CROWN ENERGY CORPORATION
215 SOUTH STATE, SUITE 550
SALT LAKE CITY, UTAH 84111
AMENDMENT TO PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 21, 1997
Shareholders of the Company were provided a Proxy Statement, dated
October 3, 1997,
providing information about the Company, its management, its major
shareholders and about the
proposals for shareholder action at the upcoming Annual Meeting of
Shareholders to be held on
October 21, 1997. Discussions with certain shareholders since the mailing of
the Proxy Statement
have resulted in the decision of the Board of Directors to amend the Crown
Energy Long Term
Equity-Based Incentive Plan proposed for approval by the Shareholders. For
convenience in using
and understanding this Amendment to the Proxy Statement, the Company will use
the same
organization of topics as in the Proxy Statement. Any information or subject
covered in the Proxy
Statement and not covered in this Amendment may be understood to be current
and correct as set
out in the Proxy Statement.
PROPOSALS FOR SHAREHOLDER ACTION
ITEM NO. 3: APPROVAL OF THE CROWN ENERGY CORPORATION LONG TERM EQUITY-BASED
INCENTIVE PLAN
On October 10, 1997, the Board of Directors amended the Crown Energy
Long Term
Equity-Based Incentive Plan to, among other immaterial and ministerial
changes, allow
nonemployee Directors to receive awards if granted by the Board, and to cap
the number of shares
subject to awards to current Executive Officers. A fuller explanation of
these changes, in the
context of the whole discussion of the Plan, is set out below:
The prior discussion of the Plan set forth in the Proxy Statement is
hereby amended to
provide that those eligible to participate within the Plan shall consist of
Company's executive
officers, key employees and non-employee directors. The maximum number of
shares of
Common Stock subject to Award under the Plan shall be 2,000,000 shares,
subject to adjustment
as provided in the Proxy Statement. The maximum number of vested shares,
however, which
may be awarded in any given year shall not exceed 400,000, provided, that no
more than 300,000
vested shares, in the aggregate, of the foregoing shares may be awarded in any
given year to full
time employees of the Company, its officers or non-employee directors, who
have served in such
capacities for six months prior to the date of the award. In no event, may
any single person
receive more than 500,000 shares under the Plan during its duration. Both of
the foregoing
numerical limitations on Awards shall be subject to adjustment in the event of
a recapitalization
or other similar event as described in the Proxy Statement. The Board shall
not be entitled to
amend the Plan without prior Shareholder approval, although they may terminate
or suspend the
Plan at any time. The Board shall determine the parties who shall receive
awards under the Plan
and this discretion may not be delegated to any officer of the Company.
Approval of the Plan requires that a greater number of shares present at
the Annual
Meeting vote in favor of the Plan than those which vote against it.
Accordingly, abstentions or
Broker non-votes will not be counted and will have no affect on the approval
of the Plan.
Approval of the Plan will not automatically result in any grant of any Awards
to specific executive
officers, key employees, directors or non-employee directors of the Company.
If the Shareholders
fail to approve the Plan in this vote, the Company will not implement it.
CERTAIN INTERESTS OF DIRECTORS
In considering the recommendation of the Board of Directors with respect
to the Plan,
Shareholders should be aware that the members of the Board of Directors have
certain interests
which may present them with conflicts of interest in connection with such
proposal in that all
Directors would be eligible to participate in the Plan.
The Board of Directors believes that the Plan is in the best interests of
the Company and
its Shareholders, and therefore, unanimously recommends a vote FOR the Plan.
In considering
the foregoing recommendation of the Board of Directors, Shareholders should be
aware that the
current members of the Board of Directors own, in the aggregate, approximately
39.7% of the
shares of the Company's issued and outstanding Common Stock, including
option shares
exercisable within 60 days of the Record Date.
The approval of the Plan, however, will not affect in any manner,
however, the current
Employment Agreement between the Company and Mr. Middleton, dated January 29,
1996. Any
Awards made to Mr. Middleton under the Plan will be in addition to those
granted under his
Employment Agreement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF
THE CROWN ENERGY EQUITY-BASED LONG-TERM INCENTIVE PLAN.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates into the Proxy Statement its Annual
Report on Form
10-K for the year ended December 31, 1996 and Quarterly Report on Form 10-Q
for the quarter
ended June 30, 1997. A copy of the Report Form 10-K is included within the
1996 Annual
Report to Shareholders mailed out with the Proxy Statement, with the
aforementioned Report on
Form 10-Q being included for the Shareholder's Review. Shareholders not
receiving a copy of
these Reports should contact the Company at 801-537-5610 to request
another copy.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
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 incorporation (I.R.S. Employer
Identification No.)
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 11,501,465 shares of $.02 par value common stock outstanding as of
August 13, 1997.
CROWN ENERGY CORPORATION
INDEX
PAGE(S)
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet at June 30,
1997 (unaudited) and December 31, 1996 3
Condensed Consolidated Statement of Income for the Three
Months ended June 30, 1997 and 1996 (unaudited) 5
Condensed Consolidated Statement of Income for the Six
Months ended June 30, 1997 and 1996 (unaudited) 6
Condensed Consolidated Statement of Stockholder's Equity
(unaudited) 7
Condensed Consolidated Statement of Cash Flows for the
Six Months ended June 30, 1997 and 1996 (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
CROWN ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
June 30,
1997 December 31,
[unaudited] 1996
CURRENT ASSETS:
Cash $26,774 $142,772
Joint interest and
trade accounts receivable 13,022 30,379
Notes receivable 150,000 0
Other current assets 154,300
72,780
Total Current Assets 344,096 245,931
INVESTMENT IN OIL AND GAS PROPERTIES 0 1,083,882
(full cost method, net of accumulated depletion)
INVESTMENT IN OIL SAND PROPERTIES 2,958,709 2,919,077
OTHER ASSETS 344,984 342,484
TOTAL ASSETS $3,647,789 $4,591,374
CROWN ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30,
1997 December 31,
[unaudited]
1996
CURRENT LIABILITIES
Accounts payable $41,318 $92,663
Current portion of long-term debt 293,635 185,984
Other current liabilities 141,553 225,322
Total Current Liabilities 476,506 503,969
LONG TERM DEBT 0 60,845
LONG TERM DEBT -- RELATED PARTIES 126,786 121,248
DEFERRED TAX LIABILITY 60,223 434,056
Total Liabilities 663,516 1,120,118
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, 11,501,465 and 11,430,571 issued and
outstanding at 1997 and 1996 230,029 228,611
Capital in excess of par value 5,553,069 5,497,772
Retained earnings (2,798,825) (2,255,127)
Total Stockholders' Equity 2,984,273 3,471,256
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,647,789 $4,591,374
CROWN ENERGY CORPORATION
[UNAUDITED]
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended
June 30,
1997
1996
REVENUE:
Oil and gas production $26,993 $55,441
Total Revenue 26,993 55,441
EXPENSES:
Production costs and related taxes 26,496 32,953
General and administrative expenses 81,119 109,645
Depletion, depreciation and amortization 8,905 15,880
Total Expenses 116,520 158,478
OPERATING INCOME (LOSS) (89,527) (103,037)
OTHER INCOME (EXPENSES):
Interest and other income 588 2,489
Gain (loss) on sale of properties 0 0
Interest and other expense (745,300) (5,410)
Total Other Income (Expenses) (744,712) (2,921)
INCOME (LOSS) BEFORE TAX PROVISION ($834,239) ($105,958)
PROVISION FOR TAXES:
Current tax expense (benefit) 0 0
Deferred tax expense (benefit) (345,663) (36,026)
NET INCOME (LOSS) ($488,576) ($69,932)
NET INCOME (LOSS) PER SHARE ($0.04) ($0.01)
CROWN ENERGY CORPORATION
[UNAUDITED]
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months Ended
June 30,
1997 1996
REVENUE:
Oil and gas production $77,496 $99,993
Total Revenue 77,496 99,993
EXPENSES:
Production costs and related taxes 54,653 62,824
General and administrative expenses 163,998 230,820
Depletion, depreciation and amortization 23,817 30,068
Total Expenses 242,468 323,712
OPERATING INCOME (LOSS) (164,972) (223,719)
OTHER INCOME (EXPENSES):
Interest and other income 1,486 5,104
Gain (loss) on sale of properties 0 0
Interest and other expense (754,045) (10,666)
Total Other Income (Expenses) (752,559) (5,562)
INCOME (LOSS) BEFORE TAX PROVISION ($917,531) ($229,281)
PROVISION FOR TAXES:
Current tax expense (benefit) 0 0
Deferred tax expense (benefit) (373,833) (77,956)
NET INCOME (LOSS) ($543,698) ($151,325)
NET INCOME (LOSS) PER SHARE ($0.05) ($0.01)
CROWN ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENT
OF STOCKHOLDERS' EQUITY
[UNAUDITED]
FOR THE SIX MONTHS ENDED JUNE 30, 1997
Common Stock Capital in
Excess of Retained
Shares Amount Par Value (Deficit) Total
BALANCE, DECEMBER 31,
1996 11,430,571 $228,611 $5,497,772 ($2,255,127) $3,471,256
Net Income (loss) for the six
months ended June 30, 1997 --- --- --- (543,698) (543,698)
Shares issued for services at 45,000 900 42,706 --- 43,606
$.86 to $1.00 per share
Shares issued for payment of 25,894 518 12,591 --- 13,109
note payable
BALANCE, JUNE 30,
1997 11,501,465 $230,029 $5,553,069 ($2,798,825) $2,984,273
CROWN ENERGY CORPORATION
[UNAUDITED]
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended
June 30,
1997 1996
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
Net income (loss) ($543,698) ($151,325)
Adjustments to reconcile net loss to
net cash used by operating activities:
Common Stock issued for commissions 0 40,000
Amortization, depreciation and depletion 23,817 30,067
Net effect of sale of subsidiary 903,430 0
Change in assets and liabilities:
Joint interest and accounts receivable 30,379 23,146
Other assets (98,800) (23,209)
Accounts Payable (51,345) (115,155)
Other current liabilities (83,769) 46,567
Deferred tax liability (373,833) (77,956)
Total adjustments 349,879 (76,540)
Net Cash Used by Operating Activities (193,819) (227,865)
CASH FLOWS FROM (TO) INVESTING ACTIVITIES:
Additions to oil sand properties (39,632) (32,424)
Net Proceeds from sale of oil
and gas properties 0 0
Net Cash Provided (Used) in
Investing Activities (39,632) (32,424)
CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
Net changes in long-term debt (32,547) 4,343
Net proceeds from issuance of convertible debenture 150,000 0
Net proceeds from sale of common stock 0 335,000
Net Cash Provided by Financing Activities $117,453 $339,343
CROWN ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[CONTINUED]
For the Six Months Ended
June 30,
1997 1996
Net Increase (Decrease) in Cash: ($115,998) $79,054
Cash at Beginning of Period $142,772 $97,247
Cash at End of Period $26,774 $176,300
Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest $4,844 $3,104
Income taxes --- ---
Supplemental Schedule of Non-cash Investing and Financing Activities:
For the period ended June 30, 1997:
The Company issued 45,000 shares of common stock in payment of accounts
payable and oil sand
costs.
The Company issued 25,894 shares of common stock in payment of a note payable.
The Company converted accrued interest of $13,142 into notes payable.
For the period ended June 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 10,000 shares of common stock to restructure an oil
sand lease.
The Company converted accrued interest of $8,121 into notes payable.
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 June 30, 1997 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,
1996 audited financial
statements. The results of operations for the period ended June 30,
1997 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. Gavilan was
sold
on July 2, 1997 for $150,000. The sale was retroactive to June 1,
1997 and, accordingly,
is accounted for in these financial statements. (See Note 3 - Sale
of Subsidiary)
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.
CROWN ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
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 1998. 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 are typical of similar companies in the industry.
NOTE 3 - SALE OF SUBSIDIARY
On July 2, 1997, the Company entered into a stock purchase agreement
with Road Runner Oil,
Inc.("RRO") to sell 100% of its interest in its wholly-owned
subsidiary, Gavilan Petroleum,
Inc.("Gavilan"). Gavilan operated oil and natural gas properties.
Under the terms of the sale, the
Company transferred to RRO all of the issued and outstanding stock
of Gavilan and in exchange
received $25,000 at closing and a promissory note under which it
will be paid $50,000 within 30
days of closing; $25,000 within 120 days of closing; and the
remaining $50,000 within 180 days
of closing. The note is secured by a pledge of the Gavilan stock.
The price was negotiated at
arms length between the Company and RRO.
The pro forma effects of the transaction for the year ended December
31, 1996 are as follows:
Total assets would have been reduced from $4,591,374 to $3,468,599,
a decrease of $1,122,775
(24%). Total liabilities would have been reduced from $1,120,118 to
$923,019, a decrease of
$197,099 (18%). Revenues would have decreased from $224,855 to
$11,226, a decrease of
$213,629 (95%). Net loss before income taxes would have increased
from a loss of $550,630 for
the year ended December 31, 1996 to a loss of $445,818, a decrease
of $104,812 (19%).
NOTE 4 - CONVERTIBLE DEBENTURE AGREEMENT
On May 6, 1997, the Company entered into a Convertible Debenture
Agreement ("Agreement")
with Oriental New Investments, Ltd., a Hong Kong corporation
("ONI"). Pursuant to the
Agreement, on May 13, 1997, the Company issued a 9% Convertible
Debenture (the
"Debenture") to ONI in the principal amount of $150,000. No
underwriters or placement agents
were utilized by either the Company or ONI in negotiating the
Agreement or in issuing the
Debenture. The Debenture was issued pursuant to the exemption from
registration under Section
5 of the Securities Act of 1933, as amended, provided by Rule 903 of
Regulation S.
Under the terms of the Debenture, payment of interest only is due
and payable quarterly
commencing July 31, 1997. Payment of the remainder of the accrued
interest and all principal
under the Debenture is due November 13, 1997 (the "Due Date"). At
any time following July 13,
1997, the holder of the Debenture may elect to convert the principal
and accrued interest under
the Debenture, in whole or in part, to shares of the Company's
common stock at 65% of the
average closing bid price as reported on the NASD Electronic
Bulletin Board for the ten (10)
preceding business days. In addition, at any time prior to the Due
Date, the Company may elect
to prepay, without penalty or premium, the outstanding principal or
accrued interest, in whole or
in part, upon fifteen (15) days written notice to the holder
of the Debenture.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULT OF OPERATIONS
RESULTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED JUNE 30, 1997, COMPARED TO THE THREE MONTHS
ENDED JUNE 30, 1996.
Oil and gas revenue decreased from $55,441 for the three months ended
June 30, 1996 to $26,993 for the
three months ended June 30, 1997, a decrease of $28,448 (51%). This decrease
was primarily due to the sale of the
Company's wholly-owned subsidiary, Gavilan Petroleum, Inc., which was
effective June 1, 1997.
Oil and gas production costs decreased from $32,953 for the three months
ended June 30, 1996 to $26,496
for the three months ended June 30, 1997, a decrease of $6,457 (20%). This
decrease was primarily due to the sale
of the Company's wholly-owned subsidiary, Gavilan Petroleum, Inc., which was
effective June 1, 1997.
General and administrative expenses decreased from $109,645 for the three
months ended June 30, 1996
to $81,119 for the three months ended June 30, 1997, a decrease of $28,526
(26%). This change was primarily due
to a decrease in consulting expenses.
Depletion, depreciation and amortization decreased from $15,880 for the
three months ended June 30,
1996 to $8,905 for the three months ended June 30, 1997, a decrease of $6,975
(44%). This decrease was
primarily due to the sale of the Company's wholly-owned subsidiary, Gavilan
Petroleum, Inc., which was effective
June 1, 1997.
Other income (expense) decreased $741,791 from the three months ended
June 30, 1997. This decrease
was primarily due to a loss of $733,361 which was recorded on the sale of the
Company's wholly-owned subsidiary,
Gavilan Petroleum, Inc.
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1997, COMPARED TO THE SIX MONTHS ENDED
JUNE 30, 1996.
Oil and gas revenue decreased from $99,993 for the six months ended June
30, 1996 to $77,496 for the
six months ended June 30, 1997, a decrease of $22,497 (22%). This decrease
was primarily due to the sale of the
Company's wholly-owned subsidiary, Gavilan Petroleum, Inc., which was
effective June 1, 1997.
Oil and gas production costs decreased from $62,824 for the six months
ended June 30, 1996 to $54,653
for the six months ended June 30, 1997, a decrease of $8,171 (13%). This
decrease was primarily due to the sale
of the Company's wholly-owned subsidiary, Gavilan Petroleum, Inc., which was
effective June 1, 1997.
General and administrative expenses decreased from $230,820 for the six
months ended June 30, 1996 to
$163,998 for the six months ended June 30, 1997, a decrease of $66,822 (29%).
This change was primarily due to
a decrease in consulting expenses.
Depletion, depreciation and amortization decreased from $30,068 for the
six months ended June 30, 1996
to $23,817 for the six months ended June 30, 1997, a decrease of $6,251 (21%).
This decrease was primarily due
to the sale of the Company's wholly-owned subsidiary, Gavilan Petroleum, Inc.,
which was effective June 1, 1997.
Other income (expense) decreased $746,997 from the six months ended June
30, 1997. This decrease was
primarily due to a loss of $733,361 which was recorded on the sale of the
Company's wholly-owned subsidiary,
Gavilan Petroleum, Inc.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had cash and other current assets of
$344,096 as compared to cash and
other current assets of $245,931 at December 31, 1996. The increase of
$98,165 was primarily due to proceeds
from the sale of the Company's subsidiary, Gavilan Petroleum, Inc., of
$150,000 and the issuance of a $150,000
convertible debenture. This increase was partially offset by a loss from
operations and payments on notes payable.
Total debt increased from $182,093 in long-term debt and $185,984 in
current portion of long-term debt
at December 31, 1996 to $126,786 in long-term debt and $293,635 in current
portion of long-term debt at June 30,
1997. This increase was due to the issuance of a $150,000 convertible
debenture. The increase was partially offset
by a reduction in debt from the sale of Gavilan of $65,139 and principal
payments made during the period.
The Company's primary objective is to complete financing for construction
and start-up of its commercial
asphalt production facility. The Company is seeking to raise approximately
$20,000,000 through a combination of
equity and debt or project financing. The Company is evaluating financing
alternatives with several investor
groups who are in the process of completing their due diligence on the
project. No assurance can be given that
financing will be available or, if available, that it will be available on
acceptable terms. If such 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 funding is not available, the Company may be required to
significantly curtail or cease its operations.
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
The Company filed a Form 8-K on June 11, 1997, to report the
issuance of a $150,000 convertible
debenture. The Company also filed a Form 8-K on July 2, 1997 to
report the sale of its wholly-
owned subsidiary, Gavilan Petroleum, Inc.
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: August 14, 1997 By: /s/ JAY MEALEY
Jay Mealey, President
Date: August 14, 1997 By: /s/ RICHARD S. RAWDIN
Richard S. Rawdin, Vice President
of Finance
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: August 14, 1997 By:
Jay Mealey, Chief Executive Officer
Date: August 14, 1997 By:
Richard S. Rawdin, Vice President
of Finance
<PAGE> _____________________________________________________________________
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934
For the fiscal year ended December 31, 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
incorporation or organization) Identification No.)
215 South State, Suite 550
Salt Lake City, Utah 84111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 537-5610
Securities registered pursuant to Section 12 (b) of the Act:
(None)
Securities registered pursuant to Section 12 (g) of the Act:
$0.02 PAR VALUE COMMON STOCK
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required
to be filed by Section 13 of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements
for the
past 90 days.
YES (X) NO ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K. [ ]
The aggregate market value of Common Stock, par value $0.02 per share held by
nonaffiliates of the Registrant on March 27, 1997, was $5,698,017 using the
average bid and asked price for Registrant's Common Stock. As of March 27,
1997, Registrant had 11,430,571 shares of its $0.02 par value Common Stock
outstanding.
____________________________________________________________________________
TABLE OF CONTENTS
Crown Energy Corporation
Form 10-K
For the year ended
December 31, 1996
PART I.
ITEM 1 Business 1
ITEM 2 Properties 6
ITEM 3 Legal Proceedings 9
ITEM 4 Submission of Matters to a Vote of Security Holders 10
PART II.
ITEM 5 Market Price for the Company's Common Equity and
Related Stockholder Matters 10
ITEM 6 Selected Financial Data
11
ITEM 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
ITEM 8 Financial Statements and Supplementary Data 14
ITEM 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 14
PART III.
ITEM 10 Directors and Executive Officers of the Registrant 14
ITEM 11 Executive Compensation 16
ITEM 12 Security Ownership of Certain Beneficial Owners
and Management 17
ITEM 13 Certain Relationships and Related Transactions 18
PART IV.
ITEM 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K 18
PART I.
ITEM 1. BUSINESS
(a) General Development of Business
Crown Energy Corporation ("Crown" or the "Company"), a Utah corporation,
was organized March 17, 1981 for the purpose of acquiring, holding and
developing oil and gas leases and properties. Crown operates through two
wholly-owned subsidiaries, BuenaVentura Resources Corporation ("BVRC") and
Gavilan Petroleum, Inc. ("Gavilan"). BVRC, a Utah corporation, was organized
October 24, 1985 and was acquired by Crown on September 30, 1992. BVRC
controls substantial oil sand reserves at Asphalt Ridge in Uintah County,
Utah, and proprietary oil production technology. Gavilan, a Utah corporation,
was organized September 9, 1985 and was acquired by Crown on January 24, 1991.
Gavilan is engaged in conventional oil production.
The Company is focusing its future growth on the development and
commercialization of its large asphalt reserve base and proprietary asphalt
production process. The Company has performed extensive analysis on its
asphalt oil and production technology, successfully operating separate pilot
and demonstration facilities. It has completed preliminary engineering and
capital cost budgets, and secured all required permits for a commercial
asphalt production facility at its Asphalt Ridge property. The Company has
expended approximately $12,049, $129,852 and $185,997 in calendar years 1994,
1995 and 1996 in connection with such development activities. The Company is
now seeking to finalize an approximate $20 million financing package for
construction and start-up operations. The Company expects production
of asphalt
and other by-products from oil sands to become its primary business activity.
The Company's offices are located at 215 South State Street, Suite 550,
Salt Lake City, Utah 84111. The Company's telephone number is (801) 537-
5610.
Unless specifically indicated otherwise, all discussion hereinafter
pertains to the Company and all business operations conducted by it and its
subsidiaries.
(b) Narrative Description of Business
(i) Asphalt Operations
General
The Company is developing an asphalt mining and production facility at
its Asphalt Ridge oil sand deposit near, Vernal, Utah where it controls
approximately 140 million barrels of reserves. The Company's objective is to
capitalize on the changes in the U.S. asphalt industry resulting from state
and federal implementation of quality and performance specifications for
paving asphalt (see New Asphalt Specifications) and become a leading supplier
of premium asphalt products. The Company is in the process of developing its
production facility which, when completed, is expected to process
approximately 3,000 tons of oil sands per day for an estimated production of
1,500 barrels of premium grade asphalt using a proprietary extraction process.
The oil extracted from Asphalt Ridge oil sands is rich in gas-oils,
asphaltenes and nitrogen allowing it to make a premium asphalt product. The
Company has successfully operated a pilot facility and a larger, commercial
sized demonstration facility using the process and has completed the
engineering and permitting for the production facility. The Company is
seeking equity and debt or project financing of approximately $20 million for
construction and start-up operations (see Liquidity and Capital Resources) and
believes it will complete financing in the second quarter of 1997, undertake
construction of its asphalt mining and production facility and thereafter
commence commercial operations in the first quarter of 1998.
Asphalt Properties. The Company, through BVRC, controls approximately
7,500 acres of private and state land at Asphalt Ridge in the Uintah Basin
near the town of Vernal, Utah. Utah contains about 90 percent of the known
U.S. oil sand deposits consisting of over 28 billion barrels of oil
concentrated in about 50 deposits. Asphalt Ridge is one of Utah's largest
deposits containing over a billion barrels of oil in place.
Extensive reserve
studies, including core drilling performed by Bechtel and Sohio between the
late 1950's and mid-1980's, estimate surface minable reserves on the Company's
acreage to be approximately 140 million barrels.
Production Process. There are three major steps in the production
process: 1) mining the oil sands; 2) separation of the oil from the sand; 3)
distillation of the oil mixture to recover the solvent and light fractions
from the asphalt. The mining stage utilizes conventional surface mining
equipment. The separation stage entails utilizing a patented process to remove
the oil from the sand. The distillation stage uses traditional refining
processes common in the oil industry.
The Company entered into a series of license agreements with Park Guymon
Enterprises, Inc., of which Dr. E. Park Guymon is a principal, for the use of
the patented extraction process. The license agreements were dated,
respectively, January 20, 1989, June 1, 1990 and June 1, 1990, all of which
were collectively amended on July 1, 1993. The license agreements entered
into with Park Guymon Enterprises, Inc., as amended, grant the Company the
exclusive license to use the oil sand extraction technology within the
exterior boundaries of the United States, within the exterior boundaries of
Canada and within Trinidad-Tobago. The Company believes it is in compliance
with the terms of the license agreements and the Company's success in will
depend in part on its ability to maintain such licenses by meeting, or
obtaining waivers of, certain production milestones.
New Asphalt Specifications. In response to the need for higher quality
and longer lasting roads, the Federal Highway Administration recently
initiated the Strategic Highway Research Program ("SHRP") and established
uniform performance and quality standards which states must follow for federal
and state highways. As states implement the SHRP standards, traditional
asphalts, which until now have been essentially a by-product of the refining
process, must be replaced by higher quality, performance grade asphalts (PG-
Asphalts). Asphalt suppliers throughout the U.S. are having to modify their
asphalt formulations, at a significant cost, to meet these new standards. The
Company has completed extensive testing and analysis which confirmed the
asphalt produced from Asphalt Ridge surpasses the new federal and state
standards for performance grade asphalt without additives or modifiers.
Utah is the first state in the western U.S. to adopt and implement the
SHRP standards and has specified PG-asphalts for most highway projects this
year. Other western states are at various administrative stages of adoption
of the SHRP standards and full implementation of the program is expected by
2000.
Local and Regional Asphalt Market. Generally speaking, regional asphalt
supplies are a very poor quality which makes them difficult or impossible to
modify to meet SHRP specifications. To meet such specifications, a typical
crude oil asphalt will require polymer addition of between 3% and 5% by
weight. At an average cost of $1.00 per pound, this adds between $60 and $100
per ton to the cost of the base stock material (which can cost as much as $125
per ton). As a result, most of the asphalt used to make PG-modified asphalt
is produced and imported from outside the region, primarily Canada. Much of
this asphalt is produced from Canadian oil sands. The high cost to transport
the Canadian asphalt to this region substantially increases the cost of this
material, which currently sells for between $175 to $190 per ton F.O.B. Salt
Lake City and is expected to rise as demand increases as more states implement
the SHRP specifications.
Competition and Company Strategy. Competition in the asphalt supply
business in very keen with several large companies, with superior financial
resources to those of the Company, as competing suppliers. The Company
believes that it has two advantages over its competitors - a superior base
(unmodified) product and significantly lower production costs. The Company
plans to initially target the Utah market and believes this market is large
enough to absorb all of the Company's production. In addition, servicing the
Utah market utilizing the Company's existing distribution channels will
eliminate the need for complicated transportation, handling and storage
arrangements other markets would require. As the regional performance grade
asphalt market expands, the Company plans to develop other markets in the
western U.S. for its expected production growth. This expansion will minimize
the effect of price volatility within a specific market and will even out the
seasonal demand fluctuations between warm and cold climate areas. Given the
highly competitive nature of the asphalt supply business, there can be no
assurance that the Company can generate operating profit in any given market
or expand its operations to other markets successfully.
The Company also plans to explore the development of a synthetic crude
oil ("SCO") production facility to capitalize on the shortage of regional
feedstock. The final decision on the timing and production volume of an SCO
facility will be predicated on project economics, market conditions and
requirements, and there can be no assurance that such facility will prove
economically feasible or profitable if and when developed.
Operating Hazards and Uninsured Risks. The Company's asphalt production
operations are subject to the risks normally incident to the development and
construction of a mining and production facility, including risks of
construction delays, labor or materials shortages, cost overruns, inclement
weather and construction liability risks such as damage to persons or property.
Although the Company intends to carry adequate insurance coverage, the Company
does not expect to be fully insured against certain of these risks because
insurance is not available or management elects not to insure due to high
premium costs. The occurrence of an event not fully insured against could
have a materially adverse effect on the Company's financial condition.
Regulation. The Company's operations are affected from time to time in
varying degrees by political developments and federal and state laws and
regulations. Utah and other states in which the Company may conduct its
asphalt mining and production activities may regulate the Company's activities.
Such regulations include rules in connection with drilling and completion
activities, the prevention and clean-up of pollution and
production conservation. The Company's mining activities are subject
to existing federal and state laws and regulations governing environmental
quality and pollution control. Such laws and regulations may substantially
increase the costs of developing, constructing and operating the asphalt mining
production facility and may prevent or delay the commencement or
condition of a given operation. The Company's management believes that its
proposed operations comply with applicable environmental legislation and
regulations, that the existence of such regulations has had no material effect
on the Company's operations to date, and that the cost of such compliance will
not be material in the future.
(ii) Oil and Gas Operations
General
The Company and Gavilan are in the business of producing, acquiring,
developing and operating oil and natural gas properties on a relatively small
scale. The Company's limited oil and gas operations are conducted in Utah.
See "Item 2 - Properties" and "Item 3 - Legal Proceedings" regarding pending
administrative actions involving certain oil and gas properties. As the
Company shifts its strategic focus to the development of its asphalt
operations, the Company expects its conventional oil and gas operations to
decrease.
Products and Principal Markets. The Company's oil and gas production is
generally sold on month-to-month contracts to unaffiliated purchasers
available in the area at the location of oil and gas production. The Company
does not refine or process the oil that it produces. While Amoco is currently
the only purchaser of the Company's oil production, several other purchasers
are available to the Company in the area in which it operates. The Company
believes it is unlikely that Amoco will discontinue the purchase of its crude
oil in the foreseeable future. However, any discontinuance or curtailment of
Amoco's crude oil purchases could have an adverse impact on the Company, at
least until such time as the Company establishes a relationship with an
alternative purchaser.
The Company's business is not seasonal; however, severe winter weather
can increase production and operating costs.
Exploration, Development and Operations. During the year ended December
31, 1996, the Company did not drill or complete any oil and gas properties.
During this time period Gavilan operated 11 wells in the Uintah Basin in
eastern Utah.
Competition. The oil and gas exploration, production, acquisition and
development industry is a highly competitive and speculative business. The
Company competes with a number of other companies, including major oil
companies, independent oil and gas operators, and individual producers and
operators, many of whom have financial and technical resources, staff and
facilities substantially greater than those of the Company. All of the
Company's drilling is conducted by third parties and in times of high drilling
activity, exploration for and production of oil and gas may be affected by the
prior commitments of such third parties and by the availability of necessary
equipment and supplies and by competition for drilling rigs. The Company
cannot predict the effect these factors might have on its operations. Based
on current market activities, the Company believes that the demand for
drilling rigs and equipment has declined due to the decline in the number of
oil and gas wells being drilled, which factors have resulted in an overall
decline in prices being paid to drillers and the cost of exploration. The
principal means of competition in oil and gas exploration and development are
product availability and price. The Company cannot predict how long the
industry will face pricing and demand instability or the ultimate impact on
the Company's markets.
Operating Hazards and Uninsured Risks. The Company's operations are
subject to the risks normally incident to the exploration for and production
of oil and gas, including blowouts, cratering, pollution, plugging costs and
fires, any of which could result in damage to or destruction of its oil and
gas wells or production facilities, suspension of operations or damage to
persons or property. Although the Company carries insurance coverage which
management believes to be adequate, the Company is not fully insured against
certain of these risks because insurance is not available or management has
elected not to insure due to high premium costs. The occurrence of an event
not fully insured against could have a materially adverse effect on the
Company's financial condition.
Regulation. The Company's operations are affected from time to time in
varying degrees by political developments and federal and state laws and
regulations. Utah and other states in which the Company may conduct its oil
and gas activities regulate the production and sale of oil and natural gas.
Such regulations include rules in connection with the operation and production
of both oil and gas wells, such as the method of developing new fields,
drilling and completion activities, spacing of wells, the prevention and
clean-up of pollution and production conservation. The Company's oil and gas
activities are subject to existing federal and state laws and regulations
governing environmental quality and pollution control. Such laws and
regulations may substantially increase the costs of exploration, development
or production of oil and gas and may prevent or delay the commencement or
continuance of a given operation. The Company's management believes that its
present operations comply with applicable environmental legislation and
regulations, that the existence of such regulations has had no material effect
on the Company's operations to date, and that the cost of such compliance will
not be material in the future.
(c) Employees
As of December 31, 1996, the Company had four full-time employees and
one part-time employee. From time to time the Company utilizes the services
of consulting geologists, engineers, landmen and accountants.
ITEM 2. PROPERTIES
(a) Oil and Gas Operations
(i) General
The Company's oil and gas producing properties are located exclusively
in the State of Utah. The Company's interests in producing and non-producing
acreage are in the form of working, royalty and overriding royalty interests.
The working interests are subject to royalty and overriding royalty interests
(either pre-existing or created in connection with their acquisition), liens
incident to operating agreements, liens for current taxes and other burdens or
minor liens, encumbrances, easements and restrictions. The Company believes
that these burdens do not materially detract from the value of its properties
or interfere with the operation of its properties.
Title to Properties. The Company's properties are burdened with
obligations incident to operating agreements, unit agreements, communitization
agreements, pooling orders, current taxes, development obligations under oil
and gas leases and other encumbrances, easements and restrictions common in
the oil and gas industry. As is common in the oil and gas industry, generally
only a preliminary investigation of property records is made at the time of
acquisition of undeveloped oil and gas properties. Prior to the commencement
of drilling operations, a thorough title examination is conducted and
significant title defects are remedied before proceeding with operations.
Prior to the sale or acquisition of properties, it may be necessary for the
Company to undertake title examination and curative work involving substantial
costs.
(ii) Oil and Gas Reserves
The following tables set forth as of December 31, 1996, the estimated
net quantities of proved developed and undeveloped oil and gas reserves for
the Company. John D. Steuble, ("Steuble), an independent petroleum engineer
and consultant, prepared the estimates included in this report of the oil and
gas reserves of the Company, the future net revenues from such reserves, the
present value thereof as of December 31, 1996 and 1995. These estimates have
been included herein in reliance upon Steuble's report and upon his authority
as an expert in petroleum engineering and reserve analysis. Of course, actual
results of operations will likely vary from estimated results due to a number
of factors, including events beyond the Company's control.
The following table shows the estimated quantities of oil and natural
gas available to be produced from the Company's net proved reserves during the
period shown.
<TABLE>
Proved Reserves
<S> <C> <C> <C> <C>
Period ending December 31: Oil (bbls) Gas (MCF)
1996 822,650 0
1995 773,628 0
1994 870,885 0
(iii) Future Net Revenues
The following table summarizes future net revenues applicable to proved
reserves.
Period Ending Proved Proved Total
December 31 Developed Undeveloped Proved
1997 $ 95,506 $ 0 $ 95,506
1998 80,867 0 80,867
1999 67,655 (973,844) (906,189)
Thereafter 245,794 5,670,685 5,916,479
Total $489,822 $4,696,841 $5,186,663
(iv) Present Value Future Net Revenues
Proved Proved Total
Developed Undeveloped Proved
Future Net Revenue
discounted at 10% per annum $354,782 $1,506,295 $1,861,077
</TABLE>
These estimates of future net revenues were made using a year-end oil
price of $21.25 per barrel and was held constant throughout the life of the
properties. Operating costs, production taxes, royalties and overriding
royalties and estimated future capital expenditures were deducted in arriving
at the estimates of future revenues. Such costs were estimated based upon
current costs and were not adjusted to reflect any anticipated changes in
prices. Such estimates have been made in accordance with current Securities
and Exchange Commission guidelines; however, interested persons should note
that such estimates are forward-looking statements and projections and the
foregoing factors and others (some of which are unpredictable) may cause
actual results to vary from the estimates provided
(v) Production, Revenue and Costs
The following table sets forth the net production attributable to the
Company's oil and gas interests, the average sales prices and average
production cost (lifting cost) for the periods indicated:
<TABLE>
<C> <C> <C>
1996 1995 1994
Production:
Oil (BBLS) 9,435 10,50 17,280
Gas (MCF) 0 0 0
Average Sales Prices:
Oil (per BBL) $19.85 $16.82 $15.76
Gas (per MCF) $ .00 $ .00 $ .00
Lifting Costs (per BBL) $11.49 $10.40 $ 9.72
</TABLE>
(vi) Developed and Undeveloped Acreage and Wells
The following table summarizes the productive oil and gas wells in which
the Company has an interest. Productive wells are those that are either
currently producing or capable of producing oil and/or gas:
As of December 31, 1996
<TABLE>
<S> <C> <S> <C>
Wells Acreage
Oil Wells Developed Acres
Gross 2.00 Gross
770
Net 1.70 Net
198
Gas Wells Undeveloped Acres
Gross 0.00 Gross
1,200
Net 0.00 Net
717
Total Combined Acres
Gross 1,970
Net 915
</TABLE>
(b) Office Space Lease
The Company conducts its business operations at 215 South State, Suite
550, Salt Lake City, Utah, where it has approximately 2,303 square feet of
office space under lease until September 30, 2001. Under the terms of the
lease, the Company pays $2,668 per month through September 30, 1997; $2,860
per month through September 30, 1998; $3,051 per month through September 30,
1999; $3,243 per month through September 30, 2000; and $3,435 per month
through the lease expiration date of September 30, 2001. There is no renewal
option under the terms of this lease.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company
itself is a party. With respect to the subsidiaries of the Company, Gavilan
is currently a party in three pending administrative actions against the
United States Department of Interior, Bureau of Indian Affairs, involving
Gavilan's $75,000 letter of credit submitted as its operating bond for
conducting oil and gas operations on Indian lands in Uintah and Ouray Indian
Reservation, Utah. The Company's oil and gas leases on these lands could be
cancelled, and the Company could lose its $75,000 operating bond, in the
event of an unfavorable outcome. The cases have been consolidated and are
under appeal. The Company believes that the final resolutions of these
actions will not have a materially adverse effect on the business of the
Company.
Gavilan is also subject to an administrative action brought by the
Bureau of Indian Affairs to cancel certain oil and gas leases in the
Roosevelt, Utah area. Gavilan is challenging these cancellations, but to the
extent Gavilan claims interests under these leases, such interests are subject
to cancellation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of 1996.
PART II.
ITEM 5. MARKET PRICE FOR THE COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock has been traded in the over-the-counter
market since 1980. The Common Stock is currently listed on the NASD OTC
Bulletin Board under the symbol CROE. At the present time, only the Common
Stock is publicly traded. The following table sets forth for the respective
period indicated, the range of high and low bid quotations, as adjusted for
stock splits, of the Company's common stock as reported by the National
Quotation Bureau and represents prices between dealers, does not include
retail markups, markdowns or commissions, and may not represent actual
transactions:
<TABLE>
<C> <C> <C> <C> <C>
CALENDAR QUARTER ENDED HIGH BID LOW BID
March 31, 1995 $1.25 $ 0.88
June 30, 1995 1.06 0.56
September 30, 1995 1.31 0.70
December 31, 1995 0.84 0.50
March 31, 1996 1.13 0.63
June 30, 1996 1.03 0.69
September 30, 1996 0.81 0.63
December 31, 1996 1.44 0.60
</TABLE>
As of March 27, 1997, the high bid and low offer quotations reported by
the National Quotation Bureau were $.69 and $.75, respectively.
On March 27, 1997, approximately 851 shareholders of record held the
Company's common stock.
The Company has not paid any cash dividend on its common shares. It is
the present policy of the Board of Directors of the Company to retain any
earnings for use in the business, and therefore, the Company does not
anticipate paying any cash dividends on its common stock in the foreseeable
future.
In November 1996, the Company issued 400,000 shares of its Common Stock to
two investors for $200,000. The exemption from registration under the
Securities Act relied upon by the Company for the issuance of the foregoing
shares was that afforded by Section 4(2).
ITEM 6. SELECTED FINANCIAL DATA
The financial data included in the following table has been derived from
the financial statements for the periods indicated. The financial statements
as of and for the years ended December 31, 1990 through 1996 were audited by
Pritchett, Siler & Hardy, P.C., formerly known as Peterson, Siler & Stevenson,
P.C., independent public accountants. The following financial data should be
read in conjunction with the financial statements and related notes and with
management's discussion and analysis of financial conditions and results of
operations included elsewhere herein.
<TABLE>
Year Ended December 31, ($000s except per share amounts)
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
Net Revenues $225 $214 $326 $445 $587
Income(Loss) from
Continuing Operations ($422) ($234) ($230) ($193) ($ 61)
Income(Loss) Per Share
Continuing Operations ($0.04) ($0.03)($0.03) ($0.02) ($0.00)
Total Assets $4,591 $4,344 $4,351 $4,481 $5,065
Total Long Term Debt $ 182 $ 794 $ 965 $1,040 $ 305
Cash Dividends Per
Common Share $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Shareholder's Equity $3,496 $3,065 $2,940 $2,880 $4,092
</TABLE>
The foregoing selected financial data is presented on a historical basis and
may not be comparable from period to period due to changes in the Company's
operations. For instance, summary financial data presented for the 1992
through 1995 calendar years includes results of operations of the Company's
Gavilan subsidiary, whereas summary financial data presented for the 1992
through 1995 calendar years includes results of operations of both the
Company's Gavilan and BVRC subsidiaries.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULT OF OPERATIONS
Liquidity and Capital Resources
At December 31, 1996, the Company had cash and other current assets of
$245,931 as compared to cash and other current assets of $134,944 at December
31, 1995. The increase of $110,987 was due to proceeds from net equity
financings totalling $575,000. The cash infusion from financing was partially
offset by a loss from operations, payments on debt obligations and
pre-construction capital 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 $182,093 in long-
term debt and $185,984 in current portion of long-term debt at December 31,
1996. This total increase of $69,363 was primarily due to new borrowings of
approximately $79,000. In order for the Company to meet its pre-construction
oil sand facility expenses and working capital requirements in 1996, the Board
of Directors approved two private placements. In January 1996, the Company
sold 800,000 shares of its Common Stock to twenty-one investors for $400,000.
In November 1996, the Company sold 400,000 shares of its Common Stock to two
investors for $200,000.
The Company's primary objective is to complete financing for
construction and start-up of its commercial asphalt production facility. The
Company is seeking to raise approximately $20,000,000 through a combination of
equity and debt or project financing. The Company is evaluating financing
alternatives with several investor groups who are in the process of completing
their due diligence on the project. No assurance can be given that financing
will be available or, if available, that it will be available on acceptable
terms. If such 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 funding is not
available, the Company may be required to significantly curtail or cease its
operations.
Results of Operations
1996 vs. 1995
Oil and gas revenue increased from $213,527 for the year ended December
31, 1995 to $224,855 for the year ended December 31, 1996, an increase of
$11,329 (5%). This increase was due to higher average oil prices. Average
oil prices increased from $16.90 per barrel in 1995 to $19.85 per barrel in
1996, an increase of 17%. This revenue increase was partially offset by a
decline in barrels produced. Barrels of oil sold for the year ended December
31, 1996 were 9,435 as compared to 10,501 barrels for the same period in 1995,
a decrease of 10%. Unless the Company acquires additional producing
properties, re-works existing wells or commences new drilling activity, lower
oil prices and normal production declines (aging oil wells produce less and
less oil each year) could adversely affect future conventional oil revenues.
Oil and gas production costs increased from $128,069 for the year ended
December 31, 1995 to $137,340 for the year ended December 31, 1996, an
increase of $9,271 (7%). This immaterial increase was due to higher
maintenance costs due to aging well equipment.
General and administrative expenses increased from $432,655 for the year
ended December 31, 1995 to $551,401 for the year ended December 31, 1996, an
increase of $118,746 (27%). This increase was primarily due to an increase in
expenses relating to the Asphalt Ridge oil sand project.
Depletion, depreciation and amortization decreased from $81,149 for the
year ended December 31, 1995 to $80,062 for the year ended December 31, 1996,
a decrease of $1,087 (1%). This decrease was due to lower production for the
period and was partially offset by a higher unit depletion rate.
Other income/expenses decreased from total expense of $31,714 for the
year ended December 31, 1995, to total expenses of $6,682 for the year ended
December 31, 1996, a decrease of $25,032 (79%). This decrease was due to an
increase in interest income and other miscellaneous income items.
1995 vs. 1994
Oil and gas revenue decreased from $325,907 for the year ended December
31, 1994 to $213,526 for the year ended December 31, 1995, a decrease of
$112,381 (34%). This decrease was due to lower production resulting from
normal production declines and the sale of a producing well. Barrels of oil
sold for the year ended December 31, 1995 were 10,501 as compared to 17,020
barrels for the same period in 1994, a decrease of 38%. This decrease was
partially offset by a 7% increase in average oil prices.
Oil and gas production costs decreased from $194,779 for the year ended
December 31, 1994 to $132,641 for the year ended December 31, 1995, a decrease
of $62,138 (32%). This decrease was due to lower production resulting from
normal production declines and the sale of a producing well.
General and administrative expenses increased from $358,651 for the year
ended December 31, 1994 to $432,655 for the year ended December 31, 1995, an
increase of $74,004 (21%). This increase was primarily due to an increase in
consulting expenses relating to the Asphalt Ridge oil sand project and to a
$50,000 finder's fee payable with regard to the Company's employment of Mr.
James Middleton.
Depletion, depreciation and amortization decreased from $113,536 for the
year ended December 31, 1994 to $81,149 for the year ended December 31, 1995,
a decrease of $32,387 (29%). This decrease was due to lower production for
the period and was partially offset by a higher unit depletion rate.
Other income/expenses increased from total expense of $26,531 for the
year ended December 31, 1994, to total expenses of $31,715 for the year ended
December 31, 1995, an increase of $5,184 (20%). This increase was due to an
increase in interest expense.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this item are set forth following
Item 14 hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with the Company's
accountants on any matter of accounting principles or practices or financial
statement disclosure.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the name, age and position of each
officer and director of the Company. Each director holds office until his
successor has been duly elected and qualified.
<TABLE>
<S> <C> <S>
Year First
Elected
NAME AGE Position/Office as a Director
James A. Middleton 61 Chief Executive Officer, 1996
Chairman of the Board of Directors
Jay Mealey 40 President, Chief Operating 1991
Officer, Treasurer
Thomas W. Bachtell 45 Director 1993
Richard S. Rawdin 38 Vice President, Director, Secretary 1992
</TABLE>
James A. Middleton - Chairman of the Board, Chief Executive Officer. Mr.
Middleton became Chairman and Chief Executive Officer on February 7, 1996.
Mr. Middleton was President of ARCO Oil and Gas Company as well as Executive
Vice President and a member of the Board of Directors of Atlantic Richfield
Company. Mr. Middleton's areas of responsibility included ARCO Products
Company, ARCO Transportation Company, ARCO Coal Company, ARCO Exploration and
Production Technology and ARCO Aluminum, Inc. Earlier in his career Mr.
Middleton was head of the engineering department of ARCO's Synthetic Fuels and
Minerals Division and was heavily involved in ARCO's activities in oil shale,
Athabasca oil sands, coal mining and coal conversion projects. He remains on
the Board of Directors of ARCO Chemical Company. Mr. Middleton also serves on
the Board of Directors of Texas Utilities Company as well as many community
and civic organizations.
Jay Mealey - President, Chief Operation Officer. Mr. Mealey has been
the President, Treasurer and a Director of the Company since 1991. He has
been employed by the Company since 1986 in various management positions. Mr.
Mealey has been actively involved in the oil and gas exploration and
production business since 1978. Prior to employment with the Company, he was
Vice President of Ambra Oil and Gas Company and worked for Belco Petroleum
Corporation and Conoco, Inc. in their exploration divisions. Mr. Mealey is
responsible for managing the day to day operations of the Company. He is a
full-time employee and it is anticipated that he will devote one hundred
percent of his time to the Company.
Richard S. Rawdin - Vice President, Director. Mr. Rawdin became Vice
President on September 23, 1991, and is a certified public accountant. He is
responsible for managing the financial and accounting functions of the Company.
From February, 1986, to September, 1991, he was Controller and Vice President
of Finance for Kerry Petroleum Company, Inc. where he was responsible for
directing the financial and accounting affairs of the company, its two
subsidiaries and six partnerships. Prior to that, he was a Senior Consultant
with Deloitte and Touche. Mr. Rawdin is a full-time employee of the Company
and it is anticipated that he will devote one-hundred percent of his time to
the Company.
Thomas W. Bachtell - Director. Mr. Bachtell is a Director and
President of the Company's wholly-owned subsidiary, BuenaVentura Resources
Corporation ("BVRC"). He is a practicing natural resources attorney and
President of the law firm of Pruitt, Gushee & Bachtell. Mr. Bachtell's law
practice focuses on advising and assisting oil, gas and mineral companies in
their exploration and development activities in the Rocky Mountain States. In
addition to his responsibilities as President of BVRC, Mr. Bachtell is
responsible for the Company's governmental and regulatory affairs along with
its natural resources legal matters.
ITEM 11. EXECUTIVE COMPENSATION
There is set forth below information concerning the annual and long-term
compensation paid for services rendered in all capacities to the Company for
the fiscal years ended December 31, 1996, 1995 and 1994 by individuals serving
during the year ended December 31, 1996 as the Chief Executive Officer of the
Company and to any other officer of the Company who received in excess of
$100,000 in compensation for the year ended December 31, 1996 (collectively,
the "Named Officers").
The following table discloses compensation received by the Named
Officers for the three fiscal years ended December 31, 1996:
SUMMARY COMPENSATION
Annual Compensation
<TABLE>
<S> <C>
Name and Principal Position Year Salary($) Bonus($) Other Annual
Compensation($)
Jay Mealey, President 1994 $78,000 $0 $0
1995 $78,000 $0 $0
1996 $78,000 $0 $0
James A. Middleton, 1996 $0 $0 $0
Chief Executive Officer
</TABLE>
The following table provides information on options granted to the Named
Officers during the fiscal year ended December 31, 1996:
OPTION GRANTS
<TABLE>
<S> <C> <C> <C> <S> <C> <C> <C>
Potential
realizable value
at assumed annual
Name Number of % of Total Exercise or Expira- rates of stock
Securities Options Granted Base Price tion Date price appreciation
Underlying to Employees in ($/Sh) for option term
Options Fiscal Year
Granted (#) 5% 10%
James A.
Middleton 300,000 100% $.66 per 01/29/01 $54,000 $120,000
share
</TABLE>
Mr. Middleton's employment agreement also provides for the grant of additional
options to Mr. Middleton upon the Company's receipt of funding for its
Asphalt Ridge project.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 28, 1997,
regarding (i) all stockholders known to the Company to be beneficial owners of
more than 5% of the outstanding common stock; (ii) each director; and (iii)
all officers and directors of the Company as a group. Each of the persons in
the table below has sole voting power and sole dispositive power as to all of
the shares shown as beneficially owned by them except as otherwise indicated.
<TABLE>
<S> <C> <C> <C>
Number of Shares Percentage
Name and Address Beneficially Owned of Class(1)
James A. Middleton 355,000(2) 3.02%
574 Chapala Drive
Pacific Palisades, Ca. 90272
Jay Mealey 2,058,051(3) 17.39%
4645 Hunters Ridge Circle
Salt Lake City, Utah 84124
Thomas W. Bachtell 2,013,448(4) 17.02%
3245 Big Spruce Way
Park City, Utah 84060
Richard S. Rawdin 450,160(5) 3.85%
P. O. Box 520982
Salt Lake City, Utah 84152
All Officers, Directors and
owners of more than 5% of the
Company's stock as a Group 4,876,659(6) 38.13%
(Includes 4 individuals)
</TABLE>
1) Based on 11,430,571 shares of the Company's Common Stock issued and
outstanding March 28, 1997. Treated as outstanding for the purpose of
computing the percentage ownership of each beneficial owner are common
shares which such beneficial owner had a right to acquire within 60 days
of March 28, 1997.
2) Includes 300,000 Options which are exercisable within 60 days.
3) Includes 406,000 Options which are exercisable within 60 days, as
well as 110,000 shares gifted by Mr. Mealey to Glenn Mealey as custodian
for Mr. Mealey's children, Cameron and Andrew Mealey. Mr. Mealey
expressly disclaims beneficial ownership of the aforementioned gifted
shares.
4) Includes 5,000 shares held as trustee of the Nielson Family Trust and
400,000 Options which are exercisable within 60 days. Mr. Bachtell
expressly disclaims beneficial ownership of the aforementioned shares
held by the Nielson Family Trust.
5) Includes 254,000 Options which are exercisable within 60 days.
6) Includes 1,360,000 Options which are exercisable within 60 days and
110,000 shares gifted by Mr. Mealey and 5,000 shares held as trustee by
Mr. Bachtell.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
1. FINANCIAL STATEMENTS:
See Index to Financial Statements
2. EXHIBITS:
EXHIBIT NO. ITEM TITLE PAGE NO.
22.1 Subsidiaries of the Company (1)
24.1 Consent of Pritchett, Siler & Hardy
25.1 Power of Attorney
27.0 Financial Data Schedule
(1) Incorporated by reference from the Company's Registration
Statement on Form S-1 filed with the Commission on or about March
13, 1996 and bearing Commission file number 0-19365.
3. REPORTS ON FORM 8-K
During the fourth quarter ended December 31, 1996, the
Company filed no reports on Form 8-K.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
CROWN ENERGY CORPORATION
(Registrant)
Date: April 15, 1997 By:/s/JAMES A. MIDDLETON
James A. Middleton
Chief Executive Officer,
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on this 15th day of April, 1997.
By:/s/JAY MEALEY By:/s/RICHARD S. RAWDIN
Jay Mealey Richard S. Rawdin
President, Chief Operating Vice President, Director
Officer and Director Secretary
CROWN ENERGY CORPORATION
INDEX TO FINANCIAL STATEMENTS
PAGE
Independent Auditors' Report of Pritchett, Siler & Hardy, P.C. F-2
Consolidated Balance Sheets, December 31, 1996 and 1995 F-3
Consolidated Statements of Operations for the years ended
December 31, 1996, 1995 and 1994 F-5
Consolidated Statements of Stockholders' Equity, for the years
ended December 31, 1996, 1995 and 1994 F-7
Consolidated Statements of Cash Flows, for the years ended
December 31, 1996, 1995 and 1994 F-8
Notes to Consolidated Financial Statements F-11
Supplemental Information - Unaudited F-24
<PAGE>
CROWN ENERGY CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
PRITCHETT, SILER AND HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
CROWN ENERGY CORPORATION
FINANCIAL STATEMENTS
CONTENTS
PAGE
_ Independent Auditors' Report 1
_ Consolidated Balance Sheets, December 31,
1996 and 1995 2 - 3
_ Consolidated Statements of Operations, for the
years ended December 31, 1996, 1995 and
1994 4
_ Consolidated Statement of Stockholders' Equity,
for the years ended December 31, 1996, 1995
and 1994 5 - 6
_ Consolidated Statements of Cash Flows, for the
years ended December 31, 1996, 1995 and
1994 7 - 9
_ Notes to Consolidated Financial Statements 10 - 23
_ Supplemental Information - Unaudited 24 - 29
<PAGE>
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
430 EAST 400 SOUTH
SALT LAKE CITY, UTAH 84111
INDEPENDENT AUDITORS' REPORT
Board of Directors
CROWN ENERGY CORPORATION
Salt Lake City, Utah
We have audited the accompanying consolidated balance sheets of
Crown Energy Corporation at December 31, 1996 and 1995 and the
related consolidated statements of operations, stockholders' equity
and cash flows for the years ended December 31, 1996, 1995 and
1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements audited by us
present fairly, in all material respects, the consolidated
financial position of Crown Energy Corporation as of December 31,
1996 and 1995, and the results of its operations and its cash flows
for the years ended December 31, 1996, 1995 and 1994, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 13 to the financial statements, the Company has suffered
recurring losses from operations, and has current liabilities in
excess of current assets. These factors raise substantial doubt
about the ability of the Company to continue as a going concern.
Management's plans with respect to this matter are also described
in Note 13. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/PRITCHETT, SILER & HARDY, P.C.
March 5, 1997
<PAGE>
CROWN ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
December 31,
<S> <C> <C>
__________________________
1996 1995
___________ ___________
CURRENT ASSETS:
Cash $ 142,772 $ 97,247
Joint interest and trade accounts
receivable, net of allowance
for doubtful accounts of
$0, at 1996 and 1995 30,379 37,697
Other current assets 72,780 -
___________ ___________
Total Current Assets 245,931 134,944
PROPERTY AND EQUIPMENT, net 1,758 5,782
INVESTMENT IN OIL AND GAS PRODUCING
PROPERTIES, full cost method 1,083,882 1,145,214
INVESTMENT IN OIL SAND PROPERTIES 2,919,077 2,733,080
OTHER ASSETS 340,726 325,230
___________ ___________
$4,591,374 $4,344,250
___________ ___________
</TABLE>
The accompanying notes are an integral part of these financial statements
-2-
<PAGE>
CROWN ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
December 31,
<S> <C> <C>
__________________________
1996 1995
___________ ___________
CURRENT LIABILITIES:
Accounts payable $ 92,663 $ 244,314
Other current liabilities 225,322 173,250
Current portion of long-term debt 185,984 67,372
Deferred tax liability - -
___________ ___________
Total Current Liabilities 503,969 484,936
LONG-TERM DEBT - Unrelated parties,
net of current portion 60,845 120,420
LONG-TERM DEBT - Related Parties 121,248 110,922
DEFERRED TAX LIABILITY 434,056 563,100
___________ ___________
Total Liabilities 1,120,118 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,
11,430,571 and 9,861,069 shares
issued and outstanding at 1996 and
1995 228,611 197,220
Capital in excess of par value 5,497,772 4,701,193
Retained earnings (deficit) (2,255,127) (1,833,541)
___________ ___________
Total Stockholders' Equity 3,471,256 3,064,872
___________ ___________
$4,591,374 $4,344,250
___________ ___________
</TABLE>
The accompanying notes are an integral part of these financial statements
-3-
<PAGE>
CROWN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
For the Year Ended
<S> <C> <C> <C>
December 31,
_______________________________________
1996 1995 1994
___________________________________
REVENUE:
Oil and gas sales $224,855 $213,526 $325,907
___________________________________
Total Revenue 224,855 213,526 325,907
___________________________________
EXPENSES:
Production costs and
related taxes 137,340 132,641 194,779
General and administrative 551,401 432,655 358,651
Depreciation, depletion and
amortization 80,062 81,149 113,536
___________________________________
Total Expenses 768,803 646,445 666,966
___________________________________
OPERATING (LOSS) (543,948) (432,919) (341,059)
___________________________________
OTHER INCOME (EXPENSE):
Interest and other income 20,589 11,880 10,250
Interest and other expense (27,271) (43,595) (36,781)
___________________________________
Total Other Income (Expense) (6,682) (31,715) (26,531)
___________________________________
(LOSS) BEFORE INCOME TAXES (550,630) (464,634) (367,590)
CURRENT TAX EXPENSE (BENEFIT) - - -
DEFERRED TAX EXPENSE (BENEFIT) (129,044) (231,025) (137,575)
___________________________________
NET (LOSS) $(421,586)$(233,609)$(230,015)
___________________________________
(LOSS) PER COMMON SHARE $ (.04)$ (.03)$ (.03)
___________________________________
WEIGHTED AVERAGE SHARES 10,932,091 9,143,720 8,755,241
___________________________________
</TABLE>
The accompanying notes are an integral part of these financial statements
-4-
<PAGE>
CROWN ENERGY CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
[RESTATED]
<TABLE>
Common Stock Capital in
____________________ Excess of Retained
Shares Amount Par Value Deficit Total
<C> <C> <C> <C> <C> <C>
______________________________________________________
BALANCE, December 31,
1992 8,355,921 167,118 4,033,520 (109,117) 4,091,521
Shares issued for
cash at $.56
per share 44,643 893 24,107 - 25,000
Shares issued for
non-cash
consideration 34,114 682 23,100 - 23,782
Net loss for the year
ended December 31,
1993 - - - (1,260,800)(1,260,800)
________________________________________________________
BALANCE, December 31,
1993 8,434,678 168,693 4,080,727 (1,369,917) 2,879,503
Shares issued for
cash at $.50 to
$.51 per share 396,851 7,937 192,063 - 200,000
Shares issued for
non-cash
consideration 128,989 2,580 69,045 - 71,625
Shares issued in
payment of a note
payable and related
accrued interest. 30,645 613 17,774 - 18,387
Fractional Share
Adjustment in
connection with
4 to 1 reverse split
of common shares 54 - - - -
Net loss for the year
ended December 31,
1994 - - - (230,015) (230,015)
________________________________________________________
BALANCE, December 31,
1994 8,991,217 179,823 4,359,609 (1,599,932) 2,939,500
Shares issued for
cash at $.35 and
$.60 per share 292,857 5,857 134,143 - 140,000
Shares issued for
non-cash
consideration at
$.33 to $.76
per share 195,273 3,905 102,029 - 105,934
Shares issued for
non-cash
consideration at
$.28 and $.35
per share to related
parties 381,722 7,635 105,412 - 113,047
Net loss for the year
ended December 31,
1995 - - - (233,609) (233,609)
_________________________________________________________
</TABLE>
[Continued]
-5-
<PAGE>
CROWN ENERGY CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
[RESTATED]
[Continued]
<TABLE>
Common Stock Capital in
__________________ Excess of Retained
Shares Amount Par Value Deficit Total
<C> <C> <C> <C> <C> <C>
______________________________________________________
BALANCE, December 31,
1995 9,861,069 197,220 4,701,193 (1,833,541) 3,064,872
Shares issued for
cash at $.50 per
share, net of
placement costs
of $65,000 800,000 16,000 319,000 - 335,000
Shares issued for
commissions 80,000 1,600 38,400 - 40,000
Shares issued for
services at $.79
to $1.00 per
share 241,547 4,832 224,542 - 229,374
Shares issued for
payment of note
payable 47,955 959 22,637 - 23,596
Shares issued for
cash at $.50
per share 400,000 8,000 192,000 - 200,000
Net loss for the
year ended
December 31, 1996 - - - (421,586) (421586)
_________________________________________________________
BALANCE, December 31,
1996 11,430,571 $228,611 $5,497,772 $(2,255,127)$(3,471,256)
_________________________________________________________
</TABLE>
The accompanying notes are an integral part of these financial statements
-6-
<PAGE>
CROWN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
For the Year Ended
December 31,
<S> <C> <C> <C> <C>
______________________________________
1996 1995 1994
_________________________________
Cash Flows From Operating
Activities:
Net (loss) $(421,586) $(233,609) $(230,015)
_________________________________
Adjustments to reconcile net
income (loss) to net cash used
in operating activities:
Depreciation, Depletion and
Amortization 65,357 81,149 113,536
(Gain) loss on sale of property
and equipment - - -
Non-cash (income) expense 474,082 33,078 19,250
Write off investment in
Partnership - - -
Depreciation of discontinued
operations - - -
Loss on disposition - - -
Bad Debt Expenses - - 808
Changes in Assets and Liabilities:
(Increase) decrease in joint
interest and trade receivables 7,318 868 (11,474)
(Increase) decrease in other
current assets - 4,875 (6,500)
(Increase) decrease in other
assets (88,276) (33,325) (25,592)
Increase (decrease) in accounts
payable (151,651) 100,073 (33,444)
Increase (decrease) in other
current liabilities (52,072) 205,654 19,293
Increase (decrease) in deferred
tax liability (129,044) (231,025) (137,575)
_________________________________
125,714 161,347 (61,698)
_________________________________
Net Cash Provided (Used) by
Operating Activities (295,872) (72,262) (291,713)
_________________________________
Cash Flows From Investing
Activities:
Additions to property and
equipment - - -
Proceeds from disposition or
sale of oil and gas
investments - 150,000 3,747
Additions to mining properties (185,997) (129,852) (12,031)
Additions to oil and gas
properties - - -
Decrease in note receivable - - 4,094
Payments for other investments - - (7,470)
Proceeds from sale of assets of
discontinued operations - - -
_________________________________
Net Cash (Used) Provided by
Investing Activities (185,997) 20,148 (11,660)
_________________________________
</TABLE>
[Continued]
-7-
<PAGE>
CROWN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS [Continued]
<TABLE>
For the Year Ended
December 31,
<S> <C> <C> <C>
______________________________________
1996 1995 1994
_________________________________
Cash Flows From Financing
Activities:
Increase in notes payable - 20,000 -
Payments on notes payable (7,606) (41,231) (32,330)
Increase in convertible debentures - - 65,000
Net proceeds from issuance of
common stock 535,000 140,000 200,000
_________________________________
Net Cash Provided (Used) by
Financing Activities 527,394 118,769 232,670
_________________________________
Net Increase (Decrease) in Cash
and Cash Equivalents 45,525 66,655 (70,703)
Cash at Beginning of Year 97,247 30,592 101,295
_________________________________
Cash at End of Year $ 142,772 $ 97,247 $ 30,592
_________________________________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for 1996 1995 1994
_________________________________
Interest $ - $ 7,744 $ 7,616
_________________________________
Income taxes $ - $ - $ -
_________________________________
</TABLE>
Supplemental Schedule of Non-cash Investing and Financing
Activities:
For the Year Ended December 31, 1996:
The Company issued 191,547 shares of common stock in payment of
$179,375 in consulting fees.
The Company issued 50,000 shares of common stock in payment of
$50,000 in consulting fees.
The Company issued 47,955 shares of common stock in payment of
$23,596 for payment on a promissory note.
Accounts payable in the amount of $78,708 were converted to a
note payable.
The Company renewed certain notes payable and accrued interest
of $17,032 was added to the principal of the new notes.
For the Year Ended December 31, 1995:
The Company issued 3,250 shares of common stock to extend the
maturity date of the convertible debentures to January 1, 1997.
The Company issued 179,987 shares of common stock in payment of
$99,320 in consulting and legal fees.
The Company issued 381,722 shares of common stock in payment of
$113,047 in deferred salaries.
[Continued]
-8-
<PAGE>
CROWN ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS [Continued]
Supplemental Schedule of Non-cash Investing and Financing Activities:
For the Year Ended December 31, 1995: [Continued]
The Company issued 12,036 shares of common stock in payment of
principal of $4,460 and $783 of interest due on a note payable.
The Company converted deferred salaries of $38,271 into a note
payable.
The Company converted accrued interest payable of $14,211 into
notes payable.
For the Year Ended December 31, 1994:
The Company issued 107,739 shares of common stock in payment of
$52,375 in deferred salaries.
The Company issued 35,645 shares of common stock in payment of
a $17,342 note payable with its accrued interest of $1,045 and
for services rendered valued at $3,000.
The Company issued 16,250 shares of common stock in connection
with the convertible debentures.
The accompanying notes are an integral part of these financial statements
-9-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Crown Energy Corporation ["PARENT"], is a Utah
Corporation engaged in the acquisition and development of oil and
gas leases. Gavilan Petroleum, Inc. ["Gavilan"], was
incorporated under the laws of the State of Utah and is engaged
in the production and selling of oil and gas from leases it
operates in the State of Utah.
Applied Enviro Systems, Inc. ["AES"], was incorporated under the
laws of the State of Oregon. During 1993, AES discontinued its
previous operations. AES currently is an inactive subsidiary.
During January, 1991 PARENT acquired Gavilan in a transaction
accounted for as a recapitalization of Gavilan in a manner
similar to a reverse purchase. During 1991, PARENT issued common
stock to acquire the remaining 15% interest in AES.
BuenaVentura Resources Corporation ["BVRC"] was incorporated
under the laws of the State of Utah on October 24, 1985 and is
engaged in the production of oil and other by-products from oil
sand properties. On September 30, 1992 PARENT acquired BVRC in a
transaction accounted for as a purchase.
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.
Property and Equipment - Property and equipment are recorded at
cost which is depreciated over the estimated useful lives of the
related assets. Depreciation is computed using the straight-line
method for financial reporting purposes, with accelerated methods
used for income tax purposes. The estimated useful lives of
property and equipment for purposes of financial reporting range
from three to seven years.
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.
-10-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Oil Sand Properties - The Company's investment in oil sand
properties including acquisition and development costs are being
capitalized and will be amortized on the unit-of-production
method upon commencement of full scale production. Full scale
production is contingent upon the Company raising the necessary
funding to finance a production facility. The Company regularly
reviews the carrying value of its investment in oil sand
properties for impairment. It is the Company's policy to reduce
the carrying value of its investment if the estimated future cash
flows from the investment falls below the current carrying value
of the investment. No reduction has been recorded in the current
year.
Intangible Assets - In connection with the acquisition of BVRC
the Company recorded intangible assets in the amount of $250,000.
These are included in other assets and are being amortized over
seventeen years on a straight-line method. During 1996, 1995 and
1994, amortization of $14,706 was recorded to expense.
Revenue Recognition - The Company's revenue comes primarily from
the sale of oil and gas. Revenue from oil and gas sales is
recognized when the product is transferred to the purchaser.
Income Taxes - The Financial Accounting Standards Board has
issued Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." This statement requires an asset
and liability approach for accounting for income taxes. This
method has been adopted by the Company beginning with the year
ended December 31, 1993.
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. Common stock
equivalents were not included in the earnings per share
computation as their effect was anti-dilutive.
Cash Flow Statement - For purposes of the statements of cash
flows, the Company considers all highly liquid debt investments
purchased with a maturity of three months or less to be cash
equivalents.
Restatement - On December 7, 1994, the Company approved,
effective on January 3, 1995, a 1 for 4 reverse split of common
stock. The financial statements and accompanying footnotes have
been restated to reflect this change for all periods presented.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses
during the reporting period. Actual results could differ from
those estimated.
Long-Lived Assets - The Company adopted SFAS No. 121 "Accounting
for the Impairment of Long-Lived Assets" effective January 1,
1996. This standard requires that the Company review the
valuation of certain long-lived assets, such as property, plant
and equipment, certain identifiable intangibles, and goodwill
related to those assets, and that an impairment loss be recorded
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The adoption
of SFAS No. 121 did not have a material effect on the Company's
financial statements.
-11-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment - at cost,
less accumulated depreciation as of December 31:
<TABLE>
1996 1995
<S> <C> <S> <C> <C>
_____________________
Furniture and office equipment $ 66,546 $ 66,546
Less: accumulated depreciation (64,788) (60,764)
_____________________
Total $ 1,758 $ 5,782
_____________________
</TABLE>
Depreciation expense charged to operations was $4,024, $4,805 and
$5,911, in 1996, 1995 and 1994, respectively.
NOTE 3 - OIL AND GAS PROPERTIES
Upon placing oil and gas properties and productive equipment in
use, the unit-of-production method, based upon estimates of
proven developed and undeveloped reserves, is used in the
computation of depletion. Depletion expense for the years ended
December 31, 1996, 1995 and 1994 amounted to $61,332, $61,638 and
$91,294, respectively. Because the Company has elected to value
its properties under the "full cost" method of accounting for oil
and gas properties, it has a maximum allowance value which is
related to the underlying oil and gas reserves. Where the
capitalized value of its properties exceeds the fair market value
of the oil and gas reserves, the Company is required to adjust
the value of properties to the cost center ceiling [See Note 1]
by increasing the valuation allowance. The Company did not
record a valuation adjustment for the years ended December 31,
1996, 1995, or 1994.
During 1995, the Company sold certain oil and gas interests for
total proceeds of $150,000. The interests which were sold were
not a significant portion of the overall full cost pool and
consequently the proceeds were recorded as a reduction to the
full cost pool.
During 1994, the Company sold certain oil and gas equipment for
$3,747. The equipment sold was not a significant portion of the
full cost pool and consequently the proceeds were recorded as a
reduction to the full cost pool.
NOTE 4 - OIL SAND PROPERTIES
The Company's investment in oil sand properties at December 31,
1996 included approximately $2,400,000 in acquisition costs from
the business acquisition of BVRC during 1992. The Company has
also capitalized approximately $500,000 in additional acquisition
and development costs related to the properties through December
31, 1996. The capitalized costs will be amortized using a unit
of production method. The Company's ability to realize its
investment in oil sand properties is dependent upon the Company
obtaining the necessary financing, which if completed would
enable the Company to continue its plans to set up a full scale
production facility. The Company has a license agreement which
allows the Company to use certain patented oil extraction
technology. The agreements require the Company to pay royalties
of 2% to 5% based on future returns after certain production
costs and taxes.
-12-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - LONG TERM DEBT
The following is a summary of long-term debt as of December 31:
<TABLE>
<C> <C> <C>
1996 1995
_____________________
Note payable to an officer, director and
shareholder in the original amount of
$38,271, at 9% per annum, due July 1,
1998 [See Below]. $ 41,833 $ 38,271
Notes payable to an officer, director and
share-holder, interest at 9%, due July 1,
1998. 58,197 53,240
Payable to various parties in connection
with foreclosed Oil & Gas properties.
Amount payable includes production taxes
and royalties payable which are being
negotiated on a long-term pay-back in the
foreclosure [See Below]. 65,139 65,139
Loan payable to an individual in the amount
of $100,000, interest at 10%. Monthly
payments of $2,622 with payments due through
June, 1997. Secured by trust deeds granting
lender liens on certain of the Company's oil
and gas properties located in the State of
Utah. [See Below] 15,282 43,653
Note payable to individual in the original
amount of $14,000, interest at 10%, due on
demand. 20,706 14,000
Note payable to an officer, director and
shareholder in the original amount of
$15,000, interest at 9%, due July 1, 1998. 21,218 19,411
Unsecured debentures to individuals,
Interest at 6%, due January 1, 1997.
[See Below] 74,600 65,000
Note payable to individual in the original
amount of $78,708, interest at 18%, due
November 1, 1997. 71,102 -
______________________
368,077 298,714
Less: Current Portion (185,984) (67,372)
______________________
$182,093 $231,342
______________________
</TABLE>
Following are maturities of long-term debt for each of the next
five years:
Amount
____________
1997 $ 185,984
1998 182,093
Thereafter -
____________
$ 368,077
____________
-13-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - LONG TERM DEBT [Continued]
During 1996, the Company converted accounts payable of $78,708
into a note payable with interest accruing at 18%. The note
provides for monthly payments of $8,000 and matures on November
1, 1997.
On December 31, 1996 the Company converted accrued interest of
$3,562, $4,956 and $1,807 on notes payable to officers and
directors to principal bringing the balance outstanding on the
notes to $41,833, $58,197 and $21,218, respectively.
At December 31, 1995 the Company had a $75,000 letter of credit
which is being held as an operating bond for the conducting of
oil and gas operations on certain Indian reservations. No
amounts have been borrowed against the letter of credit.
During February, 1995, the Company borrowed $20,000 on an 18%
Note payable to an individual who is an officer, director and
shareholder of the Company with three monthly payments of $3,000
beginning February 28, 1995 with the remaining principal and
interest due May 31, 1995. The Note was paid in full during
1995.
During November 1995, the Company converted deferred salaries of
$34,750 and their related accrued interest of $3,521 payable to
an officer, director and shareholder of the Company into a Note
Payable.
During June, 1994, the Company raised $65,000 through the sale of
partial units of an Unsecured Debenture in a private placement.
The Company had offered up to twelve $50,000 units in the
offering which expired September 30, 1994. Each unit consisted
of a promissory note for $50,000 due on or before January 1,
1996, plus 12,500 shares of the Company's Common Stock. The
promissory notes accrue interest at 6% per year payable at
maturity. During 1995 the Company, at its option, extended the
due dates of the notes to January 1, 1997 by issuing 3,250 shares
of common stock to their holders.
In August, 1991, the Company perfected its interest under certain
operating liens to commence foreclosure on two properties and
recorded the underlying liabilities of $388,116 as the
acquisition cost of the properties. The entire amount of these
liabilities is non-recourse and is to be repaid out of net
proceeds from the wells which is estimated to be $5,000 per
month. Management is currently negotiating with the respective
parties for a long-term, non-recourse payment plan wherein the
parties would be paid from a percentage of the net production
proceeds. During 1993 the amount of liability was reduced by
$295,544 to reflect management's current estimate of the actual
amounts to be assumed by the Company.
In connection with the acquisition of Gavilan, the Company
entered into a loan in the amount of $185,000 from a corporation
related to a former officer and director of the Company. The
loan provided for interest at 12% per annum and was amortized
over 24 months, through February 1, 1993. The loan was secured
by trust deeds granting lender liens on all the Company's oil and
gas property interests located in Utah. The loan was also
personally guaranteed by the Company's president. During 1992 an
additional $50,000 was borrowed and the maturity date extended to
February, 1994. The loan was paid in full during February, 1994.
-14-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - COMMON STOCK TRANSACTIONS
Reverse Stock Split - On December 7, 1994, the Board of Directors
authorized a 1 for 4 reverse split of common stock, thereby
decreasing the number of shares outstanding to 8,991,217. All
references in these financial statements and accompanying
footnotes to the number of common shares and per-share amounts
have been restated to reflect the stock split for all periods
presented. The Company recorded a 54 fractional share adjustment
in connection with the reverse split of common shares.
Common Stock Issuances - During February 1996, the Company
successfully completed a private placement of 800,000 shares of
restricted common stock for $400,000. In connection with the
private placement the Company issued 80,000 shares of restricted
common stock in commissions.
During 1996, the Company issued 51,547 shares of restricted
common stock in payment of a $50,000 finders fee included in
accounts payable, 10,000 shares of restricted common stock in
connection with the renegotiation of oil sand leases, 50,000
shares of common stock in payment of accrued liabilities, and
130,000 shares of common stock in payment of consulting and
engineering work performed.
During 1996, the Company issued 47,955 shares of restricted
common stock in payment of $23,596 in notes payable.
On November 7, 1996, management filed a form S-1 registration
statement to register under the Securities Act for the future
sale, from time to time, of 2,890,600 shares of the Company's
common stock, of which 1,236,850 are presently issued and
outstanding and 1,653,750 are reserved for issuance upon the
exercise of Company's outstanding stock options held by officers,
directors and employees of the Company and by other investors and
consultants.
On November 7, 1996, the Company sold 400,000 shares of
restricted common stock in a private placement offering at $.50
per share. Total proceeds amounted to $200,000.
During 1995, the Company sold 292,857 shares of restricted common
stock to an individual for $140,000 at prices of $.35 and $.60
per share. The Company issued 179,987 shares of restricted
common stock at prices ranging from ($.76 to $.33 per share) for
legal and consulting services valued at $99,320. Also during
1995, the Company issued 12,036 shares of common stock in lieu of
payments on a note payable of $5,243.
During 1995 and 1994, the Company issued 3,250 and 16,250 shares,
respectively, of restricted common stock to the purchasers of the
Company's unsecured debenture. [See Note 5]
During 1995 and 1994, the Company issued 381,722 and 107,739
shares of restricted common stock to officers and employees of
the Company in payment of $103,500 and $52,375 of deferred
salaries and related accrued interest of $9,547 and $0,
respectively.
During January, 1994, the Company sold 200,000 shares of
restricted common stock to a corporation for $100,000 ($.50 per
share).
During 1994, the Company sold 196,851 shares of restricted common
stock and granted 125,000 stock options [See Below] to an
investment group for $100,000 ($.51 per share sold).
-15-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - COMMON STOCK TRANSACTIONS [Continued]
During 1994, the Company issued 35,645 shares of restricted
common stock to individuals for payment of a $17,342 note payable
with its accrued interest of $1,045 and $3,000 in consulting
services ($.60 per share).
Stock Options and Warrants - As of December 31, 1996 the Company
has the following options outstanding to purchase common stock:
<TABLE>
<C> <C> <S><C> <C> <C> <C> <C>
Number
Number Exercise of Shares
of Shares Price Exercised Vesting Date Expiration Date
(A)250,000 $ .60 - July 5, 1993 May 30, 2000
(A)250,000 $ .60 - July 5, 1994 May 30, 2000
(A)250,000 $ .60 - July 5, 1995 May 30, 2000
(A)300,000 $ .5625 - May 31, 1995 May 30, 2000
(B) 7,000 $ .40 - December 31, 1991 May 30, 2000
(B) 9,000 $ .60 - January 1, 1993 May 30, 2000
(C) 25,000 $ 1.00 - September 10, 1993 May 30, 2000
(D)125,000 $ 1.00 - January 1, 1994 December 31, 1997
(E)125,000 $ 1.96 - April 7, 1994 December 31, 1997
(F)183,750 $ .75 - April 23, 1995 April 23, 2000
(G)300,000 $ .66 - January 29, 1996 January 29, 2001
___________
1,824,750
___________
(A) Options issued to three of the Company's officers.
(B) Options issued to three of the Company's officers, and an employee.
(C) Options issued to an employee.
(D) Options issued to an individual as part of the negotiations
to obtain a loan in the amount of $100,000 [See Note 5].
(E) Options issued to an investment group in connection with the
sale of the Company's Common Stock.
(F) 15,000 warrants, issued monthly in connection with an
agreement with an organization [See Note 12], to purchase
one share of the Company's common stock per warrant. The
warrants vest on issuance and are exercisable for seven
years after their issuance.
(G) Options issued to one of the Company's officers.
</TABLE>
During the periods presented in the accompanying financial
statements the Company has granted options to employees . The
Corporation has adopted the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation." Accordingly, no compensation cost
has been recognized for the stock option plans. Had compensation
cost for the Company's stock option plans been determined based
on the fair value at the grant date for awards in 1996 and 1995
consistent with the provisions of SFAS No. 123, the Company's net
loss and loss per common share would have been increased to the
pro forma amounts indicated below:
<TABLE>
<S> <C> <C>
1996 1995
____________________________
Net Loss As reported $(421,586) $(233,609)
Proforma $(428,760) $(240,871)
Loss per Common Share As reported $ (.04) $ (.03)
Proforma $ (.04) $ (.03)
</TABLE>
-16-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - COMMON STOCK TRANSACTIONS [Continued]
The fair value of each option granted is estimated on the date
granted using the Black-Scholes option pricing model with the
following weighted-average assumptions used for grants during the
period ended December 31, 1996 and 1995 risk-free interest rates
of 5.5% and 6.3% expected dividend yields of zero, expected life
of 6.1 and 5.6 years, and expected volatility 110% and 99%.
A summary of the status of the options granted to employees at
December 31, 1996, 1995 and 1994 and changes during the periods
then ended is presented in the table below:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Year Ended Period Ended Period Ended
December 31, 1996 December 31, 1995 December 31, 1994
_______________________________________________________________
Weighted Weighted Weighted
Average Average Average
Shares Exercise Shares Exercise Shares Exercise
Price Price Price
_______________________________________________________________
Outstanding
at beginning
of period 1,091,000 .60 782,000 .61 775,000 .61
Granted 300,000 .66 309,000 .56 7,000 .40
Exercised - - - - - -
Forfeited - - - - - -
Canceled - - - - - -
________________________________________________________________
Outstanding
at end of
Period 1,391,100 .61 1,091,000 .60 782,000 .61
________________________________________________________________
Weighted
average
fair
value
of options
granted 300,000 .04 309,000 .04 N/A N/A
_________________________________________________________________
A summary of the status of the options outstanding to employees
at December 31, 1996 is presented below:
Options Outstanding Options Exercisable
________________________________________________________________________
Weighted- Weighted Weighted-
Range of Average Average Average
Exercise Number Remaining Exercise Number Exercise
Prices Outstanding Contractual Price Exercisable Price
________________________________________________________________________
$.40-.60 1,066,000 3 .59 1,066,000 .59
$.66-.75 300,000 5 .66 300,000 .66
$1.00 25,000 3 1.00 25,000 1.00
________________________________________________________________________
$.40-$1.96 1,391,000 .74 1,391,000 .74
</TABLE>
Preferred Stock - The Company is authorized to issue 1,000,000
preferred shares, par value $.005 per share. The preferred
shares may be issued by the Board from time to time in one or
more issues and with such serial designations as may be stated or
expressed in its resolution providing for the issuance of such
shares. There are no series of preferred stock designated at
December 31, 1996 and 1995 and no shares of preferred stock
issued and outstanding.
-17-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - LEASES
Operating Leases - The Company leases its current office on an
operating lease which expires in September, 2001.
The future minimum lease payments for non-cancelable operating
leases as of December 31, 1996 are as follows:
<TABLE>
<S> <C>
Year ending December 31 Amount
________________________ ___________
1997 32,587
1998 34,890
1999 37,193
2000 39,496
2001 30,918
__________
TOTAL $ 175,084
__________
</TABLE>
Lease expense charged to operations was $31,778, $28,699 and
$25,909 for the years ended December 31, 1996, 1995 and 1994.
NOTE 8 - INCOME TAXES
The Company adopted Statement of Financial Accounting Standards
No. 109 Accounting for Income Taxes [FASB 109] during Fiscal
1993. FASB 109 requires the Company to provide a net deferred
tax asset or liability equal to the expected future tax benefit
or expense of temporary reporting differences between book and
tax accounting and any available operating loss or tax credit
carryforwards. At December 31, 1996 and 1995, the total of all
deferred tax assets were $908,156 and $735,679 and the total of
the deferred tax liabilities were $1,342,212 and $1,298,779. The
amount of and ultimate realization of the benefits from the
deferred tax assets for income tax purposes is dependent, in
part, upon the tax laws in effect, the Company's future earnings,
and other future events. The Company has not established a
valuation allowance. Therefore there was no change in the
valuation allowance during the years ended December 31, 1996 and
1995.
The Company has available at December 31, 1996, unused tax
operating loss carryforwards of approximately $2,400,000, which
may be applied against future taxable income and expire in
varying amounts beginning in 1996 through 2010.
-18-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - INCOME TAXES [Continued]
The components of income tax expense from continuing operations
for the years ended December 31, 1996, 1995 and 1994 consist of
the following:
<TABLE>
<S> <C> <C> <C>
December 31,
____________________________________
1996 1995 1994
__________ __________ ___________
Current income tax expense:
Federal $ - $ - $ -
State - - -
__________ __________ ___________
Net current tax expense
(benefit) $ - $ - $ -
__________ __________ ___________
Deferred tax expense (benefit)
arising from:
Excess of book over tax basis
depletion in oil & gas
properties $ (323) $ (61,983) $ (27,039)
Excess of book over tax basis
depletion in oil sand
properties 43,917 (54,799) (5,441)
Excess tax over book basis
depreciation (161) (423) 937
Net operating loss
carryforwards (172,477) (113,820) (106,032)
__________ __________ ___________
Net deferred tax expense
(benefit) $(129,044) $(231,025) $(137,575)
__________ __________ ___________
</TABLE>
Deferred income tax expense results primarily from the reversal
of temporary timing differences between tax and financial
statement income.
A reconciliation between income tax expense at the federal
statutory rate and to income tax expense at the Company's
effective rate is as follows:
<TABLE>
December 31,
____________________________________
1996 1995 1994
<S> <C> <C> <C>
_________________________________
Computed tax at the expected
federal statutory rate, 34% $(187,214) $(157,976) $(124,981)
Excess of book over tax basis
depletion in oil & gas
properties 20,193 (49,884) 3,824
Excess of book over tax basis
depletion in oil sand properties 40,521 (60,516) (11,844)
Excess tax over book basis
depreciation - - 1,945
State income taxes, net of
federal income tax benefits (16,519) (13,939) (11,028)
Sale of oil property - 51,290 1,387
Other 13,975 - 3,122
_________________________________
Effective income tax rates $(129,044) $(231,025) $(137,575)
_________________________________
</TABLE>
-19-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - INCOME TAXES [Continued]
The temporary differences gave rise to the following deferred tax
asset (liability) at December 31, 1996 and 1995:
<TABLE>
Year Ended December 31,
__________________________
1996 1995
<S> <C> <C>
________________________
NOL carryforwards $ 908,156 $ 735,679
Excess of tax over book accounting
depreciation (95) (256)
Excess of book over tax basis
in oil and gas properties (373,833) (374,156)
Excess of book over tax basis
in oil sand properties $ (968,284) $ (924,367)
The deferred taxes are reflected in the consolidated balance
sheet as follows:
Year Ended December 31,
__________________________
1996 1995
________________________
Short term asset (liability) $ - $ -
Long term asset (liability) $(434,056) $(563,100)
</TABLE>
NOTE 9 - RELATED PARTY TRANSACTIONS
A current shareholder and officer of the Company has made loans
to the Company or its subsidiaries. At December 31, 1996 and
1995, $58,197 and $53,240 was owing to the officer/shareholder on
a 9% note. The note has been renewed and matures on July 1,
1998. This amount was originally loaned to the Company during
1993. During February, 1995, the shareholder and officer loaned
the Company an additional $20,000. The amount was paid in full
during August 1995.
During 1995, the Company issued 381,722 shares of restricted
common stock to officers of the Company for deferred salaries of
$103,000 and their related accrued interest of $9,547. Also
during 1995, the Company converted deferred salaries of $34,750
and their related accrued interest of $3,521 to a $38,271 note
payable bearing interest at 9% per annum. The note has been
renewed and matures on July 1, 1998.
During May, 1995, the Company issued 300,000 options to purchase
common stock at $.5625 per share to directors and officers of the
Company.
Accounts payable at December 31, 1995 and 1994 include $2,385 and
$6,729 owing to certain officers of the Company for expense
reimbursements.
Accounts payable at December 31, 1996 and 1995 include $27,429
and $18,872 in legal fees owing to a law firm in which a
shareholder and officer of the Company is a partner. During
1995, the Company paid $33,092 to the law firm through the
issuance of 47,273 shares of common stock.
-20-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - RELATED PARTY TRANSACTIONS [Continued]
An officer/shareholder originally advanced $15,000 to the Company
during 1993. The underlying note payable provides for interest
at 9% per annum. The note has been renewed and matures on July
1, 1998. The balance outstanding at December 31, 1996 and 1995
was $21,218 and $19,411.
NOTE 10 - LITIGATION
The Company is involved in an administrative action against the
United States Department of Interior, Bureau of Indian Affairs
wherein the Bureau of Indian Affairs is attempting to cancel
certain oil and gas leases in the Roosevelt Unit in Utah. The
Company is functioning as the Unit Operator of the Leases and
could lose a substantial portion of its oil and gas producing
properties if they are canceled. The Company could also lose a
$75,000 letter of credit which is being held as an operating
bond. At this stage of the proceedings, outside counsel cannot
offer an opinion as to the probable outcome. However, the
Company intends to vigorously defend its position.
The Company is also involved in various litigation as part of its
normal business operations. In management's opinion, the
ultimate resolution of these cases will not have a material
adverse effect on the Company's financial position.
NOTE 11 - SIGNIFICANT CUSTOMERS
The Company sells substantially all of its oil production to one
purchaser because it is able to negotiate more favorable terms
with the purchaser. If the purchaser stopped buying products
from the Company, the Company would be forced to contract with
other purchasers available in the areas where the oil is
produced. The effect of a purchaser pulling out 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 it's oil is
a commodity that is readily marketable and that the marketing
methods it follows is typical of similar companies in the
industry.
NOTE 12 - AGREEMENTS
The Company entered into an employment agreement, effective
January 26, 1996 with the new Chief Executive Officer and
Chairman of the Board of Directors of the Company. The
agreement covers the three year period ending February 26, 1999,
with the option to extend the agreement through February 26,
2001. The agreement includes a base salary of 5% of the
Company's net profits from operations before depletion,
depreciation, tax credits, and amortization, but after interest
expense on debt; not to exceed $1,000,000 per year. The
agreement also calls for the Company to grant 300,000 stock
options to purchase the Company's restricted Common Stock at $.66
per share and an additional 75,000 options for each year of
Executive Employment which is completed after funding is
achieved. Additionally, other benefits are provided including
participation in certain insurance, vacation and expense
reimbursements. As of December 31, 1995, the Company had accrued
a $50,000 finders fee in connection with the new employment
agreement. The fee was paid in February 1996, through the
issuance of 51,547 shares of restricted common stock.
-21-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - AGREEMENTS [Continued]
During April, 1995 the Company entered into an agreement with an
organization to perform professional, technical and project
development services in connection with the planned oil sand
processing facility and to identify potential investors for the
project financing and to assist the Company in negotiating and
closing project financing terms and agreements. The terms of the
agreement provided for the Company to pay to the organization
monthly amounts of $5,000 in cash or $7,500 in common stock of
the Company and to issue monthly 15,000 warrants to purchase one
share per warrant of the Company's common stock at $.75 per
share. These warrants are exercisable for seven years after
their issuance. If the financing of the planned oil sand
facility is successfully funded, the Company will also pay a
cumulative finders fee of 1% to 5% of the cash proceeds arranged
by the organization and issue 24 common stock warrants for each
$1,000 received, with a 100,000 warrant minimum. These warrants
allow the organization to purchase one common share of the
Company's stock at $1.00 per share and are exercisable for a
period of seven years from the date of issuance. A total of
183,750 warrants valued at $9,665 were issued under the
agreement.
The Company currently has a two year employment agreement with
its president which expires on January 1, 1997. The agreement
will renew for successive one year periods unless canceled by
either party. The agreement provides for an annual base salary
of $78,000.
In May 1995, the Company adopted the 1995
Officer/Employee/Consultant Benefit Plan. Pursuant to the Plan,
which is administered by the Company's Board of Directors, up to
800,000 shares of Common Stock may be awarded to the Company's
officers, consultants, and employees who are selected by the
Board of Directors. The Plan also allows the Company to award
cash incentives in the place of or in addition to the award of
stock options thereunder. As of December 31, 1996, there were
99,987 shares of common stock issued under the plan to outside
consultants. There were no options or incentive awards issued
under the plan as of December 31, 1996.
NOTE 13 - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles which
contemplate continuation of the Company as a going concern.
However, the Company has incurred significant losses during the
past few years including $421,586 during 1996, and has current
liabilities in excess of current assets of $258,038 at December
31, 1996. Further the Company is still in the process of
developing its oil sand operation and thus has not reached a
profitable stage in its operations. These items raise
substantial doubt about the ability of the Company to continue as
a going concern.
-22-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 - GOING CONCERN [Continued]
Management's plans in regards to these matters are as follows:
The Company has significant oil sand reserves and management
is continuing to develop and formulate plans for the
extraction and sale of the reserves. Preliminary testing on
a reduced scale has already been completed.
Management is seeking to raise additional working capital
either through loans or from additional equity capital from
outside investors or through production joint ventures.
There is no assurance that the Company will be successful in
obtaining this additional capital.
The financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that
might be necessary should the Company be unable to obtain
additional financing or establish profitable operations.
-23-
<PAGE>
CROWN ENERGY CORPORATION
SUPPLEMENTAL INFORMATION
[Unaudited]
OIL AND GAS PRODUCING ACTIVITIES
Oil and Gas Reserves - Users of this information should be aware
that the process of estimating oil and gas reserves is very
complex, requiring significant subjective decisions in the
evaluation of available geological, engineering, and economic data
for each reservoir. The data for a given reservoir may change
substantially over time as a result of, among other things,
additional development activity, production history and viability
of production under varying economic conditions; consequently,
material revisions to existing reserve estimates may occur in the
future. Although every reasonable effort is made to ensure that
the reserve estimates reported represent the most accurate
assessment possible, the significance of the subjective decisions
required, and variances in available data for various reservoirs
make these estimates generally less precise than other estimates
presented in connection with financial statement disclosure.
Proved reserves are estimated quantities of natural gas, crude oil
and condensate, 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 developed reserves are reserves that can be expected to be
recovered through existing wells with existing equipment and
operating methods.
The oil and gas reserve information presented in the following
tables as of December 31, 1996, 1995 and 1994 is based upon reports
of petroleum engineers and management's estimate. All reserves
presented are proved reserves, all of which are located within the
United States, and are defined as estimated quantities which
geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions. Such reserves
are estimates only and should not be construed as exact amounts.
The Company does not have proved reserves applicable to long term
supply agreements with foreign governments.
-24-
<PAGE>
CROWN ENERGY CORPORATION
SUPPLEMENTAL INFORMATION
[Unaudited]
OIL AND GAS PRODUCING ACTIVITIES [Continued]
Changes in Net Proved Reserves
[Volumes in Thousands]
<TABLE>
1996 1995 1994
<S> <C> <S> <C> <S> <C> <S>
_________________________________________________
Oil Gas Oil Gas Oil Gas
(MBbls)(MMcf) (MBbls) (MMcf) (MBbls)(MMcf)
_________________________________________________
Estimated quantity at
beginning of period 774 - 871 - 1,016 -
Revisions of previous
estimates 58 - 3 - (128) -
Discoveries and extensions - - - - - -
Purchase of reserves in place - - - - - -
Production (9) - (10) - (17) -
Sale/disposal of reserves in
place - - (90) - - -
_________________________________________________
Estimated quantity at
end of period 823 - 774 - 871 -
_________________________________________________
Proved developed reserves:
Beginning of period 51 - 151 - 167 -
End of period 68 - 51 - 151 -
_________________________________________________
Company's proportional
interest in reserves of
investees accounted
for by the equity
method - end of year - - - - - -
_________________________________________________
</TABLE>
-25-
<PAGE>
CROWN ENERGY CORPORATION
SUPPLEMENTAL INFORMATION
[Unaudited]
OIL AND GAS PRODUCING ACTIVITIES [Continued]
Costs Incurred in Oil and Gas Property Acquisition,
Exploration and Development Activities
<TABLE>
December 31,
<S> <C> <C> <C>
_____________________________
1996 1995 1994
_____________________________
[In Thousand of Dollars]
Acquisition of properties:
Undeveloped leases $ - $ - $ -
Proved producing leases - - -
Exploration costs - - -
Development costs - - -
_______ _______ _______
Total Additions to Oil and Gas
Properties $ - $ - $ -
_______ _______ _______
Company's share of equity method
investees' costs of property
acquisition, exploration and
development costs $ - $ - $ -
_______ _______ _______
Capitalized Costs Relating to Oil and Gas Producing Activities
Capitalized costs as of the
end of the period:
[In thousands of dollars]
Proved properties $2,196 $2,196 $2,346
Unproved properties - - -
_______ _______ _______
Total Capitalized Costs 2,196 2,196 2,346
Less: accumulated depreciation
and depletion 1,112 1,051 989
_______ _______ _______
Net Capitalized Costs $1,084 $1,145 $1,357
_______ _______ _______
Company's share of equity
method investees' net
capitalized costs $ - $ - $ -
_______ _______ _______
</TABLE>
-26-
<PAGE>
CROWN ENERGY CORPORATION
SUPPLEMENTAL INFORMATION
[Unaudited]
OIL AND GAS PRODUCING ACTIVITIES [Continued]
Results of Operations for Producing Activities
<TABLE>
December 31,
_____________________________
1996 1995 1994
<S> <C> <C> <C>
_____________________________
[In Thousand of Dollars]
Oil and gas sales 214 $197 $287
Production costs 137 128 188
Exploration costs - - -
Depreciation and depletion 61 62 91
_______ _______ _______
Income (loss) from operations 16 7 8
Income tax benefit (expense) (6) (3) (3)
_______ _______ _______
Results of Operations from
Producing Activities
[Excluding Corporate Overhead
and Interest Costs] 10 4 5
_______ _______ _______
Company's share of equity method
investees' results of operations
for producing activities - - -
_______ _______ _______
</TABLE>
Standard Measure of Discounted Future Net Cash Flows
Relating to Proved Oil and Gas Reserves
The information that follows has been developed pursuant to
procedures prescribed by SFAS No. 69, and utilizes reserve and
production data estimated by management and independent petroleum
engineers. The information may be useful for certain comparison
purposes, but should not be solely relied upon in evaluating the
Company or its performance. Moreover, the projections should not be
construed as realistic estimates of future cash flows, nor should
the standardized measure be viewed as representing current value.
The future cash flows are based on sales, prices, costs, and
statutory income tax rates in existence at the dates of the
projections. Material revisions to reserve estimates may occur in
the future, development and production of the oil and gas reserves
may not occur in the periods assumed, and actual prices realized and
actual costs incurred are expected to vary significantly from those
used. Management does not rely upon the information that follows in
making investment and operating decisions; rather, those decisions
are based upon a wide range of factors, including estimates of
probable reserves as well as proved reserves, and different price
and cost assumptions than those reflected herein.
-27-
<PAGE>
CROWN ENERGY CORPORATION
SUPPLEMENTAL INFORMATION
[Unaudited]
OIL AND GAS PRODUCING ACTIVITIES [Continued]
Standard Measure of Discounted Future Net Cash Flows
Relating to Proved Oil and Gas Reserves
The following tables set forth the standardized measure of
discounted future net cash flows from projected production of the
Company's proved oil and gas reserves:
<TABLE>
December 31,
<S> <C> <C> <C>
_____________________________
1996 1995 1994
_____________________________
[In Thousand of Dollars]
Future reserves $17,510 $13,925 $15,023
Future production and development
costs 12,324 10,403 11,188
Future income tax expenses - - -
_______ _______ _______
Future net cash flows 5,186 3,522 3,835
Discount to present value at
10 percent 3,325 2,256 2,329
_______ _______ _______
Standardized measure of discounted
future net cash flows $1,861 $1,266 $1,506
_______ _______ _______
Company's share of equity method
investees' standardized measure of
discounted future net cash flows $ - $ - $ -
_______ _______ _______
</TABLE>
-28-
<PAGE>
CROWN ENERGY CORPORATION
SUPPLEMENTAL INFORMATION
[Unaudited]
OIL AND GAS PRODUCING ACTIVITIES [Continued]
Standard Measure of Discounted Future Net Cash Flows
Relating to Proved Oil and Gas Reserves
The following table sets forth the changes in standardized measure
of discounted future net cash flows:
<TABLE>
December 31,
<S> <C> <C> <C>
_____________________________
1996 1995 1994
_____________________________
[In Thousand of Dollars]
Balance at beginning of period $1,266 $1,506 $1,456
Sales of oil and gas net of production
costs (77) (69) (99)
Changes in prices and costs 1,083 571 489
Changes in quantity estimates and
timing of production (411) (509) (340)
Acquisition of reserves in place - - -
Current year discoveries, extensions
and improved recoveries - - -
Estimated future development and
production costs related to current
year acquisitions, discoveries,
extensions and improved recoveries - - -
Net change in income taxes - - -
Sales of reserves in place - (233) -
Accretion of discount - - -
Other - change in ten percent
discount - - -
_______ ______ _______
Balance at End of Period $1,861 $1,266 $1,506
_______ _______ _______
</TABLE>
-29-
<PAGE>
[TYPE] EX-24.1
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
430 EAST 400 SOUTH
SALT LAKE CITY, UTAH 84111
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation of our report dated March 5,
1997, appearing in the Annual Report on Form 10-K of Crown Energy Corporation
for the year ended December 31, 1996, in the Company's Registration Statement
on Form S-1, SEC File No. 333-2358.
/s/Pritchett, Siler & Hardy
Pritchett, Siler & Hardy, P.C.
March 28, 1997
[TYPE] EX-25.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below does hereby constitute and appoint Jay Mealey as his true and lawful
attorney in fact and agent,
with full power of substitution, for him and in his name, place and stead, in
any and all capacities, to
sign any and all amendments (including post-effective amendments) to this
Registration Statement
and to file the same, with all exhibits thereto, and any documents in
connection therewith, with the
United States Securities and Exchange Commission granting unto said attorneys
in fact and agents,
and each of them, full power and authority to do and perform each and every
act and thing requisite
and necessary to be done in and about the premises in order to effectuate the
same fully, to all intents
and purposes, as he might or could do in person, hereby ratify and confirm all
that said attorney in
fact and agent may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
Signature Date
/s/ James A. Middleton April 15, 1997
James A. Middleton, Chairman of
the Board of Directors, Chief
Executive Officer
/s/ Jay Mealey April 15, 1997
Jay Mealey, President,
Chief Operating Officer and Treasurer
/s/ Richard S. Rawdin April 15, 1997
Richard S. Rawdin, Vice-President,
Director and Secretary
[TYPE] EX-27
[ARTICLE] 5
[CIK] 0000876528
[NAME] CROWN ENERGY CORPORATION
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-START] JAN-01-1996
[PERIOD-END] DEC-31-1996
[CASH] 142,772
[SECURITIES] 0
[RECEIVABLES] 30,379
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 245,931
[PP&E] 66,546
[DEPRECIATION] 64,788
[TOTAL-ASSETS] 4,591,374
[CURRENT-LIABILITIES] 503,969
[BONDS] 182,093
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 228,611
[OTHER-SE] 5,597,772
[TOTAL-LIABILITY-AND-EQUITY] 4,591,374
[SALES] 224,855
[TOTAL-REVENUES] 224,855
[CGS] 137,340
[TOTAL-COSTS] 768,803
[OTHER-EXPENSES] 7,203
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 20,068
[INCOME-PRETAX] (550,630)
[INCOME-TAX] (129,044)
[INCOME-CONTINUING] (421,586)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (421,586)
[EPS-PRIMARY] (.04)
[EPS-DILUTED] (.0)
</TABLE>
