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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 EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
-------------------------------------------------
[ ] 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 1-4668
--------------
COASTAL CARIBBEAN OILS & MINERALS, LTD.
.................................................................................
(Exact name of registrant as specified in its charter)
BERMUDA NONE
.................................... ..........................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Clarendon House, Church Street, Hamilton, Bermuda HM 11
.................................................................................
(Address of principal executive offices) (Zip Code)
441-295-1422
.................................................................................
(Registrant's telephone number, including area code)
.................................................................................
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
l934 during the preceding 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. |X| Yes |_| No
The number of shares outstanding of the issuer's single class of common
stock as of August 12, 2002 was 46,211,604.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
JUNE 30, 2002
Table of Contents
PART I - FINANCIAL INFORMATION
ITEM 1 Financial Statements Page
----
Consolidated balance sheets at June 30, 2002 and
December 31, 2001
3
Consolidated statements of operations for the three
and six month periods ended June 30, 2002 and 2001 and
for the period from January 31, 1953 (inception) to
June 30, 2002 4
Consolidated statements of cash flows for the six month periods
ended June 30, 2002 and 2001 and for the period from January
31, 1953 (inception) to June 30, 2002
5
Notes to consolidated financial statements 6
ITEM 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
ITEM 3 Quantitative and Qualitative Disclosure About Market Risk 13
PART II - OTHER INFORMATION
ITEM 5 Other Information 14
ITEM 6 Exhibits and Reports on Form 8-K 15
Signatures 16
12
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars)
(A Bermuda Corporation)
A Development Stage Company
June 30, December 31,
-------- ------------
2002 2001
---- ----
ASSETS (unaudited) (Note)
Current assets:
Cash and cash equivalents $ 99,282 $ 609,024
Interest and accounts receivable 1,373 8,604
Notes receivable 15,000 15,000
Prepaid expenses 229,695 353,596
-------- --------
Total current assets 345,350 986,224
-------- --------
Contingent litigation claim (Note 4) - -
Deferred financing costs 370,610 90,391
---------- -------------
Total assets $ 715,960 $ 1,076,615
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 1,157,630 $ 358,621
----------- -----------
Minority interests - -
Shareholders' equity:
Common stock, par value $.12 per share:
Authorized - 250,000,000 shares
Outstanding - 43,468,329 shares 5,216,199 5,216,199
Capital in excess of par value 31,497,362 31,497,362
---------- ----------
36,713,561 36,713,561
Deficit accumulated during the development stage (37,155,231) (35,995,567)
------------ ------------
Total shareholders' equity (441,670) 717,994
------------ -----------
Total liabilities and shareholders' equity $ 715,960 $ 1,076,615
============ ===========
Note: The balance sheet at December 31, 2001 has been derived from
the audited consolidated financial statements at that date.
See accompanying notes.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. dollars)
(A Bermuda Corporation)
A Development Stage Company
(unaudited)
For the
period from
Jan. 31, 1953
(inception)
to June 30,
Three months ended June 30, Six months ended June 30, 2002
--------------------------- ------------------------------- --------------
2002 2001 2002 2001
---- ---- ---- ----
Interest and other income $ 477 $ 23,466 $ 4,139 $ 60,746 $ 3,873,694
------ --------- -------- --------- ------------
Expenses:
Legal fees and costs 363,324 384,262 679,756 908,961 15,360,715
Administrative expenses 138,704 130,872 332,459 281,276 8,739,699
Salaries 37,950 37,950 75,900 75,900 3,448,328
Shareholder communications 7,413 70,582 16,441 85,830 3,901,936
Write off of unproved properties - - - - 5,501,247
Exploration costs 59,247 - 59,247 480 247,465
Lawsuit judgments - - - - 1,941,916
Minority interests - - - - (632,974)
Other - - - - 364,865
Contractual services - - - 2,155,728
--------- ---------- ----------- ----------- -----------
-
606,638 623,666 1,163,803 1,352,447 41,028,925
--------- --------- --------- --------- -----------
Net loss $(606,161) $(600,200) $(1,159,664) $(1,291,701)
========== ========== ============ ============
Deficit accumulated during
the development stage $(37,155,231)
=============
Average number of shares
outstanding (basic &
diluted) 43,468,329 43,468,329 43,468,329 43,468,329
========== ========== ========== ==========
Net loss per share (basic & diluted) $(.01) $(.01) $(.03) $(.03)
====== ====== ====== ======
See accompanying notes.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
(A Bermuda Corporation)
A Development Stage Company
(unaudited)
For the period from
Jan. 31, 1953
Six months ended (inception)
June 30, To
--------
2002 2001 June 30, 2002
----------------- ----------------- -------------
Operating activities:
Net loss $(1,159,664) $(1,291,701) $(37,155,231)
Adjustments to reconcile net loss to net cash
used in operating activities:
Minority interest - - (632,974)
Write off of unproved properties - - 5,501,247
Common stock issued for services - - 119,500
Compensation recognized for stock option grant - - 75,000
Recoveries from previously written off properties - 252,173
Net change in:
Interest and accounts receivable 7,231 22,486 (1,373)
Prepaid expenses 123,901 87,366 (229,695)
Accounts payable and accrued liabilities 799,009 (15,174) 1,157,630
Deferred financing costs (280,219) 27,866 (370,610)
------------- ------------ --------------
Net cash used in operating activities (509,742) (1,169,157) (31,284,333)
------------- ----------- ------------
Investing activities:
Additions to oil, gas, and mineral properties
net of assets acquired for common stock and
reimbursements - 2,195 (3,621,688)
Proceeds from relinquishment of surface rights - - 246,733
Notes receivable - - (15,000)
Purchase of fixed assets - (61,649)
----------- ------------ ------------
-
Net cash provided by (used in) investing activities - 2,195 (3,451,604)
------------ ------------ -----------
Financing activities:
Sale of common stock net of expenses - - 29,480,970
Shares issued upon exercise of options - - 884,249
Sale of shares by subsidiary - - 750,000
Sale of subsidiary shares 3,720,000
------------ ------------ ---------
- -
Net cash provided by financing activities 34,835,219
------------ ------------ ----------
- -
Net increase (decrease) in cash and cash equivalents (509,742) (1,166,962) 99,282
Cash and cash equivalents at beginning of period 609,024 2,958,674 -
----------- ------------ ---------
Cash and cash equivalents at end of period $ 99,282 $ 1,791,712 $ 99,282
=========== ============ =========
See accompanying notes.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART I - FINANCIAL INFORMATION
June 30, 2002
ITEM 1 Financial Statements
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements include
the Company's 59.25% owned subsidiary, Coastal Petroleum Company (Coastal
Petroleum) and have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included. All such adjustments are of a normal recurring nature. Operating
results for the three and six month periods ended June 30, 2002 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2002. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K/A for the year ended December 31, 2001.
Note 2. Litigation
Florida Litigation
Coastal Petroleum has been involved in various lawsuits for many years.
Coastal Petroleum's current litigation (Florida Litigation) now involves one
basic claim: whether the State's denial of a permit constitutes a taking of
Coastal Petroleum's property. In addition, Coastal Caribbean is a party to
another action in which Coastal Caribbean claims that certain of its royalty
interests have been confiscated by the State.
In 1990, the State of Florida enacted legislation that prohibits drilling
or exploration for oil or gas on Florida's offshore acreage. Although the law
does not apply to areas where Coastal Petroleum is entitled to conduct
exploration, the State of Florida has effectively prevented any exploratory
drilling by denying the Company's application for drilling permits. In addition,
in those areas where Coastal Petroleum has only a royalty interest, the law also
effectively prohibits production of oil and gas, rendering it impossible for
Coastal Petroleum to collect royalties from those areas. During 1998, Coastal
Petroleum exhausted its legal remedies in its efforts to obtain compensation for
the drilling prohibition on its royalty interest acreage.
Lease Taking Case (Lease 224-A)
On June 26, 2000, the First District Court of Appeal affirmed an earlier
ruling that the Florida Department of Environmental Protection (DEP) could deny
Coastal Petroleum a permit to drill an exploratory well about nine miles south
of St. George Island in the Florida Panhandle. While the appeals court held that
the DEP could take such action on the basis of a compelling public purpose in
not allowing offshore oil and gas drilling in Florida, the court also found that
the DEP's action would be unconstitutional "if just compensation is not paid for
what is taken." The appeals court stated that whether the denial of the permit
constituted a taking of Coastal Petroleum's property should be determined by the
Circuit Court.
On January 16, 2001, Coastal Petroleum Company filed a complaint in the
Leon County Circuit Court in Florida against the State of Florida seeking
compensation for the State's taking of its property rights to explore for oil
and gas within its Lease 224-A.
On February 13, 2001, certain holders of royalties pertaining to Lease
224-A filed a Motion to Intervene as Additional Plaintiffs. On April 24, 2001,
the Leon County Circuit trial judge granted certain royalty holders with
overriding royalties, which aggregate approximately 4% on State Lease 224-A, the
right to intervene on a limited basis in the takings lawsuit. On May 22, 2001,
the royalty holders appealed the Circuit Court's order granting them limited
intervention to the First District Court of Appeal, claiming the order denied
them the right to fully participate in the case until after final judgment and
that the court erroneously found that the royalty holders lack an ownership
interest in Coastal Petroleum's lease. On June 12, 2001, the Court of Appeal
ordered the royalty holders to show cause why the appeal should not be dismissed
for lack of jurisdiction. The royalty holders filed a response to the Court of
Appeal on June 21, 2001, Coastal Petroleum filed its reply on July 2, 2001 and
the State of Florida filed its reply on July 5, 2001. The Court of Appeal is
currently considering the matter.
Counsel for the appealing royalty holders has advised Coastal Petroleum
that the royalty holders' position is that their interest is worth substantially
more than 4% of whatever judgment may be awarded to Coastal Petroleum in the
litigation and that they intend to make a claim against any recovery Coastal
Petroleum may obtain in the litigation. Coastal Petroleum has informed the
Circuit Court and counsel for the royalty holders that Coastal Petroleum is not
making any claim in the litigation on behalf of any interest the royalty holders
may have.
On March 5, 2001, the State filed a Motion to Dismiss Coastal Petroleum's
complaint. After the Motion was denied, discovery, which had been suspended
pending the outcome of the Motion to Dismiss, resumed. Some depositions have now
been taken, documents have been exchanged and discovery is expected to continue
until the court ordered cutoff date of August 25, 2002.
On November 27, 2001, the Leon County Circuit Court set a trial date of
September 30, 2002. The Court has set aside two weeks for the trial on the issue
of whether the State has taken Coastal Petroleum's lease. If the Court rules in
Coastal Petroleum's favor, there will then be a second trial before a jury to
determine the amount of compensation to be awarded. Both the decision of the
Court and any decision of a jury are subject to appeals by any of the parties to
the litigation.
A motion for summary judgment by the State of Florida in the taking lawsuit
(State Lease 224-A) was denied by the Leon County Circuit trial judge on June
13, 2002.
Royalty Taking Case
The offshore areas covered by Coastal Petroleum's original leases (prior to
the 1976 Settlement Agreement) are subject to certain other royalty interests
held by third parties, including Coastal Caribbean. In 1994, several of those
third parties, including Coastal Caribbean which has approximately a 12%
interest in any recovery, have instituted a separate lawsuit against the State.
That lawsuit claims that the royalty holders' interests have been confiscated as
a result of the State's actions discussed above and that they are entitled to
compensation for that taking.
The royalty holders were not parties to the 1976 Settlement Agreement, and
the royalty holders contend that the terms of the Settlement Agreement do not
protect the State from taking claims by those royalty holders. The case is
currently pending before the Circuit Court in Tallahassee. On December 2, 1999,
the Circuit Court denied the State's motion to dismiss the plaintiffs' claim of
inverse condemnation but dismissed several other claims.
On May 10, 2000, the State filed a motion for summary judgment but no
hearing date has been set for the motion. Discovery is proceeding.
Any recovery made in the royalty holders' lawsuit would be shared among the
various plaintiffs in that lawsuit, including Coastal Caribbean, but not Coastal
Petroleum.
Lease Taking Case (Lease 224-B)
On May 21, 2002, Coastal Petroleum filed a complaint in the Leon County
Circuit Court, Florida against the State of Florida seeking compensation for the
State's taking of its property rights to explore for oil and gas within its
State Lease 224-B. The lease encompasses more than 400,000 acres off the West
Coast of Florida in the Gulf of Mexico. On July 22, 2002, a motion by the State
of Florida to dismiss the case was heard. A decision on the motion is pending.
Note 3. Loss per share
Loss per share is based upon the weighted average number of common and
common equivalent shares outstanding during the period. The Company's basic and
diluted calculations of EPS are the same because the exercise of options is not
assumed in calculating diluted EPS, as the result would be anti-dilutive (the
Company has continuing losses).
Note 4. Going Concern
The Company has a limited amount of working capital, has incurred
recurring losses and has a deficit accumulated during the development stage.
Furthermore, on January 16, 2001, Coastal Petroleum Company filed a complaint in
the Leon County ITEM 1 Financial Statements
Circuit Court in Florida against the State of Florida seeking compensation for
the State's taking of its property rights to explore for oil and gas within its
Lease 224-A. On November 27, 2001, the Leon County Circuit Court set a trial
date for two weeks beginning September 30, 2002 for Coastal Petroleum's lawsuit
against the State of Florida. The cost of that litigation has been substantial
and required the Company to obtain additional capital. On June 17, 2002, the
Company commenced a rights offering for the sale of its common stock to its
shareholders. The offering was concluded on July 31, 2002 and the Company
realized gross proceeds of approximately $1,370,000 on the sale of approximately
2,740,000 shares at $.50 per share.
With the proceeds of rights offering, the Company should be able to
fund its operations through June 30, 2003, provided that the Company's
directors, officers, legal counsel and administrative consultants agree to
continue to defer the payment of all of their salaries and fees. As of June 30,
2002, the amount of salaries and fees being deferred totaled approximately
$922,000. Because the proceeds of the offering of the Company's common stock are
inadequate to fund the Company's long term capital needs, the Company intends to
explore other possible funding sources, particularly the other shareholders of
Coastal Petroleum. These situations raise substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or amounts and classification of
liabilities that may result from the outcome of these uncertainties.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
Liquidity and Capital Resources
Statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations which are not historical in nature
are intended to be forward looking statements. The Company cautions readers that
forward looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those indicated in the
forward looking statements. Among the risks and uncertainties are: the
uncertainty of any decision favorable to Coastal Petroleum in its litigation
against the State of Florida; and the substantial cost of continuing the
litigation.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations (Cont'd)
------------------------------
Short Term Liquidity
At June 30, 2002, Coastal Caribbean had approximately $99,000 of cash
and cash equivalents available. On June 17, 2002, the Company commenced a rights
offering for the sale of its common stock to its shareholders. The offering was
concluded on July 31, 2002 and the Company realized gross proceeds of
approximately $1,370,000 on the sale of 2,740,000 shares at $.50 per share.
With the proceeds of rights offering, the Company should be able to
fund its operations through June 30, 2003, provided that the Company's
directors, officers, legal counsel and administrative consultants agree to
continue to defer the payment of all of their salaries and fees. As of June 30,
2002, the amount of salaries and fees being deferred totaled approximately
$922,000. Because the proceeds of the offering of the Company's common stock are
inadequate to fund the Company's long term capital needs, the Company intends to
explore other possible funding sources, particularly the other shareholders of
Coastal Petroleum. These situations raise substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or amounts and classification of
liabilities that may result from the outcome of these uncertainties.
Long Term Liquidity
On January 16, 2001, Coastal Petroleum Company filed a complaint in the
Leon County Circuit Court, Florida against the State of Florida seeking
compensation for the State's taking of its property rights to explore for oil
and gas within its state Lease 224-A.
On May 21, 2002, Coastal Petroleum filed a complaint in the Leon County
Circuit Court, Florida against the State of Florida seeking compensation for the
State's taking of its property rights to explore for oil and gas within its
State Lease 224-B. The lease encompasses more than 400,000 acres off the West
Coast of Florida in the Gulf of Mexico.
The Company expects that the cost of the litigation will continue to be
substantial. Because the proceeds of the offering of the Company's common stock
are inadequate to fund the Company's long term capital needs, the Company
intends to explore other possible funding sources, particularly the other
shareholders of Coastal Petroleum.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations (Cont'd)
------------------------------
Results of Operations
Three months ended June 30, 2002 vs. June 30, 2001
The Company incurred a loss of $606,000 for the 2002 quarter, compared
to a loss of $600,000 for the comparable 2001 quarter.
Interest income and other income decreased 98% from $23,000 in the 2001
quarter to $500 in the 2002 quarter because of the lack of funds to invest.
Legal fees and costs decreased 5% to $363,000 for the 2002 quarter,
compared to $384,000 in the prior period. Legal fees and costs were higher in
the 2001 period as a result of Coastal Petroleum Company's lawsuit against the
State of Florida seeking compensation for the State's taking of its property
rights to explore for oil and gas within its state Lease 224-A. In addition,
Coastal Petroleum responded to the State's motions to dismiss the lawsuit. The
Company expects that the cost of the litigation will continue to be substantial
in the year 2002.
Administrative expenses increased 6% during the 2002 period to $139,000
compared to $131,000 in the 2001 period. Accounting and administrative expenses
increased during the 2002 period to $47,000 compared to $38,300 in the 2001
period because of the costs associated with various filings with the Securities
and Exchange Commission.
Salaries did not change during the periods and remained at $38,000 in
the 2002 quarter.
Shareholder communications decreased 90% during the 2002 period to
$7,000 compared to $71,000 in the 2001 period because the Company has not yet
held its 2002 Annual Meeting of Shareholders.
Exploration costs in the 2002 period represent the $59,000 in lease
rentals paid to the State of Florida to maintain Coastal Petroleum's leases.
During the year 2001, the Company concluded that its property interests were
impaired by the actions taken by the State of Florida and recorded an impairment
charge to reflect the write off of these costs. Although these costs have been
written off, the Company still has legal title to the leases and will continue
to pay annual lease rentals on the leases. All future costs incurred in
connection with the Company's Florida leases are being expensed as incurred.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations (Cont'd)
------------------------------
Six months ended June 30, 2002 vs. June 30, 2001
The Company incurred a loss of $1,160,000 for the 2002 period, compared
to a loss of $1,292,000 for the comparable 2001 period.
Interest income and other income decreased 93% from $61,000 in 2001 to
$4,000 in 2002 because of the lack of funds to invest.
Legal fees and costs decreased 25% to $680,000 for 2002, compared to
$909,000 in the prior period. Legal fees and costs were higher in the 2001
period as a result of Coastal Petroleum Company's lawsuit against the State of
Florida seeking compensation for the State's taking of its property rights to
explore for oil and gas within its state Lease 224-A. In addition, Coastal
Petroleum responded to the State's motions to dismiss the lawsuit. The Company
expects that the cost of the litigation will continue to be substantial in the
year 2002.
Administrative expenses increased 18% in 2002 to $332,000 from $281,000
in the 2001 period. Accounting and administrative expenses increased during the
2002 period to $107,000 compared to $79,000 in the 2001 period because of the
costs associated with various filings with the Securities and Exchange
Commission.
Salaries did not change during the periods and remained at $76,000 in
2002.
Shareholder communications decreased 81% during the 2002 period to
$16,000 compared to $86,000 in the 2001 period because the Company has not yet
held its 2002 Annual Meeting of Shareholders.
Exploration costs increased from $500 in the 2001 period to $59,000 in
2002. The $59,000 in exploration costs in 2002 represent the lease rentals paid
to the State of Florida to maintain Coastal Petroleum Company's offshore leases.
ITEM 3 - Quantitative and Qualitative Disclosure About Market Risk
---------------------------------------------------------
The Company does not have any significant exposure to market risk.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART II - OTHER INFORMATION
June 30, 2002
ITEM 5 - Other Information
A motion for summary judgment by the State of Florida in the taking
lawsuit (State Lease 224-A) was denied by the Leon County Circuit trial judge on
June 13, 2002.
On May 21, 2002, Coastal Petroleum filed a complaint in the Leon County
Circuit Court, Florida against the State of Florida seeking compensation for the
State's taking of its property rights to explore for oil and gas within its
State Lease 224-B. The lease encompasses more than 400,000 acres off the West
Coast of Florida in the Gulf of Mexico. On July 22, 2002, a motion by the State
of Florida to dismiss the case was heard. A decision on the motion is pending.
On June 17, 2002, the Company commenced a rights offering for the sale
of its common stock to its shareholders. The offering was concluded on July 31,
2002 and the Company realized gross proceeds of approximately $1,370,000 on the
sale of 2,740,000 shares at $.50 per share.
Coastal Caribbean is currently a passive foreign investment company, or
PFIC, for United States federal income tax purposes, which could result in
negative tax consequences to a shareholder. If, for any taxable year, the
Company's passive income or assets that produce passive income exceed levels
provided by U.S. law, the Company would be a "passive foreign investment
company," or PFIC, for U.S. federal income tax purposes. For the years 1987
through 2001, Coastal Caribbean's passive income and assets that produce passive
income exceeded those levels and for those years Coastal Caribbean constituted a
PFIC. If Coastal Caribbean is a PFIC for any taxable year, then the Company's US
shareholders potentially would be subject to adverse U.S. tax consequences of
holding and disposing of shares of our common stock for that year and for future
tax years. Any gain from the sale of, and certain distributions with respect to,
shares of the Company's common stock, would cause a U.S. holder to become liable
for U.S. federal income tax under Code section 1291 (the interest charge
regime). The tax is computed by allocating the amount of the gain on the sale or
the amount of the distribution, as the case may be, to each day in the U.S.
shareholder's holding period. To the extent that the amount is allocated to a
year, other than the year of the disposition or distribution, in which the
corporation was treated as a PFIC with respect to the U.S. holder, the income
will be taxed as ordinary income at the highest rate in effect for that year,
plus an interest charge.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
PART II - OTHER INFORMATION
June 30, 2002
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K/A for
the year ended December 31, 2001.
ITEM 6 - Exhibits and Reports on Form 8-K
- ------ --------------------------------
(a) Exhibits
99 (1) Certification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley act of
2002 by Benjamin W. Heath
99 (2) Certification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the
Sarbanes-Oxley act of 2002 by James R. Joyce
(b) Reports on Form 8-K
On May 22, 2002, the Company filed a Current Report on Form 8-K to
report that Coastal Petroleum filed a complaint in the Leon County Circuit
Court, Florida against the State of Florida seeking compensation for the State's
taking of its property rights to explore for oil and gas within its State Lease
224-B. The lease encompasses more than 400,000 acres off the West Coast of
Florida in the Gulf of Mexico. On May 28, 2002, the Company filed an amendment
to the report to correct a typographical error.
On June 18, 2002, the Company filed a Current Report on Form 8-K to
report that:
(1) a motion for summary judgment by the State of Florida in
the takings lawsuit (Lease 224-A) was denied by the Leon
County Circuit Court trial judge on June 13, 2002.
(2) on June 17, 2002, the Company announced an offering of
approximately 11 million shares of common stock exclusively to
the company's shareholders.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
FORM 10-Q
June 30, 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COASTAL CARIBBEAN OILS & MINERALS, LTD.
---------------------------------------
Registrant
Date: August 12, 2002 By /s/ James R. Joyce
--------------------------------------
James R. Joyce
Treasurer and Chief Accounting and
Financial Officer