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
January 31, 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 January 31, 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)
January 31, July 31,
ASSETS 1997 1996
---- ----
CURRENT ASSETS
Cash and cash equivalents $ 128,318 $ 94,131
Accounts receivable, prepaid
expenses, net of allowance 194,788 130,985
Other 1,603 1,603
------------ ------------
324,709 226,719
------------ ------------
PROPERTY AND EQUIPMENT, AT COST
Oil and gas properties,
full cost method of accounting 19,876,945 19,873,617
Other 302,061 302,061
------------ ------------
20,179,006 20,175,678
Less accumulated depletion,
depreciation, and amortization 17,110,465 17,006,425
------------ ------------
3,068,541 3,169,253
------------ ------------
OTHER
Investments 891,703 833,520
Notes receivable, related party --- 66,622
Other 8,382 8,832
------------ ------------
900,085 908,974
------------ ------------
TOTAL ASSETS $ 4,293,335 $ 4,304,946
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 1,497,500 $ 1,547,500
Accounts payable 759,554 747,918
Accrued expenses 689,414 616,167
Note payable, related party 26,967 50,000
Note payable, other 10,000 10,000
------------ ------------
2,983,435 2,971,585
LONG-TERM LIABILITIES
Note payable 10,000 10,000
Other 59,400 59,400
------------ ------------
3,052,835 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 21,094,871 21,091,871
Accumulated deficit (21,080,583) (21,024,122)
------------ ------------
1,250,210 1,273,671
Less treasury stock 9,710 9,710
------------ ------------
1,240,500 1,263,961
------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 4,293,335 $ 4,304,946
============= ============
See accompanying notes to condensed consolidated financial
statements.
<PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended
January 31,
1997 1996
REVENUE ---- ----
Oil and gas sales $ 278,313 $ 272,808
Overhead income 13,356 12,826
Interest income 588 6,793
Other 943 7,801
--------- ---------
293,200 300,228
--------- ---------
COSTS AND EXPENSES
Production and operating 110,420 125,078
Depletion, depreciation,
and amortization 51,798 45,923
General and administrative 172,615 203,944
Interest expense 510 20
---------- ---------
335,343 374,965
---------- ---------
NET LOSS (42,143) (74,737)
DIVIDEND REQUIREMENTS ON PREFERRED STOCK 269,775 269,775
--------- ---------
LOSS APPLICABLE TO COMMON STOCK $(311,918) $(344,512)
========= =========
LOSS PER COMMON SHARE $ (.01) $ (.02)
========= =========
See accompanying notes to condensed consolidated financial
statements.
<PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Six months ended
January 31,
----------------
1997 1996
---- ----
REVENUE
Oil and gas sales $ 504,830 $ 467,272
Overhead income 26,712 24,367
Interest income 1,225 10,779
Other 1,066 46,586
---------- ----------
533,833 549,004
---------- ----------
COSTS AND EXPENSES
Production and operating 166,345 242,157
Depletion, depreciation, and amortization 104,040 94,604
General and administrative 318,346 278,528
Interest expense 1,563 20
---------- ----------
590,294 615,309
---------- ----------
NET LOSS ( 56,461) ( 66,305)
DIVIDEND REQUIREMENTS ON PREFERRED STOCK 539,550 539,550
---------- ----------
LOSS APPLICABLE TO COMMON STOCK $ (596,011) $( 605,855)
========== ==========
LOSS PER COMMON SHARE $ (.03) $ (.03)
========== ==========
See accompanying notes to condensed consolidated financial
statements.
<PAGE>
<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
Series A 600,000 $600,000 18,092,222 $ 180,922 $21,091,871 $(21,038,440) $( 9,710) $1,249,643
Series C 300,000 $300,000 ---------- ----------- ------------- ------------ ----------
Series 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
Series A 600,000 $600,000 21,092,222 $ 210,922 $21,094,871 $(21,080,583) $( 9,710) $1,240,500
Series C 300,000 $300,000 ---------- ----------- ------------- ------------ ----------
Series E 125,000 $125,000
--------
</TABLE>
CASPEN OIL, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
January 31,
----------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $( 56,461) $( 66,305)
Adjustments to reconcile net income
to net cash provided by (used in) operating activities:
Depletion, depreciation, and amortization 104,040 94,604
Issuance of common stock 33,000 ---
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
and prepaid expenses (63,803) 71,031
Decrease in other assets 8,889 34,877
Increase (decrease) in notes/accounts payable
and accrued expenses 84,883 (308,278)
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 110,548 (174,071)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposition of property and equipment 4,401 2,806
Purchase of property and equipment, net of property
sales and well credits (7,729) (161,436)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (3,328) (158,630)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of debt (73,033) (50,000)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (73,033) (50,000)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 34,187 (382,701)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 94,131 464,876
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 128,318 $ 82,175
========= ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Six Months Ended January 31, 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 January 31, 1997, and
the results of operations for the six month periods ended
January 31, 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) Daiwa Bank, Ltd. Loan
On December 14 1990, the Company entered into an Amended and
Restated Loan Agreement with its principal lender, The Daiwa
Bank, Limited("Daiwa"), formerly Lloyd's Bank plc, and
satisfied all technical deficiencies as they existed prior
to the renegotiation. At the request of Daiwa, the Company
sold property, which was mortgaged to Daiwa, for
approximately $5,200,000. From the proceeds of the sale,
Daiwa received the total $5,200,000. Daiwa applied
$4,700,000 to the reduction of principal. Simultaneously,
the Company executed a 30-month extension note in the amount
of $2,000,000, with the guarantee by Daiwa that, upon
payment of $500,000 in June 1993, the note would be renewed
or restructured. Daiwa recognized that the Company would be
unable to make the $500,000 principal payment in June 1993
and therefore returned $500,000 from the December 1990 sale
of property to the Company.
In June 1993, after the Company paid interest for thirty
(30) months of approximately $425,000, Daiwa refused to
accept the $500,000 principal reduction payment offered by
the Company and refused to renew or restructure the note
claiming no legal obligation to do so and citing its
decision to divest itself of oil and gas loans.
On July 9, 1993, the Company received a demand notice from
Daiwa for $1,997,500 in payment of the loan balance
remaining on the $15,000,000 Credit Revolver established by
Daiwa in late 1988. The interest rate on the revolving line
of credt was prime plus one percent. On February 17, 1994,
the Company sold certain oil and gas properties for $300,000
the proceeds of which were used to reduce the bank debt
principal to $1,697,500.
For six months ended January 31, 1997 and for the years
ended July 31, 1996 and 1995, the Company made payments of
$50,000, $50,000 and $100,000 to reduce the bank debt
principal to $1,497,500 at January 31, 1997.
The Company has attempted to resolve the loan dispute. The
Company expects one of two developments between the Company
and Daiwa, or its assigns, in fiscal year 1997: (a) the
Company and Daiwa, or its assigns, reach an agreement to
renew or restructure the loan in accordance with the
December 1990 terms which provided for thirty month renewal
traunches. (However, there can be no assurance that Daiwa
will agree to do so, nor can there be any assurance that
Daiwa will not proceed to foreclose on the oil and gas
properties which secure the debt.); or (b) litigation
results in which the Company will seek damages in excess of
$10,000,000, and Daiwa may assert claims for default
interest and attorney's fees. Under the last alternative,
the Company estimates the legal fees in the range of
$150,000 in fiscal year 1997.
Generally Accepted Accounting Principals requires the
Company to carry on its financial statements the outstanding
debt owed to Daiwa of $1,497,500 as of the January 31, 1997,
plus interest accrued to July 31, 1996, using prime plus one
percent (9.25% at July 31, 1996) of $454,103 which is
included in accrued expenses.
<PAGE>
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 six months ended January 31, 1997, the working capital
deficit decreased from July 31, 1996, by approximately $86,000.
This decrease is due largely to the increase in oil and gas
pricing, and the resulting increase in cash and cash equivalents
combined with an increase in trade receivables.
The Company's current liabilities exceed current assets by
$2,658,726 at January 31, 1997. The working capital deficit at
January 31, 1997, is due primarily to the $1,497,500 principal
and $454,103 of accrued interest both outstanding on the Daiwa
Bank loan which matured in June 1993 (See Note 2) and to
outstanding trade and notes payable of approximately $700,000.
The Company anticipates that given its current cash position and
assuming a satisfactory resolution of the Daiwa matter, 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 six months ended
January 31, 1997, as compared to the six months ended January 31,
1996.
The Company experienced higher oil and gas prices in the six
months ended January 31, 1997, compared with those received in
the same period last year. Average oil and gas prices received in
the six months ended January 31, 1997, were approximately $22.00
per barrel of oil and $2.50 per MCF gas as compared to
approximately $15.90 per barrel of oil and $1.45 per MCF gas for
the six months ended January 31, 1996.<PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis or Plan of
Operation, Continued
Results of Operations, Continued
The Company reported a net loss of $(56,461) for the six months
ended January 31, 1997, compared to a net loss of $(66,305) for
the six months ended January 31, 1996. This was primarily a
result of higher oil and gas prices received during the six
months ended January 31, 1997, as compared to the same period in
fiscal year ended 1996. Oil and gas revenues approximated
$505,000 for the six months ended January 31, 1997, while
revenues for the same period in 1996 approximated $467,000.
Production and operating expenses for the period ended January
31, 1997, were approximately $166,000, as compared to the period
ended January 31, 1996, which were approximately $242,000. The
decrease in lease operating expenses to 33 percent of oil and gas
sales from 52 percent generally reflects the activities detailed
above with respect to the increase in oil and gas revenues for
the six months ended January 31, 1997.
General and administrative expenses for the six months ended
January 31, 1997, increased by approximately $40,000 from the
corresponding six months ended January 31, 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 January 31, 1997, dividends on the Company's Series
A Shares are in arrears $17.99 per share for a total of
$10,784,627.
<PAGE>
CASPEN OIL, INC.
AND SUBSIDIARIES
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none
(b) Reports on Form 8-K: none
<PAGE>
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.
March 14, 1997 By:
Gary N. Davis, Treasurer
<PAGE>
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.
March 14, 1996 By:/s/ Gary N. Davis
Gary N. Davis, Treasurer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000095254
<NAME> CASPEN OIL INC
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 128,318
<SECURITIES> 0
<RECEIVABLES> 196,391
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 324,709
<PP&E> 20,179,006
<DEPRECIATION> 17,110,465
<TOTAL-ASSETS> 4,293,335
<CURRENT-LIABILITIES> 2,983,435
<BONDS> 0
210,922
600,000
<COMMON> 425,000
<OTHER-SE> 4,578
<TOTAL-LIABILITY-AND-EQUITY> 4,293,335
<SALES> 504,830
<TOTAL-REVENUES> 533,833
<CGS> 166,345
<TOTAL-COSTS> 590,294
<OTHER-EXPENSES> 539,550
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (596,011)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> 0
</TABLE>
