SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Quarterly Period Ended September 30, 2001
[ ] Transition Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period from __________ to _________
Commission file number: 0-9435
Colorado 84-0811034
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1703 Edelweiss Drive
Cedar Park, Texas 78613
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(Address of principal executive offices) (Zip Code)
(512) 250-8692
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(Issuer's telephone number)
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As of October 31, 2001, the number of shares outstanding of the Registrant's $.01 par value Common Stock was 7,465,175.
PART I
Item 1. Condensed Consolidated Financial Statements
FieldPoint Petroleum Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
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September 30, December 31,
2001 2000
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(unaudited)
CURRENT ASSETS:
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Cash $ 320,409 $ 649,539
Trading securities 2,880 2,880
Accounts receivable:
Advances 47,500 7,500
Oil and gas sales 233,637 180,418
Joint interest billings, less allowance for doubtful
accounts of $74,192 and $71,192 respectively 102,441 61,632
Prepaid expenses 38,535 54,535
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Total current assets 745,402 956,504
PROPERTY AND EQUIPMENT:
Oil and gas properties (successful efforts method):
Leasehold costs 4,238,039 3,704,362
Lease and well equipment 768,271 437,731
Furniture and equipment 35,082 32,496
Transportation equipment 75,974 75,974
Less accumulated depletion and depreciation (1,178,750) (853,275)
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Net property and equipment 3,938,616 3,397,288
OTHER ASSETS 176,197 197,015
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Total assets $ 4,860,215 $ 4,550,807
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
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Current portion of long-term debt $ 229,760 $ 407,143
Accounts payable and accrued expenses 49,716 105,092
Oil and gas revenues payable 66,068 63,862
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Total current liabilities 345,544 576,097
LONG-TERM DEBT, net of current portion 919,038 1,238,618
DEFERRED INCOME TAXES 163,000 78,000
COMMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 75,000,000 shares authorized;
7,457,075 and 7,040,325 shares issued and outstanding,
Respectively 74,570 70,403
Additional paid-in capital 2,487,681 2,024,317
Treasury stock, 110,000 shares of common stock (1,100) (1,175)
Retained earnings 871,482 564,547
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Total stockholders' equity 3,432,633 2,658,092
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Total liabilities and stockholders' equity $ 4,860,215 $ 4,550,807
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See accompanying notes to these consolidated financial statements
FieldPoint Petroleum Corporation
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For The Three Months Ended
September 30,
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2001 2000
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REVENUE: (unaudited) (unaudited)
Oil and gas sales $ 599,110 $ 383,942
Well operational and pumping fees 29,994 32,219
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Total revenue 629,104 416,161
COSTS AND EXPENSES:
Production expense 258,246 152,131
Depletion and depreciation 112,000 39,000
General and administrative 115,718 55,018
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Total costs and expenses 485,964 246,149
OTHER INCOME (EXPENSE):
Interest income (expense), net (25,181) (21,545)
Miscellaneous 1,014 7,897
Unrealized derivative loss (13,840) --
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Total other income (expense) (38,007) (13,648)
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INCOME (LOSS) BEFORE INCOME TAXES 105,133 156,364
INCOME TAX (PROVISION) CURRENT (15,000) --
INCOME TAX (PROVISION) DEFERRED (22,000) (39,160)
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NET INCOME (LOSS) 68,133 117,204
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NET INCOME (LOSS) PER SHARE
BASIC $ 0.01 $ 0.02
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DILUTED $ 0.01 $ 0.02
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WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC 7,387,363 6,700,868
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DILUTED 7,579,160 6,968,793
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See accompanying notes to these consolidated financial statements
FieldPoint Petroleum Corporation
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For The Nine Months Ended
September 30,
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2001 2000
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REVENUE: (unaudited) (unaudited)
Oil and gas sales $ 1,803,496 $ 1,053,284
Well operational and pumping fees 90,233 96,884
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Total revenue 1,893,729 1,150,168
COSTS AND EXPENSES:
Production expense 654,565 378,644
Depletion and depreciation 324,894 117,000
General and administrative 371,356 204,297
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Total costs and expenses 1,350,815 699,941
OTHER INCOME (EXPENSE):
Interest income (expense), net (79,627) (62,669)
Miscellaneous 19,249 8,010
Realized derivative loss (39,947) --
Total other income (expense) (100,325) (54,659)
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INCOME (LOSS) BEFORE INCOME TAXES 442,589 395,568
INCOME TAX (PROVISION) CURRENT (49,638) --
INCOME TAX (PROVISION) DEFERRED (85,000) (28,046)
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NET INCOME (LOSS) 307,951 367,522
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NET INCOME (LOSS) PER SHARE
BASI $ 0.04 $ 0.06
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DILUTED $ 0.04 $ 0.05
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WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC 7,305,645 6,478,932
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DILUTED 8,122,025 7,072,948
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See accompanying notes to these consolidated financial statements
FieldPoint Petroleum Corporation
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
September 30,
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2001 2000
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(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 307,951 $ 367,522
Adjustments to reconcile to net cash
provided by operating activities:
Depletion and depreciation 324,894 117,000
Deferred Income Taxes 85,000 28,046
Income Tax Benefit from Exercise of Stock Options 34,638 --
Stock Compensation to Consultant 28,500 13,000
Changes in assets and liabilities:
Accounts receivable (134,028) (25,037)
Prepaid expenses and other assets 37,397 3,104
Accounts payable and accrued expenses (55,376) (68,701)
Oil and gas revenues payable 2,206 17,774
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Net cash provided by operating activities 631,182 452,708
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of oil and gas properties (864,217) (293,522)
Purchase of furniture and equipment (2,586) (217)
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Net cash used by investing activities (866,803) (293,739)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (497,977) (323,429)
Proceeds from exercise of options and warrants 404,468 473,482
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Net cash provided (used) by financing activities (93,509) 150,053
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NET INCREASE (DECREASE) IN CASH (329,130) 309,022
CASH, beginning of the period 649,539 117,259
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CASH, end of the period $ 320,409 $ 426,281
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See accompanying notes to these consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The condensed consolidated 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 condensed or omitted. However, in the opinion of management, all adjustments (which consist only of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the periods presented have been made. These condensed consolidated financial statements should be read in conjunction with financial statements and the notes thereto included in the Company's Form 10-KSB filing for the year ended December 31, 2000.
3 Months Ended 9 Months Ended
September 30, 2000 September 30, 2000
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Revenues $ 650,408 1,816,961
Net Income $ 244,387 766,037
Net Income per share $ .04 .13
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PART I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the Company's Financial Statements, and respective notes thereto, included elsewhere herein. The information below should not be construed to imply that the results discussed herein will necessarily continue into the future or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of the management of FieldPoint Petroleum Corporation.
General
FieldPoint Petroleum Corporation derives its revenues from its operating activities including sales of oil and gas and operating oil and gas properties. The Company's capital for investment in producing oil and gas properties has been provided by cash flow from operating activities, and from bank financing. The Company categorises its operating expenses into the categories of production expenses and other expenses.
Results of Operations
Revenues increased 51% or $212,943 to $629,104 for the three month period ended September 30, 2001 from the comparable 2000 period, this was due primarily to the overall increase in oil and gas sales. Production volumes increased 49% on a BOE basis. Average oil sales prices decreased 15% to $24.86 for the period ended September 30, 2001 compared to $29.35 for the period ended September 30, 2000. Average gas sales prices decreased 24% to $2.30 for the period ended September 30, 2001 compared to $3.06 for the period ended September 30, 2000.
Production expenses increased 70% or $106,115 to $258,246 for the three month period ended September 30, 2001 from the comparable 2000 period, this was primarily due to additional workovers in the form of remedial repairs and an increase in the number of producing oil and gas properties the company owns. Depletion and depreciation increased 187% or $73,000 to $112,000 this was primarily due to the acquisition and development of additional oil and gas properties and related equipment resulting in increased production during the period ended September 30, 2001 compared to the 2000 period. General and administrative overhead cost increased 110% or $60,700 to $115,718 for the three month period ended September 30, 2001 from the comparable 2000 period. This was attributable to increased salaries, consulting fees, and engineering fees related to research of possible acquisitions.
Net other expense for the three months ended September 30, 2001 was $38,007 compared to $13,648 for the 2000 period. This increase was primarily due to unrealized derivative loss which was offset by miscellaneous income.
Results of Operations
Revenues increased 64% or $743,561 to $1,893,729 for the nine month period ended September 30, 2001 from the comparable 2000 period, this was due to the overall increase in oil and gas sales. Production volumes increased 55% on a BOE basis. Average oil sales prices decreased 6% to $25.84 for the period ended September 30, 2001 compared to $27.51 for the period ended September 30, 2000. Average gas sales prices increased 36% to $3.50 for the nine month period ended September 30, 2001 compared to $2.58 for the period ended September 30, 2000.
Production expenses increased 72% for the nine month period ended September 30, 2001 from the comparable 2000 period, this was primarily due to additional workovers in the form of remedial repairs and an increase in the number of oil and gas properties the company owns. Depletion and depreciation expense increased 177% to $324,894, this was due to the acquisition and development of additional oil and gas properties and related equipment resulting in increased production during the period ended September 30, 2001 compared to the 2000 period. General and administrative overhead cost increased 81% or $167,059 to $371,356 for the nine month period ended September 30, 2001 from the nine month period ended September 30, 2000. This was attributable to increased salaries, consulting fees and engineering fees related to research of possible acquisitions.
Net other expense for the nine months ended September 30, 2001 was $100,325 compared to $54,659 for the comparable 2000 period. The increase was primarily due to a realized derivative loss and a slight increase in interest expense for the nine month period.
Liquidity and Capital Resources
Cash flow provided by operating activities was $631,182 for the nine month period ended September 30, 2001, as compared to $452,700 in cash flow provided by operating activities in the 2000 period. The increase in cash from operating activities was primarily due to the non-cash nature of higher depletion and depreciation and certain tax benefits during 2001, offset by an increase in accounts receivable.
Cash flow used by investing activities was $866,803 for the period ended September 30, 2001, compared to $293,739 for the period ended September 30, 2000. This was primarily due to additional purchases of oil and gas properties and related development activity in 2001. Cash flow used by financing activities was $93,509 for the period ended September 30, 2001, as compared to $150,053 provided by financing activities for the same period in 2000. This was due to repayment of existing long-term debt during 2001.
The Company cannot predict how oil and gas prices will vary during 2001 and what effect they will ultimately have on the Company. However, management believes that the Company will be able to generate sufficient cash from operations to service its bank debt and provide for maintaining current production of its oil and gas properties.
PART II
OTHER INFORMATION
None.
ISSUANCE OF RESTRICTED SECURTITIES. During the nine months ended September 30, 2001, the Company issued 334,250 shares of Common Stock upon the exercise of warrants associated with the W.B.McKEE Securities Unit offering.
As to the issuance of the securities identified above, the Company relied upon
Section 4(2) of the Securities Act in claiming exemption from the registered
requirement of the Securities Act.
None.
None.
None.
10.5 Consulting Agreement dated November 13, 2001 between FieldPoint Petroleum Corporation and TGR Group LLC.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: 11/14/2001 By: /s/ Ray Reaves
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Ray Reaves, Treasurer, Chief Financial Officer
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CONSULTING AGREEMENT
This agreement is entered into between TGR Group LLC, a Nevada Limited Liability Company (hereafter known as TGR) and Field Point Petroleum Corporation, a Colorado Company (hereafter known as Field point).
Field Point has expressed a desire to enter into this agreement with TGR to provide Internet Public Relations Services for Field Point. TGR is in the business of providing such services and desires to enter into an agreement with Field Point to provide these services to Field Point . This Agreement is for the purpose of defining the services to be provided and the rights and responsibilities of both parties.
I. SERVICES PROVIDED BY TGR
1. TGR agrees to prepare a detailed "Focus Profile Report" on Field Point, as defined on its web site (url: www.smallcapnetwork.net) following certain guidelines that have already been established by TGR and provided to Field Point. The Focus Profile Report shall be released during the month of November or December 2001, final date to be established by both parties.
2. TGR agrees to deliver the Focus Profile Report to all the members of the SmallCap Network, TGR's proprietary database of over 300,000 members.
3. TGR will post the Focus Profile Report on its web site no more than
(14) days after it has been delivered to the SmallCap Network Members.
4. TGR will continue to release to the SmallCap Network Members, through the SmallCap Digest, all new information (i.e. Press Releases, Quarterly, Annual, and other Periodic Reports, Analysts Reports, etc.) about Field Point thatField Point has formally and officially released to the general public, for a period of ninety (90) days from the date the the Focus Profile Report is delivered to the SmallCap Network Members..
II. Responsibilities of FIELD POINT
1. Field Point agrees to assist TGR, as requested, in the preparation of the corporate profile reports on said Company.
2. Field Point will, if requested, provide or arrange to be provided to TGR or its designee, such accounting records as may be necessary to complete the corporate "due diligence" necessary to compile an accurate and detailed profile report on the companies.
3. Field Point agrees to provide TGR with certain business and other material information about Field Point, its products, services, contracts, pending litigation, patents, trademarks and other such business matters which TGR may request and which TGR considers to be important for the completion of this contract.
4. Field Point agrees to notify TGR of any changes in the status or nature of its business, any pending litigation, or any other developments that may require further disclosure.
III. COMPENSATION
1. For services rendered, as described above, TGR will receive the following as its exclusive compensation under this Agreement:
a. Fifty Thousand Dollars ($50,000) US, immediately payable upon the signing of the Agreement.
IV. REPRESENTATIONS BY TGR
TGR represents, warrants, and covenants the following:
1. TGR is a Company duly organized and existing under the laws of the State of Nevada and is in good standing with the jurisdiction of its incorporation.
2. TGR will disclose to Field Point any and all material facts and circumstances which may affect its ability to perform its undertaking herein.
3. TGR will cooperate in a prompt and professional manner with Field Point or its agents in the performance of this Agreement.
4. TGR's SmallCap Network is a proprietary database that contains in excess of 300,000 members.
5. TGR agrees that this Agreement is not a Finders Agreement. TGR is not entitled to receive any additional fees or compensation from Field Point, or from any future investor in Field Point's securities, as a result of its services under this Agreement.
6. TGR shall not publish any report, including the Focus Profile Report, concerning Field Point without receiving Field Point's prior approval of the report's form and contents, except reports released to the public by Field Point.
7. Neither TGR, any of its members, nor any person affiliated with TGR has been the subject of an action brought by the SEC, the NASD, any other securities industry self regulatory organization, or any state securities regulatory agency, except as disclosed in writing to Field Point.
V. REPRESENTATIONS OF FIELD POINT
Field Point represents, warrants and covenants the following:
1. Field Point will cooperate fully with TGR in executing the responsibilities required under this Agreement so that TGR may fulfill its responsibilities in a timely manner.
2. Field Point will not interfere with, impair, delay or cause TGR to perform work not described in this Agreement.
3. Field Point will cooperate in a prompt and professional manner with TGR, its attorneys, accountants and agents during the performance of the obligations due under this Agreement.
4. Field Point represents that no person has acted as a finder or investment advisor in connection with the transactions contemplated in this Agreement. Field Point will indemnify TGR with respect to any claim for a finder's fee in connection with this Agreement. Field Point represents that no officer, director or stockholder of the company is a member of the NASD, an employee or associated member of the NASD. Field Point represents that it has disclosed or will disclose to TGR all potential conflicts of interests involving its officers, directors, principals, stockholders and/or employees.
5. All financial information from Filed Point will be provided to TGR in a timely and complete manner and all other information, which Field Point has previously provided to TGR concerning Field Point, is accurate and complete in every material respect. If it is later determined that such is not the case, it shall be considered a basis for the termination of this Agreement.
6. Field Point does hereby state that all information supplied to TGR during the course of this Agreement shall be true and accurate to the best of Field Point's knowledge. Field Point agrees to hold TGR harmless for the accuracy of any information provided by Field Point to TGR under this Agreement.
VI. CONFIDENTIALITY
TGR agrees that all information received from Field Point shall be treated as confidential information and TGR shall not share such information with any other person or entity, except as are required by TGR to fulfill this Agreement, without the express written consent of Field Point, unless such disclosure will not cause damages to Field Point.
VII INDEMNIFICATION
TGR agrees to indemnify Field Point and its directors, officers, stockholders, employees and agents and each of their respective affiliates (Field Point and each such person referred to herein as an "indemnified party") from and against any and all losses, claims, damages and liabilities, joint or several), to which any indemnified party may become subject under any applicable federal or state law or otherwise, related to or arising out of the performance by TGR of services under this Agreement, and will reimburse such indemnified party for all expenses (including reasonable counsel fees and expenses) as they are incurred in connection with the investigation of, preparation for, or defense of any pending or threatened claim, action, or proceeding. TGR will not be liable under this paragraph to the extent that any loss, claim, damage, or liability is found in a final judgment by a court of competent jurisdiction to have resulted from Field Point's willful misconduct or gross negligence. TGR agrees that no indemnified party shall have any liability (whether direct or indirect, in contract or otherwise) to TGR related to or arising out of this Agreement, except to the extent any losses, claims, damages, or liabilities are found in a final judgment by a court of competent jurisdiction to have resulted from Field Point's willful misconduct or gross negligence
VIII. NOTICES
Any notices from either party to the other shall be deemed received on the date such notice is personally delivered. Any notice sent by fax transmission shall be deemed received by the other party on the day it has been transmitted. Any notice sent by mail by either party to the other shall be deemed received on the third business day after it has been deposited at a United States Post Office. For purposes of delivering or sending notice to the parties under this Agreement such notices shall be delivered or sent as follows:
TGR Group LLC
3525 Del Mar Heights Rd #334
San Diego, CA 92130
Field Point Petroleum Corporation
1703EdelweissDrive
Cedar Park, TX 78613
IX. Entire Agreement
Neither party has made representations to the other, which is not specifically set forth in this Agreement. There are no oral or other agreements between the parties that have been entered into prior or contemporaneously with the formation of this Agreement. All oral promises, agreements, representations, statements and warranties herein, after asserted by one party against the other, shall be deemed to have been waived by such party asserting that they were made and this Agreement shall supersede all prior negotiations, statements, representations, warranties and agreements made or entered into between the parties to this Agreement.
X. NO ASSIGNMENT
Neither party may assign any benefit due or delegate performance under this Agreement without the express written consent of the other party.
XI. CONSTRUCTION
The laws of the State of California shall govern this Agreement. It shall also be construed as if the parties participated equally in its negotiation and drafting. The Agreement shall not be construed against one party over another party.
XII. ATTORNEYS FEES
In any action concerning the enforcement, breach, or interpretation of this Agreement, the prevailing party shall be entitled to recover its costs of suit and reasonable attorney's fees from the other party, in addition to any other relief granted by the court.
XIII. WAIVER
The waiver of any provision of this Agreement by either party shall not be deemed to be a continuing, waiver or a waiver of any other provision of this Agreement by either party.
XIV. SEVERABILITY
If any provision of this Agreement or any subsequent modifications hereof are found to be unenforceable by a court of competent jurisdiction, the remaining provisions shall continue to remain in full force and effect.
XV. AUTHORITY TO ENTER INTO AGREEMENT
The individuals signing this Agreement below represent to each other that they have the authority to bind their respective corporations to the terms and conditions of this Agreement. The individuals shall not, however have personal liability by executing this Agreement and sign this Agreement only in their representative capacities as authorized officers of Field Point and TGR, respectively.
IN WITNESS WHEREOF, the parties hereto have executed this Consulting Agreement on this 13th day of November 2001.
Field Point Petroleum Corporation TGR Group LLC -------------------------------- --------------------------- Ray D. Reaves Lawrence D. Isen President Authorized Signing Member |