SECURITIES AND EXCHANGE
-----------------------
COMMISSION
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WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
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[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly
period ended March 31,1996.
- Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 for the transition
period from __________ to__________
Commission File No. 0-17246
GULF EXPLORATION CONSULTANTS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0293525
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(State or other jurisdiction of (IRS Employer
incorporation or organization) identification No.)
10 Rockefeller Plaza, Suite 1012, New York, New York 10020
Registrant's telephone number including area code: (212) 247-2120
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
The number of shares of common stock outstanding as of March 31,
1996 was 93,552,625.
<PAGE>
GULF EXPLORATION CONSULTANTS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31 December 31
1996 1995
--------- -----------
(unaudited) (audited)
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 6,110 $10,425
Accounts receivable 26,687 27,111
------- -------
Total Current Assets 32,797 37,536
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PROPERTY, PLANT AND EQUIPMENT, at cost
Equipment, 80,242 80,242
Less - Accumulated depreciation, 32,596 31,840
------ ------
47,646 48,402
------ ------
$80,443 $85,938
======= =======
The accompanying notes are an integral part
of these financial statements
<PAGE>
GULF EXPLORATION CONSULTANTS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31 December 31
1996 1995
--------- -----------
(unaudited) (audited)
LIABILITIES AND STOCKHOLDERS EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 101,335 $ 114,304
Accrued expenses 34,114 34,655
Deferred income 35,779 36,347
Due to affiliates 374,114 365,666
Current portion of capital
lease obligations 5,837 5,930
Other 246,167 246,900
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797,346 803,802
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STOCKHOLDERS EQUITY
Common Stock, $0.01 par value,
100,000,000 shares authorized,
99,999,000 and 93,552,625
shares issued and outstanding
as of March 31, 1996 and
December 31, 1995, respectively 935,526 999,990
Additional paid-in capital 6,514,253 6,449,789
Retained deficit (8,157,308) (8,148,814)
Accumulated translation
adjustments (9,374) (18,829)
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(716,903) (717,864)
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$ 80,443 $ 85,938
========== ===========
The accompanying notes are an integral part
of these financial statements
<PAGE>
GULF EXPLORATION CONSULTANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Three months Three months
------------ ------------
March 31 March 31
-------- --------
1996 1995
---- ----
(unaudited) (unaudited)
REVENUES:
Subscription Revenues $ - $ 13,132
Other income 9,370 3,498
--------- ---------
9,370 16,330
--------- ----------
OPERATING EXPENSES:
On-line service production costs - (83,779)
Technical, general and
administrative (17,116) (134,590)
Depreciation, depletion and
amortization (756) (17,216)
--------- ---------
(17,872) (235,585)
--------- ---------
LOSS FROM OPERATIONS (8,502) (218,955)
--------- ---------
OTHER INCOME EXPENSE
Interest expense - (258)
Interest income 8 24
--------- ---------
8 (234)
--------- ---------
LOSS BEFORE INCOME TAX AND
EXTRAORDINARY ITEMS (8,494) (219,189)
INCOME TAX PROVISION - -
--------- ---------
NET LOSS BEFORE EXTRAORDINARY
ITEMS (8,494) (219,189)
EXTRAORDINARY GAIN - -
--------- ---------
NET LOSS TO COMMON STOCKHOLDERS $ (8,494) $(219,189)
========= =========
LOSS PER COMMON SHARE
Net loss before extraordinary
item $ .00 $ .00
Net extraordinary item $ .00 $ .00
--------- ---------
$ .00 $ .00
========= =========
LOSS PER COMMON SHARE -
ASSUMING FULL DILUTION
Net loss before extraordinary
item $ .00 $ .00
Net extraordinary item $ .00 $ .00
--------- ---------
$ .00 $ .00
========= =========
The accompanying notes are an integral part of these consolidated
financial statements
<PAGE>
GULF EXPLORATION CONSULTANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Three months Three months
------------ ------------
March 31 March 31
-------- --------
1996 1995
---- ----
(unaudited) (unaudited)
OPERATING ACTIVITIES:
Net profit (loss) $ (8,494) $(219,189)
Adjustments to reconcile
net loss to net cash
used in operating
activities
Depreciation, depletion and
amortization 756 17,216
Movement in translation
adjustment 9,455 -
Net change in accounts
receivable, accounts
payable and other 424 (31,255)
Change in operating accounts
payable and accrued
liabilities, net (14,904) 10,965
--------- ---------
Net cash flows used in
operating activities (12,763) (222,263)
--------- ---------
INVESTING ACTIVITIES
Purchase of equipment - (9,853)
Deferred expenditure - (25,557)
--------- ---------
Net cashflows provided by
investing activities - (35,410)
--------- ---------
FINANCING ACTIVITIES
Repayment of capital
lease obligation - (2,154)
Proceeds of short term loan - 200,000
Loan from affiliate 8,448 104,419
--------- ---------
Net cash flows provided by
financing activities 8,448 302,265
--------- ---------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (4,315) 44,592
CASH AND CASH EQUIVALENTS,
beginning of period 10,425 26,586
--------- ---------
CASH AND CASH EQUIVALENTS,
end of period $ 6,110 $ 77,178
========= =========
The accompanying notes are an integral part of these consolidated
financial statements
<PAGE>
GULF EXPLORATION CONSULTANTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) GENERAL
-------
The financial statements of Gulf Exploration Consultants,
Inc. (Gulf) and subsidiaries (collectively the "Company") for the
three month period ended March 31, 1996 are unaudited but
reflect, in the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to fairly
present the results for such periods. The accompanying financial
statements should be read in conjunction with the financial
statements and notes thereto contained in the Annual Report
included in the Form 10-K for the year ended December 31, 1995.
GOING CONCERN ASSUMPTION
------------------------
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern.
CHANGE OF MANAGEMENT
--------------------
On December 5, 1995 the Board of Directors accepted the
resignation of Paul L H Bristol and appointed Michael Nolan and
Jeremy Metcalfe to fill the vacancies on the Board.
Mr Nolan has been Chief Financial Officer of the Company since
May 1994. Mr Metcalfe is Chairman of Minmet plc ("Minmet") which
owns approximately 56.4% of the Company s outstanding Common
Stock.
Recapitalization and Sale of Subsidiary
---------------------------------------
On December 7, 1995 the Company entered into a Subscription
Agreement and Option (the "Micron Option") with Minmet, Micron
Limited ("Micron") and Emerging Money, relating to the
acquisition by Micron of Common Stock of Emerging Money which
would result in Micron owning 72.5% of the stock after closing.
The closing of the transactions contemplated by the Micron
Subscription is subject to certain conditions, including the
approval by the Stockholders of the Company. The Company s entry
into the Micron Subscription was necessary because neither the
Company or Emerging Money had sufficient capital to maintain the
continuing operations of Emerging Money.
On December 22, 1995 the Company and Minmet entered into a letter
agreement with DRM&S Inc. and Dennis Mensch, each the holder of
the Company s notes in the sum of $100,000 regarding the payment
of certain outstanding liabilities and future expenses of the
Company and certain other related matters in connection with
proposed transaction under the Micron Subscription Agreement and
a recapitalization of the Company. The recapitalization which is
subject to stockholder approval, would include a reverse split of
the Company s Common Stock, the exchange by DRM&S inc. and Mensch
of their notes for which each would receive 22% of the Company s
shares then to be outstanding and the Company would transfer its
27.5% interest in Emerging Money to Minmet in exchange for Minmet
reducing its ownership of the Company to an amount equal to 15%
after the recapitalization.
After the recapitalization is approved by the stockholders the
Company will seek new business opportunities.
(2) LOSS PER COMMON SHARE
---------------------
Loss per common share is based on the weighted average
number of common shares outstanding during each period. The
average number of common shares outstanding for the three month
periods ended March 31, 1996 and 1995 was 93,552,625 and
99,999,000 common shares, respectively.
Loss per common share -- assuming full dilution is based on
the weighted average number of common shares outstanding during
each period plus the additional common shares outstanding from
the assumption that the Company's serial preferred stock was
converted to common stock. The average number of shares used to
compute the fully diluted loss per share was 93,552,625 and
99,999,000 common shares for the three month periods ended March
31, 1996 and 1995, respectively.
Common stock equivalents are antidilutive and are not
considered in the calculations of loss per share.
(3) PREFERRED STOCK
---------------
On March 24, 1993, the Company acquired 3,000 shares of
Series A Preferred stock for $150,000 and zero shares of common.
That purchase retired the balance of the A Preferred shares.
(4) COMMITMENTS AND CONTINGENCIES
-----------------------------
As of May 7, 1996, the Company has not filed certain federal
and state income tax returns for the years ended 1991, 1992,
1993, 1994 and 1995. It is management s intent to file the
required tax returns in 1996. Management believes penalties for
late filing will not be material to the financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
RESULTS OF OPERATIONS
Three months ended March 31, 1996.
The Company had a net loss of $8,494 for the quarter ending
March 31, 1996. Expenses of $17,114 were incurred in
professional fees during the quarter. Other revenues related to
a tax referral in respect of tax paid in earlier years.
LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN ASSUMPTIONS
----------------------------------------------------------
As indicated in the Subsequent Events Note (1) above, it is
the Company s intention to dispose of its interest in Emerging
Money subject to stockholder approval. A meeting (or consent) of
stockholders is expected for late May 1996.
<PAGE>
PART II: OTHER INFORMATION
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
The Company has entered into agreement with the loan note holders
in that the loan note holders will take no action pending the
recapitalization.
ITEM 5. OTHER INFORMATION
-----------------
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
Exhibit 27. Financial Data Schedule
<PAGE>
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.
GULF EXPLORATION CONSULTANTS, INC.
Date: May 13, 1996
/s/ L. George Rieger
-----------------------------------
L. George Rieger,
President
/s/ Michael Nolan
-----------------------------------
Michael H Nolan
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit Description
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27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED BALANCE SHEETS, STATEMENT OF OPERATIONS, STATEMENT OF
CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 6,110
<SECURITIES> 0
<RECEIVABLES> 26,687
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 32,797
<PP&E> 80,242
<DEPRECIATION> 32,596
<TOTAL-ASSETS> 80,443
<CURRENT-LIABILITIES> 797,346
<BONDS> 0
0
0
<COMMON> 935,526
<OTHER-SE> 6,514,253
<TOTAL-LIABILITY-AND-EQUITY> 80,443
<SALES> 9,370
<TOTAL-REVENUES> 9,370
<CGS> 0
<TOTAL-COSTS> 17,872
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (8,494)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,494)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,494)
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
