FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 1996
--------------
COMMISSION FILE NUMBER 33-19598-D
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MENDELL-DENVER CORPORATION
-------------------------------------------------------
(Exact Name of Registrant as specified in its charter)
COLORADO 84-0992908
- - - --------------------------------------------------------------------------------
State or other jurisdiction of I.R.S. Employer Identification No.)
incorporation or organization)
1816 Cherokee Bluff Drive
Knoxville, Tennessee 37920-2220
- - - --------------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 423-579-9525
------------
Indicate by check 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 the Registrant's $.001 par value common stock
outstanding as of March 31, 1996, was 7,322,077.
<PAGE>
MENDELL-DENVER CORPORATION
INDEX
PART I FINANCIAL INFORMATION PAGE
- - - ------ --------------------- ----
Item 1. Balance Sheet:
March 31, 1996, 1995 and June 30, 1995 1
Statement of Operations:
Three Months March 31, 1996, 1995 3
Statement of Operations:
Nine Months March 31, 1996, 1995 4
Statement of Changes in Cash Flows:
Three Months March 31, 1996, 1995 5
Statement of Changes in Cash Flows:
Nine Months March 31, 1996, 1995 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition 10
and Results of Operations
PART II OTHER INFORMATION
- - - ------- -----------------
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of
Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
<PAGE>
PART I FINANCIAL INFORMATION
- - - -------------------------------
Item 1. Financial Statements
MENDELL-DENVER CORPORATION
Knoxville, Tennessee
Balance Sheets
as of March 31,
1996 1995
---- ----
ASSETS:
Current Assets:
- - - --------------
Cash $ 558 $ 1,076
------------- -------------
Total Current Assets $ 558 $ 1,076
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
- - - -------------------
Accounts Payable $ -0- $ 4,164
Income Taxes Payable -0- -0-
------------- -------------
Total Current Liabilities $ -0- $ 4,164
Stockholders' Equity:
- - - --------------------
Preferred Stock, $0.01 Par Value; 1,000,000
Shares Authorized, None Issued
Common Stock, $0.001 Par Value; 25,000,000
Shares Authorized; 7,322,077
Shares Issued and Outstanding 7,322 5,492
Retained Earnings (Deficit) (6,764) (8,580)
Total Stockholders' Equity 558 (3,088)
------------- -------------
Total Liabilities and
Stockholders' Equity $ 558 $ 1,076
============= =============
1
The accompanying notes are an integral part of these financial statements.
<PAGE>
MENDELL-DENVER CORPORATION
Knoxville, Tennessee
Balance Sheet as of
June 30, 1995
ASSETS:
Current Assets:
- - - --------------
Cash $ 2,084
Escrow Receivable 3,032
Income Tax Refund Receivable 1,113
-----------
Total Current Assets 6,229
-----------
Total Assets $ 6,229
===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
- - - -------------------
Accounts Payable $ 2,345
-----------
Total Current Liabilities 2,345
-----------
Shareholders' Equity:
- - - --------------------
Preferred Stock - $0.01 Par Value
1,000,000 Shares Authorized, None Issued
Common Stock - $0.001 Par Value,
25,000,000 Shares Authorized;
5,491,558 Issued and Outstanding 5,492
Retained Earnings (Deficit) (1,608)
-----------
Total Stockholders' Equity 3,884
-----------
Total Liabilities and Stockholders' Equity $ 6,229
===========
2
The accompanying notes are an integral part of these financial statements.
<PAGE>
MENDELL-DENVER CORPORATION
Knoxville, Tennessee
Statement of Operations
For the Three Months Ended March 31,
1996 1995
---- ----
Revenues:
- - - ---------
Interest Income $ -0- $ 96
Tax Refund -0- 8,076
---------------- ----------------
Total Revenues -0- 8,172
---------------- ----------------
Expenses:
- - - ---------
General and Administrative Costs 584 8,255
---------------- ----------------
Total Expenses 584 8,255
---------------- ----------------
Profit/Loss from Operations $ (584) $ (83)
================ ================
Net Income (Loss) Per Common Share $ (0.00008) $ (0.00002)
================ ================
Weighted Average of Common
Shares Outstanding 7,322,077 5,491,558
================ ================
<PAGE>
MENDELL-DENVER CORPORATION
Knoxville, Tennessee
Statement of Operations
For the Nine Months Ended March 31,
1996 1995
---- ----
Revenues:
- - - ---------
Interest Income $ 660 $ 215
Tax Refund 3,333 9,640
------------------- -------------------
Total Revenues 3,993 9,675
------------------- -------------------
Expenses:
- - - --------
General and Administrative Costs 6,206 28,963
------------------- -------------------
Total Expenses 6,206 28,963
------------------- -------------------
Profit/Loss from Operations $ (2,213) $ (19,288)
=================== ===================
Net Income (Loss) Per Common Share $ (0.0003) $ (.0035)
=================== ===================
Weighted Average of Common
Shares Outstanding 7,332,077 5,491,558
=================== ===================
4
The accompanying notes are an integral part of these financial statements.
<PAGE>
MENDELL-DENVER CORPORATION
Knoxville, Tennessee
Statement of Cash Flows
For the Three Months Ended March 31,
1996 1995
---- ----
Cash Flows From Operating Activities:
- - - ------------------------------------
Net Income (Loss) $ (584) $ (83)
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided by
Operating Activities:
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Taxes Payable -0- -0-
(Increase) Decrease in Accounts Payable -0- -0-
(Increase) Decrease in Escrow Receivable -0- -0-
------------ ------------
Net Cash Provided (Used) By
Operating Activities (584) (83)
------------ ------------
Cash Flows From Investing Activities:
- - - ------------------------------------
Net Cash Used By Investing Activities -0- -0-
Cash Flows From Financing Activities:
- - - ------------------------------------
Net Cash Provided by Financing Activities -0- -0-
------------ ------------
Net Increase (Decrease) in Cash (584) (83)
Cash Beginning of Period 1,142 1.159
------------ ------------
Cash End of Period $ 558 $ 1,076
============ ============
5
The accompanying notes are an integral part of these financial statements.
<PAGE>
MENDELL-DENVER CORPORATION
Knoxville, Tennessee
Statement of Cash Flows
For the Nine Months Ended March 31,
1996 1995
---- ----
Cash Flows From Operating Activities:
- - - ------------------------------------
Net Income (Loss) $ (2,213) $ (19,288)
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided
by Operating Activities:
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Taxes Payable -0- (8,086)
(Increase) Decrease in Accounts Payable (2,345) -0-
(Increase) Decrease in Escrow Receivable 3,032 -0-
------------ -------------
Net Cash Provided (Used) By
Operating Activities (1,526) (27,374)
------------ -------------
Cash Flows From Investing Activities:
- - - ------------------------------------
Net Cash Used By Investing Activities -0- -0-
Cash Flows From Financing Activities:
- - - -------------------------------------
Net Cash Provided by Financing Activities -0- -0-
------------ -------------
Net Increase (Decrease) in Cash (1,526) (27,374)
Cash Beginning of Period 2,084 28,450
------------ -------------
Cash End of Period $ 558 $ 1,076
============ =============
6
The accompanying notes are an integral part of these financial statements.
<PAGE>
MENDELL-DENVER CORPORATION
Knoxville, Tennessee
Notes to Financial Statements
March 31, 1996
NOTE 1: Organization and Business
-------------------------
Mendell-Denver Corporation (the Company) was incorporated an July 22,
1985. The Company was formed for the purpose of acquiring, exploring and
developing oil and gas properties.
NOTE 2: Summary of Significant Accounting Policies
------------------------------------------
Oil and Gas Properties:
----------------------
The Company followed the successful efforts method of accounting for its
oil and gas activities. Under this method, costs associated with the
acquisition, drilling and equipping of successful exploratory wells are
capitalized and amortized ratably over the life of production from the related
proved reserves. Geological and geophysical costs, delay rentals and drilling
costs of unsuccessful exploratory wells are charged to expense as incurred.
Costs of drilling, both successful and unsuccessful development wells, are also
capitalized and amortized ratably over the life of production from related
proved reserves. Undeveloped properties are assessed periodically to determine
whether the properties have been impaired, and when impairment occurs, a loss is
recognized.
Property acquisition costs for unproved oil and gas properties are
initially capitalized. The acquisition costs for unproved properties are
assessed at least annually, and if necessary, an impairment in value is
recognized. Proceeds from sales of partial interests in unproved leases are
accounted for as a recovery of cost without recognizing any gain or loss. Costs
of properties abandoned are expensed an date of abandonment.
Statement of Cash Flows:
-----------------------
The Company considers all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents. Interest paid for the
year ended June 30, 1995 was -0-, June 30, 1994 was -0-, June 30, 1993, was $43,
June 30, 1992, was $1,925. Income taxes paid in the year ended June 30, 1995
were -0-, and June 30, 1994, were $14,116. No income taxes were paid in the
years ended June 30, 1993, or 1992. Income taxes, including interest and
penalties, paid in the quarter ended September 30, 1994, were $28,195.
NOTE 3: Farmout Agreements
------------------
In fiscal year 1992, some of the properties acquired by the Company were
the result of farmout agreements including ones with stockholders of the
Company. These agreements allow the Company to drill on properties without
expending funds for the leasehold and provide the land or leasehold owner with
certain royalty interests. If the Company does not begin drilling within a
specified period of time, the agreements expire.
7
The accompanying notes are an integral part of these financial statements.
<PAGE>
NOTE 4: Related Party Transactions
--------------------------
As mentioned previously, certain Company farmout agreements involve
stockholders of the Company that have participated in the drilling of wells
through turn-key arrangements.
NOTE 5: Commitments and Contingencies
-----------------------------
None
NOTE 6: Income Taxes
------------
The Company has adopted the Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes." Adoption of SFAS No. 109 is
currently required for fiscal years beginning after December 15, 1992. Because
there are no timing differences at June 30, 1995, there are no deferred assets
or liabilities.
NOTE 7: Stock Options
-------------
In fiscal years 1990 and 1989, the Board of Directors granted stock
options to selected officers and directors to purchase shares of the Company's
common stock. A summary of options granted and outstanding at June 30, 1990,
follows:
Date Granted Number of Shares Exercise Price
------------ ---------------- --------------
April 1, 1989 500,000 $0.0625
January 1, 1990 1,000,000 $0.0250
On August 27, 1990, the above options were canceled by the Board of
Directors, and 3,200,000 options with an exercise price of $0.01 per share were
granted and are currently outstanding. For all options date, the exercise price
exceeded the market value of the common stock as established by the Board of
Directors at the date of grant; and therefore, no compensation was recorded. One
of the officers has returned his options to the Company. The remaining two
options for 2,660,000 shares and 50,000 shares had expired by June 30, 1992.
NOTE 8: Disclosures About Oil and Gas Producing Activities (Unaudited)
--------------------------------------------------------------
The reserve information is not presented for 1992 and later years
because of the sale of the properties. The Company compiled the reserve
information by adding actual production amounts back to a June 30, 1992, reserve
report prepared by an outside engineering firm. The Company emphasizes that
reserve estimates are inherently imprecise. Accordingly, these estimates are
expected to change as future information becomes available. Proved oil and gas
reserves are the estimated quantity of crude oil, natural gas, and natural gas
liquids which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing
economic -and operating conditions. Proved oil and gas reserves are those
expected to be recovered through existing wells with existing equipment and
operating methods. All proved reserves of oil and gas and the Company's
activities were located entirely within the United States.
NOTE 9: Interim Adjustments
-------------------
There were no interim adjustments pursuant to Regulation S-X, Rule 10-01
(b) (8).
8
The accompanying notes are an integral part of these financial statements.
<PAGE>
MENDELL-DENVER CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
-----------------------------------------------------------------------
Liquidity:
- - - ---------
At March 31, 1996, the Company had. positive working capital of $558.
This is accounted for by the payment of all Accounts Payable outstanding in the
amount of $2,345 and the closing of the Escrow Account Receivable in the amount
of $3,032.
At March 31, 1995, the Company had negative net working capital of
$(3,088). This is accounted for by Accounts Payable of $4,164 related to
commitments regarding the Victor E. Goodhard well offset by $1,076 Cash. The
decrease in Cash to $1,076 is primarily due to a refund of income taxes paid of
$8,076 plus interest offset by General and Administration expenses of $8,255.
Although the $4,164 appears as a liability there are sufficient funds in an
escrow account at Corporate Stock Transfer, Inc., the Company's transfer agent,
to cover all of the liability. The escrow account was set up to close the sale
of the Company's oil and gas properties in 1992.
Capital Resources:
- - - -----------------
Total Assets at March 31, 1996 were $558, which consisted solely of
Cash.
Total Assets at March 31, 1995, were $1,076, which consisted solely of
Cash.
The Company had no capital commitments at March 31, 1996, and was not
actively pursuing additional drilling opportunities. The Company is in
liquidation. All accounts have been paid. There are no employees. The Company
will not undertake any operations in the future. The only obligations of the
Corporation are the continuing expenses of stock transfer, accounting and SEC
fees. The Company is a candidate for sale or merger.
Results of Operations
- - - ---------------------
There was no revenue for the quarter ended March 31, 1996. The Company
has no operations. All Tax Refunds applied for have been received at this date.
No further applications for tax refunds are anticipated. There was no Interest
Income as all Cash was consolidated into the non-interest bearing checking
account. Cash balances were not of sufficient quantity to warrant the
maintenance of two accounts. Revenue for the nine months ending March 31, 1996,
was $3,993 consisting of $660 in Interest Income and a Tax Refund of $3,333.
The only revenue for the quarter ended March 31, 1995, was Interest
Income of $96 and an Income Tax Refund of $8,076. This is a increase of $7,631
from the same period in 1994 and is primarily attributable to the Income Tax
Refund. The Company has no operations, Revenue for the nine months ending March
31, 1995, was $9,675, primarily attributable to the Income Tax Refund of $8,076.
General and Administrative costs were $584 for the period ending March
31, 1996 and $6,206 for the nine month period of which $472 was stock transfer
fees for the quarter and $687 for the nine months. Accounting fees amounted to
$3,450 and SEC filing fees were $500 for the nine months.
9
The accompanying notes are an integral part of these financial statements.
<PAGE>
General and Administrative costs were $8,255 for the period ending March
31, 1995 and $28,963 for the nine month period. The increase for the quarter and
nine month period is primarily attributable to accounting and consulting fees.
SEC accounting requirements are ongoing and consulting fees are incurred as
management attempts to market the Company to those who may be interested in
acquiring a public company.
Net Loss from Operations was $(584) and $(2,213) for the quarter and
nine month period, respectively. The loss is primarily accounted for by the lack
of Interest Income and Tax Refunds, coupled with the ongoing expenses of audit,
accounting and stock transfer fees.
Net Loss from operations was $(83) and $(19,288) for the March, 1995,
quarter and nine months, respectively, primarily due to accounting and
consulting fees.
10
The accompanying notes are an integral part of these financial statements.
<PAGE>
PART II Other Information
-----------------
Item 1. Legal Proceedings
None
Item 2. Change in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Other Reports on Form 8-K
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Other Reports on Form 8-K: None.
11
The accompanying notes are an integral part of these financial statements.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or Section 15 (d) of the
Securities Exchange Act of 1934, the Registrant duly has caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: May 15, 1996
MENDELL-DENVER CORPORATION
(Registrant)
/s/ Charles R. Rayman
-----------------------------------------------
Charles R. Rayman, Treasurer
Chief Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MENDELL-
DENVER CORPORATION'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 558
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 558
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 558
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 7,322,077
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 558
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 584
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> (584)
<INCOME-CONTINUING> 0
<DISCONTINUED> (584)
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<CHANGES> 0
<NET-INCOME> (584)
<EPS-PRIMARY> (0.000)
<EPS-DILUTED> (0.000)
</TABLE>
