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 September 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 -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 11,680,549 shares of $.02 par value common stock outstanding as of
November 13, 1997.
CROWN ENERGY CORPORATION
INDEX
PAGE(S)
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet at
September 30,
1997 (unaudited) and December 31, 1996 3
Condensed Consolidated Statement of Income
for the Three
Months ended September 30, 1997 and 1996 (unaudited) 5
Condensed Consolidated Statement of Income
for the Nine
Months ended September 30, 1997 and 1996 (unaudited) 6
Condensed Consolidated Statement of
Stockholder's Equity (unaudited) 7
Condensed Consolidated Statement of
Cash Flows for the
Nine Months ended September 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 14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 16
ITEM 2. CHANGES IN SECURITIES 16
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 16
ITEM 5. OTHER INFORMATION 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 16
PART III. SIGNATURES 17
<PAGE>
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CROWN ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
September 30,
1997 December 31,
[unaudited] 1996
CURRENT ASSETS:
Cash $311,086 $142,772
Joint interest and trade
accounts receivable 13,022 30,379
Notes receivable 75,000 0
Other current assets 139,074 72,780
_______ _______
Total Current Assets 538,182 245,931
INVESTMENT IN OIL AND GAS PROPERTIES 0 1,083,882
(full cost method, net of accumulated depletion)
INVESTMENT IN OIL SAND PROPERTIES 2,970,229 2,919,077
OTHER ASSETS 344,983 342,484
TOTAL ASSETS $3,853,394 $4,591,374
-3-
<PAGE>
CROWN ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30,
1997 December 31,
[unaudited] 1996
CURRENT LIABILITIES
Accounts payable $90,113 $92,663
Current portion of long-term debt 268,414 185,984
Other current liabilities 140,972 225,322
Total Current Liabilities 499,499 503,969
LONG TERM DEBT 0 60,845
LONG TERM DEBT -- RELATED PARTIES 129,617 121,248
DEFERRED TAX LIABILITY 72,457 434,056
Total Liabilities 701,573 1,120,118
STOCKHOLDERS' EQUITY:
Preferred stock, $.005 par value,
1,000,000 shares
authorized, 45,000 shares issued
and outstanding 225 -----
Common stock, $.02 par value,
50,000,000 shares
authorized, 11,572,141 and 11,430,571
issued and
outstanding at 1997 and 1996 231,443 228,611
Capital in excess of par value 5,877,207 5,497,772
Retained earnings (2,957,054) (2,255,127)
Total Stockholders' Equity 3,151,821 3,471,256
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,853,394 $4,591,374
-4-
<PAGE>
CROWN ENERGY CORPORATION
[UNAUDITED]
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended
September 30,
1997 1996
REVENUE:
Oil and gas production $0 $65,646
Total Revenue 0 65,646
EXPENSES:
Production costs and related taxes 0 34,887
General and administrative expenses 145,011 97,312
Depletion, depreciation and amortization 0 16,110
Total Expenses 145,011 148,309
OPERATING LOSS (145,011) (82,663)
OTHER INCOME (EXPENSES):
Interest and other income 8,786 1,267
Gain (loss) on sale of properties 0 0
Interest and other expense (9,768) (5,109)
Total Other Income (Expenses) (982) (3,842)
LOSS BEFORE TAX PROVISION ($145,993) ($86,505)
PROVISION FOR TAXES:
Current tax expense (benefit) 0 0
Deferred tax expense (benefit) (49,638) (29,412)
NET LOSS ($96,355) ($57,093)
NET LOSS PER SHARE ($0.01) ($0.01)
CROWN ENERGY CORPORATION
[UNAUDITED]
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended
September 30,
1997 1996
REVENUE:
Oil and gas production $77,496 $165,639
Total Revenue 77,496 165,639
EXPENSES:
Production costs and related taxes 54,653 97,711
General and administrative expenses 299,009 328,132
Depletion, depreciation and amortization 23,817 46,178
Total Expenses 377,479 472,021
OPERATING LOSS (299,983) (306,382)
OTHER INCOME (EXPENSES):
Interest and other income 4,928 6,371
Gain (loss) on sale of properties 0 0
Loss on sale of subsidiary (751,461) 0
Interest and other expense (17,010) (15,775)
Total Other Income (Expenses) (763,543) (9,404)
LOSS BEFORE TAX PROVISION ($1,063,526) (315,786)
PROVISION FOR TAXES:
Current tax expense (benefit) 0 0
Deferred tax expense (benefit) (361,599) (107,367)
NET LOSS ($701,927) ($208,419)
NET LOSS PER SHARE ($0.06) ($0.02)
-6-
<PAGE>
CROWN ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENT
OF STOCKHOLDERS' EQUITY
[UNAUDITED]
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
Preferred Stock Common Stock Capital in
Excess of Retained
Shares Amount Shares Amount Par Value (Deficit) Total
______ ______ ______ _____ _________ _______ ______
BALANCE,
DECEMBER 31,1996
--- --- 11,430,571 $228,611 $5,497,772 ($2,255,127) $3,471,256
Shares issued for
services at $.86 to
$1.00 per share --- --- 45,000 900 42,706 --- 43,606
Shares issued for
payment of note
payable --- --- 56,877 1,138 24,847 --- 25,985
Shares issued in
debenture conversion --- --- 64,693 1,294 31,295 --- 32,589
Canceled shares --- --- (25,000) (500) (19,188) --- (19,688)
Sale of Preferred
Stock 45,000 225 --- --- 299,775 --- 300,000
Net Income (loss)
for the nine months
ended September
30, 1997 --- --- --- --- --- (701,927) (701,927)
BALANCE,
SEPTEMBER 30, 1997
45,000 $225 11,572,141 $231,443 $5,877,207 ($2,957,054) $3,151,821
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
CROWN ENERGY CORPORATION
[UNAUDITED]
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended
September 30,
1997 1996
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
Net income (loss) ($701,927) ($208,419)
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 45,882
Net effect of sale of subsidiary 844,926 0
Change in assets and liabilities:
Joint interest and accounts receivable 17,357 16,740
Other assets (60,187 (101,078)
Accounts payable (2,550) (109,817)
Other current liabilities (90,929) 120,102
Deferred tax liability (361,599) (107,367)
Total adjustments 370,835 (95,538)
Net Cash Used by Operating Activities (331,092) (303,957)
CASH FLOWS FROM (TO) INVESTING ACTIVITIES:
Additions to oil sand properties (16,152) (45,553)
Payments received on note receivable 75,000 0
Net proceeds from sale of
oil and gas properties 0 0
Net Cash Provided (Used) in
Investing Activities (58,848) (45,553)
CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
Net changes in long-term debt (9,442) 12,309
Net proceeds from issuance
of convertible debenture 150,000 0
Net proceeds from sale of preferred stock 300,000 0
Net proceeds from sale of common stock 0 335,000
Net Cash Provided by Financing Activities $440,558 $347,309
-8-
<PAGE>
CROWN ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[CONTINUED]
For the Nine Months Ended
September 30,
1997 1996
Net Increase (Decrease) in Cash: ($168,314) ($2,201)
Cash at Beginning of Period $142,772 $97,247
Cash at End of Period $311,086 $95,046
Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest $4,844 ---
Income taxes --- ---
Supplemental Schedule of Non-cash Investing and Financing Activities:
For the period ended September 30, 1997:
The Company issued 45,000 shares of common stock
in payment of accounts
payable and oil sand project
costs.
The Company issued 56,877 shares of common stock
in payment of $25,985 in
long-term debt.
The Company issued 64,693 shares of common stock
in a partial debenture conversion.
The Company sold its wholly-owned subsidiary,
Gavilan Petroleum, Inc. on a
note for $150,000.
For the period ended September 30, 1996:
The Company issued 191,547 shares of common stock
in payment of $89,375 in
current liabilities
and $90,000 in project costs.
The Company issued 47,955 shares of common stock
in payment of $23,596 in
long-term debt.
-9-
<PAGE>
CROWN ENERGY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared by the
Company without audit. In the
opinion of management, all adjustments (which include only normal
recurring adjustments)
necessary to present fairly the financial position, results of
operations and changes in stockholders'
equity and cash flows at September 30, 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
September 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. Crown acquired 100% of BVRC on September 30, 1992. On August
6, 1997, the name of
the corporation was changed to Crown Asphalt Corporation ["CAC"].
On September 1, 1997, the
corporation entered into a joint venture with MCNIC Pipeline and
Processing Company to construct
and operate an asphalt production facility at Asphalt Ridge (See
Note 5 - Formation of Joint
Venture). The Company's asphalt business is its primary business
activity.
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.
<PAGE>
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. As of September 30, 1997, the promissory note had a
balance of $75,000. The note
is secured by a pledge of the Gavilan stock.
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 decreased 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. On
July 21, 1997, ONI converted
a portion of the debenture into 64,693 shares of common stock. On
November 10, 1997, ONI
converted the remaining balance plus accrued interest into 108,408
shares of common stock.
NOTE 5 - FORMATION OF JOINT VENTURE
On August 1, 1997, Crown's wholly-owned subsidiary, Crown Asphalt
Corporation, ("Crown
Asphalt") entered into a joint venture with MCNIC Pipeline &
Processing, Inc., ("MCNIC"), a
subsidiary of MCN Energy Group, Inc., a large diversified energy
holding company with
approximately $4 billion in assets ("MCN"). The joint venture will
operate through Crown Asphalt
Ridge, L.L.C., a Utah limited liability company, (the "L.L.C.") and
will be devoted to extracting
commercially marketable products from Crown Asphalt's oil sands
reserves (the "Reserves") located
at Asphalt Ridge in eastern Utah.
MCNIC and Crown will initially hold sharing ratios of 75% and 25%,
respectively, in profits,
losses and obligations of the L.L.C. The forgoing ratios will be
adjusted to provide each party with
a 50% sharing ratio upon the achievement of certain payouts to
MCNIC. Crown Asphalt's required
capital contribution to the L.L.C. consists of (i) Crown Asphalt's
rights under certain equipment
leases with a fair market value of up to $3.5 million to be obtained
by Crown Asphalt; (ii) the
Sublicense of Crown's proprietary oil sands refining technology from
Park Guymon Enterprises,
Inc.; (iii) the capital reserves (which were valued at the time of
the formation of the L.L.C. at
$500,000) and (iv) an amount of cash, if any, needed to bring Crown
Asphalt's capital contributions
up to 25% of the capital required to construct the initial oil sands
refining plant (after giving effect
to the value of the items described above, MCNIC, in turn, will be
required to fund 75% of the cash
required to construct the Initial Plant contemplated by the L.L.C.'s
Operating Agreement). It is
presently estimated that such Initial Plant will cost $19 million
to construct.
NOTE 6 - SALE OF PREFERRED STOCK
On November 4, 1997, Crown completed the sale of 500,000 shares of
its 8% Class A Cumulative
Convertible Preferred Stock ("Series A Preferred Stock") to Enron
Trade & Resources Corp.
("ECT") pursuant to a Stock Purchase Agreement dated September 25,
1997 for an aggregate sales
price of $5 million. Crown issued 45,000 shares and received
$450,000 on the execution of the
Stock Purchase Agreement. The Series A Preferred are convertible at
the option of its holders into
24% of the Common Stock of Crown. Dividends shall accrue on the
outstanding Series A Preferred
shares at the rate of 8% per annum and may be paid through cash or
common shares of Crown at
the option of the holder.
Subject to the holders' right to convert the Series A Preferred,
Crown may redeem the Series A
Preferred at any time from the date on which it is issued at the
following prices: (i) if such
redemption occurs prior to 36 months, the redemption price shall be
130% of the Series A
Preferred's "Stated Value" ($10); (ii) if prior redemption occurs
after 36 months but prior to 48
months, the redemption price shall be 115% of the Stated Value;
(iii) if redemption occurs after 48
months but prior to 60 months from the date of issuance, the Series
A Preferred may be redeemed
at 110% of the Series A Preferred's Stated Value; and (iv) if
redemption occurs after 60 months
from the date of the issuance, the redemption price shall be 100% of
the Series A Preferred's Stated
Value. The holder of the Series A Preferred may require Crown to
redeem 125,000 shares of the
Series A Preferred on the eighth anniversary of its issuance and the
like amount on the ninth
anniversary of it issuance, with all remaining Series A Preferred to
be redeemed on the tenth
anniversary of its issuance at a per share price no lower than the
Stated Value.
NOTE 7 - CONCENTRATION OF CREDIT RISK
The realization of the Company's investment in oil sand properties
is dependent on the success of
the joint venture with MCNIC to successfully complete construction
of its asphalt production facility
and profitably sell the related asphalt products. The company
currently has not generated any
significant revenues through the sale of asphalt products from its
mine at Asphalt Ridge in eastern
Utah and the company currently does not have any other method of
generating revenues.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULT OF OPERATIONS
RESULTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 1997, COMPARED TO THE THREE
MONTHS ENDED SEPTEMBER 30, 1996.
Oil and gas revenue decreased from $65,646 for the three months ended
September 30, 1996 to $0 for the
three months ended September 30, 1997. This decrease was 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 $34,887 for the three months
ended September 30, 1996 to $0
for the three months ended September 30, 1997. This decrease was due to the
sale of the Company's wholly-owned
subsidiary, Gavilan Petroleum, Inc., which was effective June 1, 1997.
General and administrative expenses increased from $97,312 for the three
months ended September 30, 1996
to $145,011 for the three months ended September 30, 1997, an increase of
$47,699 (49%). This change was due to
increased overhead costs related to the Asphalt Ridge project financing.
Depletion, depreciation and amortization decreased from $16,110 for the
three months ended September 30,
1996 to $0 for the three months ended September 30, 1997. This decrease was
due to the sale of the Company's
wholly-owned subsidiary, Gavilan Petroleum, Inc., which
was effective June 1, 1997.
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1997, COMPARED TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1996.
Oil and gas revenue decreased from $165,639 for the nine months ended
September 30, 1996 to $77,496 for
the nine months ended September 30, 1997, a decrease of $88,143 (53%). 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 $97,711 for the nine months
ended September 30, 1996 to
$54,653 for the nine months ended September 30, 1997, a decrease of $43,058
(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.
General and administrative expenses decreased from $328,132 for the nine
months ended September 30, 1996
to $299,009 for the nine months ended September 30, 1997, a decrease of
$29,123 (9%). This change was primarily
due to a decrease in consulting expenses.
Depletion, depreciation and amortization decreased from $46,178 for the
nine months ended September 30,
1996 to $23,817 for the nine months ended September 30, 1997, a decrease of
$22,361 (48%). This decrease was
primarily due to the sale of the Company's wholly-owned subsidiary, Gavilan
Petroleum, Inc., which was effective June
1, 1997.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company had cash and other current assets of
$538,182 as compared to cash and
other current assets of $245,931 at December 31, 1996. The increase of
292,251 was due to proceeds from the sale
of the Company's subsidiary, Gavilan Petroleum, Inc., of $150,000, the
issuance of a $150,000 convertible debenture
and the sale of $5 million of preferred stock, $300,000 of which was received
as of September 30, 1997 net of financing
costs. The balance was received on November 5, 1997 (See Note 6 - Sale of
Preferred Stock). The increase in cash
and other current assets was partially offset by a loss from operations.
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 $129,617 in long-term debt and $268,414 in current
portion of long-term debt at September 30,
1997. This increase was primarily due to the issuance of a $150,000
convertible debenture and 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 has completed its financing for construction and start-up of
its commercial asphalt production
facility. On September 1, 1997, the Company entered into a joint venture with
MCNIC Pipeline & Processing
Company (See Note 5 - Formation of Joint Venture). On November 5, 1997, the
Company completed the sale of $5
million of preferred stock to Enron Capital & Trade Resources Corp. (See Note
6 - Sale of Preferred Stock).
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: November 14, 1997 By: /s/ JAY MEALEY
Jay Mealey, President
Date: November 14, 1997 By: /s/ RICHARD S. RAWDIN
Richard S. Rawdin, Vice President
of Finance
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0
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