<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Amendment No. 1
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
February 26, 1996
- - --------------------------------------------------------------------------------
Date of Report (Date of earliest event reported)
AMERICAN RESOURCES OF DELAWARE, INC.
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(Exact name of Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-21472 86-0713506
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(Commission File Number) (IRS Employer Identification No.)
160 Morgan Street
P. O. Box 87
Versailles, Kentucky 40383
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(Address of principal executive offices) (Zip Code)
(606)873-5455
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(Registrant's Telephone Number, including Area Code)
Not Applicable
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(Former name or former address, if changed since last report)
<PAGE>
Item 1. Changes in Control of Registrant. Not Applicable.
Item 2. Acquisition or Disposition of Assets.
PURCHASE OF ASSETS OF AKS:
On February 26, 1996, the Registrant acquired oil and gas properties
from AKS Energy Corporation. The purchase was previously reported by the
Registrant on Form 8-K which was filed on March 12, 1996. The purpose of this
Form 8-K/A is to provide the financial information required by Item 7 of Form
8-K.
Item 3. Bankruptcy Receivership. Not Applicable.
Item 4. Change in Registrant's Certified Accountant. Not Applicable.
Item 5. Other Events. Not Applicable.
Item 6. Resignation of Registrant's Directors. Not Applicable.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
The audited Statements of Revenues and Direct Operating Expenses
of the AKS Energy Corporation ("AKS") properties for the year ended December 31,
1995 and for the year ended December 31, 1994 are presented with accompanying
notes.
(b) Pro Forma Financial Information.
The unaudited Pro Forma Condensed Consolidated Balance Sheet at
December 31, 1995 and unaudited Pro Forma Consolidated Statement of Operations
for the year ended December 31, 1995 (collectively the "Financial Statements")
are presented assuming that the purchase of certain oil and gas properties,
equipment and pipelines and severance tax obligations from AKS occurred on
December 31, 1995, January 1, 1995 and January 1, 1994, respectively. The
Financial Statements have been prepared based on the historical financial
statements as of the same date or for the same period indicated.
(c) Exhibits.
None.
2
<PAGE>
SIGNATURE
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 hereunto duly authorized.
AMERICAN RESOURCES OF DELAWARE, INC.
By: /s/Jeffrey J. Hausman
---------------------------------------------
Jeffrey J. Hausman
Its: Chief Financial Officer
Dated: May 9, 1996
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3
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
American Resources of Delaware, Inc.:
We have audited the accompanying statements of revenues and direct operating
expenses of the Arakis Properties purchased by American Resources of Delaware,
Inc. for each of the years in the two-year period ended December 31, 1995.
These statements of revenues and direct operating expenses are the
responsibility of the property owner's management. Our responsibility is to
express an opinion on these statements of revenues and direct operating expenses
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 statements of revenues and direct
operating expenses are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statements of revenues and direct operating expenses. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the statements
of revenues and direct operating expenses. We believe that our audits of the
statements of revenues and direct operating expenses provide a reasonable basis
for our opinion.
The accompanying statements were prepared as described in note 1 for the purpose
of complying with certain rules and regulations of the Securities and Exchange
Commission (SEC) for inclusion in certain SEC regulatory reports and filings and
are not intended to be a complete financial presentation.
In our opinion, the accompanying statements of revenues and direct operating
expenses present fairly, in all material respects, the revenues and direct
operating expenses of the Arakis Properties purchased by American Resources of
Delaware, Inc. for each of the years in the two-year period ended December 31,
1995, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick, LLP
Houston, Texas
April 30, 1996
<PAGE>
THE ARAKIS PROPERTIES PURCHASED BY
AMERICAN RESOURCES OF DELAWARE, INC.
Statements of Revenues and
Direct Operating Expenses
Year ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Revenues $ 910,486 1,064,810
Direct operating expenses 305,160 316,887
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Revenues in excess of direct
operating expenses $ 605,326 747,923
---------- --------------
---------- --------------
</TABLE>
See accompanying notes to the Statements of Revenues and Direct Operating
Expenses.
<PAGE>
THE ARAKIS PROPERTIES PURCHASED BY
AMERICAN RESOURCES OF DELAWARE, INC.
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
(1) Summary of Significant Accounting Policies
Basis of Presentation
The accompanying statements present the revenues and direct operating
expenses of the working interests in certain oil and gas properties
purchased by American Resources of Delaware, Inc. (ARI) from AKS Energy
Corp. during February 1996 for $4.2 million in cash, stock and warrants of
ARI (the Arakis Properties). The Arakis Properties are located in the
state of Kentucky.
The statements of oil and gas revenues and direct lease operating expenses
include only the oil and gas revenues and direct lease operating expenses
attributable to the Arakis Properties. Oil and gas revenues and direct
lease operating expenses included herein are not necessarily representative
of future operations. Additionally, the financial statements do not
include depreciation, depletion and amortization, general and
administrative expenses, interest expense, or federal and state income
taxes.
Revenue Recognition
The entitlements method is used for accounting for gas revenues.
(2) Supplemental Disclosures of Selected Expenditures (Unaudited)
Total exploration and development costs and general administrative expenses
for the years ended December 31, 1995 and 1994 are as follows:
1995 1994
---- ----
Exploration costs $ 500,000 500,000
Development costs -- 1,100,000
General administrative, net of reimbursement
through joint interest billings 662,000 447,000
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(3) Supplemental Oil and Gas Reserve Information (Unaudited)
Total proved and proved developed oil and gas reserves of the Arakis
Properties at December 31, 1995 have been estimated based on reserve
estimates prepared by Richard M. Russell & Associates, Inc., as of January
1, 1996. No comparable estimates were available for prior periods.
Therefore, reserves for 1994 and 1995 have been calculated by adjusting the
January 1, 1996 amounts for prior period producing activities and,
consequently, no revisions of previous estimates have been reflected. All
reserve estimates are based on economic and operating conditions existing
at January 1, 1996. The future net cash flows from production of these
proved reserve quantities were computed by applying current prices of oil
and gas (with consideration of price changes only to the extent provided by
contractual arrangements) as of January 1, 1996 to estimated future
production of proved oil and gas reserves less the estimated future
expenditures (based on current costs) as of January 1, 1996, to be incurred
in developing and producing the proved reserves. Income taxes were
calculated without consideration of any remaining historical cost basis of
the Arakis Properties. The Arakis Properties are located in the state of
Kentucky.
(Continued)
<PAGE>
THE ARAKIS PROPERTIES PURCHASED BY
AMERICAN RESOURCES OF DELAWARE, INC.
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
<TABLE>
<CAPTION>
Estimated Quantities of Oil and Gas Reserves:
Year ended December 31,
-------------------------
1995 1994
--------- ---------
Gas Gas
(mcf) (mcf)
<S> <C> <C>
Proved reserves:
Beginning of year 8,372,808 9,121,590
Production (651,824) (748,782)
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End of year 7,720,984 8,372,808
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--------- ---------
Proved developed reserves:
Beginning of year 8,372,808 9,121,590
End of year 7,720,984 8,372,808
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<CAPTION>
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved
Oil and Gas Reserves (in 000s):
As of December 31,
------------------
1995 1994
---- ----
<S> <C> <C>
Future cash inflows $ 18,518 17,415
Future production costs (2,509) (2,724)
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Future net cash inflows before income taxes 16,009 14,691
10% discount factor (8,302) (7,639)
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7,707 7,052
Future income taxes, net of
discount at 10% per annum (2,620) (2,398)
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Standardized measure of discounted
future net cash in flows $ 5,087 4,654
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<CAPTION>
Changes in Standardized Measure of Discounted Future Net Cash Flows
Relating to Proved Oil and Gas Reserves (in 000s):
As of December 31,
------------------
1995 1994
---- ----
<S> <C> <C>
Standardized measure, beginning of year $ 4,654 6,708
Sales, net of production costs (670) (921)
Net change in income taxes 222 1,058
Change in sales prices 904 (3,062)
Accretion of discount 705 1,016
Changes in production rates (timing)
and other (728) (145)
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Standardized measure, end of year $ 5,087 4,654
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</TABLE>
<PAGE>
AMERICAN RESOURCES OF DELAWARE, INC.
AND SUBSIDIARY
Unaudited Pro Forma Condensed Consolidated Balance Sheet
December 31, 1995
<TABLE>
<CAPTION>
American
American Adjustments
Resources of --------------------------- Unaudited
Delaware Inc. Debit Credit Pro Forma
-------------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Current assets:
Cash $ 826,393 826,393 (1) --
Accounts and notes receivable 6,052,242 6,052,242
Deferred income taxes, prepaid and other 319,290 319,290
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Total current assets 7,197,925 6,371,532
Net property and equipment 29,983,641 3,191,185 (1) 33,174,826
Other assets 7,015,826 7,015,826
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Total assets $ 44,197,392 46,562,184
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Current liabilities:
Current installments at long-term debt 4,623,341 4,623,341
Accounts payable 2,732,971 2,732,971
Other current liabilities 454,915 125,000 (1) 579,915
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Total current liabilities 7,811,227 7,936,227
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Long-term debt, excluding current maturities 14,568,505 1,082,617 (1) 15,651,122
Deferred income taxes and other 3,065,738 3,065,738
Stockholders' equity 18,751,922 808,650 (1) 19,909,097
348,525 (1)
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Total liabilities and stockholders' equity $ 44,197,392 46,562,184
------------- -------------
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</TABLE>
(1) To record the acquisition of the properties, assuming the cash portion of
purchase price was paid out of the December 31, 1995 cash balance and
borrowings under the Company's existing line of credit were used to finance
the remainder of the cash portion. The value of stock used to finance the
purchase is valued at the market price at the time of the purchase. The
warrants were valued at their estimated fair value at the time of the
purchase. The purchase price was allocated as follows:
<TABLE>
<S> <C>
Cost paid at closing and other costs $ 2,909,010
Severance tax liabilities assumed 125,000
Common stock issued, 225,000 shares at fair value of $3.594 per share 808,650
Warrants issued, 225,000 shares at fair value of $1.549 per share 348,525
-------------
4,191,185
Less: cash paid prior to December 31, 1995 reflected in property
and equipment in the December 31, 1995 financial statements (1,000,000)
-------------
$3,191,185
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</TABLE>
<PAGE>
AMERICAN RESOURCES OF DELAWARE, INC.
AND SUBSIDIARY
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 1995
<TABLE>
<CAPTION>
Arakis
Properties
Purchased from
American American Adjustments
Resources of Resources of ------------------------ Unaudited
Delaware, Inc. Delaware, Inc. Debit Credit Pro Forma
-------------- -------------- ----- ------ ---------
<S> <C> <C> <C> <C> <C>
Revenues $ 17,214,299 910,486 18,124,785
Expenses 14,421,916 305,160 324,727 (1) 15,051,803
Administrative expenses 2,364,389 -- -- (2) 2,364,389
Deferred compensation and employee
severance expense 1,488,259 -- 1,488,259
--------------- ------------ ------------
Operating income (loss) (1,060,265) 605,326 (779,666)
Other income, net 1,469,731 -- 308,706 (3) 1,161,025
--------------- ------------ ------------
Income before income tax expense 409,466 605,326 381,359
Income tax expense 143,313 -- 11,243 (4) 132,070
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Net income $ 266,153 605,326 249,289
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Per common share:
Primary $ 0.07 0.06
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Weighted average number of common shares
and common share equivalents outstanding 4,067,677 4,292,677
--------------- ------------
--------------- ------------
Fully diluted $ 0.05 0.04
--------------- ------------
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Weighted average number of common shares
and common share equivalents outstanding 5,722,432 5,947,432
--------------- ------------
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</TABLE>
(1) To record pro forma depletion and depreciation expense on the properties
acquired.
(2) The oil and gas properties acquired are located in the Appalachian area,
the Company's principal area of operations. The Company does not anticipate
incurring additional administrative expenses in the management of these
properties.
(3) To record pro forma interest expense on the $3,014,010 of additional
borrowings which would have been required to finance the cash portion of the
purchase of the properties.
(4) To record additional pro forma income tax expense on the results of entries
(1), (2) and (3), at 34% U.S. federal and 6% State of Kentucky rates.
