respecting the
Company. Each of the persons acquiring such securities acknowledged in writing
that such person was obtaining "restricted securities" as defined in rule 144
under the Securities Act; that such shares could not be transferred without
registration or an available exemption therefrom; that such person must bear the
economic risk of the investment for an indefinite period; and that the Company
would restrict the transfer of the securities in accordance with such
representations. Such persons also agreed that any certificates representing
such shares would be stamped with a restrictive legend covering the transfer of
such shares. The certificates representing the foregoing shares bear an
appropriate restrictive legend conspicuously on their fact, and stop transfer
instructions are noted on the Company's stock transfer records.
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. It is currently engaged in oil and gas exploration
and development in 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 $21,883 for the quarter ended March 31, 1997 as
compared to 1996's first quarter loss of $54,917. Overall production quantities
for the first quarter of 1997 were significantly higher to levels achieved in
the first quarter of 1996, as new production from acquisitions and successfull
development activities offset production declines. Total oil and gas revenues
for the first quarter of 1997 were $18,670, and were comprised of $17,128 of oil
revenues and $1,542 of gas revenues. This was an increase from total oil and
gas revenues received in the first quarter of 1996 which was $5,292. Average
oil and gas prices received in the first quarter of 1997 were $22.59 per barrel
and $1.26 per Mcf.
Lease operating expenses for the first quarter of 1997 totaled $5,772 compared
to $3,984 for the first 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 first quarter of 1997 was
$6.07. Depletion and depreciation expense totaled $12,255 compared to $2,250
for the first quarter of 1996. This increase was also the result of new
production added during 1996.
For the first quarter of 1997, general and administrative expenses decreased to
$22,526 from $34,076 in the first 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 first quarter of 1997, the Company purchased an additional interest
in two of its existing wells of 16.50% and 19.55% from Las Colinas Oil Corp (Las
Colinas). The Company financed this purchase from a credit balance due from Las
Colinas. At December 31, 1996, the balance owed to the Company from Las Colinas
was $33,948. Of this credit balance, $17,136 was applied against the purchase
of the additional interests in two of the Company's existing wells. Further
adjustments in this credit balance were $400 received from Las Colinas on March
5, 1997 which was applied against the credit, the accounts receivable from Las
Colinas increased by $268 during the first quarter of 1997 and joint interest
billings from Las Colinas to the Company covering the Company's interest in its
wells was $9,595 during the first quarter of 1997, which was applied against
this credit. As of March 31, 1997, the credit balance of Las Colinas to the
Company was $7,087.
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 valued 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.
PART II
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed onn its behalf by the
undersigned, hereunto duly authorized.
SUNRAY MINERALS, INC.
Date: July 27, 1998 By: /s/ Michael P. O'Brien
Michael P. O'Brien, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF March 31, 1997, AND THE RELATED STATEMENT OF OPERATIONS FOR THE
THREE MONTH ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,700
<SECURITIES> 0
<RECEIVABLES> 13,485
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,185
<PP&E> 406,862
<DEPRECIATION> 134,892
<TOTAL-ASSETS> 477,655
<CURRENT-LIABILITIES> 8,379
<BONDS> 0
<COMMON> 9,363
0
0
<OTHER-SE> 2,959,053
<TOTAL-LIABILITY-AND-EQUITY> 477,359
<SALES> 18,578
<TOTAL-REVENUES> 18,671
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 40,554
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (21,883)
<INCOME-TAX> 0
<INCOME-CONTINUING> (21,883)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,883)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
