SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to
Commission File Number: 33-15097-D
BASIC NATURAL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-10457105
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2450 South Shore Boulevard
Suite 210, Houston Texas 77573
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 877-8080
Check whether the issuer (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 No X
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
stock as of the latest practicable date.
Common Stock, $.00005 Par Value 2,376,287
(Shares outstanding as of March 31, 1996)
Transitional Small Business Disclosure Format (Check One) Yes No X
1
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BASIC NATURAL RESOURCES, INC.
QUARTERLY REPORT ON FORM 10-Q FOR THE INTERIM
PERIOD ENDED MARCH 31, 1996
TABLE OF CONTENTS
Page
Number
Part I. Financial Information
Item I. Financial Statements
Balance Sheets at March 31, 1996 and June 30, 1995....................3
Statements of Operations for the Nine Months Ended
March 31, 1996 and 1995...............................................4
Statements of Changes in Stockholders' Deficit for the Nine Months
Ended March 31, 1996 and the year ended June 30, 1995.................5
Statements of Cash Flows for the Nine Months Ended March 31,
1996 and 1995.........................................................6
Notes to Financial Statements.........................................7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................7
Part II. Other Information
Item 1. Legal Proceedings....................................................8
Item 6. Exhibits and Reports on Form 8-K.....................................8
Signatures...........................................................9
2
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BASIC NATURAL RESOURCES INC.
Balance Sheets
<TABLE>
<CAPTION>
March 31, 1996 June 30, 1995
(Unaudited) (Audited)
---------------- ----------------
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 0 $ 644
---------------- ----------------
Total Current Assets 0 644
---------------- ----------------
Total Assets $ 0 $ 644
================ ================
LIABILITIES AND STOCKHOLDERS' DEFICIT:
Current Liabilities:
Accounts payable and accrued liabilities $ 28,009 $ 12,372
Loan Payable 13,200 0
Income taxes payable 0 3,299
---------------- ----------------
Total Liabilities 41,209 15,671
Stockholder's (Deficit):
Preferred Stock - $1 par value 10,000,000 shares authorized;
174,865 shares of Series A Voting Preferred Stock outstanding
at March 30, 1996 and June 30,1995 174,865 174,865
Common stock - $.00005 par value, 536,000,000
shares authorized; 2,376,287 shares issued and
outstanding at March 30, 1996 and 2,176,289 shares
issued and outstanding at June 30, 1995 119 109
Additional paid-in capital 4,610,729 4,570,739
Retained (deficit) (4,826,922) (4,760,740)
---------------- ----------------
TOTAL STOCKHOLDERS' (DEFICIT) (41,209) (15,027)
---------------- ---------------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 0 $ 644
================ ===============
</TABLE>
See accompanying notes to the financial statements.
3
<PAGE>
BASIC NATURAL RESOURCES INC.
Statements of Operations
<TABLE>
<CAPTION>
Nine Months Ended
March 31, 1996 March 31,1995
(Unaudited) (Unaudited)
------------------ ------------------
<S> <C> <C>
REVENUES $ 0 $ 0
Cost and Expenses:
Depreciation and amortization 0 51,483
General and administrative expenses 69,403 156
Interest 81 0
------------------ ------------------
Total Costs and Expenses 69,484 51,639
------------------ ------------------
Income (loss) from Continuing Operations: (69,484) (51,639)
Debt forgiveness 0 53,964
Investment income (loss) 3 0
------------------- ------------------
Income (loss) before income taxes (69,481) 2,325
Income tax expense (benefit) (3,299) 0
------------------- ------------------
Net income (loss) $ (66,182) $ 2,325
=================== ==================
Income (loss) per share (continuing operations) $ (.03) $ .00
Income (loss) per share (discontinued operations) . 00 . 00
------------------- ------------------
Income (loss) per share $ (.03) $ .00
=================== ==================
</TABLE>
See accompanying notes to the financial statements.
4
<PAGE>
BASIC NATURAL RESOURCES INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For Year Ended June 30,1995 (audited) and
For the Nine Months ended March 31, 1996 (unaudited)
<TABLE>
<CAPTION>
Common Preferred Additional Retained Total
--------------------- ---------------------- Paid-in Earnings Stockholders'
Shares Amount Shares Amount Capital (Deficit) Deficit
--------- --------- --------- ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at June 30, 1994 2,785,746 $ 139 174,865 $ 174,865 $ 4,446,541 $ (4,763,840) $ (142,295)
Common stock issued to
pay liabilities 50,000 3 0 0 124,165 0 124,168
Common stock cancelled (659,457) (33) 0 0 33 0 0
Net income 0 0 0 0 0 3,100 3,100
----------- ---------- --------- ----------- ------------- ------------ ---------------
Balance at June 30, 1995 2,176,289 109 174,865 174,865 4,570,739 (4,760,740) (15,027)
Common stock sold for
cash 200,000 10 0 0 39,990 0 40,000
Rounding related to stock
reverse (2) 0 0 0 0 0 0
Net (loss) 0 0 0 0 0 (66,182) (66,182)
------------ ---------- ---------- ----------- ------------- ------------- ----------------
Balances at March 31, 1996 2,376,287 $ 119 174,865 $ 174,865 $ 4,610,729 $ (4,826,922) $ (41,209)
============ ========== ========== =========== ============= ============= ================
</TABLE>
See accompanying notes to the Financial Statements
5
<PAGE>
BASIC NATURAL RESOURCES INC.
Statements of Cash Flows
<TABLE>
<CAPTION>
March 31,1996 March 31, 1995
(Unaudited) (Unaudited)
----------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income from (loss) $ (66,182) $ 2,325
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 0 0
Stock issued (canceled) for non-cash items 0 0
Bad debts 0 0
Disposition of assets 0 0
Changes in Assets and Liabilities:
Trade receivables 0 0
Other receivables 0 0
Deposits 0 0
Income taxes payable (3,299) 0
Accounts payable and accrued liabilities 15,637 0
------------------- ---------------------
Net cash used in Operating Activities (53,844) 2,325
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan proceeds 13,200 0
Sale of common stock 40,000 0
------------------- ---------------------
Net cash provided by financing activities 53,200 0
------------------- ---------------------
Net increase (decrease) in cash (644) 2,325
------------------- ---------------------
CASH AT BEGINNING OF YEAR 644 642
------------------- ---------------------
CASH AT END OF PERIOD $ 0 $ 2,967
------------------- ---------------------
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 0 $ 235
Income taxes paid 0 0
------------------ ---------------------
CASH AT END OF PERIOD $ 0 $ 235
=================== =====================
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
BASIC NATURAL RESOURCES INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
1. Basis of Presentation
The financial statements of Basic Natural Resources Inc. (the "Company"),
included herein, are unaudited for all periods ended March 31, 1996 and 1995.
They reflect all adjustments (consisting of normal recurring adjustments) which
are, in the opinion of management, necessary to fairly depict the results for
the periods presented. Certain information and note disclosures, normally
included in financial statements prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to rules and
regulations of the Securities and Exchange Commission. It is suggested that
these financial statements be read in conjunction with the audited financial
statements for the years ended June 30, 1995 and 1994, which are included in the
Company's annual report. The Company believes that the disclosures made herein
are adequate to make the information presented not misleading.
2. Earnings per Common and Common Equivalent Share
Earnings per common and common equivalent share is based on the average
number of common shares and dilutive common share equivalents outstanding for
the nine months and the quarters ended March 31, 1996 and 1995.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
The Company ceased all oil and gas operations in June 1994, following the
disposition of its oil and gas interests. The Company continues to seek
acquisitions and mergers in the area of computer related technologies.
Management believes that an acquisition of this nature will provide an
opportunity to enhance shareholder value.
Results of Operations
Analysis of Third Quarter 1996 Compared to Third Quarter 1995
Costs and expenses for the nine months ended March 31, 1996 declined
significantly compared to the same period in 1995. The decline in costs and
expenses is due to management's decision to cease all of the Company's operating
activities during the period ended March 31, 1995.
7
<PAGE>
Liquidity and Capital Resources
There were no recorded revenues for the nine months ended March 31, 1996.
For the period from December 31, 1995 to March 31, 1996 there was insignificant
change in the Company's working capital. At December 31, 1995, the Company
maintained a negative liquidity position which is evidenced by a current ratio
of .006 to 1. The Company has no major capital commitments at the present time.
Management continues to review potential acquisition candidates in the computer
related technolgies industry in its endeavor to restructure the Company,
increase the Company's current ratio and liquidity, and generate capital which
would provide cash flow for future capital expansion.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
This Company is involved in a lawsuit in the State of Texas which relates
to an environmental matter. The Company has been advised that it will cost
approximately $80,000 to perform a study to determine the extent of damage. The
estimated cost related to clean-up could be in excess of $500,000. The Company
currently has no means to pay any costs associated with this lawsuit. Management
is negotiating a settlement agreement with the parties to resolve this matter.
The proposed settlement provides for a payment of $10,000 and the issuance of
3,000,000 shares of the Company's common stock.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
None
B. Reports on Form 8-K
None
8
<PAGE>
SIGNATURES
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.
BASIC NATURAL RESOURCES, INC.
Dated: December 18, 1996 By: /s/ Samuel M. Skipper
-------------------------
Samuel M. Skipper
Chairman of the Board
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Basic
Natural Resources, Inc. March 30, 1996 financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000817125
<NAME> Basic Natural Resource, Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 41,209
<BONDS> 0
0
174,865
<COMMON> 119
<OTHER-SE> (216,193)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 69,403
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81
<INCOME-PRETAX> (69,481)
<INCOME-TAX> (3,299)
<INCOME-CONTINUING> (66,182)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (66,182)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
