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UNITED STATES
SECURITIES EXCHANGE COMMISSION
FORM 10-QSB/A
þ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
FOR THE QUARTERLY PERIOD ENDING FEBRUARY 28, 2005 | ||||
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from to .
Commission File Number 0-30746
TBX RESOURCES, INC.
Texas | 75-2592165 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
3030 LBJ Freeway, Suite 1320
Dallas, TX 75234
(Address of principal executive offices)
Issuer’s telephone number (972) 243-2610
Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yesþ Noo
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 33,272,537 on April 15, 2005
Transitional Small Business Disclosure Format (check one) Yeso Noþ
TBX Resources, Inc.
Index
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6 | ||||||||
7 | ||||||||
Certification of CEO and CFO Pursuant to Section 302 | ||||||||
Certification of CEO and CFO Pursuant to Section 906 |
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PART I- FINANCIAL INFORMATION
item 1. Financial Statements
The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the periods presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These financial statements should be read in conjunction with the financial statements of the Company for the year ended November 30, 2004 (including the notes thereto) set forth in Form 10-KSB.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders TBX Resources,
Inc.
I have reviewed the accompanying balance sheet of TBX Resources, Inc. as of February 28, 2005, and the statements of operations, stockholders’ equity and cash flows for the three-month ended February 28, 2005 and February 29, 2004. These interim financial statements are the responsibility of the Company’s management.
I conducted my review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should be made to the accompanying interim financial statement for them to be in conformity with U.S. generally accepted accounting principles.
James G. Somma, CPA
Euless, Texas
April 20, 2005
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TBX RESOURCES, INC.
(Unaudited)
ASSETS
Current Assets | ||||
Cash and equivalents | $ | 9,175 | ||
Trade accounts receivable | 17,726 | |||
Prepaid consulting fees | 100,000 | |||
Total current assets | 126,901 | |||
Equipment and Property | ||||
Office furniture, fixtures and equipment | 107,164 | |||
Oil and gas properties, using successful efforts accounting Proved properties and related equipment | 1,858,388 | |||
1,965,552 | ||||
Less accumulated depreciation, depletion and amortization | 1,563,923 | |||
Total equipment and property | 401,629 | |||
Prepaid Consulting and Other | 106,124 | |||
Total Assets | $ | 634,654 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
Current Liabilities | ||||
Trade accounts payable | $ | 45,490 | ||
Loan from affiliates | 276,308 | |||
Taxes payable | 7,583 | |||
Accrued expenses | 20,522 | |||
Total current liabilities | 349,903 | |||
Commitments and Contingencies | — | |||
Stockholders’ Equity | ||||
Preferred stock- $.01 par value; authorized 10,000,000 shares; no shares outstanding | — | |||
Common stock- $.01 par value; authorized 100,000,000 shares; 33,272,537 shares outstanding at February 28, 2005 | 332,725 | |||
Additional paid-in capital | 8,658,897 | |||
Accumulated deficit | (8,706,871 | ) | ||
Total stockholders’ equity | 284,751 | |||
Total Liabilities and Stockholders’ Equity | $ | 634,654 | ||
The accompanying notes are an integral part of these financial statements.
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TBX RESOURCES, INC.
For The Three Months Ended | ||||||||
Feb. 28, 2005 | Feb. 29, 2004 | |||||||
Revenues: | ||||||||
Oil and gas sales | $ | 24,863 | $ | 31,154 | ||||
Joint venture management fees | 248,840 | 24,493 | ||||||
Other | — | — | ||||||
Total revenues | 273,703 | 55,647 | ||||||
Expenses: | ||||||||
Lease operating and taxes | 27,693 | 25,363 | ||||||
Joint venture expenses | 101,764 | 24,502 | ||||||
General and administrative | 72,666 | 162,580 | ||||||
Depreciation, depletion and amortization | 28,825 | 41,073 | ||||||
Total expenses | 230,948 | 253,518 | ||||||
Operating Income (Loss) | 42,755 | (197,871 | ) | |||||
Other Income (Expense): | ||||||||
Interest and other | (1,821 | ) | (3,758 | ) | ||||
Net Income (Loss) Before Provision for Income Taxes | 40,934 | (201,629 | ) | |||||
Provision for income taxes | — | — | ||||||
Net Income (Loss) | $ | 40,934 | $ | (201,629 | ) | |||
Net Income (Loss) Per Common Share, Basic and Diluted | $ | 0.00 | $ | (0.01 | ) | |||
Weighted average common shares used in calculations: | ||||||||
Basic and diluted | 33,272,537 | 30,772,537 | ||||||
The accompanying notes are an integral part of these financial statements.
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TBX RESOURCES, INC.
For The Three Months Ended | ||||||||
Feb. 28, 2005 | Feb. 29, 2004 | |||||||
Cash Flows From Operating Activities: | ||||||||
Net income (loss) | $ | 40,934 | $ | (197,871 | ) | |||
Adjustments to reconcile net loss to net cash flow from operating activities: | ||||||||
Depreciation, depletion and amortization | 28,825 | 41,074 | ||||||
Non-cash consulting services | 24,793 | 21,543 | ||||||
Interest expense | (1,899 | ) | (3,758 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Decrease (increase) in: | ||||||||
Trade receivables | 147 | (94 | ) | |||||
Increase (decrease) in: | ||||||||
Accounts payable | (121,115 | ) | (14,070 | ) | ||||
Taxes payable | — | 818 | ||||||
Accrued expenses | 766 | — | ||||||
Deferred income | — | 144,824 | ||||||
Net cash provided by (used) for operating activities | (27,549 | ) | (7,534 | ) | ||||
Cash Flows From Investing Activities: | ||||||||
Cash used in the acquisition and development of properties | — | (756 | ) | |||||
— | (756 | ) | ||||||
Cash provided by (used) by change in other assets | — | — | ||||||
Cash Flows From Financing Activities: | ||||||||
Loan from affiliates | 27,881 | 3,379 | ||||||
27,881 | 3,379 | |||||||
Net Increase (Decrease) In Cash | 332 | (4,911 | ) | |||||
Cash at beginning of period | 8,843 | 7,438 | ||||||
Cash at end of period | $ | 9,175 | $ | 2,527 | ||||
The accompanying notes are an integral part of these financial statements.
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TBX RESOURCES, INC.
Common Stock | Additional | Accum- | Total | |||||||||||||||||
Paid-In | ulated | Stockholders' | ||||||||||||||||||
Shares | Par Value | Capital | Deficit | Equity | ||||||||||||||||
Balance November 30, 2004 | 33,272,537 | 332,725 | 8,658,897 | (8,747,805 | ) | 243,817 | ||||||||||||||
Net income for period | — | — | — | 40,934 | 40,934 | |||||||||||||||
Balance February 28, 2005 | 33,272,537 | $ | 332,725 | $ | 8,658,897 | $ | (8,706,871 | ) | $ | 284,751 | ||||||||||
The accompanying notes are an integral part of these financial statements.
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TBX RESOURCES, INC.
1. BUSINESS ACTIVITIES:
TBX Resources, Inc., a Texas Corporation, was organized on March 24, 1995. The Company’s principal business activity is acquiring and developing oil and gas properties. The Company owns 23 wells and operates another 7 wells located in East Texas. Of the 23 wells located in East Texas, 5 wells are currently producing oil and 2 wells have been designated as injection wells. The remaining 16 wells are either currently shut-in, scheduled to be brought back into production or are designated as injection wells. Also, the Company has an interest in 6 proven wells in Oklahoma. The Company’s philosophy is to acquire properties with the purpose of reworking existing wells and/or drilling development wells to make a profit. In addition, the Company has sponsored and/or managed joint venture development partnerships for the purpose of developing oil and gas properties for profit.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Recent Accounting Pronouncement –In November 2004, the FASB issued SFAS No. 151, “Inventory Costs—an amendment of ARB No. 43, Chapter 4.” (“SFAS 151”). SFAS 151 amends ARB 43, Chapter 4 to clarify that “abnormal” amounts of idle freight, handling costs and spoilage should be recognized as current period charges. SFAS 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. We do not anticipate that the adoption of this standard will not have a material impact on our financial statements, as we do not have any inventory costs.
In December 2004 the FASB issued a revised Statement 123 (SFAS 123R), “Accounting for Stock-Based Compensation” requiring public entities to measure the cost of employee services received in exchange for an award of equity instruments based on grant date fair value. The cost will be recognized over the period during which an employee is required to provide service in exchange for the award — usually the vesting period. The effective date for this statement is as of the first interim period that begins after June 15, 2005. We do not anticipate that the adoption of this standard will have a material impact on our financial statements, as we currently do not have stock based compensation.
In December 2004, the FASB issued SFAS No. 152 “Accounting for Real Estate Time-Sharing Transactions—an amendment of FASB statements No. 66 and 67” (“SFAS 152”). SFAS 152 amends SFAS 66 and 67 to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing Transactions. SFAS 152 is effective for financial statement for fiscal years beginning after June 15, 2005. We do not anticipate that the adoption of this standard will have a material impact on our financial statements, as we do not have any real estate time sharing transactions.
In December 2004, FASB issued Statement No. 153, “Exchange of Nonmonetary Assets”. This statement addresses the measurement of exchanges of nonmonetary assets and eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets and replaces it with an exception for exchanges that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. This Statement is effective for periods beginning after June 15, 2005. The Company does not expect the application of Statement No.153 to have a material impact on out financial statements, as we do not have any exchanges of nonmonetary assets.
3. SIGNIFICANT TRANSACTIONS:
a. | The Company has a management contract with a company in which Mr. Burroughs is the sole shareholder. Under the agreement, the Company performs administrative and drilling supervision services on a well-by- |
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well basis for an agreed upon fee. During the three months ended February 28, 2005, the Company generated $248,840 in revenues from joint venture management fees and incurred expenses of $107,764. For the three month ended February 29, 2004, the Company generated approximately $24,500 in revenues from this activity and incurred expenses for approximately the same amount. | ||||
b. | The Company has an operating loan from its president, Mr. Tim Burroughs. The loan balance as of February 28, 2005 is $128,516 (included in loans from affiliates) and is payable on demand at an interest rate of 6% per annum. Interest accrued on the loan for the first three months is $1,899. The loan balance as of February 29, 2004 is $157,952 with accrued interest of $3,853. The loan is secured by the Company’s oil and gas properties. The Company expects to pay back this loan from operating revenue by the end of this fiscal year. | |||
c. | In October of 2002, the Company formed and is acting as the general partner for the “Grasslands I, Limited Partnership”. The purpose of the partnership is to acquire leases for oil and gas development in the Barnett Shale play in the Fort Worth Basin of Texas. As of February 28, 2005 the Partnership is due approximately $134,615 in advances that the Company used to fund operations and is included in loans from affiliates. The Company is required to repay the advance by the end of this fiscal year. |
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Item 2. Management’s Discussion and Analysis and Results of Operation
CAUTIONARY STATEMENT
Statements in this report which are not purely historical facts, including statements regarding the Company’s anticipations, beliefs, expectations, hopes, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Act of 1934, as amended. All forward-looking statements in this report are based upon information available to us on the date of the report. Any forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from events or results described in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.
RECENT DEVELOPMENTS
The Company has a management contract with a company in which Mr. Burroughs is the sole shareholder. Under the agreement, the Company performs administrative and drilling supervision services on a well-by-well basis for an agreed upon fee. During the three months ended February 28, 2005, the Company generated $248,840 in revenues from joint venture management fees and incurred expenses of $101,764. As manager of these programs, we should receive sufficient fees to earn a profit on our work. We expect that fees from this activity will be our primary source of funds in the near future. Also, the Company reworked three East Texas wells. We estimate that these wells may generate net income of approximately $10,000 per month; however, there can be no assurance that such level of production will continue now or in the future, as the well is a new well and current data may prove to be unreliable.
DESCRIPTION OF PROPERTIES
GENERAL: The following is information concerning production from our oil and gas wells, and our productive wells and acreage and undeveloped acreage. Our oil and gas properties are located within the northern part of the east Texas salt basin. The earliest exploration in this area dates back to the early 1920s and 1930s, when frontier oil producers were exploring areas adjacent to the famous “East Texas field” located near the town of Kilgore, Texas. We have leasehold rights in three oil and gas fields located in Gregg, Hopkins, Franklin, Panola, and Wood Counties, Texas. We also acquired several wells and acreages in Oklahoma, which are described below after the Texas properties.
RESERVES REPORTED TO OTHER AGENCIES. We are not required and do not file any estimates of total, proved net oil or gas reserves with reports to any federal authority or agency.
PROPERTIES. The following is a breakdown of our properties:
Name of Field | Gross Producing Well Count | Net Producing Well Count | ||||||
East Texas Field | 0 | 0 | ||||||
Mitchell Creek & Talco Field (1) | 1 | 1 | ||||||
Manziel & Quitman Field (1) | 4 | 4 |
The following information pertains to our properties as of February 28, 2005:
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PROVED | PROVED | PERCENTAGE OF | ||||||||||||||||||||||
PROVED | PROVED | DEVELOPED | DEVELOPED | CURRENT | RESERVES IN FIELD | |||||||||||||||||||
RESERVES: | RESERVES: | RESERVES: | RESERVES: | PRODUCTION | TO TOTAL RESERVES | |||||||||||||||||||
OIL | GAS | OIL | GAS | OIL: | HELD BY THE | |||||||||||||||||||
NAME OF FIELD | (bbls) | (mcf) | (bbls) | (mcf) | (bbls) (1) | COMPANY | ||||||||||||||||||
East Texas Field | 0 | 0 | 0 | 0 | 0 | oil 0 | ||||||||||||||||||
gas 0 | ||||||||||||||||||||||||
Mitchell Creek & | 494 | 0 | 494 | 0 | 0 | oil 2.0 | ||||||||||||||||||
Talco Field | gas 0 | |||||||||||||||||||||||
Manziel & | 23,185 | 0 | 23,185 | 0 | 302 | oil 98.0 | ||||||||||||||||||
Quitman Field | gas 0 | |||||||||||||||||||||||
(1) The current production figure specified above is for the production for the month of February 2005.
PRODUCTIVE WELLS AND ACREAGE
Net | Total Gross | Net | ||||||||||||||||||||||
Total Gross | Productive | Total Gross | Net Productive | Developed | Developed | |||||||||||||||||||
Geographic Area | Oil Wells | Oil Wells | Gas Wells | Gas Wells | Acres | Acres | ||||||||||||||||||
East Texas Region | 21 | 21 | 0 | 0 | 843.2 | 838.34 |
Notes:
1. Total Gross Oil Wells were calculated by subtracting 2 wells designated as Injection Wells from the 23 wells owned and/or operated by TBX Resources, Inc as of February 28, 2005.
2. Net Productive Oil Wells were calculated by multiplying the working interest held by TBX Resources, Inc. in each of the 21 Gross Oil Wells and adding the resulting products.
3. Total Gross Developed Acres is equal to the total surface acres of the properties in which TBX Resources, Inc. holds an Interest.
4. Net Developed Acres is equal to the Total Gross Developed Acres multiplied by the percentage of the total working interest held by TBX Resources, Inc. in the respective properties.
5. All acreage in which we hold a working interest as of February 28, 2005 had existing wells located thereon; thus all acreage leased by TBX Resources, Inc. may be classified as developed.
Geographic Area | Gross Acres | Net Acres | ||||||
East Texas Region | 843.2 | 838.34 |
Note:
1. Acreage that has existing wells and may be classified as developed may also have additional development potential
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based on the number of producible zones beneath the surface acreage. A more comprehensive study of all properties currently leased by us would be required to determine precise development potential.
ANADARKO BASIN- WESTERN OKLAHOMA
No additional working interests were purchased in the current fiscal year. Four of the six wells we currently hold an interest in are producing gas. Although the wells are currently producing natural gas there can be no assurance that they will continue to do so.
In addition to the above described wells we own working interests in two lease tracts; one located in Ellis County, Oklahoma with a gross acreage interest of 27.5% in 1,505 acres and the second located in Canadian County, Oklahoma, constituting a gross acreage interest of 20% in 240 acres. The leases were purchased for the sum of $83,700 and $19,200, respectively. The Company also has a 3% interest in 640 acres in Beckham County, Oklahoma.
CRITICAL ACCOUNTING POLICIES
A summary of significant accounting policies is included in Note 2 to the audited financial statements included on Form 10-KSB for the year ended November 30, 2004 as filed with the United States Securities and Exchange Commission. Management believes that the application of these policies on a consistent basis enables the Company to provide useful and reliable financial information about our operating results and financial condition.
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 may differ from those estimates.
RESULTS OF OPERATIONS
The Company generated an operating profit of $42,755 for the three months ended February 28, 2005 as compared to an operating loss of. $197,871for the three months ended February 29, 2004. The change in the operating loss to a profit amounted to $240,626, 121.6%, is discussed below.
Revenues– Revenues generated from oil and gas sales and the joint venture management fees increased $218,056, 391.9%, from $55,647 for the three months ended February 29, 2004 to $273,703 for the three months ended February 28, 2005.
Revenues generated from joint venture management fees increased $224,347, 915.9% from $24,493 for the three months ended February 29, 2004 to $248,840 for the three months ended February 28, 2005. The work is generated from a company in which our president. Mr. Burroughs is the sole shareholder. The Company’s joint venture activities accelerated in the fourth quarter of the previous fiscal year and continued into the current fiscal year.
During the three months ended February 29, 2004, the Company generated approximately $31,154 in revenue from oil and gas sales as compared to $24,863 for the three months ended February 28, 2005. The $6,291, 20.2%, decrease is primarily due to lower production for repairs on the Hendrick lease. The Company completed re-working two East Texas wells in the fourth quarter of the previous fiscal year. The Company anticipates that monthly production from these wells will approximate 500 barrels of oil. The majority of the Texas wells remain shut-in awaiting re-work or the designation as injection wells. Revenue from the Company’s Oklahoma properties is minimal as a result of previous sales of the Company’s interest in the properties and production declines.
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Expenses– Total expenses decreased $22,570, 8.9%, from $253,518 for the three months ended February 29, 2004 to $230,948 for the three months ended February 28, 2005.
Lease operating and taxes increased $2,330, 9.1%, from $25,363 for the three months ended February 29, 2004 to $27,693 for the three months ended February 28, 2005. The increase is primarily the result of recurring expenses for the Texas oil wells.
Joint venture expenses increased $77,262, 315.3%, from $24,502 for the three months ended February 29, 2004 to $101,764 for the three months ended February 28, 2005. The work is generated from a company in which our president. Mr. Burroughs is the sole shareholder. The Company’s joint venture activities accelerated in the fourth quarter of the previous fiscal year and continued into the current fiscal year.
General and administrative expenses decreased approximately $89,914, 55.3%, from $162,580 for the three months ended February 29, 2004 to $72,666 for the three months ended February 28, 2005. The decrease is primarily due to the allocation of $81,329 of general and administrative expenses to joint venture expenses and higher compensation and employee related costs, and general expenses offset by lower consulting fees, professional fees, public relations and contract labor expenses.
Depreciation, depletion and amortization decreased $12,248, 29.8%, from $41,073 for the three months ended February 29, 2004 to $28,825 for the three months ended February 28, 2005. The decrease is due to the decrease in Company owned oil and gas properties and a change in the estimate of future lives of our properties.
Other Income (Expense)- Other expense decreased from $3,758 for the three months ended February 29, 2004 to $1,821 for the three months ended February 28, 2005. The $1,937 decrease is primarily attributable to interest charged on the Company’s operating loan from our president, Mr. Tim Burroughs.
Provision for Income Taxes –There are no recorded tax benefits for the three months ended February 28, 2005 and for the same period last fiscal year.
Net Income (loss) –The Company’s net loss decreased approximately $242,563, 120.3%, from $201,629 for the three months ended February 29, 2004 to a profit of $40,934 for the three months ended February 28, 2005. The current period profit is primarily attributable to increased joint venture activities and to a lesser extent decreased in consulting fees, professional fees, public relations and contract labor offset by higher compensation and employee related costs, and general expenses.
LIQUIDITY AND CAPITAL RESOURCES
As of February 28, 2005, we have total assets of $634,654 of which net oil and gas properties amount to $386,052 or 60.1% of the total assets. The Company’s accumulated losses through February 28, 2005 totaled $8,706,871. At February 28, 2005, we have $9,175 in cash. Our ratio of current assets to current liabilities is 0.4:1; we have no long-term debt. As of February 28, 2005, our shareholders equity was a positive $284,751.
We have funded operations from cash generated from the sale of common stock, the sale of oil and gas properties, joint venture management fees and loans from affiliates. The Company’s cash used by operating activities totaled $27,549 for the three months ended February 28, 2005 while cash used for operating activities totaled $7,534 during the three months ended February 29, 2004. The Company’s capital investments totaled $0 and $756 for the three months ended February 28, 2005 and February 29, 2004, respectively. Cash provided by loans and advances from affiliates totaled $27,881 and $3,379 for the three months ended February 28, 2005 and February 29, 2004, respectively.
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PLAN OF OPERATION FOR THE FUTURE.
We want to manage more joint venture limited partnerships. As manager of these programs, we should receive sufficient fees to earn a profit on our work. We expect that fees from this activity will be our primary source of funds in the near future. Also, the Company reworked three East Texas wells. We estimate that these wells may generate net income of approximately $10,000 per month; however, there can be no assurance that such level of production will continue now or in the future, as the well is a new well and current data may prove to be unreliable. In addition, we plan to re-work additional East Texas wells in the coming year which may increase revenue by approximately $100,000 to $150,000 a year. However, there can be no assurance that our planned and projected level of production will materialize in the future.
We expect that the principal source of funds in the near future will be from joint venture management fees and oil and gas revenues and developing our oil and gas properties and/or the acquisition of new properties. We are also actively pursuing raising capital through private placement offerings and joint venture drilling programs. Based on the aforementioned plans management expects to reduce its losses and generate positive cash flows from operations. However, there can be no assurance that such plans will materialize. In addition, actual results may vary from management’s plans and the amount may be material.
We may purchase new oil and gas properties or additional equipment to operate same. Any such additional purchases will be done on an “as needed” basis and will only be done in those instances in which we believe such additional expenditures will increase our profitability. Our ability to acquire additional properties or equipment is strictly contingent upon our ability to locate adequate financing to pay for these additional properties or equipment. There can be no assurance that we will be able to obtain the opportunity to buy properties or equipment that are suitable for our investment or that we may be able to obtain financing to pay for the costs of these additional properties or equipment at terms that are acceptable to us. Additionally, if economic conditions justify the same, we may hire additional employees although we do not currently have any definite plans to make additional hires.
The oil and gas industry is subject to various trends. In particular, at times crude oil prices increase in the summer, during the heavy travel months, and are relatively less expensive in the winter. Of course, the prices obtained for crude oil are dependent upon numerous other factors, including the availability of other sources of crude oil, interest rates, and the overall health of the economy. We are not aware of any specific trends that are unusual to our company, as compared to the rest of the oil and gas industry.
Item 3. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our President/Chief Financial Officer conducted an evaluation of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 (the “Exchange Act”) Rules 13a-14(c)) within 90 days of the filing date of this Quarterly Report on Form 10-QSB (the “Evaluation Date”). Based on the evaluation, our President/Chief Financial Officer has concluded that as of February 28, 2005 and the Evaluation Date, our disclosure controls and procedures are effective to ensure that all material information required to be filed in this Quarterly Report on Form 10-QSB has been made known to them in a timely fashion.
Changes in Internal Controls
There has been no change in our internal control over financial reporting that occurred subsequent to the date of the last evaluation that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.
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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 SECURITIES HOLDERS:
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the period covered by this Form 10-QSB.
EXHIBITS:
31.1 Certification of Chief Executive Officer/Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer/Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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