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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended MARCH 31,1999
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[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period from _______ to _______.
Commission file number 1-13162
EMPIRIC ENERGY, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-2455467
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
12750 MERIT DRIVE, SUITE 750 75251
DALLAS, TEXAS (Zip Code)
(Address of principal executive offices)
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(972) 387-4100
(Registrant's telephone number, including area code)
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 No X
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State the number of shares outstanding of each of the issuer's classes of common
equity, as of March 31, 1999. 8,169,427
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Transitional Small Business Disclosure Format Yes _____No __X___
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Page 1 of 9 pages contained in the sequential number system. The Exhibit Index
is on Page 6 of the sequential numbering system.
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<TABLE>
<CAPTION>
EMPIRIC ENERGY, INC.
INDEX TO FORM 10-QSB
PART I PAGE
<S> <C> <C>
Item 1. Financial Statements 1
Management's Discussion and Analysis of Financial Condition
Item 2. and Results of Operations 5
PART II
Item 1. Legal Proceedings 6
Item 2. Changes in Securities 6
Item 3. Defaults Upon Senior Securities 6
Item 4. Submission of Matters to a Vote of Securities Holders 6
Item 5. Other Information 6
Item 6. Exhibits and Reports on Form 8-K 6
SIGNATURE PAGE 7
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ii
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PART I
FINANCIAL INFORMATION
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. The financial statements reflect all adjustments which
are, in the opinion of management, necessary to fairly present such information.
Although the Company believes that the disclosures are adequate to make the
information presented not misleading, certain information and footnote
disclosure, including significant accounting policies, normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these financial statements be read in
conjunction with the financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K, dated December 31, 1998.
<TABLE>
<CAPTION>
BALANCE SHEET
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March 31,
1999 December 31,
ASSETS (Unaudited) 1998
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<S> <C> <C>
CURRENT ASSETS
Cash $ 31,632 $ 721
Accounts receivable
Oil and gas sales 25,885 43,188
Employee advances 907 3,041
Other 625 -
------------ -------------
Total Current Assets 59,059 46,950
PROPERTY AND EQUIPMENT
Oil and gas properties (full cost method):
Unproved leasehold costs 179,609 179,609
Proved leasehold costs and well equipment 4,376,239 4,318,875
Less accumulated depreciation, depletion, and impairment (2,488,340) (2,444,578)
------------ -------------
Net property and equipment 2,067,508 2,053,906
OTHER FURNITURE AND EQUIPMENT, net of accumulated
Depreciation of $22,472 as of 12/31/98 and $23,492 as of 3/31/98 11,017 8,346
DEPOSITS 3,281 3,281
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TOTAL ASSETS $ 2,140,855 $ 2,112,483
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1
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
Current portion of long-term, debt, including related parties $ 326,312 $ 411,043
Accounts payable and accrued expenses 120,840 141,740
Oil and gas revenues payable 10,316 8,962
Due to stockholders 17,981 21,731
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Total Current Liabilities 475,449 583,476
LONG-TERM DEBT, net of current portion, including related parties 142,003 141,760
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDER'S EQUITY
Common stock, $0.01 par value; 20,000,000 shares authorized;
8,119,427 and 7,625,353 shares issued and outstanding,
respectively 81,195 76,254
Series A convertible preferred stock, no par value, $575,000
liquidation preference 43,168 43,168
Additional paid-in capital 5,241,426 4,987,884
Receivables - Texoil (74,061) (74,061)
Obligation to repurchase treasury stock (11,875) (11,875)
Accumulated deficit (3,756,450) (3,634,123)
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Total Stockholders' Equity 1,523,403 1,387,247
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,140,855 $ 2,112,483
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2
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<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Three Months Ended March 31,
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1999 1998
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<S> <C> <C>
REVENUE -
Oil and gas sales $ 46,376 $ 3,308
COSTS AND EXPENSES:
Production expense 20,652 1,192
Depletion and depreciation 44,783 1,179
Impairment of oil and gas properties -
Interest - 1,450
General and administrative 106,658 105,539
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Total costs and expenses 172,091 109,360
OTHER INCOME (EXPENSE):
Dividend income - 11,250
Interest income - -
Consulting income 945
Other income 25,118 1,118
Interest expense (22,674) 12,368
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Total other income (expense) 3,389 24,736
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LOSS BEFORE EXTRAORDINARY ITEM $ (122,326) $ (93,684)
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EXTRAORDINARY ITEM
Gain from extinguishment of debt - -
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NET LOSS $ (122,326) $ (93,684)
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BASIC AND DILUTED LOSS PER SHARE:
Net loss $ (0.02) $ (0.016)
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WEIGHTED AVERAGE SHARES OUTSTANDING 7,872,390 5,855,250
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3
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<TABLE>
<CAPTION>
EMPIRIC ENERGY, INC.
STATEMENT OF CASH FLOWS
Three Months Ended
--------------------------------
March 31, 1999 March 31, 1998
(Unaudited) (Unaudited)
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (122,326) $ (93,684)
Adjustments to reconcile net loss to net cash from operating activities:
Depletion, depreciation and impairment 44,783 24,947
Gain on sale of assets - -
Common stock, warrants and options issued for services 6,963 -
Changes in assets and liabilities:
Accounts receivable 18,811 5,992
Other assets - (731)
Accounts payable and accrued expenses (20,900) (182,946)
Oil and gas revenues payable 1,353 -
Due to related parties (3,750) -
Other 1,875 -
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Net cash used by operating activities (73,191) (312,902)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of oil and gas properties - 220,000
Purchase of oil and gas properties 36,738) (18,328)
Purchase of furniture and equipment - -
Advances to Texoil - -
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Net cash (used) provided by investing activities (36,738) 201,672
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 82,900 -
Repayments of long-term debt (85,437) (144,850)
Proceeds from sales of common stock 143,377 -
Proceeds from sale of preferred stock - 273,807
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Net cash provided by financing activities 140,840 128,957
NET INCREASE(DECREASE) IN CASH 30,911 17,727
CASH, beginning of the year 721 1,084
CASH, end of the year $ 31,632 $ 18,811
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SUPPLEMENTAL INFORMATION-
Cash paid during the year for interest $ 22,674 $ 6,599
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NON-CASH INVESTING AND FINANCING ACTIVITY:
Purchase of oil and gas properties with equity securities $ 20,625 $ -
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Obligation to repurchase treasury stock $ - $ -
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Unamortized portion of notes payable discount $ 22,372 $ -
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Conversion of Notes Payable into common stock $ 92,074 $ -
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Purchase of furniture and equipment with notes payable $ 3,691 $ -
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4
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NOTES TO FINANCIAL STATEMENTS
See notes to financial statements included in the Company's 1998 Annual
Report on Form 10-KSB.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Oil and gas sales of $46,376 for the quarter ended March 31, 1999,
represented an increase of $43,068 from the comparable 1998 quarter. This
increase was due to revenues from the acquisition made in April 1998. Total
expenses of $172,091 for the quarter ended March 31, 1999 represented an
increase of $62,731 from the comparable 1997 quarter. The increase was due to
the higher operating expenses and the increase in overhead due to the hiring of
a President and Chief Operating Officer at the end of 1997. Total net loss of
$122,326 represented an increase of $28,642 over the net loss for the
comparable 1998 quarter due to the factors cited above.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1998, the Company had a net worth of $1,423,403 compared
to a net worth of $1,387,247 at December 31, 1997. This increase is primarily
due to the conversion of debt to equity in the quarter ended March 31, 1999.
There was a working capital deficit of $416,400 at March 31, 1999 compared to
$536,326 at December 31, 1997.
SUBSEQUENT EVENTS
Empiric announced on May 8, 1999 the participation in an exploratory
well in the United States Outer Continental Shelf, Gulf of Mexico. Vermilion
Block 90 #1 was drilled to a depth of 9,054 ft. and plugged and abandoned.
Three prospective sands were present in the well and contained gas, but not in
commercial quantities.
STRATEGY, BUSINESS PLANS AND NEED FOR THE INFUSION OF CAPITAL
Additional capital is needed to complete two other acquisitions and
continue the expected 1999 drilling program. Various sources of financing ,
including the issuance of debt and equity securities are being investigated.
During the first quarter, 544,074 shares of Common stock were issued, either for
cash, exchange of debt for equity or is a fee for financing activities.
5
<PAGE>
PART II.
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES
544,074 shares of Common stock were issued.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
NONE
6
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: May 19, 1999
EMPIRIC ENERGY, INC.
By: /s/ Clyde E. Skeen
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Clyde E. Skeen
Chief Financial Officer
By: /s/ James J. Ling
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James J. Ling
Chairman and Chief Executive Officer
By: /s/ R. Renn Rothrock, Jr.
------------------------
R. Renn Rothrock, Jr.
President and Chief Operating Officer
7
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 31632
<SECURITIES> 0
<RECEIVABLES> 27417
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 179609
<PP&E> 4376239
<DEPRECIATION> 2488340
<TOTAL-ASSETS> 2140855
<CURRENT-LIABILITIES> 475449
<BONDS> 0
<COMMON> 81195
0
43168
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1523403
<SALES> 2140855
<TOTAL-REVENUES> 46376
<CGS> 20652
<TOTAL-COSTS> 172091
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22674
<INCOME-PRETAX> (122326)
<INCOME-TAX> 0
<INCOME-CONTINUING> (122326)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (122326)
<NET-INCOME> (122326)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
