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 quarterly period ended: March 31, 1996
Commission file number: 33-15528-D
MONUMENT RESOURCES, INC.
(Exact Name of small business issuer as specified in its charter)
Colorado 84-1028449
(State or Other Jurisdiction of (IRS Employer Identification
Incorporation or Organization) Number)
513 WILCOX STREET, SUITE 220
P.O. BOX 1450
CASTLE ROCK, COLORADO 80104
(Address of Principal Executive Offices including zip code)
(303) 688-3993
(Issuer's Telephone Number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 X No ---
As of May 13, 1996, 4,587,000 shares of common stock, no par value per share,
were outstanding.
Transitional Small Business Disclosure Format (check one): Yes--- No X
MONUMENT RESOURCES, INC.
FORM 10-Q
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Balance Sheets as of March 31, 1996
and September 30, 1995 1
Statements of Operations for the Three
Months Ended March 31, 1996 and 1995 3
Statements of Cash Flows for the
Six Months Ended March 31, 1996 and 1995 4
Notes to Financial Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION 11
Item 1. Legal Proceedings
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
MONUMENT RESOURCES, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
BALANCE SHEET (Unaudited)
MARCH 31 SEPTEMBER 30
1996 1995
ASSETS
Current assets:
Cash $ 184,269 $ 446,954
Note Receivable (Note 3) 300,000 --
Accrued Interest Receivable 5,284 --
Total Current Assets 489,553 446,954
Property and equipment:
Mineral properties 96,927 96,039
Unproved oil and gas properties,
successful efforts method, net of
accumulated depletion 80,382 67,730
Office equipment, net of accumulated
depreciation 0 12
Net property and equipment 177,309 137,781
Equity Securities, at market 175,000 175,000
Total Assets $841,862 $785,735
See Notes to Financial Statements.
MONUMENT RESOURCES, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
BALANCE SHEET (Unaudited)
MARCH 31 SEPTEMBER 30
1996 1995
LIABILITIES AND STOCKHOLDER EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 4,187 $ 5,175
Income Taxes Payable 7,479 --
Total current liabilities 11,666 5,175
Deferred acquisition credit (See Note 3) 20,000 --
Total liabilities 31,666 5,175
Stockholders, equity:
Preferred stock, no par value,
authorized 1,000,000 shares,
none issued.
Common stock, no par value,
authorized 10,000,000 shares:
issued and outstanding 4,587,000
shares at 03/31/96 and 4,587,000
shares at 09/30/95. 1,156,210 1,156,210
Deficit accumulated during exploration
stage (514,605) (544,241)
Unrealized gain on equity securities 168,591 168,591
Total stockholders' equity 810,196 780,560
Total liabilities and
stockholders' equity $ 841,862 $ 785,735
See Notes to Financial Statements.
MONUMENT RESOURCES, INC. AND SUBSIDIARY
STATEMENTS OF OPERATIONS (Unaudited)
THREE MONTHS SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
1996 1995 1996 l995
Revenue:
Interest $ 6,685 $ 929 $ 10,739 $ 1,990
Oil & Gas income 2,545 -- 4,405 --
Gain on stock sale 69,325 -- 69,325 --
78,555 929 84,469 1,990
Expenses:
General & Admin 20,379 28,417 43,293 61,214
Exploration &
dry hole costs
& impairment -- 374 -- 519
O&G oper costs 1,133 -- 1,569 --
Depletion 1,866 -- 2,960 --
Depreciation 6 6 12 12
23,384 28,797 47,834 61,745
Net profit (loss) before
tax 55,171 ( 27,797) 36,635 ( 59,755)
Income taxes 7,000 -- 7,000 --
Net profit (loss) $ 48,171 $ ( 27,868) $ 29,635 $ ( 59,755)
Net profit (loss) per
share $ .01 $ ( .01) $ .00 $ ( .01)
Weighted average
number of shares
outstanding 4,587,000 4,092,000 4,587,000 4,092,000
See Notes to Financial Statements.
MONUMENT RESOURCES, INC. AND SUBSIDIARY
STATEMENTS OF CASH FLOWS (Unaudited)
SIX MONTHS
ENDED MARCH 31,
1996 1995
Cash flows from operating activities:
Net Income (loss) $ 29,635 $(59,755)
Items not requiring cash:
Depreciation and Depletion 2,972 12
Services contributed by officers -- 15,000
Deferred offering costs expense -- 6,550
Changes in operating assets and liabilities:
Increase (decrease) in accounts
payable and accrued expenses 6,491 (19,906)
(Increase) decrease in accounts
receivable and accrued income (5,284) --
Net cash flows from operations 33,814 (58,099)
Cash flows from investing activities:
Loan to Oil Company (300,000) --
Acquisition of oil and gas properties (25,611) --
Additions to mineral properties (888) (250)
Recovery of cost of oil and gas properties 10,000 --
Net cash flows from investing activities (316,499) (250)
Cash flows from financing activities:
Deferred acquisition credit 20,000 --
Repayment of notes payable -- (7,249)
Net cash flows from financing
activities 20,000 (7,249)
Net increase (decrease) in cash (262,685) (65,598)
Cash at beginning of period 446,954 158,272
Cash at end of period $ 184,269 $ 92,674
See Notes To Financial Statements.
MONUMENT RESOURCES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 1. NATURE OF OPERATIONS
The Company is engaged in the acquisition of mineral prospects and oil and gas
properties. The Company's mineral prospects are in Colorado, Montana and
western Canada. The Company's oil and gas properties and areas of interest are
in Nebraska and Kansas. Much of the Company's business has focused primarily
on brokering prospects, though in the fiscal quarter it has acquired oil
production in Nebraska.
USE OF ESTIMATES
The Company uses estimates in the preparation of its financial statements,
primarily in the determination of depletion and realizable value of its
investments in securities. Management has calculated depletion costs of its
producing oil properties based on its estimate of recoverable reserves.
Management has estimated the realizable market value of its investment in
Southern Africa Minerals Corporation based on the trading price on the Toronto
Exchange.
CONCENTRATION OF CUSTOMERS
The Company's revenues and cash flow in the near term will come from the sale
of its investments in securities and from its oil and gas properties. The cash
realized from the sale of securities is dependent on the market prices on
Canadian exchanges and on the demand for large blocks of stock. Revenues and
cash from oil and gas operations will likely be concentrated in a few
purchasers as well as the then market price of petroleum production.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited, condensed financial statements have been prepared
in accordance with Item 310 of Regulation SB and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. Operating results for the period
ended March 31, 1996 are not necessarily indicative of the results that may be
expected for the fiscal year ending September 30, 1996. These statements
should be read in conjunction with the financial statements and notes thereto
included in Form 10-KSB for the fiscal year ended September 30, 1995.
MINERAL PROPERTIES
Costs of acquiring, exploring and developing specific mineral properties are
capitalized on a property by property basis until the commercial viability of
each property is determined. When a property reaches the production stage, the
related capitalized costs will be amortized, using the units of production
method on the basis of periodic estimates of ore reserves. Mining properties
are periodically assessed for impairment of value and any impairments are
charged to operations at the time of impairment. Should a property be sold or
abandoned, its capitalized costs are charged to operations and gain or loss
recognized.
OIL AND GAS PROPERTIES
The Company follows the successful efforts method of accounting for its oil
and gas activities. Under this accounting method, costs associated with the
acquisition, drilling and equipping of successful exploratory and development
wells are capitalized. Geological and geophysical costs, delay rentals and
drilling costs of unsuccessful exploratory wells are charged to expense as
incurred. Depletion and depreciation of the capitalized costs for producing
oil and gas properties are provided by the unit-of-production method based on
proved oil and gas reserves. Undeveloped properties are periodically assessed
for possible impairment due to unrecoverability of costs invested. Cash
received for partial conveyances of property interests are treated as a
recovery of cost and no gain or loss is recognized.
NOTE 2. OIL AND GAS ACTIVITIES
In May 1995, the Company acquired a 100% leasehold interest in approximately
22,000 acres of undeveloped oil and gas leases in Perkins County, Nebraska for
$25,000 cash and 175,000 shares of the Company's restricted common stock. A
portion of this property has been optioned to a third party for a 12 well
program pursuant to an agreement whereby the Company will be reimbursed for
its acreage costs and will retain an overriding royalty. As of December 31,
1995, the Company has received $2,500 for acreage reimbursement and title
clearing and an additional $10,000 for drilling sites. Under the 12 well
program, two wells have been drilled and cased and are currently being
evaluated.
In November 1995, the Company acquired an interest in three producing oil
wells in Kimball County, Nebraska for $22,000. A total of $2,545 income was
received during this quarter and a total of $1,133 in lease operating expenses
was paid. Although the wells are generating some income at this time, no study
of oil and gas reserves on this property by independent petroleum engineers
has been performed and therefore there is no assurance of long term revenue
potential.
NOTE 3. NOTE RECEIVABLE
Pursuant to a letter agreement dated December 15, 1995, the Company provided
Crescent Oil and Gas Corporation ("Crescent"), an unrelated oil and gas
production company, a non-revolving line of credit for up to $200,000. $81,000
was advanced to Crescent during the quarter ended December 31, 1995 and the
remaining $119,000 was advanced during this quarter. The full amount of the
note was due March 14, 1996, plus 8% interest. In February, 1996, the Company
agreed to loan Crescent an additional $100,000 and the original note was
amended to include this amount and an extension of the March 14, 1996 due date
was granted. Concurrently with the fine] advance on this line of credit, the
Company received a $20,000 payment from Crescent for the right to negotiate a
potential merger/acquisition arrangement between the two companies. See note 4
for information on subsequent events.
NOTE 4. SUBSEQUENT EVENTS
On April 5, 1996, Crescent satisfied the line of credit agreement by repaying
the Company $300,000, plus interest. Subsequently, and pursuant to a February
23, 1996 Agreement and Plan of Reorganization with Powerhouse Resources, Inc.
and Crescent, the Company acquired from Powerhouse 100% of Crescent Oil & Gas
Corporation. The Company issued 1,000 shares of convertible preferred stock to
Powerhouse as payment for Crescent. The number of shares of the Company's
Common Stock to be issued on conversion of the preferred stock will range from
3,000,000 to 4,600,000, depending upon Powerhouse fulfilling certain financial
commitments and upon the Company's decision to accept or reject an offshore
oil and gas storage depot site in China.
The assets held by Crescent include: (1) gas wells and a gas gathering system
in Kansas; (2) a potential oil water flood unit containing 30 well sites in
Knox County, Texas; (3) a 15% working interest and a 2% overriding royalty
interest in a major oil and gas lease known as the Galvin Ranch totaling
approximately 69,000 acres in Webb County, Texas; and (4) several oil leases
in Lea County, New Mexico. In addition, the Company received an option from
Powerhouse to acquire the rights to an offshore oil and gas storage depot in
China which it is currently evaluating.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1996, the Company had a total of $184,269 in cash compared to
$446,954 at September 30, 1995. The decrease of $262,685 during this period
was primarily the result of a $300,000 loan to Crescent Oil & Gas Corporation.
(See Note 3 above.)
The Company has been gradually liquidating the securities it holds and using
the proceeds in its business. During this period the Company sold a total of
200,000 shares of Layfield Resources, Inc. stock and netted $69,325 in cash.
The Company's primary source of capital for operations is it working capital
and the potential value of its investments in securities of others which may
fluctuate. Management will continue to monitor the value of the securities
held and possible investment opportunities available to maximize the value of
these assets. The Company will continue to seek joint venture financing for
acquisition, development and maintenance of its natural resource properties.
Management believes that its current cash and investment position will enable
it to meet all short-term obligations and proceed to seek additional
investment opportunities with current and future revenue potential.
In connection with the acquisition of Crescent (See Note 4 above), the Company
is obligated to maintain the Crescent properties which will require routine
maintenance and capital expenditures in an undetermined amount. All of the
properties require workover of certain wells in order to continue and,
hopefully, increase production and to operate on a more profitable basis. Also
associated with these properties are royalty payments, equipment lease
payments, and office lease arrangements, which the Company is currently
renegotiating. It is anticipated that during this transition period,
additional expenses for consulting, contract labor, legal and accounting fees
will increase significantly, some of which will continue during the long term.
In addition, the Company is required to prepare a registration statement and
file it with the SEC. Effectiveness of this registration statement will
initiate the issuances of the Company's common shares to Powerhouse and its
shareholders. In order to meet these immediate and short term obligations,
and in an effort to minimize future development expenses associated with some
of the properties acquired, the Company has sold a portion of Crescent's
interest in the property known as the Galvin Ranch (reported herein at Note 4)
for $565,000 and it will utilize a portion of the cash received to satisfy
these obligations.
RESULTS OF OPERATIONS
In addition to the revenue realized from the sale of Layfield shares noted
above, during the quarter ended March 31, 1996, the Company realized a total
of $6,685 in interest compared to $929 during the quarter ended March 31,
1995. For the six month period ended March 31, 1996, interest income totalled
$10,739 compared to $1,990 for the same period in 1995. An additional $4,405
has been generated from oil and gas properties during the quarter ended March
31, 1996, which was not realized during the same period of 1995.
General and administrative expenses for the quarter and six months ended March
31, 1996 were down as compared to the comparable periods of the prior year.
The quarterly amounts dropped from $28,417 in 1995 to $20,379 in 1996, and the
six month amounts dropped from $61,214 to $43,293.
In summary the results for this six month period show an increase in revenue
of $82,479 over the same period ended March 31, 1995 and a $15,777 decrease in
expenses.
PART II.OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
N/A
ITEM 2. CHANGES IN SECURITIES
N/A
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
N/A
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
N/A
ITEM 5. OTHER INFORMATION
On April 5, 1996, Monument Resources, Inc. (the "Company") acquired all of the
outstanding stock of Crescent Oil & Gas Corporation ("Crescent") from
Powerhouse Resources, Inc. ("Powerhouse") in exchange for 1,000 shares of the
Company's Series A Convertible Preferred Stock (the "Preferred Stock"). The
shares of Preferred Stock are convertible into a total of up to 4,600,000
shares of the Companies Common Stock upon the occur upon the occurrence of
certain events. The actual number will range from 3,000,000 shares to
4,600,000 shares depending upon whether Powerhouse fulfills certain financial
commitments and whether the Company decides to accept or reject an offshore
oil and gas storage depot site in China. If all such shares of Common Stock
were to be issued upon conversion, those shares would represent approximately
50.1% of the Company's Common Stock then outstanding.
The stock issuances were made pursuant to an Agreement and Plan of
Reorganization ("Agreement") among the Company, Crescent and Powerhouse, the
sole shareholder of Crescent. The terms of the Agreement were the result of
negotiations between the managements of the Company and Powerhouse. The Board
of Directors did not obtain any independent "fairness" opinion or other
evaluation regarding the terms of the Agreement due to the cost of obtaining
such options or evaluations.
As a result of the acquisition and the issuance of the shares of the Company's
Preferred Stock referred to above, Powerhouse may be deemed to beneficially
own approximately 50.1% of the Company's Common Stock. However, the Preferred
Stock contains no voting rights and therefore Powerhouse is not presently able
to exercise voting control of the Company.
Under the terms of the Agreement, the Company has agreed to file a
registration statement under the Securities Act of 1933, as amended, covering
the shares of Common Stock issuable upon the conversion of the Preferred Stock
to enable Powerhouse to sell such shares of Common Stock or make a pro rata
distribution of such Common Stock to the shareholders of Powerhouse, which is
a publicly held company.
Pursuant to the terms of the Agreement, effective on the closing of the
acquisition the Company's Board of Directors was expanded to six (6) persons,
and the following persons are now Directors of the Company:
A.G. Foust (1)
Stewart A. Jackson (1)
John J. Womack (1)
Dennis C. Dowd(2)
Hunter G. Swanson (2)
_______________
(1) Continuing Directors of the Company.
(2) Designees of Powerhouse.
The sixth director will be selected by the five persons currently on the Board
at a later date.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
N/A
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: May 15, 1996 By:/s/ A.G. Foust
A.G. Foust President (Chief
Executive Officer, Principal
Financial and Accounting Officer)
and a Director
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheets and statements of operations found on pages 2 - 4 of
the Company's Form 10-QSB for the year to date, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
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<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1996
<CASH> 184,269
<SECURITIES> 0
<RECEIVABLES> 305,284
<ALLOWANCES> 0
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<CURRENT-ASSETS> 489,553
<PP&E> 177,309
<DEPRECIATION> -0-
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<BONDS> 0
<COMMON> 1,156,210
0
0
<OTHER-SE> (346,014)
<TOTAL-LIABILITY-AND-EQUITY> 841,862
<SALES> 84,469
<TOTAL-REVENUES> 84,469
<CGS> 0
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<OTHER-EXPENSES> 47,834
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 36,635
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