SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
_X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 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
September 30, 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-QSB FOR THE INTERIM
PERIOD ENDED SEPTEMBER 30, 1996
TABLE OF CONTENTS
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Page
Number
Part I. Financial Information
Item I. Financial Statements
<S> <C>
Balance Sheets at September 30, 1996 and June 30, 1996......................................... 3
Statements of Operations for the Three Months Ended September 30,
1996 and 1995...................................................................................4
Statements of Changes in Stockholders' Deficit for the Year Ended
June 30, 1996 and Three Months Ended September 30, 1996.........................................5
Statements of Cash Flows for the Three Months Ended September 30,
1996 and 1995...................................................................................6
Notes to Financial Statements..................................................................7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations...........................................................................8
Part II. Other Information
Item 1. Legal Proceedings...............................................................................8
Item 6. Exhibits and Reports on Form 8-K................................................................8
Signatures......................................................................................9
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2
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BASIC NATURAL RESOURCES INC.
Balance Sheets
<TABLE>
<CAPTION>
September 30, 1996 June 30, 1996
(Unaudited) (Audited)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 0 $ 0
----------------- -----------------
Total Current Assets 0 0
----------------- -----------------
Total Assets $ 0 $ 0
================= =================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued liabilities $ 28,009 $ 28,009
Loan payable 13,200 13,200
Income taxes payable 0 3,299
----------------- -----------------
Total Current Liabilities 41,209 41,209
Stockholders' Deficit:
Preferred Stock - $1 par value 10,000,000 shares authorized; 174,865 shares
of Series A Voting Preferred Stock
outstanding at September 30, 1996 and June 30, 1996 174,865 174,865
Common Stock - $.00005 par value, 536,000,000 shares authorized; 2,376,287
shares issued and outstanding at September 30, 1996
and 2,376,287 shares issued and outstanding at June 30, 1996 119 119
Additional paid-in capital 4,610,729 4,610,729
Retained earnings (deficit) (4,826,922) (4,826,922)
----------------- -----------------
Total Stockholders' Deficit (41,209) (41,209)
----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 0 0
================= =================
</TABLE>
See Accompanying Notes to the Financial Statements.
3
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BASIC NATURAL RESOURCES INC.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
REVENUES $ 0 $ 0
Cost and Expenses: 0 0
----------------- -----------------
Total Costs and Expenses 0 0
----------------- -----------------
Income (loss) from Continuing Operations: 0 0
Income tax expense (benefit) 0 0
----------------- -----------------
Net Income (Loss) $ 0 $ 0
================= =================
Income (loss) per share (continuing operations) $ (.00) $ (.00)
Income (loss) per share (discontinued operations) .00 .00
----------------- -----------------
Income (Loss) Per Share $ (.00) $ (.00)
================= =================
</TABLE>
See Accompanying Notes to the Financial Statements.
4
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BASIC NATURAL RESOURCES INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
For Year Ended June 30,1996 (audited) and
For the Three Months Ended September 30, 1996
(unaudited)
<TABLE>
<CAPTION>
Additional Retained Total
Common Preferred Paid-in Earnings Stockholders'
Shares Amount Shares Amount Capital (Deficit) Deficit
------------- ------------- -------------- ------------- ------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances 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 39,990 40,000
Rounding related to
stock reverse (2)
Net loss (66,182) (66,182)
------------- ------------- -------------- ------------- ------------- -------------- -------------
Balances at June 30,
1996 2,376,287 119 174,865 174,865 4,610,729 (4,826,922) (41,209)
Net income (loss) 0
------------- ------------- -------------- ------------- ------------- -------------- -------------
Balances at September
30, 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
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BASIC NATURAL RESOURCES INC.
Statements of Cash Flow
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1996 1995
CASH FLOWS OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ 0 $ 3,100
Adjustments to reconcile net income (loss) to net cash used in
operating activities 0 0
Changes in Assets and Liabilities:
Income taxes payable 0 (3,098)
------------------ ------------------
Net Cash Provided by Operating Activities 0 2
CASH FLOW FROM INVESTING ACTIVITIES:
Cost of securities traded 0 0
Increase (decrease) in restricted certificates of deposit 0 0
------------------ ------------------
Net Cash Provided by Financing Activities 0 0
------------------ ------------------
Net Increase (Decrease) in Cash 0 2
CASH AT BEGINNING OF YEAR 0 642
------------------ ------------------
CASH AT END OF PERIOD $ 0 $ 644
================== ==================
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 0 $ 225
Income taxes paid 0 0
------------------ ------------------
$ 0 $ 225
================== ==================
</TABLE>
See Accompanying Notes to the Financial Statements.
6
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BASIC NATURAL RESOURCES INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
1. Basis of Presentation
The financial statements of Basic Natural Resources Inc. (the "Company"),
included herein, are unaudited for all periods ended September 30, 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, 1996 and 1995, 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 three months ended September 30, 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 stockholder value.
Results of Operations
Analysis of Three Months ended September 30, 1996 Compared to Three Months
ended September 30, 1995
Costs and expenses for the three months ended September 30, 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
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Liquidity and Capital Resources
There were no recorded revenues for the three months ended September 30,
1996. For the period from June 30, 1996 to September 30, 1996 there was no
change in the Company's working capital. At June 30, 1996, 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 computer
related technologies 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 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
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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 20, 1996 By: /s/ Samuel M. Skipper
--------------------------
Samuel M. Skipper
Chairman of the Board
9
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Basic Natural Resources, Inc. September 30, 1996 financial statements
and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000817125
<NAME> Basic Natural Resources, Inc.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1996
<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
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
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<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
