SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended December 31, 1999.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act.
For the transition period from _________ to ____________
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 (I.R.S. Employer Identification No.)
incorporation or organization)
513 Wilcox Street, Suite 200, P.O. Box 1450, Castle Rock, Colorado 80104
------------------------------------------------------------------------
(Address of Principal Executive Offices, Including Zip Code)
(303) 688-3993
--------------
(Issuer's Telephone Number, Including Area Code)
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 ___
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 4,919,000 shares of common were
outstanding at February 7, 2000.
Traditional Small Business Disclosure Format (Check One):
Yes X No ___
<PAGE>
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION Page Number
Item 1. Consolidated Balance sheets as of
December 31, 1999 and September 30, 1999 3
Consolidated Statements of Operations
for the Three Months ended 5
December 31, 1999 and 1998
Consolidated Statements of Cash Flows
for the Three Months ended 6
December 31, 1999 and 1998
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 17
PART II OTHER INFORMATION 18
2
<PAGE>
Item 1. Financial Statements.
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, September 30,
1999 1999
(Unaudited)
---------- ----------
Current assets
Cash $ 15,378 $ 20,029
Investment in securities 214,516 260,404
Accounts receivable 38,725 30,477
Prepaid expense 4,583 8,416
---------- ----------
Total current assets 273,202 319,326
---------- ----------
Mineral properties 127,837 127,837
Proved and unproved oil and gas
properties, successful efforts method
net of accumulated depletion 982,983 997,364
Property and equipment:
Gas pipeline, net of accumulated depreciation 200,155 207,555
Property and equipment, net of
accumulated depreciation 41,081 45,343
---------- ----------
Net property and equipment 241,236 252,898
Investment in securities, at market 84,694 152,630
---------- ----------
Total assets $1,709,952 $1,850,055
========== ==========
See Notes to Consolidated Financial Statements.
3
<PAGE>
Item 1. Financial Statements. (Continued)
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, September 30,
1999 1999
(Unaudited)
----------- -----------
Current liabilities
Accounts payable and accrued expenses $ 31,952 $ 23,906
----------- -----------
Total current liabilities 31,952 23,906
----------- -----------
Stockholders' equity:
Preferred Stock, no par value, authorized
1,000,000 shares; none issued
Common Stock, no par value, authorized
1,000,000 shares; 4,919,000 issued
and outstanding on September 30, 1999
and 4,919,000 shares outstanding on
December 31, 1999 3,164,210 3,164,210
Accumulated deficit (1,561,600) (1,488,288)
Unrealized gain on investment in securities 75,390 150,227
----------- -----------
Total stockholders' equity 1,678,000 1,826,149
----------- -----------
Total liability and stockholders' equity $ 1,709,952 $ 1,850,055
=========== ===========
See Notes to Consolidated Financial Statements.
4
<PAGE>
<TABLE>
<CAPTION>
Item 1. Financial Statements. (Continued)
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Three Months
Ended December 31, Ended December 31,
1999 1998
----------------- -----------------
Revenue
<S> <C> <C>
Oil and gas sales $ 47,588 $ 36,514
Pipeline income 35,339 18,478
Interest and other 3,760 7,185
Gain on sale of investment stock -- 23,926
----------- -----------
Total 86,687 86,103
----------- -----------
Expenses
Oil and gas operating expense 40,370 15,189
Pipeline operating expense 22,063 28,714
General and administrative 48,786 51,549
Dryhole cost 20,968 -0-
Depletion, depreciation and amortization 27,812 21,596
----------- -----------
Total 159,999 117,048
----------- -----------
Net profit (loss) $ (73,312) $ (30,945)
=========== ===========
Basic loss per common share (.01) (.01)
=========== ===========
Diluted loss per common share (.01) (.01)
=========== ===========
Weighted average number of shares outstanding 4,919,000 5,084,869
=========== ===========
See Notes to Consolidated Financial Statements.
5
</TABLE>
<PAGE>
Item 1. Financial Statements. (Continued)
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended
December 31,
1999 1998
-------- --------
Cash flows from operating activities:
Net loss $(73,312) $(30,945)
Items not affecting cash:
Depreciation, Depletion and Amortization 27,812 21,595
Gain on sale of securities -- (23,926)
Changes in operating assets and liabilities:
Decrease in prepaid expense 3,833 4,612
Increase in accounts receivable (8,248) (10,907)
Increase in accounts payable and accrued expenses 8,046 22,738
-------- --------
Net cash flow from operations (41,869) (16,833)
-------- --------
Cash flows from investing activities:
Proceeds from sale of investment securities -- 24,727
Additions to oil and gas properties (1,769) (1,961)
Proceeds from bond investment 38,987 23,161
-------- --------
Net cash flows from investing activities: 37,218 45,927
-------- --------
Cash flows from financing activities:
Repurchase of common stock -- (55,000)
-------- --------
Net cash flows from financing activities -- (55,000)
-------- --------
Net increase (decrease) in cash (4,651) (25,906)
Cash at beginning of period 20,029 46,387
-------- --------
Cash at end of period $ 15,378 $ 20,481
======== ========
Schedule of Non-cash Investing Activities
-----------------------------------------
Decrease in unrealized gain on securities
available for sale $ (74,837) $ (12,949)
========= =========
See notes to Consolidated Financial Statements
6
<PAGE>
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
Monument Resources, Inc. and Subsidiaries (the "Company") was organized under
the laws of the State of Colorado on October 1, 1984. The Company is in the
business of acquiring and brokering mineral and oil and gas properties and
exploring, developing, and selling production from its oil and gas properties.
The Company's mineral properties are in Montana, British Columbia, Canada and
Sweden. The Company's oil and gas properties are in Webb and Knox counties,
Texas, Leavenworth County, Kansas and Kimball County, Nebraska. The Company also
operates a gas pipeline in conjunction with its Leavenworth gas wells.
The Company has a substantial investment in mineral and oil and gas properties.
The Company may not have sufficient capital to fully explore its mineral
holdings or to develop some of its oil and gas properties, which will require
significant investment. The Company has in the past relied on joint venture
partners to supply most of the funds needed to explore or develop its
properties, and may also rely on such partners for similar funding in the
future. As a result, the ability of the Company to obtain outside funding may be
critical to the Company's exploration and development of some of its properties.
As a result of these factors, recovery by the Company of its investments in
these properties cannot be assured.
CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned Canadian subsidiary, formed for the purpose of
owning real property in British Columbia, and its wholly owned Kansas
subsidiary, COG Transmission Corporation, acquired in 1996. All intercompany
transactions and balances have been eliminated in consolidation.
STATEMENT OF CASH FLOWS
For statement of cash flow purposes, the Company considers short-term
investments with original maturities of three months or less to be cash
equivalents. Cash restricted from use in operations beyond three months is not
considered a cash equivalent.
MANAGEMENT'S USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent liabilities at the date of the financial statements and
reported amounts of revenues and expenses. Actual results could differ from
those estimates.
The mining and oil and gas industries are subject, by their nature, to
environmental hazards and cleanup costs for which the Company carries insurance.
At this time, management knows of no substantial costs from environmental
accidents or events for which it may be currently liable. In addition, the
Company's oil and gas business makes it vulnerable to changes in wellhead prices
of crude oil and natural gas. Such prices have been volatile in the past and can
be expected to be volatile in the future. By definition, proved reserves are
based on current oil and gas prices and estimated reserves. Price declines
reduce the estimated quantity of proved reserves and increase annual
amortization expense (which is based on proved reserves).
7
<PAGE>
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates the carrying value of assets, other than investments in
marketable securities, for potential impairment on an ongoing basis under the
tenets of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of," effective 1995. Under SFAS No. 121,
the Company periodically evaluates the carrying value of long-lived assets and
long-lived assets to be disposed of and certain identifiable intangibles and
goodwill related to those assets for potential impairment. The Company considers
projected future operating results, cash flows, trends and other circumstances
in making such estimates and evaluations and reduces the carrying value of
impaired assets to fair value.
EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Financial
Accounting Standard No. 128 ("SFAS No. 128"), addressing earnings per share.
SFAS No. 128 changed the methodology of calculating earnings per share and
renamed the two calculations basic earnings per share and diluted earnings per
share. The calculations differ by eliminating any common stock equivalents (such
as stock options, warrants, and convertible preferred stock) from basic earnings
per share and changes certain calculations when computing diluted earnings per
share. The Company has adopted SFAS No. 128 in fiscal year 1998.
The following is a reconciliation of the numerators and denominators used in the
calculations of basic and diluted earnings (loss) per share for the quarters
ended December 31, 1999, and 1998:
<TABLE>
<CAPTION>
1999 1998
----------------------------------- ------------------------------------
Per Per
Net Share Net Share
(Loss) Shares Amount (Loss) Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Basic Earnings per share:
Net income (loss)
and share amounts $ (73,312) 4,919,000 $ (.01) $ (30,945) 5,084,869 $ (.01)
Dilutive securities:
stock warrants -- -- -- -- -- --
Repurchased shares -- -- -- -- -- --
----------------------------------- -------------------------------------
Diluted earnings per share:
Net (loss) and assumed
share conversion $ (73,312) 4,919,000 $ (.01) $ (30,945) 5,084,869 $ (.01)
=================================== ====================================
</TABLE>
COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" ('SFAS No. 130"), which establishes standards
for reporting of comprehensive income. This pronouncement requires that all
items recognized under accounting standards as components of comprehensive
income, as defined in the pronouncement, be reported in a financial statement
that is displayed with the same prominence as other financial statements.
Comprehensive income includes changes in equity during a period, except those
resulting from investments by owners and distributions to owners. Under
comprehensive income, the Company reports unrealized gains and losses on
investments in debt and equity securities. The financial statement presentation
required under SFAS No. 130 is effective for all fiscal years beginning after
December 15, 1997. The Company has adopted SFAS No. 130 in fiscal 1999.
8
<PAGE>
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
SEGMENT REPORTING
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information" ("SFAS No.
131"), which amends the requirements for a public enterprise to report financial
and descriptive information about its reportable operating segments. Operating
segments, as defined in the pronouncement, are components of an enterprise about
which separate financial information is available that is evaluated regularly by
the Company in deciding how to allocate resources and in assessing performance.
The financial information is required to be reported on the basis that is used
internally for evaluating segment performance and deciding how to allocate
resources to segments. The disclosures required by SFAS No. 131 are effective
for all fiscal years beginning after December 15, 1997. The Company has adopted
SFAS No. 131 in fiscal year 1999.
PENSION AND OTHER POST-RETIREMENT BENEFITS
Statement of Financial Accounting Standards No. 132, "Employers' Disclosures
about Pension and Other Post-retirement Benefits" was effective for financial
statements with fiscal years beginning after December 31, 1997. Earlier
application was permitted. The new standard revises employers' disclosures about
pension and other post-retirement benefit plans but did not change the
measurement or recognition of those plans. SFAS No. 132 standardized the
disclosure requirements for pensions and other post-retirement benefits to the
extent practicable, required additional information on change in the benefit
obligations and fair values of the plan assets that will facilitate financial
analysis and eliminated certain disclosures previously required when no longer
useful. The adoption of SFAS No. 132 does not have a material effect on the
Company's results of operations.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The FASB has recently issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No.
133"). SFAS No. 133 established standards for recognizing all derivative
instruments including those for hedging activities as either assets or
liabilities in the statement of financial position and measuring those
instruments at fair value. This Statement is effective for fiscal years
beginning after June 30, 1999. The adoption of SFAS No. 133 does not have a
material effect on the Company's financial statements.
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. Proved and unproved
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 and unproved properties are periodically
assessed for possible impairment due to unrecoverability of costs invested.
Developed and proved properties are periodically assessed under the accounting
rules of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of." Cash received for partial conveyances
of property interests are treated as a recovery of cost and no gain or loss is
recognized.
9
<PAGE>
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
PROPERTY, EQUIPMENT, AND GAS PIPELINE
Depreciation of property and equipment are expensed in amounts sufficient to
relate the expiring costs of depreciable assets to operations over estimated
service lives, principally using the straight-line method. Estimated service
lives range from three to eight years. The gas pipeline is being depreciated 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.
INCOME TAXES
Deferred taxes are provided on the liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss
carryforwards and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
INVESTMENTS IN SECURITIES
The company follows Statement of Financial Accounting Standards ("SFAS") 115,
"Accounting for Certain Investments in Debt and Equity Securities," in
accounting for its security investments. In accordance with SFAS No. 115, the
Company's investments in securities have been classified as available for sale
because they are being held for an indefinite period of time. Under the
available for sale classification, the securities are recorded as an asset at
current market value on the balance sheet with an equal amount representing
unrealized gains recorded as a component of stockholders' equity. The current
market value is derived from published newspaper quotations as of December 31,
1999, and September 30, 1999. At the time of sale, a gain or loss is recognized
in the statement of operations using the cost basis of securities sold as
determined by specific identification.
FINANCIAL INSTRUMENTS
Concentration of Credit Risk
- ----------------------------
Financial instruments, which potentially subject the Company to significant
concentrations of credit risk, consist principally of cash, trade receivables
and investments in securities.
The Company maintains cash with various financial institutions. The Company
periodically evaluates the financial services of these institutions and believes
the credit risk to be minimal.
The Company has recorded trade accounts receivable from the business operations.
The Company periodically evaluates the collectibility of trade receivables and
believes the receivables to be fully collectible and the credit risk to be
minimal.
The Company's investment in U.S. Government securities are subject to moderate
price volatility due to interest rate changes; however, realization of these
investments has minimal risk. The Company's investment in common stock of two
companies is subject to substantial price volatility due to the nature of
Canadian stock markets, the nature of the extractive industries business and
variations in the Canadian dollar exchange rate.
10
<PAGE>
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Fair Value
- ----------
The carrying amount of the Company's financial instruments is equivalent to
their fair value as follows:
Cash and cash equivalents - The carrying amount approximates fair value
because of the short maturities of these instruments.
Marketable securities - The carrying amounts approximate the fair value
because the securities are valued at the market prices based on published
trading price information and was accounted for using the available for
sale accounting method.
STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"), was issued in October, 1995 by the Financial
Accounting Standards Board. SFAS No. 123 provides an alternative method of
accounting for stock-based compensation arrangements, based on fair value of the
stock-based compensation utilizing various assumptions regarding the underlying
attributes of the options and stock, rather than the existing method of
accounting for stock-based compensation which is provided in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB No. 25"). The Financial Accounting Standards Board encourages entities to
adopt the fair-value based method but does not require adoption of this method.
The Company will continue its current accounting policy under APB No. 25 but has
adopted the disclosure-only provisions of SFAS No. 123 for any options and
warrants issued to employees, directors or consultants.
NOTE 2 - ESTIMATES AND RISKS
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues and expenses. Such
estimates primarily relate to impairments of mineral and oil and gas properties,
oil and gas reserves and future dismantlement, restoration and abandonment
costs. The actual future results in the above areas may differ from the
estimated amounts.
Financial statement accounts, which potentially subject the Company to
concentrations of credit risk, consist primarily of cash and investments in
securities. The Company attempts to deposit its cash with high quality financial
institutions in amounts less than the federal insurance limit of $100,000 in
order to limit credit risk. The Company's investment in bonds is considered to
have minimum credit risk since they are U.S. government instruments. The
Company's investments in common stock are considered to have substantial credit
risk since the stock is in companies without a long history of successful
operations and whose market values are variable and cyclical.
11
<PAGE>
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 2 - ESTIMATES AND RISKS (CONTINUED)
The mining and oil and gas industries are subject, by their nature, to
environmental hazards and cleanup costs for which the Company carries
catastrophe insurance. At this time, management knows of no substantial costs
from environmental accidents or events for which it may be currently liable. In
addition, the Company's oil and gas business makes it vulnerable to changes in
wellhead prices of crude oil and natural gas. Such prices have been volatile in
the past and can be expected to be volatile in the future. By definition, proved
reserves are based on current oil and gas prices. Price declines reduce the
estimated quantity of proved reserves and increase annual amortization expense
(which is based on proved reserves).
NOTE 3 - INVESTMENTS IN SECURITIES
The Company has recorded its investment in 75,000 shares of Southern Africa
Minerals Corporation ("SAMC") (Toronto Exchange), a Canadian company, and
1,900,000 shares of Layfield Resources, Inc. ("Layfield") (Vancouver Exchange),
a Canadian company, at fair value in accordance with Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS 115"). During the quarter ended December 31, 1998, the
Company sold 50,000 shares of Layfield and 25,000 shares of Southern Africa,
recognizing a gain of $23,926. Based on the demonstrated liquidity and
marketability of the Layfield and SAMC shares, and in the accordance with SFAS
115, the Company has recorded its investments in the stocks based on published
market listings and on the closing bid price on the stocks' respective
exchanges. These shares are classified by the Company as available for sale and
non-current, since such sale may not necessarily be consummated in the near
term.
The Company's investment in debt securities consists of various U.S. government
financial instruments. The Company considers these bonds to be currently
available for sale and has no timetable for sale or redemption. Nevertheless,
the Company does not expect to hold the bonds to maturity.
Investments in securities are summarized as follows at December 31, 1999:
Unrealized Fair
Gain (Loss) Value
----------- ---------
Available-for-sale securities:
Common stock $ 81,738 $ 84,644
Debt securities (maturing in 1 to 21 years) (6,901) 214,516
--------- ---------
$ 74,837 $ 299,160
========= =========
Investments in securities are summarized as follows at September 30, 1999:
Unrealized Fair
Gain Value
-------- --------
Available-for-sale securities:
Common stock $149,845 $152,630
Debt securities (maturing in 1 to 3 years) 382 260,404
-------- --------
$150,227 $413,034
======== ========
12
<PAGE>
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 4 - MINERAL PROPERTIES
DOBLER PROSPECT, BROADWATER COUNTY, MONTANA
The Dobler prospect, with capitalized costs of $59,520 at December 31, 1999, and
September 30, 1999, consists of 80 acres of fee simple land (including minerals)
and mineral rights to the 280 surrounding acres.
The Company is continually trying to locate joint venture opportunities to
further explore the property and has considered selling the property.
Alternative uses of the mineral property are supplying flux to a nearby smelter
or selling the property as ranch land. The property's value as ranch land or as
a homesite approximates the Company's capitalized costs in the prospect.
WISCONSIN MINE PROPERTY, BRITISH COLUMBIA, CANADA
The Company's Wisconsin Mine Property consists of two patented gold mining
claims covering approximately 64 acres, plus ten surrounding unpatented mining
claims. An alternative use for the property is the harvesting of timber or sale
as real estate. The fair value of the property approximates, at minimum, the
capitalized cost of $33,197 at December 31, 1999, and September 30, 1999.
SKANE ZINC PROSPECT, SWEDEN
The Skane Zinc Prospect, with capitalized costs of $35,120, at December 31,
1999, consists of approximately 19,700 acres of exploration licenses in southern
Sweden. The properties are prospective for shallow zinc, lead, minor precious
metals, and possible fluorite and barite deposits. The company owns a 70%
working interest in the project which is operated by Geoforum Scandinavia AB
which owns the remaining 30% working interest. The company is currently seeking
an industry partner to fund the exploration and development of the project.
ALL MINERAL PROPERTIES
Total mineral costs for all properties capitalized were $127,837 as of December
31, 1999, and September 30, 1999.
13
<PAGE>
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 5-PROPERTY AND EQUIPMENT
The following is a summary of property and equipment at cost, less accumulated
depreciation:
December 31, September 30,
1999 1999
(Unaudited)
--------- ---------
Land $ 12,500 $ 12,500
Machinery and equipment 77,885 77,885
--------- ---------
Total 90,385 90,385
Less: Accumulated depreciation (49,304) (45,042)
--------- ---------
Net property and equipment 41,081 45,343
--------- ---------
Pipeline 300,000 300,000
Less: Accumulated depreciation (99,845) (92,445)
--------- ---------
Net pipeline 200,155 207,555
--------- ---------
Net property and equipment $ 241,236 $ 252,898
========= =========
Depreciation expense charged to operations was $11,662 for the first quarter
ended December 31, 1999, and $43,395 for the fiscal year ended September 30,
1999.
The useful lives of property and equipment for purposes of computing
depreciation are:
Machinery and equipment 5 years
Pipeline Useful life of related gas production,
approximately 5 to 7 years
NOTE 6 - STOCKHOLDERS' EQUITY
The Company's amended Articles of Incorporation authorize the issuance of
1,000,000 shares of preferred stock with no par value. The preferred stock may
be issued from time to time with such designation, rights, preferences and
limitations as the Board of Directors may determine by resolution. As of
December 31, 1999, no shares of preferred stock have been issued.
NOTE 7 - STOCK OPTION PLANS
During 1986, the Company adopted an Employees' Incentive Stock Option Plan (the
"Employees' Plan"). The exercise price of the shares covered by stock options
granted pursuant to the Employees' Plan must be, at a minimum, 100% of the
quoted market value of the stock at the time the option is granted. No options
are outstanding under this Plan.
During 1986, the Company adopted a Directors' Stock Option Plan (the "Directors'
Plan") for the benefit of the non-employee directors of the Company. The
exercise price of the shares covered by options granted pursuant to the
Directors' Plan must be $.80 per share. With respect to each individual option
granted under the Directors' Plan, the Board of Directors will determine
separately the number of shares, the option period, and the limitations which
will apply to the exercise of options. No options are outstanding under the
Directors' Plan.
14
<PAGE>
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 7 - STOCK OPTION PLANS (CONTINUED)
In January 1993, the Company granted stock options (exclusive of the above
plans) to the officers in lieu of compensation. The options are for 540,000
shares and are exercisable for the five years beginning January 14, 1993 at a
price of $.10 per share, which price was in excess of market value of the
Company's shares at the date of grant. In May 1995, the Company's former
President, Stewart Jackson, exercised all of his options for 320,000 shares of
the Company's common stock at $.10 per share. On December 8, 1997, the board of
directors extended the options granted on 220,000 shares to January 13, 1999,
exercisable at $.10 per share. Options for 220,000 shares were exercised on
January 11, 1999. Of these exercised options, options for 160,000 shares were
exercised by the Company's President, A.G. Foust, and options for 60,000 shares
were exercised by Dru E. Campbell, Assistant Secretary to the Company.
The following schedule summarizes information with respect to options granted
under the Company's equity plans:
Weighted Average
Number of Exercise Price of
Shares Shares Under Plans
------ ------------------
Outstanding September 30, 1998 220,000 $ .10
Granted -- --
Exercised -- --
Forfeited or expensed -- --
------- -------
Outstanding December 31, 1998 220,000 $ .10
Granted -- --
Exercised (220,000) $ .10
Forfeited or expensed
-------- -------
Outstanding December 31, 1999 -0- -0-
======== =======
NOTE 8 - SEGMENT INFORMATION
The Company operates in three industry segments within the United States: (1)
oil and gas exploration and development, (2) mineral exploration and
development, and (3) gas transmission pipeline.
Identified assets by industry are those assets that are used in the Company's
operations in each industry. Corporate assets are principally cash, investment
securities, furniture, and fixtures.
During fiscal 1999, the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" (SFAS 131). The adoption of SFAS 131 requires the presentation of
descriptive information about reportable segments which is consistent with that
made available to the management of the Company to assess performance.
The oil and gas segment derives its revenues from the sale of oil and gas. The
mining segment receives its revenues primarily from the sale of minerals and
precious metals and from time to time from the sale of a mineral venture that it
has originated. Corporate income is primarily derived from interest income on
funds held in money market accounts and the sale of securities. The pipeline
segment derives revenue from the sale of natural gas from the Company's gas
field in Leavenworth, Kansas.
During the three months ended December 31, 1999, there were no intersegment
revenues. The accounting policies applied by each segment are the same as those
used by the Company in general.
15
<PAGE>
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 8 - SEGMENT INFORMATION (CONTINUED)
Net sales to one customer of the gas transmission pipeline segment totaled
$76,000 or approximately 88% of revenues for the three months ended December 31,
1998.
There have been no differences from the last annual report in the bases of
measuring segment profit or loss. There have been no material changes in the
amount of assets for any operating segment since the last annual report.
For the Quarters Ending December 31, 1999 and 1998
Segment information consists of the following:
<TABLE>
<CAPTION>
Oil and Gas Pieline Mining Corporate Consolidated
----------- ------- ------ --------- ------------
<S> <C> <C> <C> <C> <C>
Revenues
1999 $ 47,588 35,339 - 3,760 $ 86,687
1998 36,514 18,478 - 31,111 86,103
Income (Loss)
From Operations
1999 $ (33,323) 5,061 - (45,050) $ (73,312)
1998 9,604 (17,480) - (23,069) (30,945)
Identifiable Assets
1999 $ 1,018,242 237,382 127,837 32,490 $ 1,709,952
1998 1,103,589 273,418 127,837 535,599 2,040,443
Depreciation, Depletion
and Valuaton Charged
to Idetifiable Assets
1999 $ 19,573 8,215 - 24 $ 27,812
1998 14,328 7,244 - 24 21,596
Capital Expenditures
1999 $ 1,769 - - - $ 1,769
1998 1,961 - - - 1,961
</TABLE>
NOTE 9 - OIL AND GAS ACTIVITIES
During the quarter ended December 31, 1999, the Company worked over two of its
gas wells in the Leavenworth, Kansas, gas project. An additional zone in the
Upper McLouth Formation was perforated and stimulated (acidized and fracture
treated). Due to adverse weather conditions and inability to obtain certain
required equipment on a timely basis, the results of the workovers are still
being evaluated. The initial results have been somewhat disappointing, but the
testing is being continued and, the final evaluation of the workovers'
effectiveness will be determined during the quarter ending March 31, 2000.
Also, the Company participated for a 6.25% W.I. in the drilling of a test well
in Kern County, California. The Brandt 46X-27 test well was non-productive (dry)
and the well was plugged and abandoned during November 1999. The Company
expended approximately $21,000 as its share of the drilling and evaluation
costs.
16
<PAGE>
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 9 - OIL AND GAS ACTIVITIES (CONTINUED)
Additionally, as of July 1, 1999, the Company entered into an Agreement to
transfer operation of its East Voss property in Knox County, Texas. The
Agreement provides that the new operator will assume all the rights and
obligations associated with the project in exchange for a cash payment of
$10,000, future payments of $40,000 and a perpetual overriding royalty (ORR)
interest of 7.5%. The purchaser has failed to make a required $20,000 payment in
January 2000 and it may not continue as required under the Agreement. Hence, the
Company may have to institute legal action to protect its rights. Management is
hopeful that the purchaser will fulfill its obligations under the Agreement.
However, if the purchaser fails to complete its obligations, Management is
confident that legal action will either force compliance under the Agreement or
the Company will take back the properties at the same or better conditions than
at the time of the sale. Management does not expect to incur any significant
financial effect under either option.
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
Item 2 - Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1999, the Company had a total of $15,378 in cash and $241,250
in working capital compared to $20,029 in cash and working capital of $295,420
at September 30, 1999. This represents a decrease of $4,651 in cash and a
$54,170 decrease in working capital. The decrease in cash and working capital
during the three months ended December 31, 1999, were the result of additions to
oil and gas properties of approximately $1,800, and proceeds from Bond
Investment of approximately $39,000 which was offset by the $21,000 cost of a
dry hole drilled in California during the first quarter of fiscal 2000, an
increase in accounts receivable of $8,200 and net proceeds received from the
sale of investment stock of approximately $24,000.
At the present time, the Company's primary source of cash for operations and
exploration is its current working capital, cash which can be raised by selling
shares held for investment or its investment in U.S. government treasury
securities and funds derived from its oil and gas operations. 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 holdings or obtain third-party
funding may limit development of most of its properties.
Although the Company intends 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, gas and pipeline sales increased significantly for the
quarter ended December 31, 1999, from $36,514 to $47,588, a 30% increase. This
increase was due primarily to the improvement of prices the Company receives for
its oil and gas. Interest income declined $3,425, from $7,185 to $3,760 or 48%.
Pipeline income increased $16,861 or 91% due to increased volume of gas sold and
improved prices from the same period a year ago.
17
<PAGE>
Item 2 - Financial Statements (Continued)
MONUMENT RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(CONTINUED)
RESULTS OF OPERATIONS (CONTINUED)
Oil and gas operating expenses increased $25,181 or 165% from $15,189 to
$40,370. This increase resulted from the workover and testing of two gas wells
in Kansas for approximately $15,000 and plugging costs of $11,000 for several
wells in the Galvan Ranch Field, Webb County, Kansas.
Dry hole costs of approximately $21,000 were incurred when the Company
participated in a Stevens Test of the Brandt 46X-27 located in Kern County,
California.
General and administrative expenses totaled $48,786 for the quarter ended
December 31, 1999, compared to $51,549 for the three-month period ended December
31, 1998. The fairly constant general and administrative costs when comparing
the two periods reflects management's continuing efforts to contain costs
whenever possible.
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.
18
<PAGE>
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)
Date: February 7, 2000 by: /s/ A.G. Foust
- ---------------------- ------------------
A.G. Foust
President (Chief Executive Officer,
Principal Financial and Accounting
Officer) and a Director
19
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
Still need to proof*************************************
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> SEP-30-2000 SEP-30-1999
<PERIOD-START> OCT-01-1999 OCT-01-1998
<PERIOD-END> DEC-31-1999 SEP-30-1999
<CASH> 15,378 20,029
<SECURITIES> 214,516 260,404
<RECEIVABLES> 38,725 30,477
<ALLOWANCES> 0 0
<INVENTORY> 4,583<F1> 8,416<F1>
<CURRENT-ASSETS> 273,202 319,326
<PP&E> 1,352,056 1,378,099
<DEPRECIATION> 84,694<F2> 152,630<F2>
<TOTAL-ASSETS> 1,709,952 1,850,055
<CURRENT-LIABILITIES> 31,952 23,906
<BONDS> 0 0
(1,561,600)<F3> (1,488,288)<F3>
75,390<F4> 150,227<F4>
<COMMON> 3,164,210 3,164,210
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 1,709,952 1,850,055
<SALES> 82,927 54,992
<TOTAL-REVENUES> 86,687 86,103
<CGS> 62,433 43,903
<TOTAL-COSTS> 159,999 117,048
<OTHER-EXPENSES> 20,968<F5> 0<F5>
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (73,312) (30,945)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (73,312) (30,945)
<EPS-BASIC> (.01) (.01)
<EPS-DILUTED> (.01) (.01)
<FN>
<F1>Prepaid Expense
<F2>Investment in Stocks
<F3>Accumulated Deficit
<F4>Unrealized Gain on Investment in Securities
<F5>Dry hole Costs
</FN>
</TABLE>
