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FORM 10-Q. QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 For the period ended March 31, 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 May 9, 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 MONTHS ENDED MARCH 31, 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 10
PART II. OTHER INFORMATION 11
Item 5 Other Information 11
Item 6 Exhibits and reports on Form 8-K 12
Signatures 12
Certifications 13
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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, March 31,
2002 2003
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ASSETS
Current assets:
Cash and cash equivalents $ 316,473 $ 294,738
Marketable equity securities, available for sale 61,540 68,410
Natural gas "put" contracts, at fair value - 53,010
Accounts receivable 48,948 66,399
Notes receivable, related parties 9,318 9,550
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436,279 492,107
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Oil and gas properties, at cost,
successful efforts method: 737,857 747,857
Accumulated depletion and depreciation (420,924) (430,924)
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316,933 316,933
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Total assets $ 753,212 $ 809,040
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,481 $ 42,811
Accrued liabilities 1,323 6,375
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16,804 49,186
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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 470,910 481,286
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 456,246 445,870
Treasury stock, at cost, 63,083 shares issued and
outstanding (83,151) (83,151)
Accumulated other comprehensive loss (65,205) (58,335)
Accumulated deficit (94,706) (83,655)
Note receivable from directors (10,600) (5,075)
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736,408 759,854
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Total liabilities and stockholders' equity $ 753,212 $ 809,040
========== ==========
See accompanying notes to unaudited condensed financial statements.
4
CROFF ENTERPRISES, INC.
STATEMENTS OF OPERATIONS
For the three months ended March 31, 2002 and 2003
(Unaudited)
2002 2003
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Revenues
Oil and gas sales $ 49,321 $ 103,108
Loss on natural gas "put" contracts - (5,031)
Gain on sale of marketable equity
securities 23,026 -
Other income 1,891 2,223
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74,238 100,300
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Expenses
Lease operating expense including
production taxes 14,014 29,735
Proposed drilling fund - 6,392
General and administrative 23,406 35,122
Overhead expense, related party 6,000 6,000
Depletion and depreciation 8,000 10,000
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51,420 87,249
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Pretax income 22,818 13,051
Provision for income taxes - 2,000
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Net income 22,818 11,051
Net income (loss) applicable to
preferred B shareholders (657) 10,376
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Net income applicable to
common shareholders $ 3,475 $ 675
========== ==========
Basic and diluted net income
per common share $ .04 $ *
========== ==========
Weighted average common shares outstanding 566,060 566,060
========== ==========
* less than $0.01 per common 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 three month period ened March 31, 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 reallocation - 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 - - - - - - 6,870 -
Net income for the three months
ended March 31, 2002 - - - - - - - 11,051
Preferred stock reallocation - 10,376 - - (10,376) - - -
-------- -------- -------- -------- ---------- -------- ------------- -----------
Balance at March 31, 2003 540,659 $481,286 629,143 $ 62,914 $ 445,870 $(83,151) $ (58,335) $ (83,655)
======== ======== ======== ======== ========== ======== ============= ===========
See accompanying notes to unaudited condensed financial statements.
6
CROFF ENTERPRISES, INC.
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2002 and 2003
(Unaudited)
2002 2003
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Cash flows from operating activities:
Net income $ 22,818 $ 11,051
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion and depreciation 8,000 10,000
Realized (gain) on marketable
equity securities (23,026)
Unrealized loss on natural gas "put" contracts - 5,031
Changes in operating assets and
liabilities:
Accounts receivable 13,522 (17,451)
Accrued interest on notes receivable (1,331) (307)
Accounts payable (486) 27,330
Accrued liabilities (3,032) 5,052
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Net cash provided by operating
activities 16,465 40,706
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Cash flows from investing activities:
Purchase of natural gas contracts - (58,041)
Acquistion of property leases - (10,000)
Purchase of marketable equity securities (165,502) -
Proceeds from sale of marketable equity
securities 88,528 -
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Net cash provided by (used in) investing activities 23,026 (68,041)
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Cash flows from financing activities:
Payment on note receivable from a director - 5,600
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Net Cash provided by financing activities - 5,600
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Net increase (decrease) in cash and
cash equivalents 39,491 (21,735)
Cash and cash equivalents
at beginning of period 338,870 316,473
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Cash and cash equivalents
at end of period $ 378,361 $ 294,738
========== ==========
Supplemental disclosure of non-cash investing and financing activities:
During the three month periods ended March 31, 2002 and 2003, the Company
had unrealized gains/(losses) on available for sale securities in the amount of
$(600) and $6,870, respectively. During the three month period ended
March 31, 2002, the Company had unrealized losses on natural gas contracts of
$5,031.
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 month periods ended
March 31, 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.
2. Subsequent Events
On April 30, 2003, the Company closed on the acquisition of its initial
prospective properties for the proposed drilling fund. The initial prospective
properties acquired were three non-producing oil, gas and mineral leases
totaling approximately 500 acres in DeWitt County, Texas for a total purchase
price of $79,413.
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 March 31, 2003, the Company had assets of $809,040. At March 31, 2003,
the Company's current assets totaled $492,107 compared to current liabilities
of $49,186. Working capital at March 31, 2003 totaled $442,921, an increase of
6% compared to $419,475 at December 31, 2002. The Company had a current ratio
at March 31, 2003 of approximately 10:1. The market value of the Company's
marketable equity securities were $58,335 below cost at March 31, 2003. During
the quarter ended March 31, 2003, net cash provided by operations totaled
$40,706, as compared to $16,465 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 can borrow up to $100,000 to fund
investments in oil and gas properties. The variable rate is based on Prime plus
1.5%, subject to a floor of 7% and a ceiling of 12%. The Company had no short-
term or long-term debt outstanding at March 31, 2003. In April 2003, the
Company borrowed $50,000 for the assignment of property leases in Texas (see
Item 5 Other Information).
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.
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
that would be realized on termination, approximated $53,010 at March 31, 2003.
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. Transaction gains and losses are determined
monthly and are included as increases or decreases in oil and gas revenues in
the period the contracted production is sold.
At March 31, 2003, there were no significant commitments for capital
expenditures. On March 11, 2003 the Company paid $10,000 as an escrow deposit
toward the assignment of property leases in Texas (see Item 5 Other
Information). 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 borrowings available under its line of credit,
projected operating cash flows and the cash on hand will be sufficient to cover
its working capital, capital expenditures, planned development activities and
debt service requirements for the next 12 months. In connection with
consummating any significant acquisition, 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 March 31, 2003 compared to three months ended March 31, 2002.
Revenues for the first quarter of 2003 totaled $100,300, a 35% increase
from the prior year period. Net income for the first quarter of 2003 totaled
$11,051, a decrease of 52% compared to the first quarter of 2002. Oil and gas
sales for the first quarter of 2003 totaled $103,108, a 109% 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 average sale
price of oil in first quarter of 2003 for the Company was approximately $27 per
barrel compared to $17 per barrel for the same period in 2002. The average sale
price of natural gas in the first quarter of 2003 for the Company was $3.75 per
Mcf (Mcf equates to one thousand cubic feet), compared to $1.80 per Mcf for the
same period in 2002. Production of oil increased primarily due to the
acquisition of new wells in Michigan. A significant factor in the decreased net
income for the quarter compared to the prior year quarter was that the Company
realized a gain on the sale of marketable equity securities totaling $23,026
during the first quarter of 2002.
Lease operation expense, which includes all production related taxes for
the first quarter of 2003, totaled $29,735 compared to the first quarter of
2002, which totaled $14,014. 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 first quarter of 2002.
Depreciation and depletion expense for the first quarter of 2003 totaled
$10,000, a 25% increase from the prior year period, which totaled $8,000. This
increase is attributable to depletion on new oil and gas properties.
During the first quarter of 2003, the Company has incurred $6,392 in costs
associated with exploring the concept of creating a type of drilling fund (see
Item 5 Other Information).
General and administrative expense, including rent for the first quarter
of 2003, totaled $41,122, which is $11,716 higher than the first quarter of
2002 which totaled $29,406. 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
As disclosed in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002, the Company is currently in the initial stages of exploring
the concept of creating a type of drilling fund that could be sold, possibly in
conjunction with the Company's common stock, to raise money for exploratory or
development drilling. The Board of Directors has authorized management to draft
a preliminary plan, discuss financing, and investigate joint venture partners
and identify prospective properties. During the first quarter of 2003, the
Company has incurred $6,392 in costs associated with exploring the concept of
creating a type of drilling fund. On April 30, 2003, the Company closed on the
acquisition of its initial prospective properties for the proposed drilling
fund. The initial prospective properties acquired were three non-producing
oil, gas and mineral leases totaling approximately 500 acres in DeWitt County,
Texas for a total purchase price of $79,413. Currently, no financing
commitments have been obtained and there is no assurance of any such financing
being obtained
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 March 31,
2003, the balance on this note including accrued interest was $9,550. Reef
Energy is currently attempting to sell assets to repay this loan. In December
2001, the Company loaned three of its Directors a total of $40,000 associated
with the exercise of their stock warrants. The fully recourse notes due
December 31, 2002 bear interest at 6% per annum. At March 31, 2003, one note
remained unpaid, which totaled $5,075 including accrued interest. All other
notes were repaid in full.
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 March 31, 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: May 13, 2003 By: /S/Gerald L. Jensen
---------------- ------------------------------
Gerald L. Jensen, President,
Chief Executive Officer
Date: May 13, 2003 By: /s/Stuart D. Kroonenberg
---------------- ------------------------------
Stuart D. Kroonenberg,
Chief Financial Officer
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-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures 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) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the
registrant's board of directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; 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; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
DDate: May 13, 2003 By: /S/Gerald L. Jensen
---------------- ------------------------------
Gerald L. Jensen, President,
Chief Executive Officer
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-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures 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) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the
registrant's board of directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; 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; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 13, 2003 By: /s/Stuart D. Kroonenberg
---------------- ------------------------------
Stuart D. Kroonenberg,
Chief Financial Officer
Exhibit 99.1
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 March 31, 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: May 13, 2003 By: /S/Gerald L. Jensen
---------------- ------------------------------
Gerald L. Jensen, President,
Chief Executive Officer
Exhibit 99.2
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 March 31, 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: May 13, 2003 By: /s/Stuart D. Kroonenberg
---------------- ------------------------------
Stuart D. Kroonenberg,
Chief Financial Officer