FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ ] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.
For the Quarterly Period Ended March 31, 1996.
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.
Commission File No. 0-13933
THERMAL EXPLORATION COMPANY
(Exact Name of registrant as specified in its charter)
California 94-2185688
(State or other jurisdiction of (I.R.S. identification No.)
incorporation or organization)
11525 Caroline Lane, Nevada City, California 95959
(Address of principal executive offices)
Registrant's telephone number including area code: (916) 265-0653
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
twelve months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to the filing requirements for the
past 90 days. Yes X No.
The number of shares outstanding of the issuer's common
stock, as of March 31, 1996, is 17,100,528
<PAGE>
Part I - Financial Information
Item 1. FINANCIAL STATEMENTS
Thermal Exploration Company
(A Development Stage Company)
Statements of Financial Position
(Unaudited)
March 31, 1996 June 30, 1995
Assets:
Cash & Cash Equivalents $ 5,633 $ 958
Receivables 9,700 75,497
Total Current Assets 15,333 76,455
Deferred Exploration Costs and
Mineral Claims 1,994,241 1,591,095
Other 516 630
Total Assets $ 2,010,090 $ 1,668,180
Liabilities and Shareholders' Equity
Accounts Payable and Accrues Expenses 563,969 97,494
Total Current Liabilities 563,969 97,494
Accounts Payable to be Refinanced -0- 108,000
Total Liabilities 563,969 205,494
Convertible Series A Preferred Stock 76,561 465,000
5,000,000 Shares Authorized: 120,000 and
155,000 Shares Outstanding at March 31, 1996
and
June 30, 1995, respectively;
$3.00 Per Share Liquidation Preference
Common Stock, 100,000,000 Shares 7,255,050 6,730,910
Authorized, No Par; 17,100,528
and 16,415,528 Shares Outstanding
at March 31, 1996 and June 30
1995, Respectively
Accumulated Deficit:
Prior to development stage (5,178,836) (5,178,836)
During development stage (706,654) (554,388)
(starting July 1, 1991)
Total Accumulated Deficit (5,885,490) (5,733,224)
Total Shareholders Equity 1,446,121 1,462,686
Total Liabilities and
Shareholders' Equity $ 2,010,090 $ 1,668,180
Shareholders' Equity
The Accompanying Notes are an Integral Part of These Financial Statements.
<PAGE>
Thermal Exploration Company
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended March 31, Ended March 31,
<S> <C> <C> <C> <C>
1996 1995 1996 1995
Revenue:
Income $ -0- $ -0- $ -0- $ -0-
Total -0- -0- -0- -0-
Expenses:
Consulting Fees and 2,400 15,240 19,440 34,740
Contract Labor
Professional Fees 3,611 16,706 99,621 34,812
Rent and Utilities 2,660 3,017 8,077 8,899
Stock Maintenance 4,276 5,579 11,262 10,771
Travel 372 520 1,084 970
Other 4,128 4,938 10,952 13,294
Total Expenses 17,447 46,000 150,436 103,486
Gain on Asset Disposal -0- -0- -0- 44,433
Interest Income 1 1 519 409
Currency Gain (Loss) (312) 1,250 (1,449) 795
Miscellaneous Income -0- -0- -0- 7,484
Loss From Operations (17,758) (44,749) (151,366) (50,365)
Provisions for Income -0- 100 900 900
Tax
Net Loss $ (17,758) $ (44,849) $ (152,266) $ (51,265)
Net Loss Per Share $ -0- $ -0- $ (.01) $ -0-
Shares Used in Computation 17,075,528 16,415,528 16,887,750 16,415,528
</TABLE>
The Accompanying Notes are an Integral Part of these Financial Statements.
<PAGE>
THERMAL EXPLORATION COMPANY
(A Development Stage Company)
STATEMENTS OF OPERATIONS
PERIOD FROM JULY 1, 1991 (START OF DEVELOPMENT STAGE)
TO DECEMBER 31, 1995
JULY 1, 1991
TO
MARCH 31,
1996
(UNAUDITED)
REVENUE:
Royalties $ 41,411
COSTS AND EXPENSES:
General and administrative 909,550
Loss on disposition/writedown of oil and gas
seismic costs 511,136
Writeoff of deferred exploration costs
and mineral claims 114,672
Writeoff of other assets 27,814
1,563,172
OPERATING LOSS (1,521,761)
OTHER INCOME:
Gain on sale of mineral claims 44,433
Gain on sale of marketable securities 38,098
Gain on sale of land 30,664
Gain on sale of royalty interest 50,000
Other 18,453
181,648
OTHER EXPENSES:
Legal settlement costs 128,031
Other 74,183
202,214
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (1,524,324)
INCOME TAX PROVISION (BENEFIT) (20,713)
LOSS FROM CONTINUING OPERATIONS (1,521,611)
DISCONTINUED GEOTHERMAL OPERATIONS:
Income from operations 4,571
Gain on sale (net of income tax of $9,033) 810,386
NET LOSS $ (706,654)
PER COMMON SHARE:
Loss from continuing operations $ (.11)
Discontinued operations $ .06
Net loss $(.05)
SHARES USED IN COMPUTATION 13,594,151
The accompanying notes are an integral part of these financial statements.
<PAGE>
Thermal Exploration Company
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
MARCH 31,
<S> <C> <C>
1996 1995
Cash Flows From Operating Activities:
Net Income (Loss) $ (152,266) $ (51,265)
Adjustments to Reconcile Net Income (Loss) to Cash
Provided by Operating Activities:
Depreciation 114 474
Amortization of Intangibles -0- 707
Gain on Sale of Assets -0- (44,433)
Decrease (Increase) in Receivables 65,797 (1,400)
Increase (Decrease) in Accrued Liabilities 157,843 (63,324)
Payments of Accounts Payable to be Refinanced (108,000) (71,000)
Net Cash Flow From (36,512) (230,241)
Operating Activities
Cash Flows From Investing Activities:
Deferred Exploration Costs (111,445) (199,756)
Cash Flows From Financing Activities:
Proceeds from sale of Asset -0- 24,248
Proceeds of Stock Issue 119,140 377,550
Proceeds from Borrowings from Western 33,492 -0-
Net Cash Flows From 152,632 401,798
Financing Activities
Net Increase (Decrease) in Cash 4,675 (28,330)
Cash at Beginning of Period 958 (29,330)
Cash at End of Period $ 5,633 $ 1,131
</TABLE>
The Accompanying Notes are an Integral Part of these Financial Statements
<PAGE>
THERMAL EXPLORATION COMPANY
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
PERIOD FROM JULY 1, 1991 (START OF DEVELOPMENT STAGE)
TO DECEMBER 31, 1995
JULY 1, 1991
TO
MARCH 31,
1996
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (706,654)
Adjustments to reconcile to net cash used by
operating activities:
Depreciation and amortization 16,988
Gain on sale of discontinued operations (819,419)
Gain on sale of land (30,664)
Gain on sale of mineral claims (44,433)
Gain on sale of marketable securities (38,098)
Gain on sale of royalty interest (50,000)
Loss on disposition/writedown of seismic costs 511,136
Legal settlement costs paid in common stock 128,031
Writeoff of deferred exploration costs
and mineral claims 114,672
Writeoff of other assets 27,814
Other 7,742
Effect of changes in:
Account receivables 198,208
Other assets (3,869)
Accounts payable and accrued expenses 159,742
Net cash used by operating activities (528,804)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of geothermal operations 562,485
Additions to deferred exploration costs
and mineral claims (1,132,453)
Proceeds from sale of:
Marketable securities 57,592
Mineral claims 40,855
Seismic asset 66,640
Royalty interest 50,000
Seismic data usage fees received 24,238
Purchases of furniture and equipment (2,570)
Net cash used by investing activities (333,213)
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock for cash 825,465
Advances from operating partner 78,536
Payments of operating advances (108,896)
Net cash provided by financing activities 795,105
Net decrease in cash and equivalents (66,912)
Cash and equivalents at beginning of period 72,545
Cash and equivalents at end of period $ 5,633
The accompanying notes are an integral part of these financial statements.
<PAGE>
Thermal Exploration Company
(A Development Stage Company)
Notes to Financial Statements
March 31, 1996
(Unaudited)
Note 1 - Financial Statements
The accompanying financial statements as of March 31, 1996 and for the periods
ended March 31, 1996 and 1995 have been prepared by the Company without audit.
In the opinion of management, all necessary adjustments have been made to
present fairly the financial position, results of operations, and the cash
flows for all periods presented .
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial
statements be read in conjunction with the audited financial statements and
notes thereto included in the Company's June 30, 1995, Annual Report to
Shareholders. The results of operations for the periods ended March 31, 1996
and 1995, are not necessarily indicative of the operating results for these
full years.
Development Stage - Effective August 1, 1991, the Company sold its interest in
certain geothermal operations, recognizing a gain on the sale of $810,386. The
divested operations had been the Company's primary source of operating cash
flows and, accordingly, the Company is deemed to be in the development stage
for its fiscal year ended June 30, 1992 and thereafter. Development stage
amounts for the period
July 1, 1991 to June 30, 1995 in the Company's statements of operations include
a gain of $810,386 on the sale of geothermal operations and income from such
operations of $4,571.
Note 2 - Related Parties
On November 2, 1995, the Company's president was appointed to also serve as
president of Western Copper Holdings Limited (Western), the Company's joint
venture partner in the Carmacks Copper Project.
Note 3 - Equity
During the quarter ended December 31, 1995, 135,000 shares of Series A
Preferred Stock were converted into 135,000 shares of common stock. In
addition, during the quarter ended December 31, 1995, 100,000 shares of Series
A Preferred Stock were issued in exchange for the cancellation of $16,561 in
U.S. liabilities.
Note 4 - Related Party Payable
Included in Accounts Payable and Accrued Expenses are amounts owed to Western.
At March 31, 1996 the Company owed Western $453,670, related to deferred
explorations costs for the Carmacks joint venture and certain cash advances.
Note 5 - Loan Guarantee
The Company is guarantor on a February 14, 1996, $2.5 million (Canadian) line
of credit from Rothschild Australia Ltd. to Western. The entire Carmacks
property is security for the loan. At March 31, 1996, $625,000 (CN) of the
available line had been drawn. The funds were used primarily for development
expenditures of the Carmacks project.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
A. Liquidity and Capital Resources
Thermal Exploration Company (the "Company") had a cash balance of $5,633
as of March 31, 1996, an increase of $4,615 from the previous balance of $958
as at June 30, 1995. Total liabilities as at March 31, 1996, were $563,969 as
compared to $205,494 on June 30, 1995. The increase in the cash balance is
insignificant with respect to day to day operations. The increase in
liabilities is attributable to the Company's share of exploration expenditures
incurred by Western Copper Holdings Limited ("Western Copper"), its joint
venture partner in the Carmacks Copper Project, loans from Western Copper for
the proposed Arrangement involving the Company and Western Copper, and day to
day operating expenses. As of March 31, 1996, the Company owes Western Copper
approximately $453,670. The Company has no current obligations other than day
to day administrative expenses and its on-going commitment to fund its 50%
joint venture interest in the exploration and development of the Carmacks
Copper Project near Carmacks, Yukon. The Company currently relies on loans
from Western Copper and equity financing to meet its short term and joint
venture obligations.
The Company and Western Copper are currently proceeding with a
reorganization pursuant to an Arrangement whereby shareholders of the Company
shall receive one common share of Western Copper for each five common shares of
Thermal. It is also proposed that Thermal shareholders, other than Western
Copper, will receive shares in Pacific Cascade Resources Corporation
("Pacific"), a wholly owned subsidiary whose assets will consist of all of the
assets of Thermal other than its interest in the Carmacks Project. All
liabilities will remain with Thermal. The assets to be transferred to Pacific
have nominal value. The Arrangement is subject to shareholder, regulatory, and
court approval.
Rothschild Australia Ltd. ("Rothschild") has entered into a credit
agreement to loan Cdn $2.5 million to Western Copper to be used primarily for
engineering of the Carmacks Project. Under the agreement, the loan to Western
is guaranteed by Thermal and is secured by Thermal's interest in the Carmacks
Copper Project. As of March 31, 1996, Western had drawn down Cdn $625,000, in
the aggregate against this facility.
Thermal and Western Copper are also holding discussions with Rothschild
which could lead to senior equity and debt funding for the Carmacks Copper
Project. There is no assurance that these financing discussions will be
successful.
The Company has no operating revenues and is entirely dependent on its
ability to either borrow funds from Western Copper or raise funds through the
sale of assets or the sale of its common shares to meet the administrative and
exploration/development obligations.
In the event that the Arrangement with Western is not effected, Thermal
will be required to meet its obligations to the joint venture. In the event
Thermal fails to meet these obligations, its interest in the joint venture may
be diluted.
<PAGE>
B. RESULTS OF OPERATIONS
During the three month period ended March 31, 1996, the Company had no
operating revenue. The Company also had no operating revenue for the
corresponding three month period in 1995. The Company does not anticipate
receiving any significant income prior to placing the Carmacks Copper Project
into production. To meet its monthly operating expenses the Company will need
to raise additional funds by loans from Western Copper or through the sale of
assets or the private placement of its preferred or common stock.
Total operating expenses for the three month period ended March 31, 1996,
were $17,447 which represents a decrease of $28,553 from the prior year's
corresponding period when operating costs were $46,000. The decrease is
primarily the result of lower consulting and professional fees.
During the next nine months, the joint venture expects to incur costs of
approximately $1,000,000 (Cdn) to develop and permit the Carmacks Copper
Projects. The joint venture intends to fund these expenses through a
$2,500,000 (Cdn) loan from Rothschild to Western Copper. Thermal has
guaranteed repayment of the loan and has secured its repayment with its joint
venture interest in the Carmacks Project.
In the event the proposed Arrangement with Western is not effected,
Thermal will be responsible for its pro rata expenses to the joint venture and
obligations under the guaranty to the Rothschild loan.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
On April 12, 1996, a group of unaffiliated purchasers acquired Prime
Equities International Corporation's 35% interest in Western Copper Holdings
Ltd. Western Copper is the Company's joint venture partner in the Carmack's
Copper project. Western is the Company's largest shareholder owning
approximately 34% of the outstanding common stock of the Company.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
SIGNATURE
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THERMAL EXPLORATION COMPANY
May 20, 1996 By: F. DALE CORMAN
F. Dale Corman
Chairman and President
(Chief Executive and
Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-QSB FOR THE PERIOD ENDED MARCH 31, 1996 FOR THERMAL EXPLORATION COMPANY ABD
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000097725
<NAME> THERMAL EXPLORATION COMPANY
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 5,633
<SECURITIES> 0
<RECEIVABLES> 9,700
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,333
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,010,090
<CURRENT-LIABILITIES> 563,969
<BONDS> 0
0
76,561
<COMMON> 7,255,050
<OTHER-SE> (5,885,490)
<TOTAL-LIABILITY-AND-EQUITY> 2,010,090
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 17,447
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (17,758)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,758)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
