SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For Quarter Ended Commission File Number
April 30, 1997 1-7965
CASPEN OIL, INC.
(Exact name of registrant as specified in its charter)
Nevada 75-1325831
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 S. Wadsworth Boulevard
Irongate 3, Suite 201
Lakewood, CO 80226
(Address or principal executive offices)
(303) 987-0925
(Registrant's telephone number, including area code)
(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 and 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 requirement for the past 90 days.
Yes X No
As of April 30, 1997, the Registrant had 21,092,222 shares of
Common Stock outstanding.
Transitional Small Business Disclosure Format: Yes ; No X
CASPEN OIL, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
April 30, July 31,
ASSETS 1997 1996
---- ----
CURRENT ASSETS
Cash and cash equivalents $ 163,273 $ 94,131
Accounts receivable, prepaid
expenses, net of allowance 183,223 130,985
Other --- 1,603
------------ ------------
346,496 226,719
------------ ------------
PROPERTY AND EQUIPMENT, AT COST
Oil and gas properties,
full cost method of accounting 19,880,132 19,873,617
Other 302,061 302,061
------------ ------------
20,182,193 20,175,678
Less accumulated depletion,
depreciation, and amortization 17,160,825 17,006,425
------------ ------------
3,021,368 3,169,253
------------ ------------
OTHER
Investments 893,127 833,520
Notes receivable, related party --- 66,622
Other --- 8,832
------------ ------------
893,127 908,974
------------ ------------
TOTAL ASSETS $ 4,260,991 $ 4,304,946
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 192,996 $ 1,547,500
Accounts payable 703,795 747,918
Accrued expenses 260,239 616,167
Note payable, other 35,404 60,000
------------ ------------
1,192,434 2,971,585
LONG-TERM LIABILITIES
Note payable 1,164,504 10,000
Deferred interest 851,194 ---
Other 59,400 59,400
------------ ------------
TOTAL LIABILITIES 3,267,532 3,040,985
------------ ------------<PAGE>
SHAREHOLDERS' EQUITY
Convertible preferred stock:
Series A 600,000 600,000
Series C 300,000 300,000
Series E 125,000 125,000
Common stock 210,922 180,922
Additional paid-in capital 20,697,781 21,091,871
Accumulated deficit (20,930,534) (21,024,122)
------------ ------------
1,003,169 1,273,671
Less treasury stock 9,710 9,710
------------ ------------
993,459 1,263,961
------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 4,260,991 $ 4,304,946
============= ============
See accompanying notes to condensed consolidated financial
statements.
CASPEN OIL, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended
April 30,
1997 1996
REVENUE ---- ----
Oil and gas sales $ 325,404 $ 237,328
Gain on sale of oil
and gas property 100,000 ---
Overhead income 13,355 12,826
Interest income 825 3,601
Other 4,540 11
--------- ---------
444,124 253,766
--------- ---------
COSTS AND EXPENSES
Production and operating 88,795 105,694
Depletion, depreciation,
and amortization 50,360 43,358
General and administrative 156,482 189,355
Interest expense ( 1,562) ---
---------- ---------
294,075 338,407
---------- ---------
NET INCOME (LOSS) 150,049 ( 84,641)
DIVIDEND REQUIREMENTS ON PREFERRED STOCK 269,775 269,775
--------- ---------
LOSS APPLICABLE TO COMMON STOCK $(119,726) $(354,416)
========= =========
LOSS PER COMMON SHARE $ (.01) $ (.02)
========= =========
See accompanying notes to condensed consolidated financial
statements.
CASPEN OIL, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Nine months ended
April 30,
-----------------
1997 1996
---- ----
REVENUE
Oil and gas sales $ 830,234 $ 704,600
Gain on sale of oil
and gas property 100,000 ---
Overhead income 40,067 37,193
Interest income 2,050 14,380
Other 5,605 46,597
---------- ----------
977,956 802,770
---------- ----------
COSTS AND EXPENSES
Production and operating 255,140 347,851
Depletion, depreciation, and amortization 154,400 137,962
General and administrative 474,828 467,883
Interest expense 1 20
---------- ----------
884,369 953,716
---------- ----------
NET INCOME (LOSS) 93,587 (150,946)
DIVIDEND REQUIREMENTS ON PREFERRED STOCK 809,325 809,325
---------- ----------
LOSS APPLICABLE TO COMMON STOCK $( 715,738) $( 960,271)
========== ==========
LOSS PER COMMON SHARE $ (.03) $ (.05)
========== ==========
See accompanying notes to condensed consolidated financial
statements.
<TABLE>
CASPEN OIL, INC.
AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders' Equity
(Unaudited)
<CAPTION>
Preferred Stock Common Stock Additional Accumu- Total
paid-in lated Treasury shareholders'
Series Shares Amount Shares Amount capital deficit stock equity
------ ------- --------- ---------- ---------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at July 31, 1996 A 600,000 $600,000 18,092,222 $ 180,922 $21,091,871 $(21,024,122) $( 9,710) $1,263,961
C 300,000 300,000
E 125,000 125,000
-------
Net loss (14,318) (14,318)
Balance at October 31, 1996
A 600,000 $600,000 18,092,222 $ 180,922 $21,091,871 $(21,038,440) $( 9,710) $1,249,643
C 300,000 $300,000 ---------- ----------- ------------- ------------ ----------
E 125,000 $125,000
--------
Issuance of 3,000,000 shrs.
Common Stock 3,000,000 30,000 3,000 33,000
Net loss (42,143) (42,143)
Balance at January 31, 1997
A 600,000 $600,000 21,092,222 $ 210,922 $21,094,871 $(21,080,583) $( 9,710) $1,240,500
C 300,000 $300,000 ---------- ----------- ------------- ------------ ----------
E 125,000 $125,000
--------
Adjustment for deferred interest (397,090) (397,090)
Net income 150,049 150,049
Balance at April 30, 1997 A 600,000 $600,000 21,092,222 $ 210,922 $20,697,781 $(20,930,534) $( 9,710) $ 993,459
C 300,000 $300,000 ---------- ----------- ------------- ------------ ----------
E 125,000 $125,000
--------
</TABLE>
CASPEN OIL, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
April 30,
-----------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 93,587 $(150,946)
Adjustments to reconcile net income
to net cash provided by (used in) operating activities:
Depletion, depreciation, and amortization 154,400 137,962
Issuance of common stock 33,000 ---
Deferred interest (397,090) ---
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
and prepaid expenses (52,238) 51,380
Decrease in notes receivable --- 2,079
Decrease in other assets 17,450 34,877
Increase (decrease) in accounts payable
and accrued expenses 451,144 (267,746)
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 300,253 (192,394)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposition of property and equipment 4,506 2,957
Purchase of property and equipment, net of property
sales and well credits (11,021) (196,251)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (6,515) (193,294)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of debt (224,596) (50,000)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (224,596) (50,000)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 69,142 (435,688)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 94,131 464,876
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 163,273 $ 29,188
========= ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
CASPEN OIL, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Nine Months Ended April 30, 1997
(1) Basis of Presentation
The condensed interim consolidated financial statements
included herein are unaudited but in the opinion of
management reflect all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of the
financial position of the Company at April 30, 1997, and
the results of operations for the nine month periods ended
April 30, 1997, and 1996. Interim results are not
necessarily indicative of expected annual results because of
the impact of prices obtained for oil and gas and other
factors. These condensed consolidated financial statements
should be read in conjunction with the consolidated
financial statements of the Company, and related notes
thereto, included in its annual report on Form 10-KSB.
(2) Loan Debt
In April 1997, the Company and its lender agreed to
restructure the terms of the Revolving Line of Credit note
and the Amended and Restated Loan Agreement, whereby, as of
April 1997, all technical deficiencies as they existed prior
to the restructure of terms, were satisfied. At April 1997,
the terms are as follows. Initially, thirty monthly
principal only payments will be due in the amount of
$16,083.33, computed on a principal loan balance owing of
$1,447,500 at the time of restructure. The principal
balance owing at September 30, 1999 will then be $965,000.
Following a second thirty-month tranche of principal only
payments of $16,083.33, the principal balance owing at March
31, 2002 will be $482,500, until paid off after a third and
final thirty-month tranche of principal only payments of
$16,083.33 at September 30, 2004.
Pursuant to the terms, the Company and its lender further
agreed that previously contested default interest on the
original Amended and Restated Loan Agreement dated December
14, 1990, computed through March 31, 1997 totalling
$851,193.74, would be deferred and become due and payable
in full on September 30, 2004.
The Company and its lender additionally agreed that current
interest would remain at the prime rate plus one percent,
computed monthly, but payable in balloon payments
corresponding with the end of each of the thirty-month
principal only payment cycles, whereby, the first interest
balloon payment would be due and payable on September 30,
1999; the second on March 31, 2002; and, the third and
final on September 30, 2004.
The Company's lender required an advanced principal
reduction payment of $100,000, which was paid during the
period ended April 30, 1997.
The current principal note balance due at April 30, 1997 is
$192,996.
The total deferred long-term interest balance is
$851,193.74 at April 30, 1997.
Long-term debt related to the principal balance of the note
totalled $1,154,504 at April 30, 1997.
(3) Arbitration Award
In June 1996, the Company filed a Demand for Arbitration
against Quantum Soil Remediation, Inc., et al for defaulting
on two promissory notes due to the Company. The Company
prevailed and, on March 31, 1997, was awarded the principal
amounts of the promissory notes, including interest thereon,
totalling $240,000.
The Company has recorded approximately $211,000 of the award
amount and has impaired the remaining $29,000 pending
collection.
CASPEN OIL, INC.
AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis or Plan of
Operation
The following discussion of the Company's financial condition and
results of operations should be read in conjunction with the
condensed consolidated financial statements included in this
report and the consolidated financial statements and notes
contained in the Company's annual report on Form 10-KSB for the
fiscal year ended July 31, 1996.
Liquidity and Capital Resources
During the nine months ended April 30, 1997, the working capital
deficit decreased from July 31, 1996, by approximately
$1,899,000. This decrease is primarily due to the
reclassification of defaulted note and accrued interest
previously classified, pursuant to Generally Accepted Accounting
Principles, as current liabilities. However, as of April 4,
1997, terms of the note principal and interest were settled
leaving approximately $193,000 of current principal only due,
with approximately $1,155,000 of long-term principal and
approximately $851,000 of deferred long-term interest due,
pursuant to the note terms (see Note 2).
The Company's current liabilities exceed current assets by
$845,938 at April 30, 1997. The working capital deficit at
April 30, 1997, is due primarily to the $964,000 of trade
accounts payable and accrued expenses.
The Company anticipates that given its current cash position it
will have sufficient working capital to meet its obligations
during the ensuing fiscal year.
Results of Operations
Oil and gas revenues were somewhat higher in the nine months
ended April 30, 1997, as compared to the nine months ended April
30, 1996.
The Company experienced higher oil and gas prices in the nine
months ended April 30, 1997, compared with those received in
the same period last year. Average oil and gas prices received in
the nine months ended April 30, 1997, were approximately $19.00
per barrel of oil and $2.00 per MCF gas as compared to
approximately $16.00 per barrel of oil and $1.60 per MCF gas for
the nine months ended April 30, 1996.<PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis or Plan of
Operation, Continued
Results of Operations
The Company reported a net income of $93,587 for the nine months
ended April 30, 1997, compared to a net loss of $(150,946) for
the nine months ended April 30, 1996. This was primarily a
result of higher oil and gas prices received during the nine
months ended April 30, 1997, as compared to the same period in
fiscal year ended 1996. Oil and gas revenues approximated
$830,000 for the nine months ended April 30, 1997, while
revenues for the same period in 1996 approximated $705,000.
Production and operating expenses for the period ended April 30,
1997, were approximately $255,000, as compared to the period
ended April 30, 1996, which were approximately $348,000. The
decrease in lease operating expenses to 31 percent of oil and gas
sales from 49 percent generally reflects the activities detailed
above with respect to the increase in oil and gas revenues for
the nine months ended April 30, 1997.
General and administrative expenses for the nine months ended
April 30, 1997, increased by approximately $7,000 from the
corresponding nine months ended April 30, 1996.
Series A Preferred Stock Cumulative Dividends In Arrears
The terms of the Series A Shares provide that no dividends may be
paid on the Common Shares or Series C or E Preferred Shares while
dividends on the Series A Shares are in arrears. The Company has
not paid any dividends on the Series A Shares since June 30,
1988. As of April 30, 1997, dividends on the Company's Series
A Shares are in arrears $18.44 per share for a total of
$11,054,402.
CASPEN OIL, INC.
AND SUBSIDIARIES
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
New Accounting Pronouncement
The Financial Accounting Standards Board ("FASB") has recently
issued Statement of Financial Accounting Standards No. 128
"Earnings Per Share" ("SFAS No. 128"). This pronouncement
provides a different method of calculating earnings per share
than is currently used in accordance with Accounting Board
Opinion (APB) No. 15, "Earnings Per Share". SFAS No. 128
provides for the calculation of "Basic" and "Diluted" earnings
per share. Basic earnings per share includes no dilution and is
computed by dividing income available to common shareholders by
the weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential
dilution of securities that could share in the earnings of an
entity, similar to fully diluted earnings per share. The Company
will adopt SFAS No. 128 in its fiscal year ended in 1998 and its
implementation is not expected to have a material effect on the
consolidated financial statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none
(b) Reports on Form 8-K - none
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.
CASPEN OIL, INC.
June 18, 1997 By:
Gary N. Davis, Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000095254
<NAME> CASPEN OIL INC
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> APR-30-1997
<CASH> 163,273
<SECURITIES> 0
<RECEIVABLES> 183,223
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 346,496
<PP&E> 20,182,193
<DEPRECIATION> 17,160,825
<TOTAL-ASSETS> 4,260,991
<CURRENT-LIABILITIES> 1,192,434
<BONDS> 0
210,922
600,000
<COMMON> 425,000
<OTHER-SE> (242,463)
<TOTAL-LIABILITY-AND-EQUITY> 4,260,991
<SALES> 830,234
<TOTAL-REVENUES> 977,956
<CGS> 255,140
<TOTAL-COSTS> 884,369
<OTHER-EXPENSES> 809,325
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (715,738)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> 0
</TABLE>
