SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Amendment No. 3
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
March 5, 1998
- -----------------------------------------------------------------
Date of Report (Date of earliest event reported)
AMERICAN RESOURCES OF DELAWARE, INC.
- -----------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware
- -----------------------------------------------------------------
(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. Not Amended.
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 Statement of Businesses Acquired.
The audited Statements of Revenues and Direct
Operating Expenses of the TECO properties for each of the years
in the three-year period = ended December 31, 1997 as previously
filed are hereby amended for the purpose of removing from "Direct
operating expenses" certain Administrative expenses of TECO which
were inadvertently included and which the Registrant would not
have incurred. Accordingly, "Revenues, net of direct operating
expenses" for each of the years increased by the same amounts.
Additionally, the words "TECO Properties" have been amended to
read "TECO Oil and Gas Properties" throughout the report in order
to more particularly describe the properties purchased.
(b) Pro Forma Financial Information.
The Unaudited Pro Forma Consolidated Statement of
Operations for the year ended December 31, 1997 as previously
filed is hereby amended to:
(i) reflect the reduction in "Expenses"
associated with the TECO Oil and Gas Properties from $2,491,825
to $1,662,832 as a result of the amendment of direct operating
expenses discussed in numerical paragraph 7(a), hereinabove; and
(ii) correct the Adjustment for "Other income
(expense), net" from $5,069,800 to ($5,069,800), the brackets
having previously been inadvertently omitted and the resultant
total of ($7,787,144) having been correct as originally filed.
The Unaudited Pro Forma Consolidated Statement of
Operations for the three months ended March 31, 1998 as
previously filed is hereby amended to:
(i) correct the Adjustment for "Other income
(expense), net" from $875,061 to ($875,061), the brackets having
previously been inadvertently omitted; and
2
<PAGE>
(ii) revise the total "Other income (expense),
net" from ($1,825,904) to ($1,795,996), the former number having
been a typographical error.
(c) Exhibits. None.
3
<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/Ralph Currie
----------------------------------
Its: Chief Financial Officer
Dated: May 29, 1998
4
<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 TECO Oil and Gas Properties
purchased by American Resources of Delaware, Inc. for each of the
years in the three-year period ended December 31, 1997. 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 TECO
Oil and Gas Properties purchased by American Resources of
Delaware, Inc. for each of the years in the three-year period
ended December 31, 1997, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
May 19, 1998
F-1
<PAGE>
THE TECO PROPERTIES PURCHASED BY
AMERICAN RESOURCES OF DELAWARE, INC.
Statements of Revenues and
Direct Operating Expenses
Years ended December 31, 1997, 1996 and 1995
and
Period ended January 31, 1998 (Unaudited)
<TABLE>
(Unaudited)
January 31, December 31, December 31, December 31,
1998 1997 1996 1995
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $768,629 $6,637,030 $4,742,994 $ -
Direct operating
expenses 163,124 1,662,832 1,467,026 627,547
======== ========== ========== ==========
Revenues, net of
direct operating
expenses $605,505 $4,974,198 $3,275,968 ($627,547)
======= ========= ========= =======
</TABLE>
See accompanying notes to the Statements of Revenues and Direct
Operating Expenses
F-2
<PAGE>
THE TECO 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 TECO Oil & Gas, Inc. (TECO) in
February 1998 for approximately $57.7 million in cash and
notes payable. The TECO Oil and Gas Properties are located
in 41 offshore blocks in the Gulf of Mexico and include
producing properties and certain unproved properties.
In the opinion of management, the accompanying unaudited
statements shown contain all adjustments, consisting only of
those of a normal recurring nature, necessary to present
fairly the Company's revenues and direct operating expenses
for the years ended December 31, 1997, 1996 and 1995. These
results = are not indicative of the results to be expected
for the full fiscal years.
The accompanying statements of revenues and direct operating
expenses were derived from the historical accounting records
of TECO. The statements include only the oil and gas
revenues and direct lease operating expenses attributable to
the TECO Oil and Gas Properties and are not intended to be a
complete set of financial statements. Oil and gas revenues
and direct lease operating expenses included herein are not
necessarily representative of future operations.
Additionally, the statements do not include depreciation,
depletion and amortization, general and administrative
expenses, interest income or expense, or federal and state
income taxes since historical expenses of this nature
incurred by TECO are not necessarily indicative of the costs
to be incurred by ARI. Presentation of full historical
financial statements is not practicable as these properties
were never separately audited and such financial statements
are not reasonably available.
Historical financial information reflecting financial
position, results of operations and cash flows are not
presented because the purchase price was assigned to the oil
and gas property interests acquired. Accordingly, the
historical statements of revenues and direct operating
expenses are presented in lieu of the financial statements
required under Rule 3-05 of Securities and Exchange
Commission Regulation S-X.
F-3
<PAGE>
REVENUE RECOGNITION
The sales method is used for accounting for gas revenues.
(2) CAPITAL EXPENDITURES (UNAUDITED)
Direct operating expenses do not include exploration and
development expenditures related to the properties which
totaled approximately $6,533,456, $4,350,095 and $289,760
for the years ended December 31, 1997, 1996 and 1995,
respectively.
(3) COMMITMENTS AND CONTINGENCIES
Management is unaware of any legal, environmental or other
commitments or contingencies that would be materially
important in relation to these statements of revenues and
direct operating expenses.
(4) SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED)
Total proved and proved developed oil and gas reserves of
the TECO Oil and Gas Properties for the periods presented
have been estimated based on reserve estimates prepared by
Ryder Scott Company as of July, 1, 1997 and December 31,
1997. 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 the report date to estimated future production of proved
oil and gas reserves less the estimated future expenditures
(based on current costs) as of the report date to be
incurred in developing and producing the proved reserves.
Changes in reserve estimates were derived by adjusting such
quantities and values for actual production using current
prices and costs.
F-4
<PAGE>
THE TECO PROPERTIES PURCHASED BY
AMERICAN RESOURCES OF DELAWARE, INC.
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
Estimated Quantities of Oil and Gas Reserves:
<TABLE>
Year ended December 31,
-----------------------
1997 1996 1995
---- ---- ----
(Mcfe) (Mcfe) (Mcfe)
<S> <C> <C> <S>
Proved reserves:
Beginning of year 6,509,059 - N/A
Revision of prior year
estimate (964,545) -
New discoveries and
extensions 23,980,844 8,457,927
Production (2,719,308) (1,948,868)
---------- ---------- ---
End of year 26,806,050 6,509,059 N/A
========== ========== ===
Proved developed reserves:
Beginning of Year 6,509,059 N/A N/A
========== === ===
End of Year 16,022,178 6,509,059 N/A
========== ========== ===
</TABLE>
Standardized Measure of Discounted Future Net Cash Flows Relating
to Proved Oil and Gas Reserves (in 000s):
<TABLE>
Year ended December 31,
-----------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <S>
Future cash flows $ 63,383 15,036 N/A
Future development costs (10,837) -
Future production costs (6,902) (328)
------- ------
45,644 14,708
Future taxes (15,975) (5,148)
------- ------
29,669 9,560
Future net cash flows,
10% annual discount
for estimated timing
of cash flows (7,115) (2,292)
------- ------ ----
Standardized measure of
discounted future
net cash inflows $22,554 7,268 N/A
======= ====== ===
</TABLE>
(Continued)
F-5
<PAGE>
THE TECO PROPERTIES PURCHASED BY
AMERICAN RESOURCES OF DELAWARE, INC.
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
Changes in Standardized Measure of Discounted Future Net Cash
Flows Relating to Proved Oil and Gas Reserves (in 000s):
<TABLE>
Year ended December 31,
-----------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <S>
Standardized measure,
beginning of year 7,268 -
New discoveries and extensions
(net of future development
costs; discounted @ 10%) 27,895 14,603
Sales, net of production costs (4,974) (3,275)
Net change in income taxes (8,321) (3,913)
Change in production rates,
and other (432) (147)
Accretion of discount 1,118 -
------- ------- ---
Standardized measure,
end of year 22,554 7,268 N/A
======= ======= ===
</TABLE>
F-6
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The Unaudited Pro Forma Condensed Consolidated Balance Sheet
at December 31, 1997 is presented assuming that the purchase
of certain oil and gas properties and equipment from TECO
Oil & Gas, Inc. occurred in January 1997. The Unaudited Pro
Forma Consolidated Statement of Operations for the year
ended December 31, 1997 and for the three months ended March
31, 1998 are presented assuming that the purchase of certain
oil and gas properties and equipment from TECO Oil & Gas,
Inc. occurred on January 1, 1997. The Unaudited Pro Forma
Financial Statements have been prepared based on the
historical financial statements as of and for the year ended
December 31, 1997 and the unaudited financial statements for
the three months ended March 31, 1998 as indicated and are
not necessarily indicative of the results which would have
been obtained had the acquisitions taken place on such
dates.
F-7
<PAGE>
AMERICAN RESOURCES OF DELAWARE, INC.
AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Balance Sheet
December 31, 1997
<TABLE>
American Adjustments
Resources of ------------------------- Unaudited
Delaware, Inc. Debit Credit Pro Forma
-------------- ----- ------ ---------
<S> <C> <C> <C> <C>
Current assets:
Cash $ 1,180,638 1,300,000(1) (119,362)
Accounts and notes receivable 4,964,253 4,964,253
Deferred income taxes, prepaid
and other 424,483 424,483
---------- -----------
Total current assets 6,569,374 5,269,374
Net property and equipment 51,249,493 57,680,000(1) 108,929,493
Other assets 3,747,067 3,747,067
---------- -----------
Total assets $61,565,934 117,945,934
========== ===========
Current liabilities:
Current installments of
long-term debt 4,682,006 16,500,000(1) 39,682,006
18,500,000(1)
Unearned revenue 820,051 820,051
Accounts payable 963,169 963,169
Other current
liabilities 924,763 924,763
---------- -----------
Total current liabilities 7,389,989 42,389,989
Long-term debt, excluding
current maturities 25,392,892 21,380,000(1) 46,772,892
Deferred income taxes and other 2,165,882 2,165,882
Unearned revenue 2,095,643 2,095,643
Stockholders' equity 24,521,528 24,521,528
---------- -----------
Total liabilities and
stockholders' equity $61,565,934 117,945,934
========== ===========
</TABLE>
(1) To record the acquisition of the TECO Oil and Gas Properties.
As consideration for the properties, ARI paid $57,680,000, of
which $1,300,000 was paid in cash upon execution of the Purchase
and Sale Agreement, $37,880,000 was paid from funds borrowed
under ARI's existing credit facility and a new facility with
DNB Energy Assets, Inc., and the balance of $18,500,000 was
in the form of a promissory note in favor of TECO.
F-8
<PAGE>
AMERICAN RESOURCES OF DELAWARE, INC.
AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 1997
<TABLE>
American Teco Adjustments
Resources of Oil and Gas ------------------------- Unaudited
Delaware, Inc. Properties Debit Credit Pro Forma
-------------- ----------- ----- ------ ---------
<S> <C> <C> <C> <C> <C>
Revenues $38,032,146 6,637,030 44,669,176
Expenses 35,030,980 1,662,832 2,433,352(1) 39,127,164
Administrative expenses 3,322,887 - -(2) 3,322,887
---------- ---------- ----------
Operating income (loss) (321,721) 4,974,198 2,219,125
Other income (expense), net (2,717,344) - (5,069,800)(3) (7,787,144)
---------- ---------- ----------
Income (loss) before
income tax expense (3,039,065) 4,974,198 (5,568,019)
Income tax benefit 1,192,474 - 1,011,582(4) 2,204,056
---------- ---------- ----------
Net income (loss) $(1,846,591) 4,974,198 (3,363,963)
========== ========== ==========
Per common share:
Basic $ (0.21) $ (0.38)
========== ==========
Weighted average number of
common shares outstanding 9,021,810 9,021,810
========== ==========
</TABLE>
(1) To record pro forma depletion and depreciation expense on
the TECO Oil and Gas Properties acquired.
(2) The Company does not anticipate incurring additional
administrative expenses in the management of these properties.
(3) To record pro forma interest expense on additional borrowings
which would have been required to finance the cash portion of
the purchase of the properties. This assumes no issuance of
stock to TECO.
(4) To adjust pro forma income tax expense.
F-9
<PAGE>
AMERICAN RESOURCES OF DELAWARE, INC.
AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the three months ended March 31, 1998
<TABLE>
American Teco Adjustments
Resources of Oil and Gas ------------------------- Unaudited
Delaware, Inc. Properties Debit Credit Pro Forma
-------------- ----------- ----- ------ ---------
<S> <C> <C> <C> <C> <C>
Revenues $8,702,552 768,629 9,471,181
Expenses 6,509,004 163,124 482,315(1) 7,154,444
Administrative expenses 768,211 - -(2) 768,211
---------- ---------- ----------
Operating income (loss) 1,425,337 605,505 1,548,526
Other income (expense), net (920,935) - (875,061)(3) (1,795,996)
---------- ---------- ----------
Income (loss) before
income tax expense 504,402 605,505 (247,470)
Income tax (expense) benefit (201,761) - 300,749(4) 98,988
---------- ---------- ----------
Net income (loss) $ 302,641 605,505 (148,482)
========== ========== ==========
Per common share:
Basic $ 0.03 $ (0.02)
========== ==========
Weighted average number of
common shares outstanding 9,998,564 9,998,564
========== ==========
Fully diluted $ 0.03
==========
Weighted average number of
common shares and common share
equivalents outstanding 10,265,748
==========
</TABLE>
(1) To record pro forma depletion and depreciation expense
on the TECO Oil and Gas Properties acquired.
(2) The Company does not anticipate incurring additional
administrative expenses in the management of these properties.
(3) To record pro forma interest expense on additional borrowings
which would have been required to finance the cash portion of
the purchase of the properties. This assumes no issuance of
stock to TECO.
(4) To adjust pro forma income tax expense.
F-10
