UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A1
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-19365
CROWN ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Utah 87-0368981
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
215 South State, Suite 550, Salt Lake City, Utah, 84111
(Address of principal executive offices, zip code)
(801) 537-5610
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last
report)
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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the
latest practicable date.
There were 10,980,571 shares of $.02 par value common stock outstanding as of
November 13, 1996.
CROWN ENERGY CORPORATION
INDEX
PAGE(S)
PART I. Financial Information
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheet at September 30,
1996 (unaudited) and December 31, 1995 3
Condensed Consolidated Statement of Income for the Three
Months ended September 30, 1996 and 1995 (unaudited) 5
Condensed Consolidated Statement of Income for the Nine
Months ended September 30, 1996 and 1995 (unaudited) 6
Condensed Consolidated Statement of Stockholder's Equity
(unaudited) 7
Condensed Consolidated Statement of Cash Flows for the
Nine Months ended September 30, 1996 and 1995 (unaudited) 8
Notes to Condensed Consolidated Financial Statements
(unaudited) 10
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
PART II. Other Information
ITEM 1. Legal Proceedings 15
ITEM 2. Changes in Securities 15
ITEM 3. Defaults upon Senior Securities 15
ITEM 4. Submission of Matters to a Vote of Security Holders 15
ITEM 5. Other Information 15
ITEM 6. Exhibits and Reports on Form 8-K 15
PART III. Signatures 16
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
CROWN ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<S> <C> <C>
September 30,
1996 December 31,
[unaudited] 1995
CURRENT ASSETS:
Cash $95,046 $97,247
Joint interest and trade accounts
receivable 20,957 37,697
Other current assets 78,578 0
Total Current Assets 194,581 134,944
PROPERTY AND EQUIPMENT 3,060 5,782
(net of accumulated depreciation)
INVESTMENT IN OIL AND GAS PROPERTIES 1,102,054 1,145,214
(full cost method, net of accumulated
depletion)
INVESTMENT IN OIL SAND PROPERTIES 2,868,633 2,733,080
OTHER ASSETS 347,730 325,230
TOTAL ASSETS $4,516,058 $4,344,250
</TABLE>
<TABLE>
CROWN ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
September 30,
1996 December 31,
[unaudited] 1995
CURRENT LIABILITIES
Accounts payable $134,494 $244,314
Current portion of long-term debt 121,140 67,372
Other current liabilities 191,340 173,250
Total Current Liabilities 446,974 484,936
LONG TERM DEBT 60,349 120,420
LONG TERM DEBT -- RELATED PARTIES 118,578 110,922
DEFERRED TAX LIABILITY 455,733 63,100
Total Liabilities 1,081,634 1,279,378
STOCKHOLDERS' EQUITY:
Preferred stock, $.005 par value,
1,000,000 shares authorized, no shares
issued and outstanding ----- -----
Common stock, $.02 par value, 50,000,000
shares authorized, 10,980,571 and
9,861,069 issued and
outstanding at 1996 and 1995 219,610 197,220
Capital in excess of par value 5,256,774 4,701,193
Retained earnings (2,041,960) (1,833,541)
Total Stockholders' Equity 3,434,424 3,064,872
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $4,516,058 $4,344,250
</TABLE>
<TABLE>
CROWN ENERGY CORPORATION
[Unaudited]
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<S> <C> <C> <C>
For the Three Months Ended
September 30,
1996 1995
REVENUE:
Oil and gas production $65,646 $37,563
Total Revenue 65,646 37,563
EXPENSES:
Production costs and related taxes 34,887 33,470
General and administrative expenses 97,312 121,579
Depletion, depreciation and amortization16,110 11,540
Total Expenses 148,309 166,589
OPERATING INCOME (LOSS) (82,663) (129,026)
OTHER INCOME (EXPENSES):
Interest and other income 1,267 10,426
Gain (loss) on sale of properties 0 0
Interest and other expense (5,109) (4,430)
Total Other Income (Expenses) (3,842) 5,996
INCOME (LOSS) BEFORE TAX PROVISION ($86,505) ($123,030)
PROVISION FOR TAXES:
Current tax expense (benefit) 0 0
Deferred tax expense (benefit) (29,412) (41,830)
NET INCOME (LOSS) ($57,093) ($81,200)
NET INCOME (LOSS) PER SHARE ($0.01) ($0.01)
</TABLE>
<TABLE>
CROWN ENERGY CORPORATION
[Unaudited]
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<S> <C> <S> <C> <C>
For the Nine Months Ended
September 30,
1996 1995
REVENUE:
Oil and gas production $165,639 142,171
Total Revenue 165,639 142,171
EXPENSES:
Production costs and related taxes 97,711 101,938
General and administrative expenses 328,132 313,311
Depletion, depreciation and amortization 46,178 39,967
Total Expenses 472,021 455,216
OPERATING INCOME (LOSS) (306,382) (313,045)
OTHER INCOME (EXPENSES):
Interest and other income 6,371 11,361
Gain (loss) on sale of properties 0 0
Interest and other expense (15,775) (13,435)
Total Other Income (Expenses) (9,404) (2,074)
INCOME (LOSS) BEFORE TAX PROVISION ($315,786) ($315,119)
PROVISION FOR TAXES:
Current tax expense (benefit) 0 0
Deferred tax expense (benefit) (107,367) (107,140)
NET INCOME (LOSS) ($208,419)($207,979)
NET INCOME (LOSS) PER SHARE ($0.02) ($0.02)
</TABLE>
<TABLE>
CROWN ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENT
OF STOCKHOLDERS' EQUITY
[Unaudited]
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
<C> <C> <C> <C> <C> <C> <C>
Common Stock Capital in
Excess of Retained
Shares Amount Par Value (Deficit) Total
BALANCE, DECEMBER
31, 1995 9,861,069 $197,220 $4,701,193 ($1,833,541) $3,064,872
Net Income (loss) for
the nine months ended
September 30, 1996 --- --- --- (208,419) (208,419)
Shares issued for
cash at $.50 per share
in private placement
net of placement
costs 800,000 16,000 319,000 --- 335,000
Shares issued for
commissions 80,000 1,600 38,400 --- 40,000
Shares issued for
non-cash consider-
ation at $.79 to 191,547 3,831 175,544 --- 179,375
$1.00 per share
Shares issued for
payment of note
payable 47,955 959 22,637 --- 23,596
BALANCE, SEPTEMBER
30, 1996 10,980,571 $219,610 $5,256,774 ($2,041,960) $3,434,424
</TABLE>
<TABLE>
CROWN ENERGY CORPORATION
[Unaudited]
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<S> <C> <C>
For the Nine Months Ended
September 30,
1996 1995
Cash Flows From (To) Operating Activities:
Net income (loss) ($208,419) ($207,979)
Adjustments to reconcile net loss to
net cash used by operating activities:
Common Stock issued for commissions 40,000 0
Accrued interest converted into notes
payable 12,309 8,992
Amortization, depreciation and
depletion 45,882 39,967
Non-cash (income) expense 0 0
Change in assets and liabilities:
Joint interest and accounts
receivable 16,740 9,619
Other assets (101,078) (458)
Accounts payable (109,817) (14,252)
Other current liabilities 120,102 140,629
Deferred tax liability (107,367) (107,140)
Total adjustments (83,229) 77,357
Net Cash Used by Operating
Activities (291,648) (130,622)
Cash Flows From (To) Investing Activities:
Additions to oil sand properties (45,553) (63,473)
Net Proceeds from sale of oil and gas properties 0 150,000
Net Cash Provided (Used) in
Investing Activities (45,553) 86,527
Cash Flows From (To) Financing Activities:
Principal payments on long-term debt 0 (19,020)
Net proceeds from sale of common stock 335,000 90,000
Net Cash Provided by Financing
Activities $335,000 $70,980
</TABLE>
<TABLE>
CROWN ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[Continued]
<S> <C> <C>
For the Nine Months Ended
September 30,
1996 1995
Net Increase (Decrease) in Cash: ($2,201) $26,885
Cash at Beginning of Period $97,247 $30,592
Cash at End of Period $95,046 $57,477
Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest --- $3,997
Income taxes --- ---
Supplemental Schedule of Non-cash Investing and Financing Activities:
For the period ended September 30, 1996:
The Company issued 191,547 shares of common stock in payment of $89,375
in current liabilities and $90,000 in project costs.
The Company issued 47,955 shares in payment of $23,596 in notes payable.
</TABLE>
CROWN ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared by the
Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of
operations and changes in stockholders' equity and cash flows at
September 30, 1996 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It
is suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto
included in the Company's December 31, 1995 audited financial
statements. The results of operations for the period ended
September 30, 1996 are not necessarily indicative of the operating
results for the full year.
ORGANIZATION
Crown Energy Corporation ["Crown"], a Utah corporation, was
organized on March 17, 1981. Crown's primary activities have been
the acquisition and development of oil and gas leases.
BuenaVentura Resources Corporation ["BVRC"], a Utah corporation,
was organized October 24, 1985. BVRC is active in the mining and
development of oil sand deposits and owns the rights to a newly
patented technology for the extraction of oil from oil sands.
Crown acquired 100% of BVRC on September 30, 1992.
Gavilan Petroleum, Inc. ["Gavilan"], a Utah corporation, was
organized on September 9, 1985. Gavilan is engaged in the
production and selling of oil and gas from leases it operates in
the state of Utah. Gavilan became a 100% subsidiary of Crown on
January 24, 1991.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant
intercompany transactions have been eliminated in consolidation.
OIL AND GAS PROPERTIES
Oil and gas properties are accounted for on the full cost method,
whereby all costs associated with acquisition, exploration and
development of oil and gas properties are capitalized on a
country-by-country, cost center basis. All oil and gas revenues
are derived from reserves located in the state of Utah.
Amortization of such costs is determined by the ratio of current
period production to estimated proved reserves. Estimated proved
reserves are based upon reports of petroleum engineers.
The net carrying value of oil and gas properties is limited to the
lower of amortized costs or the cost center ceiling [defined as
the sum of the present value [10% discount rate] of estimated,
unescalated future net cash flows from proved reserves, plus the
lower of cost or estimated fair value of unproved properties,
giving effect to income taxes].
OIL SAND PROPERTIES
The Company's investment in oil sand properties, including
acquisition and development costs, are being capitalized and will
be amortized by the unit-of-production method once commercial
production commences, projected to be early 1997. The Company
reviews its investment in oil sand properties for impairment
whenever events or changes in circumstance indicate that the
carrying amount of the investment may not be recoverable. The
Company's basis of determining the recoverability of its
investment is based on estimated future cash flows expected to
result from the extraction and production of products from the oil
sands. The Company is unaware of any events or changes in
circumstance that would merit a review for impairment, however the
Company's estimated future cash flows from its investment in oil
sands exceeds the carrying value of the investment, thus there is
no current impact from the adoption of SFAS 121.
INCOME (LOSS) PER SHARE
The computation of income (loss) per share of common stock is
based on the weighted average number of shares outstanding during
the periods presented.
NOTE 2 - SIGNIFICANT CUSTOMERS
The Company sells substantially all of its oil production to one
purchaser. If this purchaser stopped buying products from the
Company, the Company would then contract with other purchasers
available in the areas where the oil is produced. The effect of
this purchaser pulling out of the area would at least put a
temporary downward pressure on prices in the area, but it is not
currently possible for the Company to estimate how the Company
would be affected. Management believes that its oil is a
commodity that is readily marketable and that the marketing
methods it follows is typical of similar companies in the
industry.
NOTE 3 - SUBSEQUENT EVENT
On November 7, 1996, the Company completed a $200,000 private
placement of 400,000 shares of restricted common stock at $.50 per
share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULT OF OPERATIONS
RESULTS OF OPERATIONS
For the three month period ended September 30, 1996, compared to the three
months ended September 30, 1995.
Oil and gas revenue increased from $37,563 for the three months ended
September 30, 1995 to $65,646 for the three months ended September 30, 1996,
an increase of $28,083 (75%). This change was due to an increase in production
and higher oil prices for the period. Total production increased from 1,949
barrels for the three months ended September 30, 1995 to 2,513 barrels for the
same period in 1996, an increase of 29%. This increase in production was the
result of one producing well being shut-in for 2 months in 1995 thereby
lowering third quarter 1995 production totals. Average oil prices increased
from $16.62 for the three months ended September 30, 1995 to $19.98 for the
same period in 1996.
Oil and gas production costs increased from $33,470 for the three months
ended September 30, 1995 to $34,887 for the three months ended September 30,
1996, an immaterial change of $1,417 (4%).
General and administrative expenses decreased from $121,579 for the three
months ended September 30, 1995 to $97,312 for the three months ended September
30, 1996, a decrease of $24,267 (20%). This change was primarily due to a
decrease in consulting expenses.
Depletion, depreciation and amortization increased from $11,540 for the
three months ended September 30, 1995 to $16,110 for the three months ended
September 30, 1996, an increase of $4,570 (40%). This change was due to an
increase in production and a higher depletion unit rate for 1996.
For the nine month period ended September 30, 1996, compared to the nine months
ended September 30, 1995.
Oil and gas revenue increased from $142,171 for the nine months ended
September 30, 1995 to $165,639 for the nine months ended September 30, 1996,
an increase of $23,468 (17%). This increase was primarily due to an increase
in average oil prices from $16.99 for the nine months ended September 30, 1995
to $19.49 for the same period in 1996, an increase of 14.7%.
Oil and gas production costs decreased from $101,938 for the nine months
ended September 30, 1995 to $97,711 for the nine months ended September 30,
1996, an immaterial decrease of $4,227 (4%).
General and administrative expenses increased from $313,311 for the nine
months ended September 30, 1995 to $328,132 for the nine months ended
September 30, 1996, an increase of $14,821 (5%). This change was due to an
increase in general overhead expenses relating to the Asphalt Ridge Oil
Sand Project.
Depletion, depreciation and amortization increased from $39,967 for the
nine months ended September 30, 1995 to $46,178 for the nine months ended
September 30, 1996, an increase of $6,211 (16%). This change was due to an
increase in the depletion unit rate for 1996.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had cash and other current assets of
$194,581 as compared to cash and other current assets of $134,944 at December
31, 1995. The increase of $59,637 was primarily due to net proceeds from an
equity financing of $400,000 completed in February, 1996. The increase was
partially offset by a loss from operations and pre-construction capital and
permitting costs incurred on the Asphalt Ridge Oil Sand Project.
Total debt increased from $231,342 in long-term debt and $67,372 in
current portion of long-term debt at December 31, 1995 to $178,927 in long-term
debt and $121,140 in current portion of long-term debt at September 30, 1996.
This increase was primarily due to accrued interest being converted into notes
payable.
The Company's primary objective is to complete financing for construction
of its full-scale, 1,000 barrel per day commercial asphalt production facility.
The Company is seeking approximately $10 - $12m for construction costs and
approximately $4 - $5m for start-up and working capital and is evaluating
financing alternatives with several investor groups. No assurance can be given
that additional financing will be available or, if available, that it will be
available on acceptable terms. If additional funds are raised by issuing
equity securities, further dilution to then-existing stockholders may result.
If such additional funds are raised through the issuance of debt securities,
the Company's cash flows will be required to be devoted to service such debt.
If adequate funds are not available, the Company may be required to
significantly curtail or cease its operations. On November 7, 1996, the Company
completed a $200,000 private placement (See Subsequent Event Note) and believes
that its existing cash balances will be sufficient to meet current working
capital requirements.
PART II. - OTHER INFORMATION
ITEM 1. Legal Proceedings
None.
ITEM 2. Changes 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 Reports on Form 8-K
None.
PART III. - 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.
CROWN ENERGY CORPORATION
(Registrant)
Date: December 13, 1996 By:
Jay Mealey, President
Date: December 13, 1996 By:
Richard S. Rawdin, Vice
President of Finance
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000876528
<NAME> CROWN ENERGY CORPORATION
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 95,046
<SECURITIES> 0
<RECEIVABLES> 20,957
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 194,581
<PP&E> 66,842
<DEPRECIATION> 63,782
<TOTAL-ASSETS> 4,516,058
<CURRENT-LIABILITIES> 446,974
<BONDS> 178,927
0
0
<COMMON> 219,610
<OTHER-SE> 3,214,814
<TOTAL-LIABILITY-AND-EQUITY> 4,516,058
<SALES> 65,646
<TOTAL-REVENUES> 65,646
<CGS> (34,887)
<TOTAL-COSTS> (148,309)
<OTHER-EXPENSES> (1,267)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (5,109)
<INCOME-PRETAX> (86,509)
<INCOME-TAX> 29,412
<INCOME-CONTINUING> (57,093)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (57,093)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> 0
</TABLE>
