-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ad0JBXiFtLUGSCLgP4nbM8yGJDpy3x2/feH5K5dpYqC3dULNbOnmRsmQZ9/tIBtA YyV6PcPeFojmWPOkDzQ6ug== 0001028596-99-000031.txt : 19990426 0001028596-99-000031.hdr.sgml : 19990426 ACCESSION NUMBER: 0001028596-99-000031 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19990423 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APPALACHIAN OIL & GAS CO INC CENTRAL INDEX KEY: 0000732814 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 870382031 STATE OF INCORPORATION: UT FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-11732 FILM NUMBER: 99599633 BUSINESS ADDRESS: STREET 1: 511 SECOND AVENUE NORTH CITY: NASHVILLE STATE: TN ZIP: 37201 BUSINESS PHONE: 6153554789 MAIL ADDRESS: STREET 1: 511 SECOND AVENUE NORTH CITY: NASHVILLE STATE: TN ZIP: 37201 10QSB 1 FORM 10QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 2054 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 ------------------ OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE AT OF 1934 For the transition period from __________ to __________ Commission file number 0-11732 -------- APPALACHIAN OIL & GAS COMPANY, INC ----------------------------------- (Exact name of registrant as specified in its charter) ------------------------------------------------------- UTAH 87-0382031 ------ ------------ (State of other jurisdiction of (IRS Employer Incorporation or organization) identification No.) 701 Second Avenue North, Nashville, TN 37201 - -------------------------------------- ------- (Address of principal executive offices) (Zip Code) Registrants telephone number, including area code: (615) 254-4789 ---------------- 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 to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such report(s), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ The total number of shares outstanding as of September 30, 1995 were ------------------- 3,135,795. - ---------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements -------------------- The Financial Statements of the Registrant required to be filed with this 10-QSB Quarterly Report were prepared by York, Neel & Company, LLP, Certified Public Accountants, and commence on the following page, together with Related Notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Registrant. -THIS SPACE INTENTIONALLY LEFT BLANK- /Letterhead/ Malcolm E. Neel, CPA YORK NEEL & COMPANY, LLP Roderick J. Topkins, CPA CERTIFIED PUBLIC ACCOUNTANTS Leonard F. Adcock, CPA BUSINESS CONSULTANTS Michael L. Toms, CPA 1113 Bethel Street Jeffrey T. Ebelhar, CPA Hopkinsville, Kentucky 42240 Martin McElroy, CPA (502) 886-0206 John M. DeAngelis, CPA FAX (502) 886-0875 Doug E. Keller, CPA J. Wesley Alford, Jr, CPA Rebecca M. Whitehead, CPA Bradley K. Cornelius, CPA Malcolm E. Neel, III, CPA ------------------------------------------ C. Louis DeAngelis, CPA Independent Accountant's Report To the Board of Directors Appalachian Oil & Gas Company, Inc. Nashville, Tennessee We have reviewed the accompanying consolidated balance sheet of Appalachian Oil & Gas Company, Inc., (a Utah Corporation) and its subsidiary as of September 30, 1995, and the related consolidated statements of operations, stockholders' equity and cash flows for the three month periods ended September 30, 1995 and 1994, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Appalachian Oil & Gas Company, Inc. A review consists principally of inquiries of Company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet (presented herein) of Appalachian Oil & Gas Company Inc. as of June 30, 1995, and the related consolidated statements of operations, stockholders' equity and cash flows (not presented herein) and we expressed an unqualified opinion on those statements in our report dated April 24, 1996, but we have not preformed any auditing procedures since that date. /S/ York, Neel & Company, LLP Hopkinsville, Kentucky December 6, 1996 _______________________________________________________ Hopkinsville - Madisonville - Morganfield - Hendersen - Owensboro APPALACHIAN OIL & GAS COMPANY, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET September 30, 1995 and June 30, 1995
ASSETS September 30, June 30, 1995 1995 Unaudited Audited ------------ ------------ Current assets: Cash and cash equivalents $ 2,974 $ 12,602 Accounts receivable - trade 78,378 72,648 ------------ ------------ Total current assets 81,352 85,250 ------------ ------------ Property and equipment: Oil and gas properties 626,095 626,095 Other property and equipment 750,053 747,053 ------------ ------------ 1,376,148 1,373,148 Less accumulated depreciation, depletion and amortization 842,226 824,865 ------------ ------------ 533,922 548,283 ------------ ------------ $ 615,274 $ 633,533 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 30,000 $ 32,628 Notes payable - related parties 128,500 138,500 Accounts payable: Trade 47,679 24,674 Royalties 31,583 44,193 Transported gas 44,423 51,418 Accrued expenses 6,235 5,352 ------------ ------------ Total current liabilities 288,420 296,765 Long term debt, net of current portion 91,991 96,862 ------------ ------------ 380,411 393,627 ------------ ------------ Commitments and contingencies Stockholders' equity: Common stock, par value $.01 per share, 10,000,000 shares authorized, issued and outstanding 3,135,795 and 3,235,795 shares at September 30, 1995 and June 30, 1995, respectively 31,358 32,358 Additional paid in capital 1,814,342 1,813,342 Retained deficit (1,610,837) (1,605,794) ------------ ------------ Total stockholders' equity 234,863 239,906 ------------ ------------ $ 615,274 $ 633,533 ============ ============
See accompanying notes and accountant's report 2 APPALACHIAN OIL & GAS COMPANY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
Three-month period ended September 30, 1995 1994 ------------ ------------ Revenues: Oil and gas sales $ 99,678 $ 139,005 Drilling programs - 2,418 Other 1,717 5,005 ------------ ------------ 101,395 146,428 Costs and expenses: Other operating expenses 37,655 52,790 Depreciation, depletion and amortization 17,362 21,932 Interest 5,484 5,667 General and administrative 45,937 70,470 ------------ ------------ 106,438 150,859 ------------ ------------ Net loss before minority interest (5,043) (4,431) Minority interest - 707 ------------ ------------ Net loss $ (5,043) $ (5,138) ============ ============ Earnings (loss) per share $ (0.00) $ (0.00) ============ ============
See accompanying notes and accountant's report. 3 APPALACHIAN OIL & GAS COMPANY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY For the three month periods ended September 30, 1995, and 1994
Additional Common Paid-In Accumulated Shares Stock Capital Deficit ---------------------------------------------------------- Balance, June 30, 1994 3,235,795 $ 32,358 $ 1,813,342 $(1,514,286) Net loss for the three months ended September 30, 1994 - - - (5,138) ---------------------------------------------------------- Balance, September 30, 1994 3,235,795 32,358 1,813,342 (1,519,424) Net loss for the nine months ended June 30, 1995 - - - (86,370) ---------------------------------------------------------- Balance, June 30, 1995 3,235,795 32,358 1,813,342 (1,605,794) Common shares canceled (100,000) (1,000) 1,000 - Net loss for the three months ended September 30, 1995 - - - (5,043) ---------------------------------------------------------- Balance, September 30, 1995 3,135,795 $ 31,358 $ 1,814,342 $(1,610,837) ==========================================================
See accompanying notes and accountant's report. 4 APPALACHIAN OIL & GAS COMPANY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
Three-month period ended September 30, 1995 1994 ------------ ------------ Cash Flows from Operating Activities: Net loss $ (5,043) $ (5,138) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation, depletion and amortization 17,362 21,932 Undistributed income of limited partnership - 707 Changes in operating assets and liabilities: (Increase) decrease in: Accounts receivable (5,730) 22,370 Increase (decrease) in: Accounts payable 3,400 (39,323) Accrued expenses 883 (3,864) ------------ ------------ Net cash provided by (used in) by operating activities 10,872 (3,316) ------------ ------------ Cash Flows from Investing Activities: Purchase of property and equipment (3,000) (2,200) Purchase of oil and gas properties - (11,550) Increase in other assets - (5,000) ------------ ------------ Net cash used in operating activities (3,000) (18,750) ------------ ------------ Cash flows from Financing Activities: Principal payments on notes payment (10,000) (7,500) Principal payments on long-term debt (7,500) (6,928) ------------ ------------ Net cash used in financing activities (17,500) (14,428) ------------ ------------ Decrease in cash and cash equivalents (9,628) (36,494) Cash and cash equivalents, beginning of period 12,602 66,602 ------------ ------------ Cash and cash equivalents, end of period $ 2,974 $ 30,108 ============ ============
See accompanying notes and accountant's report 5 APPALACHIAN OIL AND GAS COMPANY, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Significant accounting policies of the Company are as follows: a. Principles of Consolidation The consolidated financial statements include the accounts of Appalachian Oil & Gas Company, Inc. (AOGI) and its subsidiary, TKGC #1 Partnership. All significant intercompany accounts and transactions have been eliminated in consolidation. b. Business Activity and Major Customers AOGI and its subsidiary operates in primarily one business segment, which is the acquisition, exploration and development of oil and gas properties. The Company's oil and gas properties are located in Clay County, Kentucky. The majority of all gas sales are made to one customer in south-central Kentucky. c. Cash and cash equivalents Cash includes amounts on hand and in financial institutions. Cash equivalents include all highly liquid investments with an original maturity of three months or less when purchased. d. Allowance for Losses AOGI uses the specific write-off method to provide for doubtful accounts since experience and management's estimation indicates an adequate allowance for such accounts is immaterial. e. Oil and Gas Properties The Company uses the successful efforts method of accounting for oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells that find proved reserves, and to drill and equip development wells are capitalized. Costs to drill exploratory wells that do not find proved reserves, geological and geophysical costs, and costs of carrying and retaining unproved properties are expensed. Continued 6 APPALACHIAN OIL AND GAS COMPANY, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies, Continued e. Oil and Gas Properties, Continued The costs associated with dismantlement and site restoration are considered immaterial based on past history of AOGI. Unproved oil an gas properties that are individually significant are periodically assessed for impairment of value, and a loss is recognized at the time of impairment by providing an impairment allowance. Other unproved properties are amortized based on the Company's experience of successful drilling and average holding period. Capitalized costs of producing oil and gas properties, after considering estimated dismantlement and abandonment costs and estimated salvage values, are depreciated and depleted by the unit-of production method. Support equipment and other property and equipment are depreciated over their estimated useful lives. On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and amortization with a resulting gain or loss recognized in income. On the sale of an entire interest in an unproved property for cash or cash equivalent, gain or loss on the sale is recognized, taking into consideration the amount of any recorded impairment if the property had been assessed individually. If a partial interest in an unproved property is sold, the amount received is treated as a reduction of the cost of the interest retained. f. Income Taxes Deferred income taxes are provided for significant temporary differences in recognition of revenues and expenses for financial reporting and income tax reporting purposes. Continued 7 APPALACHIAN OIL AND GAS COMPANY, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies, Continued, f. Income Taxes, Continued For Federal income tax purposes, the Company deducts certain exploration and development costs, which are capitalized and amortized for financial reporting purposes. The Company uses statutory depletion for income tax reporting. Investment tax credits are accounted for as a reduction of income tax expense in the year taxes payable are reduced. g. Minority Interest Effective April 15, 1994, AOGI acquired 53.35 percentage interest in the TKGC #1 Partnership for $28,000 in cash and a partial assignment of an oil and gas farm out agreement. The acquisition was accounted for as a purchase. AOGI's 53.35 percentage interest requires that TKGC #1's operations be included in the consolidated financial statements. The remaining interest (46.65%) is shown as "minority interest". TKGC #1 did not have any operations as of June 30, 1994. April 1, 1995, the TKGC #1 Partnership was dissolved with each partner receiving their percentage ownership in two oil and gas wells. h. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. I. Environmental Costs Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Liabilities are recorded when environmental assessments are probable and the amounts can be reasonably estimated. Continued 8 APPALACHIAN OIL AND GAS COMPANY, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. Property and Equipment A summary of property and equipment is as follows: Sept. 30, June 30, 1995 1995 -------- -------- Proved oil and gas properties $626,095 $626,095 Less accumulated depreciation, depletion and amortization 422,971 419,503 203,124 206,592 Land 14,810 14,810 Gas gathering system 490,834 490,834 Machinery and equipment 209,536 206,536 Office furniture and equipment 34,873 34,873 Other property and equipment 750,053 747,053 Less accumulated depreciation 419,255 405,362 330,798 341,691 --------- --------- Net property and equipment $533,922 $548,283
AOGI incurred depreciation expense of $13,893 and $17,216 for the three month periods ended September 30, 1995 and 1994, respectively. 3. Notes Payable - Related Parties At September 30, 1995, and June 30, 1995, the Company had notes payable to several Company stockholders for $128,500 and $138,500, respectively. These notes are unsecured and payable on demand with interest due monthly at a rate of 9.0%. 4. Long-Term Debt At September 30, 1995 and June 30, 1995, long-term debt consisted of the following items:
Sept. 30, June 30, ---------- --------- 1995 1995 Note payable to an individual; monthly principal payments of $2,500 plus interest; interest rate of 10.0%; due March 1999; collateral - all assets of the Company $121,991 $129,490 Less current portion of long-term debt 30,000 32,628 $ 91,991 $ 96,862
Continued 9 APPALACHIAN OIL AND GAS COMPANY, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Continued 4. Long-Term Debt, Continued The Company's long-term debt payments are estimated to be repayable annually as set forth in the following schedule:
Years Ending September 30, Amount ------------- -------- 1996 $ 30,000 1997 30,000 1998 30,000 1999 31,991 --------- $121,991
5. Common Stock Effective July 1, 1995, the Company canceled 100,000 shares of common stock that had been outstanding. The shares were voluntarily returned to the Company with no cost to the Company. 6. Income Taxes The Company has unused net operating losses of $1,399,000 and unused investment tax credits of approximately $30,000 as of September 30, 1995. All carryforward amounts expire on or before June 30, 2007. For financial reporting purposes, a valuation allowance of $485,860, has been recognized to offset the deferred tax assets related to these items. The net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes are reflected in deferred income taxes. Significant components of the Company's deferred tax assets and liabilities as of September 30, 1995 and June 30, 1995 are as follows:
Sept. 30 June 30 1995 1995 --------- --------- Deferred tax assets: Net operating loss $475,660 $473,960 Investment tax credit 10,200 10,200 Total deferred tax assets 485,860 484,160 Valuation allowance for deferred tax assets (485,860) (484,160) Deferred tax liabilities - - Net deferred tax asset $ - $ -
Continued 10 APPALACHIAN OIL AND GAS COMPANY, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. Commitments and Contingencies During the year ended June 30, 1993, AOGI sold its rights to the leases associated with the Hamlin project located in Nevada. If the current owner of those leases fails to complete the drilling of a well on that property, the leases revert back to AOGI. There is potential for liability if the leases revert back to AOGI. However, such liability cannot be estimated. Management believes it is unlikely for the leases to revert back to AOGI. No liability has been recorded for this contingency. AOGI is exposed to risks of future material loss related to torts; theft of, damage to, expropriation of, or destruction of assets; business interruption, errors or omission; or acts of God and those risks have not been transferred to unrelated third parties through insurance. 8. Statement of Cash Flows Disclosure AOGI paid $5,484 and $5,667 in interest during the three months ended September 30, 1995 and 1994 respectively. As shown in footnote 5, AOGI canceled 100,000 shares of common stock. This was a non-cash transaction that decreased common stock by $1,000 and increased additional paid in capital by the same amount. 9. Earnings (Loss) Per Share Earnings (loss) per share are based on the weighted average number of shares outstanding of 3,135,795 and 3,235,795 for the three month periods ended September 30, 1995, and 1994, respectively. 10. Subsequent Events Effective March 27, 1996, AOGI sold 60% of their operating assets and 60% of their well interests for $427,550. The company that purchased the assets began operating and managing the majority of AOGI's wells as of February 1, 1996. AOGI incurred a capital gain from the sale of approximately $197,000. 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations An analysis of the revenues for the current quarter as compared to the same reporting period in 1994 showed a $40,000 decrease to the company. Revenues showed a decrease in that the oil and gas revenues dropped considerably during the month of August as there was no contract in existence and the Company had to go to the Spot Market for its sales. The price on the Spot Market was much less than before under our previous contract. In September, 1995, the company obtained a short-term contract. This contract provided a higher price than the open Spot Market, but still was not at the level of our previous contract. Another factor in the decrease in revenues was due to the fact the Company had no drilling program in place during the current quarter. Due to the fact that the Company knew revenues would be lower for this quarter, the Company made every effort to keep expenses down. Operating expenses decreased approximately $15,000.00. Repairs and maintenance costs decreased over $25,000 as compared to the prior year quarter due to the fact the Company stopped using its old compressor and leased a new compressor. Lease expense increased approximately $16,000 due to the leasing of the new compressor. Contract services also decreased over $10,000 due to the release of some contract field personnel. General and Administrative expenses were down approximately $25,000 because of a decrease in administrative salaries and no Director's fees were paid for this quarter. Administrative salaries were down due to the resignation of a key management person. The Company continues to be satisfied with the reduction of long-term debt as the company continues to make timely monthly payments on the long-term debt of the Company and the Board of Directors has voiced its desire to make additional principal payments on the long-term debts as funds become available. PART II. OTHER INFORMATION Item 1. Legal Processing State of Tennessee On the Relation of James E. Ables, et. al. Vs. Appalachian Oil & Gas On March 11, 994, Clyde M. Fuller renewed his petition for release of his personal bond of $10,000.00. Plaintiffs (then 13-D Group, now present Company Management) has simultaneously moved the Court to fix damages caused by defendant in attempting to reverse Order of the Court for the sum of $24,276.47, or alternatively to the extent of Mr. Fuller's bond. This case is still pending in Chancery Court, Hamilton County, Tennessee. Item 2. Changes in Securities. Effective July 1, 1995, the Company canceled 100,000 shares of common stock that had been outstanding. The shares were voluntarily returned to the Company with no cost to the Company. Item 3. Defaults Upon Senior Securities. None; not applicable Item 4. Submission of Matters to a Vote of Security Holders. There were no submission of matters to a vote of Security Holders as of the period ending September 30, 1995. Item 5. Other Information None; not applicable Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. None. (b) Reports on Form 8-K. None. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: December 30, 1996 Appalachian Oil & Gas Company, Inc. /S/ Raymond A. Connelly Raymond A. Connelly, President/CEO /S/ Bill Jones Bill Jones, Secretary/Treasurer EX-27 2
5 0000732814 APPALACHIAN OIL AND GAS COMPANY, INC. 3-MOS JUN-30-1995 SEP-30-1995 2,974 0 78,378 0 0 81,352 1,376,148 842,226 615,274 288,420 0 0 0 31,358 203,505 615,274 99,678 101,395 37,655 0 68,783 0 0 (5,043) 0 (5,043) 0 0 0 (5,043) 0 0
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