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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, 2001
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
(Registrants 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 issuers
class of common stock, as of the latest practicable date: 526,060
shares, one class only as of May 1, 2001.
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, 2001(UNAUDITED).
PART I. FINANCIAL INFORMATION Page
Number
Balance Sheets as of December 31, 2000
and March 31, 2001 3&4
Statements of Operations for
the Three Months
Ended March 31, 2000 and 2001 5
Statements of Cash Flows
for the Three Months
Ended March 31, 2000 and 2001 6
Notes to unaudited Financial Statements 7
Managements Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
ITEM 6(b)Reports on Form 8-K 9
Signatures 9
Forward-looking statements in this report, including without
limitation, statements relating to the Companys 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 Companys plans, strategies, objective, expectations and
intentions are subject to change at any time at the discretion of
the Company; (ii) the Companys plans and results of operations
will be affected by the Companys ability to manage its growth
and inventory (iii) other risks and uncertainties indicated from
time to time in the Companys 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. March
31, 31,
2000 2001
CURRENT ASSETS:
Cash and Cash Equivalents $191,634 $238,725
Marketable equity securities 6.125 5,750
Accounts receivable:
Oil and gas purchasers 88,242 88,181
Refundable income taxes 3,500 5,378
Total current assets 289,501 338.034
PROPERTY AND EQUIPMENT, AT COST:
Oil & gas properties, successful
efforts method:
Proved properties
611,960 617,165
Unproved properties
97,102 97,102
709,062 714,267
Less accumlulated depletion &
depreciation (370,391) (380,391)
Net property and Equipment 338,671 333,876
Total Assets $628,172 $671,910
PART I: FINANCIAL INFORMATION
CROFF ENTERPRISES, INC.
BALANCE SHEET
(Unaudited)
Dec. March
31, 31,
2000 2001
CURRENT LIABILITIES:
Accounts payable $ 10,838 $ 16,958
Accrued liabilities
5,368 3,892
Total current liabilities
16,206 20,850
STOCKHOLDERS EQUITY:
Class A preferred stock, no par value;
5,000,000 shares, none issue
Class B Preferred stock, no par value;
1,000,000 authorized 500,659 shares
(2000 and 2001) issued and 475,359 475,359
outstanding
Common stock, $.10 par value
20,000,000 shares
authorized, 589,143 shares issued
(2000 and 2001) 58,914 58,914
Capital in excess of par value
415,797 415,797
Accumulated deficit
(255,153) (215,859)
Less treasury stock at cost, 62,883
shares (2000)
and 63,083 shares (2001)
(82,951) (83,151
Total stockholders equity
611,966 651,060
Total liabilities & equity $ $
628,172 671,910
CROFF ENTERPRISES, INC.
Statement of Operations
For the three months ending March 31, 2000 and 2001
(Unaudited)
2000 2001
REVENUE:
Oil and gas sales $ 68,266 $ 122,361
Other income
1,647 3,026
Total revenue 69,913 125,387
COSTS AND EXPENSES:
Lease operating expense 19,821 46,752
Depreciation and depletion 10,500 10,000
General and administrative 23,862 23,341
Rent Expense Related Party 4,800 6,000
Total cost and 58,983 86,093
expenses
Net income 10,930 $ 39,294
$
Net income applicable to 9,300 $ 37,883
preferred stock $
Net income applicable to common 1,630 $ 1,411
shareholders $
Basic and diluted net per $ * $ 01
common share
*-Less than .01 per share
CROFF ENTERPRISES, INC.
Statement of Cash Flows
For the three months ending March 31, 2000 and 2001
(Unaudited)
2000 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ $
10,930 39,294
Adjustments to reconcile net income to net
cash
provided by operating activities
Depreciation and depletion
10,500 10,000
Change in assets and liabilities
Accounts receivable
(3,417) (1,817)
Other assets
(625) (5,205)
Accounts payable
4,154 6,120
Accrued liabilities
1,965 (1,476)
Marketable securities
(1,125) 375
Total adjustments
11,452 7,997
Net cash provided by operating activities
22,382 47,291
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock
(200)
Net cash used in financing
(200)
Increase in cash
22,382 47,091
Cash and cash equivalents at beginning of
period $ 57,716 $ 191,634
Cash and cash equivalents at end of period
$ 80,098 $ 238,725
CROFF ENTERPRISES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2001
PART I BASIS OF PREPARATION.
The condensed financial statements for the three month
periods ended March 31, 2001 and 2000 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 years financial statements to conform to
the 2001 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
Companys Annual Report on Form 10-K for the year ended December
31, 2000, which report has been filed with the Securities and
Exchange Commission, and is available from the Company.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three-Month period Ended March 31, 2001
as Compared to the Three-Month Period Ended March 31, 2000
OIL AND GAS OPERATIONS
Oil and gas revenue, about equally divided between royalties
and working interest, for the three months ended March 31, 2001,
was $122,361 compared to $68,266 for the quarter ending March 31,
2000. The primary cause for this increase was the large run up in
natural gas prices, which increased from the range of $2.50 per
MCF in 2000, to as high as $9.00 per MCF in 2001. This increase
in natural gas prices has reversed but the current prices are in
the $4 to $5 an MCF range. Oil prices also increased slightly
from one year ago. Natural gas production is up about five
percent and oil production declined a few percent, so production
is essentially stable.
Production costs, which includes lease operating expenses,
unsuccessful drilling expense, and all production related taxes,
for the three months ended March 31, 2001, increased
significantly to $46,752 when compared to the production costs of
$19,821 incurred during the quarter ended March 31, 2000. The
primary reason for this increase was the expenditure of $22,000
incurred in a five percent participation in an unsuccessful new
well in Oklahoma. The well was completed but has not produced.
The remaining increase is due to higher production taxes due to
higher prices and inflation in oil field costs.
OTHER INCOME
During the three month period ended March 31, 2001, the
Company had other income of $3,026. This was a increase from
$1,647 in the same period in 2000. The increase was due to
higher interest on larger deposits.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the quarter ending
March 31, 2001, were $23,341 plus rent expense of $6,000 for a
total of $29,341 compared to $23,862 plus $4,800 rent expense for
a total of $28,622 in the same period in 2000. The rent expense
from a related party increased from $1,600 a month to $2,000 a
month beginning in 2001. The overhead expenses were stable and
should remain stable this year.
FINANCIAL RESOURCES AND LIQUIDITY
As of March 31, 2001, the Companys current assets exceeded
current liabilities by $317,184. As of December 31, 2000, the
Companys current assets exceeded current liabilities by
$273,295. The Companys current ratio is approximately 16:1.
The Company is currently looking to purchase producing oil and
gas assets after rebuilding its cash reserves last year. The
Company expects to remain in a strong liquid position.
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, 2001.
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: