SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2000 Commission File No. 0-6119
TRI-VALLEY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 84-061743
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
230 South Montclair Street, Suite 101, Bakersfield, California 93309
(Address of Principal Executive Offices)
Registrant's Telephone Number Including Area Code: (661) 837-9300
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of Class)
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 was
required to file such reports), and (2) has been subject to such requirement for
the past 90 days. Yes___X__ No_____
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB, if
applicable, or any amendment to this Form 10-KSB.
___X__
The issuer's revenues for the most recent fiscal year were $2,197,369.
As of January25, 2001, 19,653,748 common shares were issued and outstanding, and
the aggregate market value of the common shares of Tri-Valley Corporation held
by non-affiliates on that date was approximately$29,078,340.
DOCUMENTS INCORPORATED BY REFERENCE: None
Transitional Small Business Disclosure Format (check one): Yes; No X
---
Exhibit Index appears on page 32.
PART I
ITEM 1. BUSINESS
------------------
Tri-Valley Corporation, a Delaware corporation, is in the business of exploring,
acquiring and developing prospective and producing petroleum and precious metals
properties and interests therein. Tri-Valley has two wholly owned subsidiaries.
Tri-Valley Oil & Gas Company ("TVOG") operates the oil & gas activities. TVOG
derives the majority of its revenue from gas production. Tri-Valley Power
Corporation is the other wholly owned subsidiary. However, this subsidiary is
inactive at the present time. The precious metals activity is operated directly
by Tri-Valley Corporation.
TVOG primarily generates its own exploration prospects from its internal
database, and also screens prospect submittals from other geologists and
companies. TVOG generates these geological "plays" within a certain geographic
area of mutual interest ("AMI"). The prospect is then presented to potential
co-venturers. The company deals with both sophisticated individual investors
and energy industry companies. TVOG is the operator of these co-ventures.
In 1987, the Company acquired precious metals claims on Alaska state lands. The
Company has conducted exploration operations on these properties and has reduced
its original claims to a block of approximately 38,760 acres (60.6 square
miles). The Company has conducted trenching, core drilling, bulk sampling and
assaying activities to date and has reason to believe that mineralization exists
to justify additional exploration and development activities. However, to date,
the Company has not identified probable mineral reserves on these properties
ITEM 2. PROPERTIES
--------------------
The Company's headquarters and administrative offices are located at 230 South
Montclair Street, Suite 101, Bakersfield, California 93309. The Company leases
approximately 2,500 square feet of office space at that location. The principal
properties of the Company consist of proven and unproven oil and gas and
precious metal properties, maps and geologic records related to prospective oil
and gas and precious metal properties, office and other equipment. TVOG has a
worldwide geologic library with data on every continent except Antarctica
including over 700 leads and prospects in California, the Company's present area
of emphasis. This is further supported by a database of over 20,000 line miles
of 2-D seismic.
Oil and Gas Operations
-------------------------
The oil and gas properties in which the Company holds interests are primarily
located in the area of central California known as the Sacramento Valley. The
Company also leases exploration acreage in the San Joaquin and Santa Maria
Valleys. The Company contracts for the drilling of all its wells and does not
own any drilling equipment, bulk storage facilities, transportation pipelines or
refineries.
The company has retained the services of Cecil Engineering, an independent
engineer, for the purposes of estimating the Company's net share of proved
developed oil and gas reserves on all the Company's oil and gas properties at
December 31, 2000. The Company does not include any undeveloped reserves in
these reserve studies and, accordingly, only proved developed reserves are
reported herein. Price is a material factor in the stated reserves of the
Company, because higher prices permit relatively higher-cost reserves to be
produced economically. Higher prices generally permit longer recovery, hence
larger reserves at higher values. Conversely, lower prices generally limit
recovery to lower-cost reserves, hence smaller reserves. The process of
estimating oil and gas reserve quantities is inherently imprecise. Ascribing
monetary values to those reserves, therefore, yields imprecise estimated data at
best.
The estimated future net recoverable oil and gas reserves from proved developed
properties as of December 31, 2000, December 31, 1999 and December 31, 1998 were
as follows:
ITEM 2. PROPERTIES
--------------------
BBL MCF
--- -----
December 31, 2000 Condensate 299 Natural Gas 1,842,672
December 31, 1999 Condensate 185 Natural Gas 1,540,003
December 31, 1998 Condensate 234 Natural Gas 1,434,539
Using year-end oil and gas prices and current levels of lease operating
expenses, the estimated present value of the future net revenue to be derived
from the Company's proved developed oil and gas reserves, discounted at 10%, was
$12,920,069 at December 31, 2000, $1,308,178 at December 31, 1999,and $1,213,400
at December 31, 1998. Reference is made to the unaudited supplemental
information of the consolidated financial statements for further information on
oil and gas reserves and estimated values.
The following table sets forth the net quantities of natural gas and crude oil
produced by Registrant during:
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2000 1999 1998
Natural Gas (MCF) 249,011 210,333 277,946
Crude Oil (BBL ) 50 119 137
The following table sets forth the average sales price and average production
(lifting) cost per unit of oil and gas produced by registrant during:
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2000 1999 1998
Natural gas (per MCF) $3.76 $2.20 $2.20
Production Costs
(per MCF) .21 .20 .20
Net Profit per MCF $3.55 $2.00 $2.00
As of December 31, 2000, the Company had the following gross and net position in
wells and developed acreage:
Wells (1) Acres (2)
---------- ----------
Gross Net Gross Net
11 4.537 2192 645
(1) "Gross" wells represent the total number of producing wells in which the
Company has a working interest. "Net" wells represent the number of gross
producing wells multiplied by the percentages of the working interests therein
by the Company. "Net wells" recognizes only those wells in which the Company
holds an earned working interest. Working interests earned at payout have not
been included.
(2) "Gross" acres represent the total acres in which the Company has a
working interest; "net" acres represent the aggregate of the working interests
of the Company in the gross acres.
The Company drilled one exploratory well in 2000, but as of March 15, 2001, the
Company has not determined whether this well is capable of commercial
production. See Management's Discussion and Analysis of Financial Condition -
Petroleum Activities, page 8.
ITEM 2. PROPERTIES
--------------------
The following table sets forth the number of productive and dry exploratory and
development wells drilled by the Company during:
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2000 1999 1998
Exploratory 2*
Producing -0- -0- -0-
Dry 1** -0- -0-
Total 3 -0- -0-
Development
Producing -0- -0- -0-
Dry -0- -0- -0-
Total -0- -0- -0-
*At December 31, 2000 , one well, the Ekho #1, had been drilled but not yet
completed. The Sunrise Mayel #1 was still drilling.
**During 2000 we plugged and abandoned one well that had been drilled in 1998
but had never produced hydrocarbons in commercial quantities.
The following table sets forth information regarding undeveloped oil and gas
acreage in which the Company had an interest on December 31, 2000.
State Gross Acres Net Acres
----- ----------- ---------
California 25,564 20,890
Nevada 14,575 14,575
Some of the Company's undeveloped acreage is held pursuant to leases from
landowners. Such leases have varying dates of execution and generally expire
one to five years after the date of the lease.
Precious Metals
----------------
The precious metals properties are located in interior Alaska. They are
comprised of 898 40-acre claims and 16 160-acre prospecting sites, of which 84
claims are leased from others, located solely on State open lands requiring
annual assessment work, and an annual per claim fee. All fees are current.
The following table sets forth the information regarding the acreage position
the Company has under lease in Alaska as of December 31, 2000:
State Gross Acres Net Acres
----- ----------- ---------
Alaska 38,760 37,966
Mineral properties claimed on Open State land require minimum annual assessment
work of $100 worth per State of Alaska claim. In 1999, the Company staked 40
160-acre prospecting sites. In July 2000, the Company converted 24 prospecting
sites into 96 new claims and staked an additional 32 claims to bring its land
position to approximately 40,640 acres (63.5 square miles). These additional
128 claims were subsequently dropped in November 2000. Also in 2000, Kinross
Gold Co., successor to Cyprus Amax Mining Co., quitclaimed 81 claims to
Tri-Valley, bringing its present land position to approximately 38,760 acres
(60.6 square miles). Expenditures on the Richardson, Alaska acreage have
already carried forward annual assessment requirements more than four years on
all its claims. The Company has no Federal claims.
ITEM 2. PROPERTIES
--------------------
Tri-Valley has had a joint scientific research agreement with TsNIGRI, the
Central Research Institute of Geological Prospecting for Base and Precious
Metals, based in Moscow, Russia since 1991. The proprietary technology they use
for evaluating large areas of covered sub-arctic terrain has been impressive and
encouraging to our efforts. Physical gold has been found at 60 locations along
a 20-mile swath and over 1,000 samples have been assayed by Bondar-Clegg, a
respected assay house. We believe we have a great potential and intend to
continue our exploration and future development of these properties.
Management believes it has demonstrated that the Company possesses a superior
mineral property which could reward the shareholders dramatically from discovery
success with little downside exposure at present.
Environmental
-------------
The Company's energy operations are subject to a number of regulations relating
to environmental protection, as are all exploration and production companies.
However, the Company believes it is in full compliance with all environmental
related rules and regulations.
ITEM 3. LEGAL PROCEEDINGS
----------------------------
During 2000, we settled one lawsuit between the Company and a former consultant,
which had been pending from 1997. We were not party to any other material legal
proceedings during 2000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------------------------
On September 16, 2000, the Company held its annual meeting. The matters
submitted to a vote of the security holders included the election of directors,
restated Certificate of Incorporation , and the election by the Company to be
governed by 203 of the Delaware General Corporation Laws. The shareholders
elected all of the nominees for director who were recommended by the board.
They approved the restated Certificate of Incorporation and approved the
proposal to be governed by 203 of the Delaware General Corporation Law.
The shareholder votes were as follows:
Measure #1 - Election of Directors
FOR AGAINST ABSTAIN
Earl H. Beistline 18,260,785 127,325
F. Lynn Blystone 18,264,680 123,430
Milton J. Carlson 18,266,485 121,625
Dennis P. Lockhart 18,266,485 121,625
Loren J. Miller 18,266,485 121,625
Measure #2 - Approved restated Certificate of Incorporation.
FOR AGAINST ABSTAIN
14,352,402 111,309 4,046,024
Measure #3 - Election by the Company to be governed by 203 of the Delaware
General
Corporation Laws.
FOR AGAINST ABSTAIN
14,318,398 189,213 4,002,124
------
PART II
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ITEM 5. MARKET PRICE OF THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
--------------------------------------------------------------------------------
HOLDER MATTERS
---------------
Shares of Tri-Valley Corporation stock are traded over-the-counter on the
Electronic Bulletin Board under the symbol "TRIL". The following table shows
the high and low bid and asked prices of Tri-Valley stock for the quarterly
periods indicated as reported by the OTC Stock Journal:
Bid Prices Asked Prices
----------- -------------
High Low High Low
---- ---- ---- ----
2000:
First Quarter. $ 3.438 $ 1.44 $ 3.63 $ 1.43
Second Quarter $ 4.125 $ 2.03 $ 4.53 $ 1.88
Third Quarter. $ 3.188 $ 1.75 $ 3.38 $ 1.72
Fourth Quarter $ 1.938 $ 1.13 $ 2.06 $ 1.06
Bid Prices Asked Prices
----------- -------------
High Low High Low
---- --- ---- ---
1999:
First Quarter $ .470 $ .34 $ .56 $ .34
Second Quarter $ 1.063 $ .38 $ 1.12 $ .38
Third Quarter $ 1.188 $ .72 $ 1.31 $ .63
Fourth Quarter $ 1.969 $ 1.19 $ 2.16 $ 1.19
As of December 31, 2000, the Company estimates that its common stock was held by
approximately 2,000 shareholders of record in 40 states and at least 4 foreign
countries.
The Company historically has paid no dividends, and at this time does not plan
to pay any dividends in the immediate future. Rather, the Company strives to
add share value through discovery success. As of January 22, 2001, we had 13
market makers for our stock. In 2000, trading volume exceeded 14 million
shares.
Recent Sales of unregistered Securities
-------------------------------------------
During 2000 there were 14,000 shares issued at $0.50 each from the exercise of
stock options held by one director and one former employee. Additionally,
194,500 shares were sold to individuals in private placement, 55,000 at a price
of $1.25 per share and 139,500 at a price of $1.50 per share, all exempt under
Section 4(2) of the Securities Act of 1933. Also in 2000, 40,000 shares were
awarded to outside directors for past services and 5,000 shares were issued to
F. Lynn Blystone according to the terms of his employment agreement.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
----------------------------------------------------------------------------
Notice Regarding Forward-Looking Statements
This report contains forward-looking statements. The words, "anticipate,"
"believe," "expect," "plan," "intend," "estimate," "project," "could," "may,"
"foresee," and similar expressions are intended to identify forward-looking
statements. These statements include information regarding expected development
of the Company's business, lending activities, relationship with customers, and
development in the oil and gas industry. Should one or more of these risks or
uncertainties occur, or should underlying assumptions prove incorrect, actual
results may vary materially and adversely from those anticipated, believed,
estimated or otherwise indicated.
Overview
We believe that, after 20 years of downsizing in the petroleum industry,
increased oil and natural gas prices during the past year have created a
favorable environment for renewed growth. Production from existing reserves
continues to decline, while demand increases. While the trend for demand to
outstrip available supplies is
worldwide as well as national, we believe that it is particularly acute in
California, our primary venue for exploration and production, which imports 53%
of its oil and 85% of its natural gas demand. According to Liam McGee, the
President of Bank of America, California is the world's fifth largest economy.
Oil prices tend to be set based on worldwide supplies and prices, while natural
gas prices seem to be more dependent on local conditions. Over the past year,
natural gas prices in California have risen dramatically, and our revenue due to
oil and gas sales has risen with the price of gas. We expect that gas prices
will hold steady or possibly increase over the next year. If has prices should
fall, for instance due to new regulatory measures or the discovery of new and
easily producible reserves, our revenue from oil and gas sales would also fall.
We are now grading and prioritizing our geologic library, which contains over
700 leads and prospects, for exploratory drilling. We use our library to decide
where we should seek oil and gas leases for future explorations. Of course, we
cannot be sure that any future prospect can be obtained at an attractive lease
price or that any exploration efforts would result in a commercially successful
well.
Already the first two prospects, Ekho #1 and the Sunrise Mayel #1, have
discovered resources of accumulations of exceptional potentials in the mapped
area, according to logs and cores of the test wells recently drilled. Both
wells are in "tight" reservoirs and require artificial hydraulic fracturing to
enhance flow rates and neither can yet be certified as commercial, so we cannot
be sure that either of these prospects will result in proved, developed
reserves. In each play, Tri-Valley has as many as 40 or more locations based on
spacing rules, in its lease blocks over mapped closures.
Management is confident that the Company inventory and projects can deliver
exceptional value to shareholders and partners if we can fund a velocity of
drilling to make the discoveries among the inevitable dry holes of the
exploration businessWe seek to fund and drill enough exploratory wells for
commercial discoveries to make up for the cost of the inevitable dry holes that
we can expect, in the exploration business. Our future results will depend on
our success in finding new reserves and commercial production, and there can be
no assurance what revenue we can ultimately expect from any new discoveries.
Natural Gas Activities
The Company generally sells a percentage of production on a fixed contract price
and the remainder at the monthly spot price. In times when we expect the price
of gas to weaken, we try to increase the amount we sell under fixed prices.
When we expect the price of gas to rise, we seek to sell more gas in the spot
market. In 2000, we sold 49% of our production under fixed price contracts and
51% on the spot market. Because we expect gas prices to continue to rise, we
intend to sell 100% of our production on the spot market in 2001. Because we
plan to sell only on the spot market in 2001, a drop in the price of gas would
have a more adverse impact on us than if we entered into some fixed price
contracts for sale of future production.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
Our hydrocarbon reserves were valued by independent engineers at a net present
value of $11,887,320 at December
31, 2000, an increase of $10,670,021 from December 31, 1999 after taking into
account the SEC mandatory 10% discount rate and also taking into consideration
the effect of income tax. This was due primarily to the increase in gas prices.
This value does not appear on the balance sheet because accounting rules require
discovered reserves to be carried on the balance sheet at the cost of obtaining
them rather than the actual future net revenue from producing them.
Tri-Valley arranges to be carried, (we don't have to pay for our interest), in
the test wells on prospects. Under these arrangements, we usually minimize the
Company's cost to drill and also receive relatively little value from the
reserves we discover. On the other hand, we occasionally incur extra expenses
for drilling or development that we choose, in our discretion, not to pass on to
other venture participants. This occurred in 2000, when we incurred dry hole
expenses of $440,228 that we elected not to charge to our co-venturers.
Petroleum Activities
We began drilling the Ekho No. 1 on February 7, 2000. This is the first of
three test wells in a program to test deep mapped structure approximately 26
miles long and four to five miles wide and north of Bakersfield, where
Tri-Valley Oil and Gas (TVOG) is headquartered. The Ekho No. 1 reached total
depth of 19,085 feet in record time, taking only 80 drilling days. We hoped to
drill into naturally fractured area of the target formation to achieve
natural flow potential. The well did encounter oil that is 48.6 API gravity and
1,460 Btu gas with no H2S, CO2, nitrogen or water. However, the borehole
encountered "tight"sands, which will require artificial fracturing to provide
avenues for the oil and gas to flow at higher rates.
This additional cost came at a time when the Canadian partners in the joint
venture encountered national market conditions that precluded them from raising
sufficient funds to stay in the project and all but one of the Canadian partners
dropped out. Tri-Valley is in the process of repartnering the project with
stronger partners to assure that the project can go forward through completion
of the Ekho No. 1 and into drilling the Ekho No. 2 and No. 3 test wells.
Precious Metals Activity
The price of gold has fluctuated in the last 12 months from a high of $316.20
per oz. to a low of $262.80 per oz. However, the Company believes its
properties contain deposits that can produce the gold at a cost that will still
allow a significant profit.
Tri-Valley and Placer Dome U.S., Inc., entered into an agreement on March 22,
1999, whereby they would explore part of our claim block. They performed field
exploration work in the summer of 1999 and 2000. However due to the depressed
prices of gold, Placer Dome on September 18, 2000, notified us that they were
not going to go further on the agreement. Tri-Valley retains rights to
60.6square miles of claims and prospecting sites.
We are confident that other parties will be willing to participate when the
price of gold recovers. Kennecott Exploration has signed a
confidentiality/non-compete agreement on Tri-Valley's entire claim block plus
another 50 square miles surrounding.
Telecommunications
We loaned a general partnership $125,000.00 in 1997 which was secured by the
assets of the partnership. The note is in default and the Company is trying to
collect on this note. The managing general partner is alleging the assets
belong to an L.L.C., which is in bankruptcy. The underlying licenses are being
sold and the proceeds will be put in escrow until the bankruptcy court
determines the rightful owner. We feel that we will prevail and be successful
in recovering our claim.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
RESULTS OF OPERATIONS
Comparison of Years Ended December 31, 2000 and 1999
------------------------------------------------------------
Balance Sheet
--------------
The Company had $1,373,570 cash on hand at December 31, 2000 compared to
$8,050,469 at December 31, 1999. This decrease was the result of the Company
spending funds that had been advanced by our joint venture partners to drill
Ekho #1. Trade accounts receivable are $663,177 (427% greater) for the year
ended December 31, 2000 compared to the same period last year. This was the
result of increased production due to re-working of some of our wells and the
increase of natural gas prices. Trade accounts payable were $189,913 (48%
greater) in the year ended December 31, 2000 due to invoices to be paid related
to drilling the Sunrise-Mayel#1 well. Accounts payable to joint venture
participants is larger this year due to accrued revenue at year-end on their
behalf. The decrease in advances from joint venture participants is because at
year end 1999 we had funds on deposit for the Ekho #1 that were paid out over
2000 as the well was drilled.
Revenues
Oil and Gas sales of $1,045,013 for the year ended 2000 compared to $522,591 for
the year ended 1999, a 199% increase. This $522,422 increase was due to
increased production and the increase in natural gas prices. The decrease of
$928,791 in sale of oil and gas properties was because the prospect we sold in
2000 was smaller than the prospect sold in 1999.
Interest income increased by $66,881 (207%) in 2000 to $99,234, from $32,353 in
1999. The increased interest income came from funds the company had on account.
Other income dropped to $34,862 in 2000 from $261,460 in 1999, because Placer
Dome USA, paid the Company $225,000 pursuant to our option agreement signed in
1999, discussed inPrecious Metals Activity.
Costs and Expenses
--------------------
Costs and expenses are $900,287 greater for the fiscal year 2000, a 34%
increase. The oil and gas lease expenses were $440,428 larger due to the write
off of a well that was drilled in a previous year. Cost of oil and gas
prospects sold are $276,051 (26%) less this year because this prospect was
smaller than the one sold in 1999. General and administrative expenses are
$928,847 (107%) greater due to legal costs and the settlement of a lawsuit filed
in 1997.
In 1999, we recorded $148,334 for impairment of acquisition costs, as we wrote
down the value of previously acquired properties. We incurred no such
impairment expense in 2000.
Financial Condition
Operating Activities
Tri-Valley had a negative cash flow from operations during 2000. This was due
in large part to a one-time charge to settle the lawsuit. Also, the Company
incurred a write-off of a well deemed to be non-commercial. The Company expects
to have a positive cash flow in the fiscal year 2001 due to the increased
natural gas prices.
Investing Activities
In 2000, we spent $293,489 on capital expenditures, compared to $105,713 in 1999
- a 177% increase. The capital expenditures were incurred in connection with
leasing activities. Our proceeds from sale of property increased by $74,760
(93%) in 2000 to $154,760, compared to $80,000 in 1999. Overall, our cash used
by investing activities rose to $155,782 in 2000 from $27,033 in 1999, a
$128,749 (476%) increase.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
Financing Activities
Cash used by financing activities was ($5,111,663) in fiscal year 2000 compared
to cash provided financing activities of $7,918,906 for fiscal year ended 1999.
In 1999, joint venture participants advanced $7,742,568 for the Ekho #1 well.
In 2000, we recorded a decrease of funds advanced of $5,359,863 as we expended
the funds to drill the well.
The Company in recent years has financed a portion of its operations by the sale
of the Company's common stock in private placement transactions. In 2000, we
raised $285,000 from private placements of common stock, compared to $171,307 in
1999.
The overall increase in all activity related to our cash flows in 2000 were
directly related to the large size of the Ekho project, for which funds were
largely raised in 1999 and spent in 2000, on the first Ekho well.
ITEM 7: FINANCIAL STATEMENTS
TRI-VALLEY CORPORATION
INDEX
Page(s)
-------
Report of Brown Armstrong Randall Reyes Paulden & McCown,
Independent Auditor's Report 12
Consolidated Balance Sheets at December 31, 2000 and 1999 13
Consolidated Statements of Operations for the Years Ended
December 31, 2000 and 1999 14
Consolidated Statements of Changes in Shareholders' Equity for the
Years Ended December 31, 2000 and 1999 15
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2000 and 1999 16
Notes to Consolidated Financial Statements 17-25
Supplemental Information about Oil and Gas Producing
Activities (Unaudited) 26-28
12
REPORT OF INDEPENDENT AUDITOR'S
The Board of Directors
Tri-Valley Corporation
Bakersfield, California
We have audited the accompanying consolidated balance sheets of Tri-Valley
Corporation as of December 31, 2000 and 1999, and the related consolidated
statements of operations, changes in shareholders' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly in all material respects the financial position of Tri-Valley Corporation
at December 31, 2000 and 1999, and the results of their operations and their
cash flows for the years then ended, in conformity with generally accepted
accounting principles.
BROWN ARMSTRONG RANDALL
REYES PAULDEN & MCCOWN
ACCOUNTANCY CORPORATION
Bakersfield, California
February 9, 2001
The accompanying notes are an integral part of these financial statements.
16
TRI-VALLEY CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2000 1999
----------- ------------
ASSETS
------
Current Assets
Cash $ 1,373,570 $ 8,050,469
Accounts receivable, trade 818,361 155,184
Prepaid expenses 12,029 2,029
-------------- ---------------
Total Current Assets 2,203,960 8,207,682
-------------- ---------------
Property and Equipment, Net (Notes 1 and 2) 1,306,689 1,059,755
-------------- ---------
Other Assets
Deposits 100,105 100,000
Note receivable (Note 9) 125,000 125,000
Acquisition costs (Note 1) 51,270 50,000
Investments in partnerships (Note 1) 29,059 12,006
Well Database (net of accumulated amortization
of $44,788 and $37,755 at December 31, 2000
and 1999, respectively) 63,862 70,895
Goodwill (net of accumulated amortization
of $210,593 and $199,747 at December 31, 2000
and 1999, respectively)(Note 1) 223,260 234,106
Other 13,914 13,914
------------- ----------------
Total Other Assets 606,470 605,921
-------------- ----------------
TOTAL ASSETS $ 4,117,119 $ 9,873,358
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------
Current Liabilities
Notes payable (Note 3) $ 10,672 $ 10,554
Trade accounts payable 581,017 391,104
Amounts payable to joint venture participants 540,142 95,986
Advances from joint venture participants,
net (Note 1) 2,517,737 7,877,600
-------------- ---------------
Total Current Liabilities 3,649,568 8,375,244
-------------- ---------------
Long-Term Portion of Notes Payable (Note 3) 12,038 21,055
-------------- ---------------
Shareholders' Equity
Common stock, $.001 par value; 100,000,000
shares authorized; 19,554,748 and 19,301,248,
issued and outstanding at December 31, 2000
and 1999, respectively 19,555 19,281
Less: common stock in treasury, at cost,
163,925 and 179,425 shares at December 31, 2000
and 1999, respectively (21,913) (45,163)
Capital in excess of par value 8,666,688 8,344,462
Accumulated deficit (8,208,817) (6,841,521)
--------------- --------------
Total Shareholders' Equity 455,513 1,477,059
-------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,117,119 $9,873,358
================ ===============
TRI-VALLEY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
December 31, December 31,
2000 1999
----------- ------------
Revenues
Sale of oil and gas $ 1,045,013 $ 522,591
Gain on sale of property 154,760 77,434
Interest income 99,234 32,353
Sale of oil and gas prospects 863,500 1,792,291
Other income 34,862 261,460
--------------- ---------------
Total Revenues 2,197,369 2,686,129
--------------- ---------------
Costs and Expenses
Mining exploration costs 162,741 193,069
Oil and gas leases 601,946 161,518
Cost of oil and gas prospects sold 784,710 1,060,761
General and administrative 1,931,105 1,002,258
Depreciation, depletion and amortization 64,433 80,946
Interest 19,730 17,492
Impairment of acquisition costs - 148,334
--------------- -------
Total Costs and Expenses 3,564,665 2,664,378
--------------- ---------------
Net Income (Loss) before Income Taxes (1,367,296) 21,751
Tax Provision (Note 5) - -
---------------- ---------------
Net Income (Loss) $ (1,367,296) $ 21,751
=============== =================
Basic Earnings (Loss) per Common Share $ (.07) $ .00
============== =================
Diluted Earnings (Loss) per Common Share $ N/A $ .00
============== =================
Weighted Average Number of Shares Outstanding 19,293,188 18,957,278
================ ================
TRI-VALLEY CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
Capital in
Excess of Accumulated Treasury Shareholder
Shares Par Value Par Value Deficit
----------- ------------ ----------- ------------
Stock Equity
-- ------------
Balance at
December 31, 1998
19,088,248 $19,088 $8,177,655 $(6,863,272) $(41,061) $1,292,410
Issuance of common stock 193,000 193 171,307 - (4,102) 167,398
Stock issuance costs - - (4,500) - - (4,500)
Net income 21,751 21,751
---------- ------- --------- ----------- --------- ------
Balance at
December 31, 1999 19,281,248 19,281 8,344,462 (6,841,521) (45,163) 1,477,059
Issuance of common stock 273,500 274 373,376 23,250 396,900
Stock issuance costs - (51,150) - (51,150)
Net income (loss) - - (1,367,296) - (1,367,296)
---------- ------- --------- ----------- -------- -----------
Balance at
December 31, 2000
19,554,748 $19,555 $8,666,688 $(8,208,817) $(21,913) $ 455,513
=========== ======= ========== ============ ========= ==========
TRI-VALLEY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, December 31,
2000 1999
----------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 1,367,296) $ 21,751
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Depreciation, depletion, and amortization 64,433 80,946
(Gain) on sale of property (154,760) (77,434)
Non-employee stock compensation 88,650 -
Impairment, dry hole and other disposals
of property and equipment - 164,529
Changes in operating capital:
(Increase) decrease in accounts receivable (663,177) 152,389
Increase in prepaids (10,000) -
Increase in deposits and other assets (1,375) (28,992)
Increase (decrease) in trade accounts payable 189,915 (191,431)
Increase (decrease) in amounts payable to joint
venture participants and related parties 444,156 (154,390)
------------ ------------
Net Cash Used by Operating Activities (1,409,454) (32,632)
------------ --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property 154,760 80,000
Capital expenditures (293,489) (105,713)
Investment in partnerships (17,053) (1,320)
---------- ------------
Net Cash Used by Investing Activities (155,782) (27,033)
----------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in advances from
joint venture participants (5,359,863) 7,742,568
Principal payments on long-term debt (8,900) (5,134)
Proceeds from issuance of common stock 274 192
Additional paid in capital 284,726 171,307
Purchase of treasury stock - (4,102)
Sale of treasury stock 23,250 -
Proceeds from loan - 18,575
Stock issuance costs (51,150) (4,500)
-------------- --------------
Net Cash Provided (Used) by
Financing Activities (5,111,663) 7,918,906
--------------- ----------------
Net Increase (Decrease) in Cash
and Cash Equivalents (6,676,899) 7,859,241
Cash at Beginning of Year 8,050,469 191,226
----------------- -----------------
Cash at End of Year $ 1,373,570 $ 8,050,469
================ ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 19,730 $ 17,492
================== =================
Income taxes paid $ 15,756 $ 4,662
================== ==================
TRI-VALLEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------
This summary of significant accounting policies of Tri-Valley Corporation is
presented to assist in understanding the Company's financial statements. The
financial statements and notes are representations of the Company's management,
which is responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
Principles of Consolidation
-----------------------------
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, Tri-Valley Oil & Gas Co. All material intercompany
accounts and transactions have been eliminated in consolidation.
Use of Estimates in the Preparation of Financial Statements
-------------------------------------------------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities and disclosures at the date
of the financial statements as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Material estimates that are particularly susceptible to significant change
relate to the estimate of Company oil and gas reserves prepared by an
independent engineering consultant. Such estimates are subject to numerous
uncertainties inherent in the estimation of quantities of proved reserves.
Estimated reserves are used in the calculation of depletion, depreciation and
amortization as well as the Company's assessment of proved oil and gas
properties for impairment.
History and Business Activity
--------------------------------
Historically an oil and gas exploration and production company, emphasizing the
Sacramento Valley natural gas province and now very active in the south San
Joaquin Valley. In 1987, the Company added precious metals exploration. The
Company conducts its oil and gas business primarily through its wholly owned oil
and gas subsidiary, Tri-Valley Oil & Gas Company ("TVOG"). TVOG is engaged in
the exploration, acquisition and production of oil and gas properties . At
present, the precious metals exploration activities are conducted directly by
the parent, Tri-Valley Corporation ("TVC"). TVC has traditionally sought
acquisition or merger opportunities within and outside of petroleum and mineral
industries.
Cash Equivalent and Short-Term Investments
----------------------------------------------
Cash equivalents include cash on hand and on deposit, and highly liquid debt
instruments with original maturities of three months or less.
Goodwill
--------
The consolidated financial statements include the net assets purchased of
Tri-Valley Corporation's wholly owned oil and gas subsidiary, TVOG. Net assets
are carried at their fair market value at the acquisition date. The excess of
acquisition costs over the fair value of assets acquired is included in and has
been allocated to goodwill. Goodwill of $433,853 is being amortized on a
straight-line basis over 40 years. The carrying amount of goodwill is evaluated
periodically. Factors used in the evaluation include the Company's ability to
raise capital as a public company and anticipated cash flows from operating and
non-operating mineral properties. Tri-Valley Corporation has not established an
allowance for the impairment of goodwill which may be realized should the
Company be acquired or merged with another organization.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
----------------------------------------------
Acquisition Costs
------------------
In prior years, the Company capitalized costs as a part of a potential
acquisition of 26 wireless communication licenses held by five partnerships. As
discussed in Note 9, the licenses and equipment, which the Company may
eventually acquire, are included in a security agreement as collateral between
the debtor and the Company. During 1999, $148,334 of previously capitalized
acquisition costs were considered impaired.
Drilling Agreements/Joint Ventures
------------------------------------
Tri-Valley frequently participates in drilling agreements whereby it acts as
operator of drilling and producing activities. As operator, TVOG is
contingently liable for the activities of these ventures. The Company owns a
carried interest and/or overriding royalty interest in such ventures, earning a
working interest at payout.
Receivables from and amounts payable to these related parties (as well as other
related parties) have been segregated in the accompanying financial statements.
In the event the Company has expended funds for a project in an amount greater
than the original contribution from investors, the Company cash-calls the
participants for additional funds. Excess project funding is held until it is
determined that no further requirement exists for abandonment or plugging back
of project wells, at which time the funds are refunded. In 2000, the Company
expensed $490,861 worth of joint venture project costs attributed to a dry hole
project.
Sale of Oil and Gas Prospects
----------------------------------
The Company sells the rights to oil and gas prospects to the joint ventures
created for drilling and exploration activities. These amounts represent the
Company's costs of leasing and acquiring the prospects, and other geological and
geophysical costs (hereafter referred to as "GGLA") plus a profit to the
Company. The Company recognizes gain on the sale of prospect GGLA at the point
when the joint venture is fully funded, as the portion of the project cost
attributed to GGLA is nonrefundable upon completion of project funding.
Oil and Gas Property and Equipment (Successful Efforts)
--------------------------------------------------------------
The Company accounts for its oil and gas exploration and development costs on
the successful efforts method. Under this method, costs to acquire mineral
interests in oil and gas properties, to drill and complete exploratory wells
that find proved reserves and to drill and complete development wells are
capitalized. Exploratory dry-hole costs, geological and geophysical costs and
costs of carrying and retaining unproved properties are expensed when incurred,
except those GGLA expenditures incurred on behalf of joint venture drilling
projects, which the Company defers until the GGLA is sold at the completion of
project funding. Depletion, depreciation and amortization of oil and gas
producing properties are computed on an aggregate basis using the
units-of-production method.
The Financial Accounting Standards Board (FASB), Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and/or Long-Lived Assets to be Disposed of," requires that
long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. It establishes guidelines for determining recoverability based on
future net cash flows from the use of the asset and for the measurement of the
impairment loss. Impairment loss under SFAS No. 121 is calculated as the
difference between the carrying amount of the asset and its fair value. Any
impairment loss is recorded in the current period in which the recognition
criteria are first applied and met. Under the successful efforts method of
accounting for oil and gas operations, the Company periodically assesses its
proved properties for impairments by comparing the aggregate net book carrying
amount of all proved properties with their aggregate future net cash flows. The
statement requires that the impairment review be performed on the lowest level
of asset groupings for which there are identifiable cash flows. In the case of
the Company, this results in a field by field impairment review.
Upon the sale of oil and gas reserves in place, costs less accumulated
amortization of such property are removed from the accounts and resulting gain
or loss on sale is reflected in operations. Upon abandonment of properties, the
reserves are deemed fully depleted and any unamortized costs are recorded in the
statement of operations under leases sold, relinquished and impaired.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
----------------------------------------------
Gold Mineral Property
-----------------------
The Company has invested in several gold mineral properties with economic
development potential. All mineral claim acquisition costs and exploration and
development expenditures are charged to expense as incurred. The Securities and
Exchange Commission permits capitalization of acquisition, exploration and
development costs only after persuasive engineering evidence is obtained to
support recoverability of these costs (ideally upon determination of proven
and/or probable reserves based upon dense drilling samples and feasibility
studies by a recognized independent engineer). Although the Company has
performed drilling samples, and an independent engineer has deemed the gold
properties contain profitable reserves, management has chosen to follow the more
conservative method of accounting by expensing gold mineral costs in the period
the expense is incurred.
Properties and Equipment
--------------------------
Properties and equipment are depreciated using the straight-line method over the
following estimated useful lives:
Office furniture and fixtures 3 - 7 years
Building 40 years
Leasehold improvements are amortized over the life of the lease.
Maintenance and repairs, which neither materially add to the value of the
property nor appreciably prolong its life, are charged to expense as incurred.
Gains or losses on dispositions of property and equipment other than oil and gas
are reflected in operations.
Concentration of Credit Risk and Fair Value of Financial Instruments
-----------------------------------------------------------------------------
As discussed in Note 6, the Company sells oil, gas and natural gas liquids to
primarily one purchaser located in the northern California region.
The Company places its temporary cash investments with high credit quality
financial institutions and limits the amount of credit exposure to any one
financial institution.
Fair value of financial instruments are estimated to approximate the related
book value, unless otherwise indicated, based on market information available to
the Company. The fair value of the Company's note receivable is estimated based
on the discounted value of the future cash flows expected to be received, and
considers the length of time the note has been in default. The present value is
estimated to be $94,000 at December 31, 2000.
Earnings (Loss) Per Share (SFAS 128)
-----------------------------------------
Financial Accounting Standards Board (FASB), Statement of Financial Accounting
Standards No. 128 (SFAS 128), "Earnings Per Share", was adopted by the Company
for the year ended December 31, 1997. SFAS 128 replaces the presentation of
primary earnings per share with a presentation of basic earnings per share based
upon the weighted average number of common shares for the period. It also
requires dual presentation of basic and diluted earnings per share for companies
with complex structures.
Reclassification
----------------
Certain amounts in the financial statements have been reclassified to be
consistent and comparable from year-to-year.
Accounting Pronouncements
--------------------------
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 which summarizes certain of the staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. The Company does not anticipate a material impact on its financial
position or results of operations.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
----------------------------------------------
In April 2000, the FASB issued Financial Interpretation Number (FIN) 44,
Accounting for Certain Transactions Involving Stock Compensation--an
Interpretation of Accounting Principles Board No. 25. FIN 44 clarifies the
application of Opinion No. 25. This Interpretation was effective immediately and
all issues are to be handled prospectively. The adoption of FIN 44 did not have
a material impact on the Company's financial position or results of operations.
NOTE 2 - PROPERTY AND EQUIPMENT
------------------------
Oil and gas properties, and equipment and fixtures consist of the following:
December 31, December 31,
2000 1999
----------- ------------
Oil and Gas - California
----------------------------
Proved properties, net of accumulated
depletion of $525,916 and $496,282 at
December 31, 2000 and 1999, respectively $ 226,790 $ 200,104
Unproved properties 990,089 762,521
------------ ------------
Total Oil and Gas Properties 1,216,879 962,625
------------ -----------
Other Property and Equipment
-------------------------------
Land 11,281 11,281
Building, net of accumulated depreciation
$9,495 and $8,367 at December 31, 2000
and 1999, respectively 35,629 36,758
Office equipment, vehicle, and leasehold
improvements net of accumulated depreciation
of $142,348 and $125,427 at
December 31, 2000 and 1999, respectively 42,900 49,091
----------- -------------
Total Other Property and Equipment 89,810 97,130
------------ -------------
Property and Equipment (Net) $ 1,306,689 $ 1,059,755
============== ==============
NOTE 3 - NOTES PAYABLE
--------------
December 31, December 31,
2000 1999
----------- ------------
Note payable to National Bank of Alaska
dated August 27, 1992; secured by property;
payable in monthly installments of $539
including interest. Interest rate at 12.00%,
December 31, 2000, and December 31, 1999. $ 2,706 $ 8,460
Note payable to Imperial Premium Finance, Inc.,
dated June 9, 1997; secured by contractual
policy; interest at 12.00%; payable in monthly
installments of $680 including interest. 4,574 4,574
Note payable to Union Bank, dated January 15, 2000;
secured by a vehicle; interest at 8.5%;
payable in 60 monthly installments of $380. 15,430 18,575
------ ------------
22,710 31,609
Less current portion 10,672 10,554
------------- ------------
Long-Term Portion of Notes Payable $ 12,038 $ 21,055
============ ============
NOTE 3 - NOTES PAYABLE (Continued)
--------------
Maturities of long-term debt for the years subsequent to December 31, 2000 are
as follows:
Year Ended
December 31,
---------------
2001 $ 10,672
2002 3,691
2003 4,017
2004 4,330
------------------
$ 22,710
================
NOTE 4 - RELATED PARTY TRANSACTIONS
----------------------------
Employee Stock Options
------------------------
The Company has a qualified and a nonqualified stock option plan which provide
for the granting of options to key employees, consultants, and nonemployee
directors of the Company. The option price, number of shares and grant date are
determined at the discretion of the Company's board of directors. Options
granted under the plans are exercisable immediately, however, the plan expires
in August 2008.
The Company has elected to account for the stock option plans under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued for Employees,"
and related interpretations. Accordingly, no compensation expense has been
recognized for the stock option plans.
The fair value of each option grant is estimated on the date of granting using
the Black-Scholes American option-pricing model with the following
weighted-average assumptions used for grants in 2000 and 1999, respectively.
Expected volatility of 89.28 and 89.97 percent for 2000 and 84.02 and 82.05 for
1999 and risk-free interest rates of 5.25 and 7.25 percent, respectively.
A summary of the status of the Company's fixed stock option plan as of December
31, 2000 and 1999, and changes during the years ending on those dates is
presented below:
2000 1999
------------------------ -------------------------------
Weighted-Average Weighted-Average
Shares Exercise Price Shares Exercise Price
-------- --------------- -------- ---------------
Fixed Options
Outstanding at
beginning of year 1,248,000 $0.77 666,000 $0.71
Granted 1,410,000 $1.57 600,000 $0.63
Exercised (14,000) $0.50 (18,000) $0.50
Cancelled - -
Outstanding at
end of year 2,644,000 $1.20 1,248,000 $0.77
Options exercisable
at year-end 2,644,000 1,248,000
Weighted-average fair
value of options granted
during the year $ 1.30 $ 0.53
NOTE 4 - RELATED PARTY TRANSACTIONS (Continued)
----------------------------
The following table summarizes information about fixed stock options outstanding
at December 31, 2000:
Options Outstanding and Exercisable
Weighted-Average
Number Outstanding Remaining Weighted-Average
------------------ --------- ----------------
Range of Exercise Prices at December 31, 2000 Contractual Life Exercise Price
------------------------ -------------------- --------------- --------------
$.50 - $2.43 2,644,000 7.65 $ 1.20
A summary of option transactions during the years ended December 31, 2000 and
1999 is presented below:
Number Weighted-Average
of Shares Exercise Price
------------- -----------------
Outstanding at December 31, 1998 666,000 $ 0.71
Issued 600,000 0.63
Exercised (18,000) 0.50
--------- -----
Outstanding at December 31, 1999 1,248,000 0.77
Issued 1,410,000 1.57
Exercised (14,000) 0.50
--------- -----
Outstanding at December 31, 2000 2,644,000 1.20
========== =====
Exercisable at December 31, 2000 2,644,000 1.20
========== =====
Available for Issuance at December 31, 2000 995,000
==========
Beneficial Owners
------------------
The following is known to the Company to be the only beneficial owner of 5% or
more of the Company's outstanding common stock at December 31, 2000:
Ownership Shares Percentage
---------------- ----------
Dennis Vaughan 1,009,200 5.2%
Partnerships
------------
Tri-Valley is a general partner and operator of the Tri-Valley Oil & Gas
Exploration Programs 1971-1 and Martins-Severin Partnerships. Income derived
from these activities follows:
December 31, December 31,
2000 1999
------------ ------------
Partnership income, net of expenses $ 140,833 $ 73,463
=========== ============
Issuance of Stock
-------------------
In April of 2000, the Company issued 5,000 shares to the President and CEO of
TVC and 10,000 shares to each of the four Board of Directors in lieu of cash
payments for services rendered to the Company. These transactions have been
recorded at the fair value of the Company's stock at the date of the award,
which amount to $88,650.
NOTE 5 - INCOME TAXES
-------------
At December 31, 2000, the Company had available net operating loss carry
forwards for financial statements and federal income tax purposes of
approximately $2,100,000. These loss carry forwards expire between 2001 and
2014.
The components of the net deferred tax assets were as follows:
December 31, December 31,
2000 1999
----------- ------------
Deferred Tax Assets:
Net operating loss carry forwards $ 802,644 $ 1,160,000
Statutory depletion carry forwards 259,233 215,000
------------ ------------
Total Deferred Tax Assets 1,061,877 1,375,000
Valuation Allowance (1,061,877) (1,375,000)
---------------- ----------------
Net Deferred Tax Assets $ - $ -
============ ============
A full valuation allowance has been established for the deferred tax assets
generated by net operating loss and statutory depletion carry forwards due to
the uncertainty of future utilization.
NOTE 6 - MAJOR CUSTOMERS
----------------
Oil and Gas
-------------
The Company received in excess of 10% of its oil and gas revenue from various
sources as follows:
A Other
------------------- ------------------
Period Ended:
December 31, 1999 $ 491,573 $ 31,018
December 31, 2000 $ 994,553 $ 50,460
All oil and gas sales have occurred in the northern California gas market.
NOTE 7 - FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS
--------------------------------------------------------
The Company adopted SFAS No. 131, Disclosure About Segments of an Enterprise and
Related Information in 1998 which changes the way the Company reports
information about its operating segments.
The Company identifies reportable segments by product and country, although the
Company currently does not have foreign country segments. The Company includes
revenues from both external customers and revenues from transactions with other
operating segments in its measure of segment profit or loss. The Company also
includes interest revenue and expense, DD&A, and other operating expenses in its
measure of segment profit or loss.
The accounting policies of the reportable segments are the same as those
described in the Summary of Significant Accounting Principles (see Note 1).
The Company's operations are classified into two principal industry segments.
Following is a summary of segmented information for 2000 and 1999:
NOTE 7 - FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS (Continued)
--------------------------------------------------------
Oil and Gas Precious Metals Total
------------ --------------- -----
YEAR ENDED DECEMBER 31, 2000
Revenues from External Customers $ 1,045,013 $ - $ 1,045,013
Interest Revenue $ 99,234 $ - $ 99,234
Interest Expense $ 19,730 $ - $ 19,730
Expenditures for Segment Assets $ 293,489 $ - $ 293,489
Depreciation, Depletion,
and Amortization $ 64,433 $ - $ 64,433
Total Assets $ 4,117,119 $ - $ 4,117,119
Net Loss $ (1,204,555) $ (162,741) $ (1,367,296)
YEAR ENDED DECEMBER 31, 1999
Revenues from External Customers $ 522,591 $ - $ 522,591
Interest Revenue $ 32,353 $ - $ 32,353
Interest Expense $ 17,492 $ - $ 17,492
Expenditures for Segment Assets $ 105,713 $ - $ 105,713
Depreciation, Depletion,
and Amortization $ 80,946 $ - $ 80,946
Total Assets $ 9,873,358 $ - $ 9,873,358
Net Income (Loss) $ 214,820 $ (193,069) $ 21,751
NOTE 8 - COMMON STOCK
-------------
During 2000 the Company issued 194,500 shares of unregistered, restricted common
stock in private placement transactions, 45,000 shares to officers and
directors, 14,000 issued to employees exercising options, and reissued 15,500
shares of treasury stock.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
-------------------------------
Litigation
----------
During the year ended 1997, the Company filed an action in Contra Costa Superior
Court against an unrelated Corporation (defendant) for breach of contract,
declaratory relief, breach of confidence, deceit, negligent misrepresentation,
interference with prospective economic advantage, unfair competition, and
constructive trust. The matter proceeded to trial on January 19, 1999, and
resulted in a judgement for defendants. The judgement was entered in favor of
defendants on July 26, 1999. Thereafter, defendants filed a motion for their
attorney fees pursuant to California Civil Code. On December 21, 1999, the Court
issued an order awarding attorneys' fees to defendants. On January 19, 2000, the
Company filed its appeal of the order. In November 2000, the matter was settled
and the Company paid $600,000, which is included in general and administrative
expenses as reported in results of operations for the year ended December 31,
2000.
NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)
-------------------------------
On May 7, 1998, the Company executed a note receivable with 3rd Mobile in the
amount of $125,000, and a Security Agreement dated May 9, 1997 which secured the
note. The Security Agreement indicates that the Company holds a security
interest in all assets and personal property of 3rd Mobile including, but not
limited to, all accounts receivable, office equipment, automobiles,
communications towers and business facilities and equipment, customer lists, FCC
licenses (known and unknown), pending customer orders, and work product in
progress, together with the proceeds thereof (the Collateral). The Collateral
secures the amounts due under the $125,000 note, including interest, in addition
to all costs and fees, including attorneys' fees, in regard to enforcement
against the Collateral. During 1998, the note receivable went into default. An
action was filed by the Company against 3rd Mobile on June 23, 1999 in the New
York Supreme Court, Onondaga County to foreclose on the Collateral. Subsequent
to June 23, 1999, the Company learned that the Collateral was included as listed
assets of Central New York Mobile Systems, L.C., whom had filed Chapter 11
bankruptcy in Sacramento, California. The Company believes that it properly and
legally secured its interest in the Collateral and is awaiting the results of
disposition from the bankruptcy court.
Mining Activities
------------------
On March 22, 1999, the Company and Placer Dome U.S., Inc. (PDUS), executed a
definitive agreement for PDUS to explore, develop and mine approximately 36
square miles of the Company's then 61.5-square mile claim block at Richardson,
Alaska. Terms of the agreement called for PDUS to expend a minimum of $6.5
million in work on the property and partially reimburse the Company for some of
its previous exploration, all within five years, in order for PDUS to earn 51%
interest in the property. The Company received payments from PDUS totaling $0
and $225,000 during 2000 and 1999, respectively, which has been recorded as
other revenue. After spending $750,000, PDUS terminated this agreement on
September 18, 2000, and the 36 square miles has reverted back to the Company.
Kennecott Exploration has signed a confidentiality/non-compete agreement on
Tri-Valley's entire claim block plus another 50 square miles surrounding.
Contingencies
-------------
The Company is subject to possible loss contingencies pursuant to federal, state
and local environmental laws and regulations. These include existing and
potential obligations to investigate the effects of the release of certain
hydro-carbons or other substances at various sites; to remediate or restore
these sites; and to compensate others for damages and to make other payments as
required by law or regulation. These obligations relate to sites owned by the
Company or others, and are associated with past and present oil and gas
operations. The amount of such obligations is indeterminate and will depend on
such factors as the unknown nature and extent of contamination, the unknown
timing, extent and method of remedial actions which may be required, the
determination of the Company's liability in proportion to other responsible
parties, and the state of the law.
Leases
------
The Company leases its office space on a month to month basis.
------
TRI-VALLEY CORPORATION
SUPPLEMENTAL INFORMATION ABOUT OIL AND GAS PRODUCING
ACTIVITIES (UNAUDITED)
The following estimates of proved oil and gas reserves, both developed and
undeveloped, represent interests owned by the Company located solely in the
United States. Proved reserves represent estimated quantities of crude oil and
natural gas which geological and engineering data demonstrate to be reasonably
certain to be recoverable in the future from known reservoirs under existing
economic and operating conditions. Proved developed oil and gas reserves are
reserves that can be expected to be recovered through existing wells, with
existing equipment and operating methods. Proved undeveloped oil and gas
reserves are reserves that are expected to be recovered from new wells on
undrilled acreage, or from existing wells for which relatively major
expenditures are required for completion.
Disclosures of oil and gas reserves which follow are based on estimates prepared
by independent engineering consultants for the year ended December 31, 2000 and
1999. Such analyses are subject to numerous uncertainties inherent in the
estimation of quantities of proved reserves and in the projection of future
rates of production and the timing of development expenditures. These estimates
do not include probable or possible reserves.
These estimates are furnished and calculated in accordance with requirements of
the Financial Accounting Standards Board and the Securities and Exchange
Commission ("SEC"). Because of unpredictable variances in expenses and capital
forecasts, crude oil and natural gas price changes, largely influenced and
controlled by U.S. and foreign government actions, and the fact that the basis
for such estimates vary significantly, management believes the usefulness of
these projections is limited. Estimates of future net cash flows presented do
not represent management's assessment of future profitability or future cash
flows to the Company. Management's investment and operating decisions are based
upon reserve estimates that include proved reserves prescribed by the SEC as
well as probable reserves, and upon different price and cost assumptions from
those used here.
It should be recognized that applying current costs and prices and a 10 percent
standard discount rate does not convey absolute value. The discounted amounts
arrived at are only one measure of the value of proved reserves.
Capitalized costs relating to oil and gas producing activities and related
accumulated depletion, depreciation and amortization were as follows:
December 31, December 31,
2000 1999
----------- ------------
Aggregate capitalized costs:
Proved properties $ 752,706 $ 696,386
Unproved properties 990,089 762,521
Accumulated depletion, depreciation
and amortization (525,916) (496,282)
Net Capitalized Assets $ 1,216,879 $ 962,625
=============== =================
The following sets forth costs incurred for oil and gas property acquisition,
exploration and development activities, whether capitalized or expensed, during:
December 31, December 31,
2000 1999
----------- ------------
Acquisition of producing properties and productive and
non-productive acreage 56,320 $ 80,398
================= ==================
Exploration costs $ 227,568 $ -
================ =======================
Results of operations from oil and gas producing activities
-------------------------------------------------------------------
The results of operations from oil and gas producing activities are as follows:
December 31, December 31,
2000 1999
----------- ------------
Sales to unaffiliated parties $ 1,045,013 $ 521,271
Production costs (601,946) (161,518)
Depletion, depreciation and amortization (29,634) (51,596)
413,433 308,157
Pro forma statutory income tax expense (144,489) (103,431)
Results of operations from activities
before extraordinary items (excluding
blending operations, corporate overhead
and interest costs) $ 268,944 $ 204,726
================= =================
Changes in estimated reserve quantities
-------------------------------------------
The net interest in estimated quantities of proved developed and undeveloped
reserves of crude oil and natural gas at December 31, 2000 and 1999, and changes
in such quantities during each of the years then ended, were as follows:
December 31, 2000 December 31, 1999
-------------------- ----------------------
Oil Gas Oil Gas
(BBL) (MCF) (BBL) (MCF)
-------- --------- ------- ---------
Proved developed and undeveloped reserves:
Beginning of year 185 1,540,004 234 1,434,499
Revisions of previous estimates extensions,
discoveries and other additions 164 551,679 70 315,838
Production (50) (249,011) (119) (210,333)
--- -------- -------- ---------
End of year 299 1,842,672 185 1,540,004
=== ========= === =========
Proved developed reserves:
Beginning of year 185 1,540,004 234 1,434,499
=== ========= === =========
End of year 299 1,842,672 185 1,540,004
=== ========= === =========
Standardized measure of discounted future net cash flows relating to proved oil
--------------------------------------------------------------------------------
and gas reserves
------------------
A standardized measure of discounted future net cash flows is presented below
for the year ended December 31, 2000 and 1999.
The future net cash inflows are developed as follows:
(1)Estimates are made of quantities of proved reserves and the future
periods during which they are expected to be produced based on year-end economic
conditions.
(2) The estimated future production of proved reserves is priced on the
basis of year-end prices.
(3) The resulting future gross revenue streams are reduced by estimated
future costs to develop and to produce proved reserves, based on year end cost
estimates.
(4) The resulting future net revenue streams are reduced to present
value amounts by applying a ten percent discount.
Disclosure of principal components of the standardized measure of discounted
future net cash flows provides information concerning the factors involved in
making the calculation. In addition, the disclosure of both undiscounted and
discounted net cash flows provides a measure of comparing proved oil and gas
reserves both with and without an estimate of production timing. The
standardized measure of discounted future net cash flows relating to proved
reserves reflects income taxes.
December 31, December 31,
2000 1999
------------------- -------------------
Future cash in flows $ 25,127,878 $ 3,265,995
Future production and development costs (1,975,633) (875,081)
Future income tax expenses (7,951,963) (122,128)
--------------- ----------------
Future net cash flows 15,200,282 2,268,786
10% annual discount for estimated
timing of cash flows 6,716,556 1,051,537
------------- ----------------
Standardized measure of discounted
future net cash flow $ 8,483,726 $ 1,217,249
=============== ===============
Changes in standardized measure of discounted future net cash flow from proved
--------------------------------------------------------------------------------
reserve quantities
-------------------
This statement discloses the sources of changes in the standardized measure from
year to year. The amount reported as "Net changes in prices and production
costs" represents the present value of changes in prices and production costs
multiplied by estimates of proved reserves as of the beginning of the year. The
"accretion of discount" was computed by multiplying the ten percent discount
factor by the standardized measure as of the beginning of the year. The "Sales
of oil and gas produced, net of production costs" is expressed in actual dollar
amounts. "Revisions of previous quantity estimates" is expressed at year-end
prices. The "Net change in income taxes" is computed as the change in present
value of future income taxes.
December 31, December 31,
2000 1999
-------------------- --------------------
Standardized measure - beginning of period $ 1,217,249 $ 1,178,295
-------------- --------------
Sales of oil and gas produced,
net of production costs (443,067) (260,215)
Revisions of estimates of reserves
provided in prior years:
Net changes in prices and production costs 10,411,028 40,691
Revisions of previous quantity estimates 3,186,723 354,958
Extensions and discoveries 694,792 -
Purchases of minerals in place 842,668 -
Accretion of discount 1,306,674 221,930
Changes in production rates (timing) and other (902,506) (381,372)
Net change in income taxes (7,829,835) 62,962
--------------- ------------------
Net increase 7,266,477 38,954
---------------- ------------------
Standardized measure - end of period $ 8,483,726 $ 1,217,249
=============== ===============
------
PART III
--------
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------------
The following information is furnished with respect to each director and
executive officer:
Year First
Became Director or Position With
Name of Director Age Executive Officer Company
F. Lynn Blystone 65 1974 President, CEO, Director,TVC
CEO and Director, TVOG
President, CEO, Director, TVPC
Dennis P. Lockhart(1) 54 1982 Director
Milton J. Carlson(1) 70 1985 Director
Earl H. Biestline 84 1992 Director
Loren J. Miller(1) 56 1992 Director
C. Chase Hoffman 78 2000 Director
Thomas J. Cunningham 58 1997 Treasurer, Chief Financial Officer
and Secretary, TVC, TVOG, and TVPC
Joseph R. Kandle 58 1999 President, TVOG
(1)- Member of Audit Committee
F. LYNN BLYSTONE - 65 President and Chief Executive Officer of 1974
Tri-Valley Corporation and Tri-Valley Power
Corporation, and CEO of Tri-Valley Oil & Gas
Company, which are two wholly owned
subsidiaries of Tri-Valley Corporation,
Bakersfield, California
Mr. Blystone became president of Tri-Valley Corporation in October, 1981, and
was nominally vice president from July to October, 1981. His background
includes institution management, venture capital and various management
functions for a mainline pipeline contractor including the Trans Alaska
Pipe-line Project. He has founded, run and sold companies in several fields
including Learjet charter, commercial construction, municipal finance and land
development. He is also president of a family corporation, Bandera Land
Company, Inc., with real estate interests in Kern, Riverside and Orange Counties
California. A graduate of Whittler College, California, he did graduate work at
George Williams College, Illinois in organization management. He gives full
time to Tri-Valley.
DENNIS P. LOCKHART - 54 President 1982
Heller International Group, Inc.
Chicago, Illinois
Mr. Lockhart is a senior officer and Director of Heller Financial Inc. and
President of Heller's international subsidiary which operates in 18 countries.
Heller Financial is a NYSE company active in various lines of commercial
finance. He has been President of Heller International Group since 1988. Prior
to 1988, Mr. Lockhart was an officer of Citicorp/Citibank and held a number of
corporate banking and management positions in the U.S. and overseas. He is a
graduate of Stanford University and The John Hopkins University School of
Advanced International Studies. He also attended the Senior Executive Program
at the Sloan School of Management, Massachusetts Institute of Technology.
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------------
MILTON J. CARLSON - 70 Investor, Kalispell, Montana 1985
Mr. Carlson is a principal in Earthsong Corporation which, in part, consults on
environmental matters and performs environmental audits for government agencies
and public and private concerns. Until its merger with another firm, Mr.
Carlson formerly was vice president and corporate secretary of Union Sugar
Company, a $100 million unit of Sara Lee Corporation. He was involved in
representing industrial end users of energy tthrough the California
Manufacturers Association as the former chairman of the CMA steering committee
of the standing energy and environmental committees. Mr. Carlson was also the
energy and environmental representative with Sara Lee energy advisory group and
monitored related matters before the California Public Utilities Commission and
Energy Commission as well as serving as the legislative representative in
Sacramento and Washington, D.C. Mr. Carlson attended the University of Colorado
at Boulder and the University of Denver.
LOREN J. MILLER, CPA - 56 Treasurer, The Jankovich Company 1992
San Pedro, California
Mr. Miller has served in a treasury and chief financial officer capacity as Vice
president successively of Hershey Oil Corporation and Mock Resources, Inc.
Prior to that he was vice president and general manager of Tosco Production
Finance Corporation and formerly a senior auditor with Touche Ross & Co. He is
experienced in exploration, production, product trading, refining and
distribution as well as corporate finance. He holds a B.S. in accounting and a
M.B.A. in finance from the University of Southern California.
EARL H. BEISTLINE, LLD. - 84 Mining Consultant 1992
Fairbanks, Alaska
Dr. Beistline is a past chairman of the Alaska State Minerals Commission and
Dean Emeritus of the School of Mineral Industry of the University of Alaska.
Born in Juneau, he has achieved a special position in Alaska during its
transition from territorial status into statehood. He has numerous honors from
local, state and federal governments, academia, professional and civic
organizations and the mineral industry. An active miner in the Central-Circle
Mining District, Dr. Beistline also serves as a director of one of the state's
primary companies, Usibelli Coal Mines, Inc. He holds a Bachelor of Mining
Engineering, Engineer of Mines and Honorary Doctor of Law degree from the
University of Alaska.
C. CHASE HOFFMAN - 78 Owner, Hoffman Farms 2000
Tulare, California
Mr. Hoffman has owned and operated a milk cow dairy since 1965. He was a Senior
Vice President and General Manager for Knudsen for the State of California. He
has been a land and housing developer in California and Hawaii. Mr. Hoffman
also sits as a director for these other companies, Seine River Resources,
Vancouver, British Columbia, with California gold operations and Guatemala oil
properties, and Power House Corporation, a British Columbia, Canada,
hydroelectric project
THOMAS J. CUNNINGHAM - 58 Secretary, Treasurer and Chief Financial 1997
Officer of Tri-Valley Corporation, and its
wholly owned subsidiaries, Tri-Valley Oil &
Gas Company and Tri-Valley Power
Corporation, Bakersfield, California
Named as Tri-Valley Corporation's Treasurer and Chief Financial Officer in
February 1997, and as Corporate Secretary on December 21, 1998. Mr. Cunningham
has over 25 years experience in corporate finance, Securities and Exchange
Commission public company reporting, shareholder relations, and employee
benefits. In his career he served as Staff Accountant for Forest Oil,
Supervisor for Tesoro Petroleum, Controller for Tucker Drilling, Inc., and as
Executive Vice President, Chief Financial Officer and Director for Star
Resources, Inc. Most recently he was a Management Consultant in finance,
marketing and human resource matters including employee benefit planning. He
received his education in accounting and business administration from Angelo
State University, Texas.
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------------
JOSEPH R. KANDLE - 58 President and Chief Operating Officer 1998
Tri-Valley Oil & Gas Company, wholly
owned subsidiary of Tri-Valley Corporation
Bakersfield, California
Mr. Kandle was named as President of Tri-Valley Oil & Gas Co. February 1, 1999
after having joined Tri-Valley Oil & Gas on June 1, 1998, as Vice President -
Engineering. Mr. Kandle is a 1965 graduate of the Montana school of mines with
a B.S. degree in Petroleum Engineering. Mr. Kandle has 34 years of experience in
drilling, production, and operations starting with Mobil in 1965 where he
specialized in deep drilling. After Mobil, he has held positions of V.P. &
Chief Engineer of Great Basins Petroleum, V.P. - Engineering with Star Resources
and V.P.- Engineering with Atlantic Oil Company.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 and Securities and Exchange
Commission regulations require that the Company's directors, certain officers,
and greater than 10 percent shareholders must file reports of ownership and
changes in ownership with the SEC and must furnish the Company with copies of
all such reports they file. Based solely on the information furnished to the
Company, we believe that no person failed to file required Section 16(a) reports
on a timely basis during or in respect of 2000.
ITEM 10. EXECUTIVE COMPENSATION
----------------------------------
The following table summarizes the compensation of the chairman of the board and
the president of the Company and its subsidiaries, F. Lynn Blystone (the "Named
Officer"), for the fiscal year ended December 31, 2000, 1999, and 1998.
Long Term
Compensation
Annual Compensation Awards
(a) (b) ( c ) (d) (e)
Other Securities
Name Period Covered Salary Compensation Underlying Options
F. Lynn FYE 12/31/00 $ 95,870 $9,850(2)
Blystone, CEO FYE 12/31/99 $ 95,712
FYE 12/31/98 $156,000(1)
(1) Includes salary that was deferred when Mr. Blystone took a reduced
salary in 1996.
(2) Includes value of common shares awarded pursuant to Mr. Blystone's
employment contract.
Aggregated 2000 Option Exercises and Year-End Values
The following table summarizes the number and value of all unexercised stock
options held by the Named Officer and the Directors at the end of 2000.
ITEM 10. EXECUTIVE COMPENSATION
----------------------------------
( A ) ( B ) ( C )
Number of Securities Value of Unexercised In-
Underlying Unexercised The-Money Options/SARs at
Options/SARs at FY-End (#) FY-End ($)*
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
F. Lynn Blystone 595,000/0 0/0
Dennis P. Lockhart 220,000/0 0/0
Milton J. Carlson 218,000/0 0/0
Loren J. Miller 220,000/0 0/0
Earl H. Beistline 198,000/0 0/0
C. Chase Hoffman 150,000/0 0/0
*Based on a fair market value of $1.47 per share, which was the closing bid
price of the Company's Common Stock in the NASD National Market System on
December 31, 2000.
Compensation of Directors
---------------------------
The Company compensates non-employee directors for their service on the board of
directors. On 4/3/00, four non-employee directors were issued 10,000 shares of
common stock valued at fair market value of $1.97. These shares were awarded at
the 1999 Annual Meeting and Mr Hoffman was not a director at that time. On
9/16/00, each non-employee director received 50,000 stock options with an
exercise price of $2.43 per option. On 11/10/00, each non-employee director
received 100,000 stock options with an exercise price of $1.22 per option. The
following tables sets forth information regarding the cash compensation paid to
outside directors in 2000.
(A) (B)
NAME FEES
---- ----
Earl Beistline $2,650
Milton Carlson $2,650
Dennis P. Lockhart $1,800
Loren J. Miller $2,650
C. Chase Hoffman $850
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------------------------
As of December 31, 2000, there were 19,554,748 shares of the Company's common
stock outstanding. The following persons were known by the Company to be the
beneficial owners of more than 5% of such outstanding common stock:
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------------------------
Number of Percent of
Name and Address Shares Total
F. Lynn Blystone
P.O. Box 1105
Bakersfield, CA 93302 1,024,264(1) 5.1%
Dennis Vaughan
2298 Featherhill Road
Santa Barbara, CA 93108 1,009,200(1) 5.2%
(1) Includes 595,000 shares of stock Mr. Blystone has the right to acquire
upon the exercise of options within 60 days after December 31, 2000, and 30,200
shares held in the name of Bandera Land Company, Inc., a family corporation of
which Mr. Blystone is the president.
The following table sets forth the beneficial ownership of the Company's common
stock as of December 31, 2000 by each director, by each of the executive
officers named in Item 11, and by the executive officer named in Item 10 and
directors as a group:
Number of Percent of
Directors Shares(1) Total(2)
F. Lynn Blystone 1,024,264(3) 5.1%
Dennis P. Lockhart 282,091(3) 1.4%
Milton J. Carlson 289,000(3) 1.4%
Loren J. Miller 255,300(3) 1.3%
Earl H. Beistline 248,000(3) 1.3%
C. Chase Hoffman 197,500(3) 1.0%
Total group (all directors and
Executive officers 6 persons) 2,295,955(3) 10.9%
(1) Includes shares which the listed shareholder has the right to acquire,
from options, within 60 days after Decmeber 31, 2000, as follows: Dennis P.
Lockhart 220,000; Milton J. Carlson 218,000; Loren J. Miller 220,000 and Earl H.
Beistline198,000. F. Lynn Blystone has 595,000.
(2) Based on total outstanding shares of 19,554,748 as of December 31, 2000.
The persons named herein have sole voting and investment power with respect to
all shares of common stock shown as beneficially owned by them, subject to
community property laws where applicable.
(3) Includes 30,200 shares held in the name of Bandera Land Company, Inc., a
family corporation of which Mr. Blystone is the president.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------------
None.
ITEM 13. EXHIBITS, LISTS, AND REPORTS ON FORM 8-K
---------------------------------------------------------
(a) Exhibits.
Exhibit
Number Description of Exhibit Page
3.1 Amended and Restated Certificate of Incorporation
21.1 Financial Data Schedule
(b) Reports on Form 8-K
- None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
March 23, 2001 By:_/s/ F. Lynn Blystone____________________
F. Lynn Blystone
President, Chief Executive Officer and
Director
March 23, 2001 By:__/s/ Thomas J. Cunningham________________
Thomas J. Cunningham
Secretary, Treasurer, and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates included:
March 23, 2001 By:__/s/ Dennis P. Lockhart__________________
Dennis P. Lockhart, Director
March 23, 2001 By:__/s/ Milton J. Carlson___________________
Milton J. Carlson, Director
March 23, 2001 By:__/s/ Earl H. Beistline___________________
Earl H. Beistline, Director
March 23, 2001 By:__/s/ Loren J. Miller____________________
Loren J. Miller, Director
March 23, 2001 By:__/s/ C. Chase Hoffman____________________
C. Chase Hoffman, Director