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FORM 10-Q. QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
and Exchange Act of 1934
For the period ended March 31, 2000
or[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to
Commission File Number: 100
CROFF ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Utah 87-0233535
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
621 17th St., Suite 830, Denver, Colorado 80293
(Address of principal executive offices) (Zip Code)
(303) 383-1555
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report.)
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 Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant has required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
X Yes No
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date: 526,515 shares, one class
only as of May 1, 2000.
INDEX
INDEX TO INFORMATION INCLUDED IN THE QUARTERLY REPORT (FORM 10-Q) TO
THE SECURITIES AND EXCHANGE COMMISSION FOR THE THREE MONTHS ENDED
MARCH 31, 2000(UNAUDITED).
PART I. FINANCIAL INFORMATION Page Number
Balance Sheets as of December 31, 1999
and March 31, 2000 3&4
Statements of Operations for
the Three Months
Ended March 31, 1999 and 2000 5
Statements of Cash Flows
for the Three Months
Ended March 31, 1999 and 2000 6
Notes to Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
ITEM 5 OTHER INFORMATION 10
Reports on Form 8-K 10
Signatures 10
Forward-looking statements in this report, including without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Investors are cautioned that such forward-looking statements
involve risks and uncertainties; including without limitation to, the
following: (i) the Company's plans, strategies, objective, expectations
and intentions are subject to change at any time at the discretion of the
Company; (ii) the Company's plans and results of operations will be
affected by the Company's ability to manage its growth and inventory (iii)
other risks and uncertainties indicated from time to time in the Company's
filings with the Securities and Exchange Commission. Neither the Securities
and Exchange Commission nor any other regulatory body takes any position as
to the accuracy of forward-looking statements.
PART I: FINANCIAL INFORMATION
CROFF ENTERPRISES, INC.
BALANCE SHEET
(Unaudited)
Dec. 31, March 31,
1999 2000
CURRENT ASSETS:
Cash and Cash Equivalents: $ 57,716 $ 80,098
Marketable equity securities 4,375 5,500
Accounts receivable:
Oil and gas purchasers 43,915 47,331
Refundable income taxes 2,500 3,125
Total current assets 108,506 136,054
PROPERTY AND EQUIPMENT, AT COST:
Oil & gas properties, successful
efforts method:
Proved properties 628,560 628,560
Unproved properties 97,102 97,102
$ 725,662 $ 725,662
Less accumulated depletion and (336,006) (346,506)
depreciation
Net property and equipment $389,656 $379,156
Total assets $498,162 $515,210
PART I: FINANCIAL INFORMATION
CROFF ENTERPRISES, INC.
BALANCE SHEET
(Unaudited)
Dec. 31, March 31,
1999 2000
CURRENT LIABILITIES:
Accounts Payable $14,451 $18,604
Accured Liabilities 3,358 5,323
Total current liabilities $ 17,809 $23,927
CONTINGENCIES (NOTE 2)
STOCKHOLDERS' EQUITY:
Class A preferred stock, no par
value; 5,000,000 shares, none
issue
Class B Preferred stock, no par
value; 520,000 authorized, 500,659
shares (1999 and 2000)issued and
outstanding 350,359 359,659
Common stock, $.10 par value
20,000,000 shares authorized
589,143 shares issued
1999 and 2000) 58,914 58,914
Capital in excess of par value 540,797 540,797
Accumulated deficit (386,821) (385,191)
$563,249 $574,179
Less treasury stock at cost,
62,628 shares (1999 and 2000) (82,896) (82,896)
Total stockholders' equity $480,353 $491,283
Total liabilities & equity $498,162 $515,210
CROFF ENTERPRISES, INC.
Statement of Operations
For the three months ending March 31,1999 and 2000
(Unaudited)
1999 2000
REVENUE:
Oil and gas sales $ 40,196 $68,266
Gain on disposal of oil and
gas properties
Other income(loss) 47 1,647
Total revenue $40,243 $69,913
COSTS AND EXPENSES:
Lease operating expense 12,397 19,821
Depreciation and depletion 9,800 10,500
General and administrative 20,679 23,862
Rent Expense - Related Party 4,800 4,800
Total cost and expenses $47,676 58,983
Net income (loss) $(7,433) $10,930
Net income (loss) applicable
to preferred stock 6,000 9,300
Net income (loss) applicable to
common shareholders $1,433 $1,630
Basic and diluted net loss per
common share $(*) $*
*-Less than .01 per share
CROFF ENTERPRISES, INC.
Statement of Cash Flows
For the three months ending March 31,1999 and 2000
(Unaudited)
1999 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(7,433) $10,930
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation and depletion 9,800 10,500
Change in assets and liabilities:
(Increase) decrease in accounts receivable (7,109) (3,417)
(Increase) decrease in other assets (700) (625)
Increase (decrease) in accounts payable 15,282 4,154
Increase (decrease) in accrued liabilities 5,562 1,965
Increase (decrease) in marketable securities 312 (1,125)
Total adjustments $23,147 $11,452
Net cash provided by operating activities: $15,714 $22,382
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of note payable
Union Bank and Trust $(23,369)
Net cash used in financing $(23,369)
Increase (decrease) in cash (7,655) 22,382
Cash and cash equivalents at beginning
of period 14,294 57,716
Cash and cash equivalents at end of period $6,639 $80,098
CROFF ENTERPRISES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000
PART I BASIS OF PREPARATION.
The condensed financial statements for the three month periods
ended March 31, 2000 and 1999 in this report have been prepared by the
Company without audit pursuant to the rules and regulations of the
Securities and Exchange Commission and reflect, in the opinion of the
management, all adjustments necessary to present fairly the results of the
operations of the interim periods presented herein. Certain
reclassifications have been made to the prior year's financial statements to
conform to the 2000 presentation. Certain information in footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations, although the Company
believes the disclosures presented herein are adequate to make the
information presented not misleading. It is suggested that these condensed
financial statements be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1999, which report has been filed with the
Securities and Exchange Commission, and is available from the Company.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three-Month period Ended March 31, 2000
as Compared to the Three-Month Period Ended March 31, 1999.
OIL AND GAS OPERATIONS
Oil and gas revenue, about equally divided between royalties and
working interest, for the three months ended March 31, 2000, was $68,266
compared to $40,196 for the quarter ending March 31, 1999. The primary
cause for this increase was due primarily to the large increase in oil prices
which increased almost 100% between the first quarter of 1999 and the
first quarter of 2000. There was no additional production of oil. Natural
gas prices were also higher, increasing approximately ten percent over the
year earlier period.
Production costs, which includes lease operating expenses and all
production related taxes, for the three months ended March 31, 2000,
increased significantly to $19,821 when compared to the production costs
of $12,397 incurred during the quarter ended March 31, 1999. This
increase was due to wells that were shut in or workovers that were
postponed during the period of lower prices, being put back in production,
and higher production taxes.
OTHER INCOME
During the three month period ended March 31, 2000, the Company
had other income of $1647. This was a increase from $47 in the same
period in 1999. The increase was due to higher interest on larger deposits
and an increase in the value of the securities held.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the quarter ending March 31,
2000, were $23,862 plus rent expense of $4,800 for a total of $28,662
compared to $20,679 plus $4,800 for a total of $25,479 in the same period
in 1999. The reason for this increase was primarily due to all auditing
expenses for 2000 being booked in this quarter, and moving expenses for
the Company. The Company expects general and administrative costs to
remain stable this year.
YEAR 2,000 DISCLOSURE
The Company incurred no significant expenditures or problems due to the
year 2000 compliance.
FINANCIAL RESOURCES AND LIQUIDITY
As of March 31, 2000, the Company's current assets exceeded current
liabilities by $112,127. As of December 31, 1999, the Company's current
assets exceeded current liabilities by $90,697. The Company's current
ratio is approximately 6:1. The Company is currently accumulating cash and
liquid assets to build the current liquid accounts of the Company to the
$150,000 level to prepare for a possible reverse merger of the Company.
The Company expects to continue to operate at a positive cash flow for the
remainder of this year and to accumulate cash and securities.
PART II. OTHER INFORMATION
ITEM 6(B) REPORTS ON FORM 8-K
The registrant has filed no reports on Form 8-K for the period ending
March 31, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REGISTRANT: CROFF ENTERPRISES, INC.
By:
Gerald L. Jensen
Chief Executive Officer and Chief Financial Officer
By:
Beverly Licholat
Chief Accounting Officer
Dated: 5/12/1\2000