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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 June 30, 2003
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 ------------ ------------
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CROFF ENTERPRISES, INC.
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(Exact name of registrant as specified in its charter)
Utah 87-0233535
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
621 17th St., Suite 830, Denver, Colorado 80293
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(Address of principal executive offices) (Zip Code)
(303) 383-1555
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(Registrant's telephone number, including area code)
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(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
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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
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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: 566,060 shares, one class only
as of August 8, 2003, exclusive of 63,083 common shares, exclusive of 63,083
common shares held in treasury stock.
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INDEX
INDEX TO INFORMATION INCLUDED IN THE QUARTERLY REPORT (FORM 10-Q) TO THE
SECURITIES AND EXCHANGE COMMISSION FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2003 (UNAUDITED).
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Page Number
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PART I. UNAUDITED FINANCIAL INFORMATION
Item 1. Unaudited financial statements 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Item 3. Controls and Procedures 11
PART II. OTHER INFORMATION 11
Item 5 Other Information 11
Item 6 Exhibits and reports on Form 8-K 11
Signatures 11
Certifications 12
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Forward-Looking Statements
Certain information included in this report, other materials filed or to
be filed by the Company with the Securities and Exchange Commission ("SEC"), as
well as information included in oral statements or other written statements made
or to be made by the Company contain or incorporate by reference certain
statements (other than statements of historical or present fact) that constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
All statements, other than statements of historical or present facts, that
address activities, events, outcomes or developments that the Company plans,
expects, believes, assumes, budgets, predicts, forecasts, estimates, projects,
intends or anticipates (and other similar expressions) will or may occur in the
future are forward-looking statements. These forward-looking statements are
based on management's current belief, based on currently available information,
as to the outcome and timing of future events. When considering forward-looking
statements, you should keep in mind the risk factors and other cautionary
statements in this Form 10-Q and the Company's Annual Report on Form 10-K for
the year ended December 31, 2002. Such forward-looking statements appear in a
number of places and include statements with respect to, among other things,
such matters as: future capital, development and exploration expenditures
(including the amount and nature thereof), drilling, deepening or refracing of
wells, oil and gas reserve estimates (including estimates of future net
revenues associated with such reserves and the present value of such future net
revenues), estimates of future production of oil and natural gas, business
strategies, expansion and growth of the Company's operations, cash flow and
anticipated liquidity, grassroots prospects and development and property
acquisitions, obtaining financial or industry partners for prospect or program
development, or marketing of oil and natural gas. We caution you that these
forward-looking statements are subject to risks and uncertainties. These risks
include but are not limited to: general economic conditions, the Company's
ability to finance acquisitions and drilling, the market price of oil and
natural gas, the risks associated with exploration, the Company's ability to
find, acquire, market, develop and produce new properties, operating hazards
attendant to the oil and gas business, uncertainties in the estimation of
proved reserves and in the projection of future rates of production and timing
of development expenditures, the strength and financial resources of the
Company's competitors, the Company's ability to find and retain skilled
personnel, climatic conditions, labor relations, availability and cost of
material and equipment, environmental risks, the results of financing efforts,
regulatory developments and the other risks described in the Company's Annual
Report on Form 10-K for the year ended December 31, 2002.
Should one or more of the risks or uncertainties described above or
elsewhere in this Form 10-Q or presented in the Company's Annual Report
on Form 10-K for the year ended December 31, 2002 occur, or should underlying
assumptions prove incorrect, our actual results and plans could differ
materially from those expressed in any forward-looking statements. We
specifically disclaim all responsibility to publicly update any information
contained in a forward-looking statement or any forward-looking statement in
its entirety and therefore disclaim any resulting liability for potentially
related damages.
All forward-looking statements attributable to us are expressly qualified
in their entirety by this cautionary statement.
PART I. UNAUDITED FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
The financial statements included herein have been prepared in conformity
with generally accepted accounting principles. The statements are unaudited but
reflect all adjustments, which, in the opinion of management, are necessary to
fairly present the Company's financial position and results of operations. All
such adjustments are of a normal recurring nature.
CROFF ENTERPRISES, INC.
BALANCE SHEETS
(Unaudited)
December 31, June 30,
2002 2003
----------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 316,473 $ 228,497
Marketable equity securities, available for sale 61,540 85,910
Natural gas "put" contracts, at fair value - 26,220
Accounts receivable 48,948 74,131
Notes receivable, related parties 9,318 9,792
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436,279 424,550
---------- ----------
Oil and gas properties, at cost,
successful efforts method: 737,857 836,044
Accumulated depletion and depreciation (420,924) (440,924)
---------- ----------
316,933 395,120
---------- ----------
Total assets $ 753,212 $ 819,670
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,481 $ 17,835
Accrued liabilities 1,323 7,061
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16,804 24,896
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Stockholders' equity:
Class A Preferred stock, no par value
5,000,000 shares authorized, none issued - -
Class B Preferred stock, no par value; 1,000,000
shares authorized, 540,659 shares issued and
outstanding 470,910 493,287
Common stock, $.10 par value; 20,000,000 shares
authorized, 629,143 shares issued and outstanding 62,914 62,914
Capital in excess of common stock par value 456,246 433,869
Treasury stock, at cost, 63,083 shares issued and
outstanding (83,151) (83,151)
Accumulated other comprehensive loss (65,205) (40,835)
Accumulated deficit (94,706) (71,310)
Note receivable from directors (10,600) -
---------- ----------
736,408 794,774
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Total liabilities and stockholders' equity $ 753,212 $ 819,670
========== ==========
See accompanying notes to unaudited condensed financial statements.
4
CROFF ENTERPRISES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
2002 2003 2002 2003
-------- -------- -------- --------
Revenues
Oil and gas sales $ 65,537 $121,569 $114,858 $224,677
Loss on natural gas "put" contracts - (26,790) - (31,821)
Gain on sale of marketable
equity securities - - 23,026 -
Other income 1,465 751 3,356 2,974
-------- -------- -------- --------
67,002 95,530 141,240 195,830
-------- -------- -------- --------
Expenses
Lease operating expense including
production taxes 14,571 36,983 28,585 66,718
Proposed drilling fund - 4,581 - 10,973
General and administrative 21,808 23,621 45,214 58,743
Overhead expense, related party 6,000 6,000 12,000 12,000
Depreciation and depletion 8,000 10,000 16,000 20,000
-------- -------- -------- --------
50,379 81,185 101,799 168,434
-------- -------- -------- --------
Pretax income 16,623 14,345 39,441 27,396
Provision for income taxes - 2,000 - 4,000
-------- -------- -------- --------
Net income $ 16,623 $ 12,345 $ 39,441 $ 23,396
======== ======== ======== ========
Net income applicable to
preferred B stockholders' 15,986 12,001 15,329 22,377
-------- -------- -------- --------
Net income applicable to
Common stockholders' $ 637 $ 344 $ 24,112 $ 1.019
======== ======== ======== ========
Basic and diluted net income
per common share $ * $ * $ .04 $ *
======== ======== ======== ========
Weighted average common shares
outstanding 566,060 566,060 566,060 566,060
======== ======== ======== ========
* Less than $0.01 per share
See accompanying notes to unaudited condensed financial statements.
5
CROFF ENTERPRISES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
For the year ended December 31, 2002 and
the six month period ened June 30, 2003
(Unaudited)
Accumulated
Preferred B stock Common stock Capital in other
------------------ ------------------ excess of Treasury comprehensive Accumulated
Shares Amount Shares Amount par value stock loss deficit
-------- -------- -------- -------- ---------- -------- ------------- -----------
Balance at December 31, 2001 540,659 $397,085 629,143 $ 62,914 $ 530,071 $(83,151) $ (1,150) $ (193,618)
Net unrealized loss on marketable
equity securities - - - - - - (64,055) -
Net income for the year ended
December 31, 2001 - - - - - - - 98,912
Preferred stock allocation - 73,825 - - (73,825) - - -
-------- -------- -------- -------- ---------- -------- ------------- -----------
Balance at December 31, 2002 540,659 $470,910 629,143 $ 62,914 $ 456,246 $(83,151) $ (65,205) $ (94,706)
-------- -------- -------- -------- ---------- -------- ------------- -----------
Net unrealized gain on marketable
equity securities - - - - - - 24,370 -
Net income for the six months
ended June 30, 2002 - - - - - - - 23,396
Preferred stock allocation - 22,377 - - (22,377) - - -
-------- -------- -------- -------- ---------- -------- ------------- -----------
Balance at June 30, 2003 540,659 $493,287 629,143 $ 62,914 $ 433,869 $(83,151) $ (40,835) $ (71,310)
======== ======== ======== ======== ========== ======== ============= ===========
See accompanying notes to unaudited condensed financial statements.
6
CROFF ENTERPRISES, INC.
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2002 and 2003
(Unaudited)
2002 2003
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Cash flows from operating activities:
Net income $ 39,441 $ 23,396
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion and depreciation 16,000 20,000
Realized (gain) on marketable
equity securities (23,026) -
Unrealized loss on natural gas "put" contracts - 31,821
Changes in operating assets and
liabilities:
Accounts receivable 14,524 (25,183)
Accrued interest on notes receivable (1,944) (474)
Accounts payable (2,731) 2,354
Accrued liabilities (3,335) 5,738
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Net cash provided by operating
activities 38,929 57,652
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Cash flows from investing activities:
Purchase of natural gas contracts - (58,041)
Acquistion of property leases and improvements - (98,187)
Purchase of working interest in proved properties (49,585) -
Purchase of marketable equity securities (269,475) -
Proceeds from sale of marketable equity
securities 188,528 -
---------- ----------
Net cash used in investing activities (130,532) (156,228)
---------- ----------
Cash flows from financing activities:
Payment on note receivable from a director - 10,600
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Net Cash provided by financing activities - 10,600
---------- ----------
Net decrease in cash and
cash equivalents (91,603) (87,976)
Cash and cash equivalents
at beginning of period 338,870 316,473
---------- ----------
Cash and cash equivalents
at end of period $ 247,267 $ 228,497
========== ==========
Supplemental disclosure of non-cash investing and financing activities:
During the six month periods ended June 30, 2002 and 2003, the Company had
unrealized gains/(losses) on available for sale securities in the amount of
$(35,653) and $24,370, respectively. During the six month period ended June 30,
2003, the Company had losses on natural gas contracts of $31,821.
See accompanying notes to unaudited condensed financial statements.
7
CROFF ENTERPRISES, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. Basis of preparation
The condensed financial statements for the three and six month periods
ended June 30, 2003 and 2002 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 information in footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America 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, 2002, which
report has been filed with the Securities and Exchange Commission, and is
available from the Company or at www.Croff.com.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Critical Accounting Policies and Estimates
The Company's discussion and analysis of its financial condition and
results of operation are based upon financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements
requires the Company to make estimates and judgments that affect the
reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the year. The Company
analyzes its estimates, including those related to oil and gas revenues,
oil and gas properties, marketable securities, income taxes and contingencies.
The Company bases its estimates on historical experience and various other
assumptions that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates under different assumptions or
conditions. The Company believes the following critical accounting policies
affect its more significant judgments and estimates used in the preparation of
its financial statements and the uncertainties that it could impact our results
of operations, financial condition and cash flows. The Company accounts for
its oil and gas properties under the successful efforts method of accounting.
Depletion, depreciation and amortization of oil and gas properties and the
periodic assessments for impairment are based on underlying oil and gas reserve
estimates and future cash flows using then current oil and gas prices combined
with operating and capital development costs. There are numerous uncertainties
inherent in estimating quantities of proved oil and gas reserves and in
projecting future rates of production and timing of development expenditures.
The Company has designated its marketable equity securities as "securities
available for sale". The Company follows SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended, which establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded on the balance sheet as either an asset or liability measured at
its fair value. It also requires that changes in the derivatives' fair value
be recognized currently in earnings unless specific hedge accounting criteria
are met. Special accounting for qualifying hedges allows a derivative's gains
and losses to offset related results on the hedged item in the income
statement, and requires that a company must formally document, designate,
and assess the effectiveness of transactions that receive hedge accounting
treatment. Historically, oil and gas prices have experienced significant
fluctuations and have been particularly volatile in recent years. Price
fluctuations can result from variations in weather, levels of regional or
national production and demand, availability of transportation capacity to
other regions of the country and various other factors. Increases or decreases
in oil and gas prices received could have a significant impact on future
results.
Liquidity and Capital Resources
At June 30, 2003, the Company had assets of $819,670 and current assets
totaled $424,550 compared to current liabilities of $24,896. Working capital
at June 30, 2003 totaled $399,654, a decrease of 5% compared to $419,475 at
December 31, 2002. The Company had a current ratio at June 30, 2003 of
approximately 17:1. The market value of the Company's marketable equity
securities were $40,835 below cost at June 30, 2003. During the six month
period ended June 30, 2003, net cash provided by operations totaled $57,652, as
compared to $38,929 for the same period in 2002. The Company's cash flow from
operations is highly dependent on oil and gas prices. On June 11, 2002, the
Company entered into a one-year variable rate revolving line of credit agreement
whereby the Company could borrow up to $100,000 to fund investments in oil and
gas properties. The variable rate was based on Prime plus 1.5%, subject to a
floor of 7% and a ceiling of 12%. The Company has elected not to renew this
expired revolving line of credit. The Company had no short-term or long-term
debt outstanding at June 30, 2003.
On March 21, 2003, the Company purchased a single natural gas "put"
contract for each month beginning June 2003 and ending May 2004. Each contract
is for 10,000 MMBTU (roughly equivalent to 10,000 Mcf) of natural gas at the
strike price of $4.75. The Company paid $58,041 for these twelve contracts and
the Company's maximum financial exposure is limited to the premium paid for
these contracts of $58,041. The estimated fair value of the Company's contracts
if sold on June 30, 2003 was $26,220. The value of these contracts changes
daily. These natural gas contracts are not accounted for as a hedge in part
because the natural gas volume per the series of contracts exceeds the Company's
current volume of natural gas production.
At June 30, 2003, there were no significant commitments for capital
expenditures. During the six month period ended June 30, 2003, the Company
purchased non-producing oil, gas and mineral leases in DeWitt County, Texas
totaling $90,760. In addition, the Company incurred $7,427 in general land
improvements associated with these leases. These leases were acquired to be
used in the Company's proposed drilling fund. The Company is uncertain at this
time as to the size and extent of its 2003 capital budget. The Company plans to
finance its ongoing development, acquisition and exploration expenditures and
possible equity repurchases using internal cash flow. In addition, proceeds
from asset sales and bank borrowings may be utilized as well as possible joint
ventures or future public and private offerings of debt or equity securities.
However, future cash flows are subject to a number of variables, including the
level of production and oil and gas prices, and there can be no assurance that
operations and other capital resources will provide cash in sufficient amounts
to maintain planned levels of capital expenditures or that increased capital
expenditures will not be undertaken.
The Company believes that projected operating cash flows and cash on hand
will be sufficient to cover its working capital requirements for the next 12
months. In connection with consummating any significant capital expenditures or
development activities, additional debt or equity financing will be required,
which may or may not be available on terms that are acceptable to the Company.
While certain costs are affected by the general level of inflation, factors
unique to the oil and gas industry result in independent price fluctuations.
Over the past five years, significant fluctuations have occurred in oil and gas
prices. Although it is particularly difficult to estimate future prices of oil
and gas, price fluctuations have had, and will continue to have, a material
effect on the Company. Overall, it is management's belief that inflation is
generally favorable to the Company since it does not have significant operating
expenses.
Results of Operations
Three months ended June 30, 2003 compared to three months ended June 30, 2002.
Revenues for the second quarter of 2003 totaled $95,530, a 43% increase
from the prior year period. Net income for the second quarter of 2003 totaled
$12,345, a decrease of 26% compared to the second quarter of 2002. Oil and gas
sales for the second quarter of 2003 totaled $121,569, an 85% increase from the
prior year period. The major factor in this increase in revenue was the
combination of price and production for oil and natural gas. The Company's
average sale price of oil in second quarter of 2003 was approximately $25.62
per barrel compared to $22 per barrel for the same period in 2002. The average
sale price of natural gas in the second quarter of 2003 for the Company was
$3.71 per Mcf (Mcf equates to one thousand cubic feet), compared to $2.32 per
Mcf for the same period in 2002. Production of oil primarily increased due to
the acquisition of new wells in Michigan. A significant factor for the
decreased net income during the quarter compared to the prior year quarter was
that the fair market value of the Company's "put" contracts decreased $26,790
during the second quarter of 2003. In addition, the Company incurred $4,581
associated with its proposed drilling fund and $2,000 for income taxes during
the second quarter of 2003.
Lease operation expense, which includes all production related taxes for
the second quarter of 2003, totaled $36,983 compared to $14,571 for the second
quarter of 2002. This increase was attributable to the increased operating
expenses due to additional oil and gas working interest acquisitions and higher
production related taxes compared to the second quarter of 2002.
Depreciation and depletion expense for the second quarter of 2003 totaled
$10,000, a 25% increase from $8,000 for the prior year period. This increase
is attributable to depletion on new oil and gas properties.
During the second quarter of 2003, the Company has incurred $4,581 in
costs associated with the Company's proposed drilling fund.
General and administrative expense, including rent for the second quarter
of 2003, totaled $29,621, which is comparable to $27,808 for the second quarter
of 2002.
Six months ended June 30, 2003 compared to six months ended June 30, 2002.
Revenues for the six months ended June 30, 2003 totaled $195,830, a 39%
increase from the prior year period. Net income for the six months ended
June 30, 2003 and 2002 totaled $23,396 and $39,441, respectively. Oil and gas
sales for the six months ended June 30, 2003 totaled $224,667, a 96% increase
compared to $114,858 for the prior year period. The major factor in this
increase in revenue was the combination of price and production for oil and
natural gas. Production of oil increased primarily due to the acquisition of
working interests in eleven wells located in Michigan, Montana, Oklahoma and
Texas during the second half of 2002. Net income for the six months ended
June 30, 2003 decreased compared to the prior year period primarily due to a
$31,821 write down of the fair market value of the Company's "put" contracts.
In addition, the Company incurred $10,973 associated with its proposed drilling
fund and $4,000 for income taxes during the six months ended June 30, 2003.
Lease operation expense, which includes all production related taxes for
the six months ended June 30, 2003, totaled $66,718 compared to $28,585 for the
prior year period. This increase was attributable to the increased operating
expenses due to additional oil and gas working interest acquisitions and higher
production related taxes.
Depreciation and depletion expense for the six months ended June 30, 2003
totaled $20,000, a 25% increase compared to $16,000 for the prior year period.
This increase is attributable to depletion on new oil and gas properties.
During the first six months of 2003, the Company has incurred $10,973 in
costs associated with the Company's proposed drilling fund.
General and administrative expense, including rent for the six months
ended June 30, 2003, totaled $70,743 which is $13,529 higher than the same
period for 2002 which totaled $57,214. This increase was primarily
attributable to additional costs incurred related to the Company's Annual
Report on Form 10-K for the year ended December 31, 2002.
ITEM 3. CONTROLS AND PROCEDURES
Croff's principal executive officer and principal financial officer have
evaluated the effectiveness of Croff's "disclosure controls and procedures," as
such term is defined in Rule 13a-14(c) and 15d-14(c) of the Securities Exchange
Act of 1934, as amended, within 90 days of the filing date of this Quarterly
Report on Form 10-Q. Based upon their evaluation, the principal executive
officer and principal financial officer concluded that the Company's disclosure
controls and procedures are effective. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
these controls, since the date the controls were evaluated.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On June 15, 2001, the Company loaned $15,000 to Reef Energy Corporation,
a company in which Croff's President owns approximately a one-fourth interest.
This short-term secured note bears interest at 10% per annum. At June 30,
2003, the balance on this note including accrued interest was $9,792. Reef
Energy is currently attempting to sell assets to repay this loan.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The registrant has filed no exhibits or reports on Form 8-K for the
quarter ended June 30, 2003.
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.
Date: August 12, 2003 By: /S/Gerald L. Jensen
---------------- ------------------------------
Gerald L. Jensen, President,
Chief Executive Officer
Date: August 12, 2003 By: /s/Stuart D. Kroonenberg
---------------- ------------------------------
Stuart D. Kroonenberg,
Chief Financial Officer
Exhibit 31.1
CERTIFICATION PURSUANT TO
SECURITIES EXCHANGE ACT OF 1934: RULES 13a-14, 13a-15, 15d-14, and 15d-15
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Gerald L. Jensen, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Croff Enterprises,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting ( as defined in the Exchange Act Rules 13a-15(f) and
15d-15(f) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant is made
known to us, particularly during the period in which this quarterly report
is being prepared;
b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:
a) all significant deficiencies in the design or operation of internal
controls over financial reporting are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and report
financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Date: August 12, 2003 By: /S/Gerald L. Jensen
---------------- ------------------------------
Gerald L. Jensen, President,
Chief Executive Officer
Exhibit 31.2
CERTIFICATION PURSUANT TO
SECURITIES EXCHANGE ACT OF 1934: RULES 13a-14, 13a-15, 15d-14, and 15d-15
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Stuart D. Kroonenberg, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Croff Enterprises,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting ( as defined in the Exchange Act Rules 13a-15(f) and
15d-15(f) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant is made
known to us, particularly during the period in which this quarterly report
is being prepared;
b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:
a) all significant deficiencies in the design or operation of internal
controls over financial reporting are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and report
financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Date: August 12, 2003 By: /s/Stuart D. Kroonenberg
---------------- ------------------------------
Stuart D. Kroonenberg,
Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Croff Enterprises, Inc. (the
"Company") on Form 10-Q for the period ended June 30, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Gerald L. Jensen, Chief Executive Officer of the Company, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
Date: August 12, 2003 By: /S/Gerald L. Jensen
---------------- ------------------------------
Gerald L. Jensen, President,
Chief Executive Officer
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Croff Enterprises, Inc. (the
"Company") on Form 10-Q for the period ended June 30, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Stuart D. Kroonenberg, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
Date: August 12, 2003 By: /s/Stuart D. Kroonenberg
---------------- ------------------------------
Stuart D. Kroonenberg,
Chief Financial Officer