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U.S. 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 December 31, 1996
Commission File Number: 33-15528-D
MONUMENT RESOURCES, INC. AND SUBSIDIARY
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(Exact name of Small Business Issuer as Specified in its Charter)
Colorado 84-1028449
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
513 Wilcox Street, Suite 220, PO 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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(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 --- No -X-
As of February 12, 1997, 7,587,000 shares of common stock, no par value per
share, were outstanding.
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MONUMENT RESOURCES, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION Page Number
Balance Sheets as of December 31, 1996
and September 30, 1996 3
Statements of Operations for the
Three Months Ended December 31, 1996 and 1995 3
Statements of Cash Flows for the
Three Months Ended December 31, 1996 and 1995 4
Notes to Financial Statements 5
Management's Discussion and Analysis
of Financial Condition and Results of
Operations 8
PART II. OTHER INFORMATION 10
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MONUMENT RESOURCES, INC. AND SUBSIDIARIES
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
December 31, September 30,
1996 1996
Current Assets
Cash $ 272,389 $ 329,677
Investment in Securities 604,825 596,325
Accounts Receivable 40,753 15,953
Prepaid Expense 6,539 11,554
Total Current Assets 924,506 953,509
Mineral Properties 91,023 91,023
Proved and Unproved Oil & Gas
properties, successful efforts method
net of accumulated depletion (Note 2) 1,666,775 1,676,316
Property and equipment:
Gas pipeline, net of accumulated
depreciation (Note 2) 287,844 289,978
Property and Equipment, net of
accumulated depreciation (note) 55,000 58,741
Net Property and Equipment 342,844 348,719
Investment in Securities, at Market
(Note 2) 491,914 491,914
Total Assets $3,517,062 $3,561,481
See Notes to Financial Statements.
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MONUMENT RESOURCES, INC. AND SUBSIDIARIES
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS EQUITY
(Unaudited) (Audited)
December 31, September 30,
1996 1996
Current Liabilities
Accounts Payable and Accrued Expenses $ 24,224 $ 22,320
Accounts Payable, Stockholder 20,344 54,431
Total Current Liabilities 44,568 76,751
Stockholder's 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 outstand-
ing - 7,587,000 on September 30, 1996
and December 31, 1996 3,531,210 3,531,210
Accumulated Deficit ( 544,221) ( 531,985)
Unrealized Gain on Investment in
Securities (Note 1) 485,505 485,505
Total Stockholders Equity 3,472,494 3,484,730
Total Liability and Stockholder's Equity $3,517,062 $3,561,481
See Notes to Financial Statements.
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MONUMENT RESOURCES, INC. AND SUBSIDIARIES
STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended December 31,
1996 1995
Revenue
Oil and Gas Sales $ 58,033 $ 1,691
Interest 10,674 4,054
Total 68,207 5,745
Expenses
Oil and Gas Operating Expense 24,898 200
General and Administrative 37,550 22,981
Depletion, Depreciation and
Amortization 18,495 1,100
Total 80,943 24,281
Net Loss Before Taxes ( 12,236) ( 18,536)
Income Taxes -0- -0-
Net ( 12,236) ( 18,536)
Net Loss per Share Nil Nil
Weighted Average number of
shares outstanding 6,847,200 4,587,000
See Notes to Financial Statements.
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MONUMENT RESOURCES, INC. AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended December 31,
1996 1995
Cash flows from operating activities:
Net (loss) Income $( 12,236) $( 18,536)
Items not requiring cash:
Amortization/Depreciation and
Depletion Services contributed
by officers 18,495 1,100
Changes in operating assets and
liabilities:
Decrease in prepaid Expense 5,015 -0-
Increase (decrease) in accounts
payable and accrued expenses ( 32,183) 2,363
(Increase) Decrease in accounts
receivable and accrued income ( 24,800) ( 284)
Net Cash Flows from Operations ( 45,709) ( 15,357)
Cash Flows from investing activities:
Investment in Securities ( 8,500) -0-
Loan to Oil Company ( 81,000)
Acquisition of oil and gas
properties ( 3,079) ( 22,333)
Additions to mineral properties -0- ( 888)
Recovery of cost of oil and gas
properties -0- 10,000
Net Cash Flows from investing
activities ( 11,579) ( 94,221)
Net increase (decrease) in cash ( 57,288) ( 109,578)
Cash at beginning of period 329,677 446,954
Cash at end of period $ 272,389 $ 337,376
See Notes to Financial Statements.
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MONUMENT RESOURCES, INC. AND SUBSIDIARIES
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, Kansas and Texas. Much of the Company's business has focused
primarily on brokering prospects, though in the past year it has acquired oil
and gas production in Nebraska, Kansas and Texas.
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 and Layfield Resources, Inc. 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 prices 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 December 31, 1996 are not necessarily indicative of the results that may
be expected for the fiscal year ending September 30, 1997. 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, 1996.
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MONUMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
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.
PROPERTY, EQUIPMENT AND GAS PIPELINE
Depreciation and amortization of property and equipment are expenses in
amounts sufficient to relate the expiring costs of depreciable assets to
operation over estimated service lives, principally using the straight-line
method. Estimated service lives range from three to eight years. The gas
pipeline is being amortized on units-of-gas production method based on the
production of the gas wells served by the pipeline. When such assets are sold
or otherwise disposed of, the cost and accumulated depreciation are removed
from the accounts and any resulting gain or loss is reflected in operations in
the period realized.
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MONUMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 2. OIL AND GAS ACTIVITIES
In November 1995, the Company acquired an interest in three producing oil
wells in Kimball County, Nebraska for $22,000 in cash.
Effective April 1, 1996, the Company acquired oil and gas properties and a gas
pipeline from Crescent Oil & Gas Corporation ("Crescent"). The purchase
included the Leavenworth Kansas proved producing and proved undeveloped gas
properties and the nearby gas pipeline, various equipment associated with the
pipeline, proved producing and proved undeveloped gas properties in Texas
known as the Galvan Ranch property and proved producing and proved undeveloped
oil properties and related surface equipment in East Voss, Texas. These
properties constitute the major percentage of the oil and gas reserves of the
Company at December 31, 1996. The Company valued the purchase at $2,600,000,
based on the estimated fair value of the property. In addition to the oil and
gas properties, the Company purchased 100% of the stock of C.O.G. Transmission
Corporation ("COG"), which had title to the gas pipeline prior to the sale to
the Company. No purchase value was allocated to the purchase of COG by the
Company.
In May 1996, the Company sold half of its interest in the Galvan Ranch
property for $565,000 in cash. The Company recognized no gain or loss on the
transaction such the selling price equaled the basis assigned by the Company
at the time of purchase on April 1, 1996.
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MONUMENT RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1996, the Company had a total $272,389 in cash and $879,938
in working capital compared to $329,677 in cash and $876,758 in working
capital at September 30, 1996, reflecting a decrease in cash of $57,288 and an
increase in working capital of $3,180. The decrease in cash during this
period was the result of the paydown of accounts payable to Powerhouse
Resources, Inc. of approximately $36,000 relating to the Kansas and Texas
acquisition and an increase in general and administrative costs of
approximately $14,000 cause by increased audit, legal and consulting fees
associated with the Company's expanded activities.
At the present time, the Company's primary source of cash for operations and
exploration is its current working capital, and cash which can be raised by
selling shares of SAF or Layfield and its investment in U.S. Government
treasury securities. The Company has, in the past and plans in the future, to
rely on joint venture partners or equity funding to supply most of the funds
needed to evaluate and develop its properties. Any inability of the company
to raise additional capital through a stock offering, to liquidate its
securities holding or obtain third party funding may limit development of most
of its properties.
Although the Company intend to use joint venture or equity funding to explore,
acquire and, if warranted, develop its properties, the natural resource
business is nevertheless very capital intensive.
The Company continues to seek joint venture financing for its properties and
to acquire properties with near term revenue generating capability.
Management's efforts to evaluate, identify and/or acquire such revenue
generating prospects and to further develop its existing properties have been
ongoing during this past year and, while management is optimistic, there is no
assurance that the Company will be successful in securing the required
capital.
RESULTS OF OPERATIONS
Revenues from oil and gas sales increased significantly from $1,691 in the
quarter ended December 31, 1995 to $58,033 in the quarter ended December 31,
1996 due to the revenue from oil and gas properties in Kansas and Texas which
were acquired during April 1996. Interest income increased by $6,620 to
$10,674 due to the higher level of cash on hand during the quarter ended
December 31, 1996.
Oil and Gas Operating expenses increased significantly from $200 in the
quarter ended December 31, 1995, to $24,898 in the quarter ended December 31,
1996, due to the expenses involved in operating the newly acquired Kansas and
Texas properties.
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General and Administrative expense totalled $37,550 compared to $22,981 during
the quarter ended December 31, 1995 reflecting an increase of approximately
$14,570 or 63%. This increase was due to an increase in audit and accounting
fees and legal fees associated with recent acquisitions. Rent expense
increased from $900 per quarter to approximately $4,285.00 per quarter because
the Company now maintain offices in Denver as well as Castle Rock, Colorado.
Officers salary increased $3,000 from $6,000 a quarter at December 31, 1995 to
$9,000 for the quarter ended December 31, 1996.
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MONUMENT RESOURCES, INC. AND SUBSIDIARIES
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
N/A
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule Filed herewith electronically
(b) Reports on Form 8-K. None.
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MONUMENT RESOURCES, INC. AND SUBSIDIARIES
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.
MONUMENT RESOURCES, INC.
(Registrant)
By: /s/ A.G. Foust
A.G. Foust
President (Chief Executive Officer,
Principal Financial and Accounting
Officer) and a Director
Date: February 12, 1997
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of operations found on
pages 1 - 3 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>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1996
<CASH> 272,389
<SECURITIES> 604,825
<RECEIVABLES> 40,753
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 924,506
<PP&E> 342,844
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,517,062
<CURRENT-LIABILITIES> 44,568
<BONDS> 0
<COMMON> 3,531,210
0
0
<OTHER-SE> 58,716
<TOTAL-LIABILITY-AND-EQUITY> 3,517,062
<SALES> 58,033
<TOTAL-REVENUES> 68,207
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 80,943
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (12,236)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,236)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
