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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K/A
AMENDMENT NO. 2
CURRENT REPORT
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
April 5, 1996
------------------------------------------------
Date of Report (date of earliest event reported)
MONUMENT RESOURCES, INC.
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Exact name of Registrant as Specified in its Charter
Colorado 33-15528-D 84-1028449
- --------------------------- --------------- ---------------------------
State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
11 Wilcox Street, P.O. Box 1450, Castle Rock, Colorado 80104
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Address of Principal Executive Offices, Including Zip Code
(303) 688-3993
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Registrant's Telephone Number, Including Area Code
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. The following
financial statements are filed herewith:
Pages
-----
Independent Auditors' Report F-1
Statement of Revenue and Direct Expenses of the
Assets Acquired from Crescent Oil & Gas Corporation
for the Years ended September 30, 1995 and 1994 and
for the Six Months Ended March 31, 1996 (Unaudited) F-2
Notes to Statements of Revenue and Direct Expenses
of the Assets Acquired From Crescent Oil & Gas
Corporation F-3 to F-6
(b) PRO FORMA FINANCIAL INFORMATION. The following pro forma financial
information is filed herewith:
Information Regarding Condensed Pro Forma Combined
Statement of Operations F-7
Unaudited Condensed Pro Forma Combined Statement of
Operations for the Year Ended September 30, 1995 and
Notes thereto F-8
Unaudited Condensed Pro Forma Combined Statement of
Operations for the Six Months Ended March 31, 1996
and Notes thereto F-9
(c) EXHIBITS.
Exhibit 2 Agreement and Plan of Reorganization among Monument
Resources, Inc., Crescent Oil & Gas Corporation, and
Powerhouse Resources, Inc., and Addendum thereto*
Exhibit 2.1 Supplement to Agreement dated August 5, 1996*
Exhibit 3 Articles of Amendment to Articles of Incorporation
(Series A Convertible Preferred Stock)*
__________________
* Previously filed
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HOLBEN, BOAK, COOPER & CO.
Certified Public Accountants 1720 S. Bellaire Street, Suite 500
Professional Corporation Denver, Colorado 80222
(303) 759-2727 FAX (303) 759-2728
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Monument Resources, Inc. and Subsidiary
Castle Rock, Colorado
We have audited the accompanying statements of revenue and direct expenses of
the assets acquired by Monument Resources, Inc. from Crescent Oil & Gas
Corporation for the years ended September 30, 1995 and 1994. This financial
statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the results of operations for the assets acquired by
Monument Resources, Inc. from Crescent Oil & Gas Corporation for the years
ended September 30, 1995 and 1994, in conformity with generally accepted
accounting principles.
/s/ Holben, Boak, Cooper & Co.
HOLBEN, BOAK, COOPER & CO.
Denver, Colorado
November 7, 1996
F-1
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MONUMENT RESOURCES, INC. AND SUBSIDIARY
STATEMENTS OF REVENUE AND DIRECT EXPENSES
OF THE ASSETS ACQUIRED FROM
CRESCENT OIL & GAS CORPORATION
FOR THE YEARS ENDED SEPTEMBER 30, 1995 AND 1994
AND THE 6 MONTHS ENDED MARCH 31, 1996
March 31,
1996 September 30,
(Unaudited) 1995 1994
--------- --------- --------
Oil and Gas Revenue $ 40,274 $ 81,818 $ 74,483
Transmission Income 50,493 140,273 -0-
-------- --------- --------
90,767 222,091 74,483
Lease Operating Expense 30,615 93,245 70,072
Production Taxes 428 903 1,297
Transmission Expense 33,098 66,201 -0-
-------- -------- --------
64,141 160,349 71,369
Excess of Revenue over
direct expenses $ 26,626 $ 61,742 $ 3,114
-------- --------- --------
-------- --------- --------
See Notes to Financial Statements
F-2
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MONUMENT RESOURCES, INC. AND SUBSIDIARY
NOTES TO STATEMENTS OF REVENUE AND DIRECT EXPENSES
OF THE ASSETS ACQUIRED FROM
CRESCENT OIL & GAS CORPORATION
(Continued)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Effective as of April 1, 1996, Monument Resources, Inc. (the "Company")
acquired various working and overriding royalty interests of the producing oil
and gas properties of Crescent Oil & Gas Corporation ("Crescent"). The
acquired assets include interests in (1) the Galvan Ranch property in Webb
County, Texas; (2) the Leavenworth, Kansas gas pipeline and related
properties, and (3) the East Voss Field located in Knox County, Texas. The
accompanying statement presents the revenues and the associated direct
expenses of these properties, as incurred by Crescent for the years ended
September 30, 1995 and 1994 and for the six months ended March 31, 1996
(unaudited). The statement does not include depreciation, amortization or
depletion or any allocation of corporate overhead costs or any other indirect
expenses including income taxes.
The Form 8-K, Amendment 2, filed by the Company on April 5, 1996 and which
describes the acquisition in detail, should be read in conjunction with these
financial statements.
NOTE 2 - MAJOR CUSTOMERS
All oil and gas revenues were derived from three purchasers as follows:
Year Ended September 30,
------------------------
1994 1995 March 31, 1996
----------- ---------- --------------
A 78% 89% 89%
B 11% 5% 5%
C 11% 6% 6%
NOTE 3 - UNAUDITED OIL AND GAS RESERVE QUANTITIES
The following unaudited reserve estimates presented as of September 30, 1995
and 1994 were prepared by Resource Services International, an independent
engineering Company. There are many uncertainties inherent in estimating
proved reserve quantities and in projecting future production rates and the
timing of development expenditures. In addition, reserve estimates of new
discoveries that have little production history are more imprecise than those
of properties with more production history. Accordingly, these estimates are
expected to change as future information becomes available.
Proved oil and gas reserves are the estimated quantities of crude oil,
condensate, natural gas and natural gas liquids which geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions.
Proved developed oil and gas reserves are those reserves expected to be
recovered through existing wells with existing equipment and operating
methods.
F-3
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MONUMENT RESOURCES, INC. AND SUBSIDIARY
NOTES TO STATEMENTS OF REVENUE AND DIRECT EXPENSES
OF THE ASSETS ACQUIRED FROM
CRESCENT OIL & GAS CORPORATION
(Continued)
Unaudited net quantities of proved and proved developed reserves of crude oil
(including condensate) and natural gas (all located within the United States)
are as follows:
Changes in Proved Reserves (BBLS) (MCF)
------ -------
(in thousands)
Estimated quantity, September 30, 1993 -0- 3568
Production -0- < 97>
Acquisition 252 -0-
Revision -0- 2943
---- -----
Estimated quantity, September 30, 1994 252 6414
Production -0- < 105>
Revisions < 84> < 760>
---- -----
Estimated quantity, September 30, 1995 168 5549
---- -----
---- -----
Proved reserves at year end Developed Undeveloped Total
- --------------------------- ------------------------ -----
Oil (Bbls) (in thousands)
September 30, 1994 -0- 252 252
September 30, 1995 -0- 168 168
Gas (MCF)(in thousands)
September 30, 1994 1887 4527 6414
September 30, 1995 638 4911 5549
The following table presents a standardized measure of the discounted future
net cash flows attributable to the Company's proved oil and gas reserves.
Future cash inflows were computed by applying year-end prices of oil and gas
to the estimated future production of proved oil and gas reserves. The future
production and development costs represent the estimated future expenditures
(based on current costs) to be incurred in developing and producing the proved
reserves, assuming continuation of existing economic conditions. Future
income tax expenses were computed by applying statutory income tax rates to
the difference between pre-tax net cash flows relating to the Company's proved
oil and gas reserves and the tax basis of proved oil and gas properties and
available net operating loss carryforwards. Discounting the future net cash
inflows at 10% is a method to measure the impact of the time value of money.
F-4
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MONUMENT RESOURCES, INC. AND SUBSIDIARY
NOTES TO STATEMENTS OF REVENUE AND DIRECT EXPENSES
OF THE ASSETS ACQUIRED FROM
CRESCENT OIL & GAS CORPORATION
(Continued)
September 30,
1995 1994
----------------------
(in thousands)
Future cash inflows $ 12,910 $ 17,488
Future production and development costs < 6,182> < 7,741>
Future income tax expense -0- -0-
-------- --------
Future net cash flows 6,728 9,747
10% annual discount for
estimating timing of cash flows < 3,011> < 4,187>
-------- --------
Standardized measure of discounted
future net cash flows $ 3,717 $ 5,560
-------- --------
-------- --------
The following presents the principal sources of the changes in the
standardized measure of discounted future cash flows:
September 30,
--------------------------
1995 1994
-------- --------
(in thousands)
Standardized measure of
discounted future net cash
flows, beginning of year $ 5,560 $ 2,218
-------- --------
Sales and transfers of oil and
gas produced, net of
production costs < 62> < 3>
Extensions and revisions < 2,218> 1,706
Net changes in prices and
production costs < 119> < 390>
Other -0- 132
Acquisitions -0- 1,675
Accretion of discount 556 222
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< 1,843> < 3,342>
Standardized measure of discounted
future cash flows, end of year $ 3,717 $ 5,560
-------- --------
-------- --------
F-5
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MONUMENT RESOURCES, INC. AND SUBSIDIARY
NOTES TO STATEMENTS OF REVENUE AND DIRECT EXPENSES
OF THE ASSETS ACQUIRED FROM
CRESCENT OIL & GAS CORPORATION
(Continued)
NOTE 4 - SUBSEQUENT EVENTS
On May 10, 1996, the Company sold approximately one-half of its interest in
the Galvan Ranch property located in Webb County, Texas for $565,000. No gain
or loss was recognized on this transaction because the Company had assigned a
basis of $565,000 to the acquisition in the Galvan Ranch property and wrote
off that basis against the sales price.
F-6
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INFORMATION REGARDING
CONDENSED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
The following unaudited condensed pro forma combined statements of operations
for the year ended September 30, 1995 and the six months ended March 31, 1996
are presented to show the effects of the acquisition of certain oil and gas
producing properties (the "Properties") by Monument Resources, Inc.
("Monument") as if the acquisition had taken place on October 1, 1994. The
acquisition, which occurred effective April 1,1996, is accounted for as a
purchase. The financial information for Monument for the year ended September
30, 1995 and six months ended March 31, 1996 is derived from its Form 10-KSB
and 10-QSB as filed for those periods and should be read in conjunction with
these statements. Additionally, Form 8-K, Amendment 2, filed by the Company on
April 5, 1996, and which describes the acquisition of the properties in detail
and the Company's Form 10-QSB for the quarter ended June 30, 1996, which
contains a balance sheet for the Company that reflects the acquisition, should
also be read in conjunction with these statements.
The pro forma results of operations are not necessarily indicative of the
results of operations that would actually have occurred if the transaction had
been effective as of October 1, 1994.
F-7
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MONUMENT RESOURCES, INC. AND SUBSIDIARY
CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Year Ended September 30, 1995
(Unaudited)
Pro Forma
Historical Adjustments
------------------- --------------- Pro Forma
Monument Properties Debit Credit Combined
Revenues -------- ---------- ------- ------ ---------
Oil & Gas 81,818 81,818
Gain on Sale of Investments 362,969 0 362,969
Interest 8,086 8,086
Transmission Income 0 140,273 140,273
--------- ------- --------
371,055 222,091 593,146
--------- ------- --------
Costs & Expenses
Oil & Gas production 0 94,148 94,148
Abandonment of Mineral and Oil
& Gas properties and explor-
ation costs 42,229 42,229
Depreciation, depletion &
amortization 23 (1)35,000 35,023
Transmission expense 0 66,201 66,201
Selling, general &
administrative 110,173 0 (2) 5,000 115,173
Income taxes 20,279 - (3)56,721 77,000
------- ------- --------- ------ --------
172,704 160,349 96,721 0 429,774
--------- ------- --------- ------ --------
Net Income 198,351 61,742 <96,721> 0 163,372
--------- ------- --------- ------ --------
--------- ------- --------- ------ --------
Net Income per common share 0.05 n/a 0.02
--------- ------- --------
--------- ------- --------
Weighted average number of
common shares outstanding 4,279,151 n/a 7,279,151
--------- ------- ---------
--------- ------- ---------
NOTES TO CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(A) Pro forma adjustments:
(1) To record depletion and amortization on the properties acquired,
using the full cost method. Depletion and amortization of the properties
valued at $2,600,000 is computed using a unit-of-production method based on
proved reserves as determined by independent engineers.
(2) Estimated accounting and legal costs associated with SEC filings
regarding the acquisition.
(3) To record additional income taxes.
(B) Pro forma income per share:
The income per common share is based on the weighted average number of common
shares outstanding for the period presented.
F-8
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MONUMENT RESOURCES, INC. AND SUBSIDIARY
CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Six Months Ended March 31, 1996
(Unaudited)
Pro Forma
Historical Adjustments
------------------- -------------- Pro Forma
Monument Properties Debit Credit Combined
-------- ---------- ------- ------- --------
Revenues
Oil & Gas 4,405 40,274 44,679
Gain on Stock Sale 69,325 69,325
Transmission Income 0 50,493 50,493
Interest & Other 10,739 10,739
--------- ------- --------
84,469 90,767 175,236
--------- ------- --------
Costs & Expenses
Oil & Gas production 1,569 31,043 32,612
Depreciation, depletion &
amortization 2,972 (1)24,880 27,852
Selling, general &
administrative 43,293 43,293
Transmission Expense 0 33,098 33,098
Income taxes 7,000 - (2)<1,200> 5,800
------- ------- --------- ------ --------
54,834 64,141 23,680 142,655
--------- ------- --------- ------ --------
Net Income 29,635 26,626 <23,680> 0 32,581
--------- ------- --------- ------ --------
--------- ------- --------- ------ --------
Net Income per common share 0.01 n/a -
--------- ------- --------
--------- ------- --------
Weighted average number of
common shares outstanding 4,587,000 n/a 7,587,000
--------- ------- ---------
--------- ------- ---------
NOTES TO CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(A) Pro forma adjustments:
(1) To record depletion and amortization on the properties acquired,
using the full cost method. Depletion and amortization of the properties
valued at $2,600,000 is computed using a unit-of-production method based on
proved reserves as determined by independent engineers.
(2) To record reduction of income taxes expense.
(B) Pro forma income per share:
The income per common share is based on the weighted average number of common
shares outstanding for the period presented.
F-9
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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, hereunto duly authorized.
MONUMENT RESOURCES, INC.
Date: November 15, 1996
By /s/ A.G. Foust
A.G. Foust, President
