TherapeuticsMD - 10-Q quarterly report FY

 

MARK ONE

For the quarterly and nine month period ended September 30, 2007

 

OR

 

r       TRANSITION REPORT pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

 

Commission File Number: 000-16731

(Exact Name Of Registrant As Specified In Its Charter)

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

INDEX TO INFORMATION INCLUDED IN THE QUARTERLY REPORT (FORM 10-Q) TO THE SECURITIES AND EXCHANGE COMMISSION FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 (UNAUDITED).

Forward-Looking Statements

 

 

All statements, other than statements of historical or present facts, that address activities, events, outcomes or developments that the Company plans, expects, believes, assumes, budgets, predicts, forecasts, estimates, projects, intends or anticipates (and other similar expressions) will or may occur in the future are forward-looking statements. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the cautionary statements in this Form 10-Q and the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2006. Such forward-looking statements appear in a number of places and include statements with respect to, among other things, such matters as: future capital, development and exploration expenditures (including the amount and nature thereof), drilling, deepening or refracing of wells, oil and natural gas reserve estimates (including estimates of future net revenues associated with such reserves and the present value of such future net revenues), estimates of future production of oil and natural gas, business strategies, expansion and growth of the Company’s operations, cash flow and anticipated liquidity, prospects and development and property acquisitions, obtaining financial or industry partners for prospect or program development, or marketing of oil and natural gas. We caution you that these forward-looking statements are subject to risks and uncertainties.  These risks include but are not limited to: general economic conditions, the Company’s ability to finance acquisitions and drilling, the market price of oil and natural gas, the risks associated with exploration, the Company’s ability to find, acquire, market, develop and produce new properties, operating hazards attendant to the oil and natural gas business, uncertainties in the estimation of proved reserves and in the projection of future rates of production and timing of development expenditures, the strength and financial resources of the Company’s competitors, the Company’s ability to find and retain skilled personnel, climatic conditions, labor relations, availability and cost of material and equipment, environmental risks, the results of financing efforts, regulatory developments and the other risks described in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2006.

Reserve engineering is a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data and the interpretation of that data by reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, these revisions could change the schedule of any further production and/or development drilling. Accordingly, reserve estimates are generally different from the quantities of oil and natural gas that are ultimately recovered.

              In addition, the Company is in a transition period, with the Company considering various “going forward” proposals that may materially alter the financing, structure, and core business of the Company, which may in turn, significantly affect current estimates or projections.

Should one or more of the risks or uncertainties described above or elsewhere in this Form 10-Q or presented in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2006 occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. We specifically disclaim all responsibility to publicly update any information contained in a forward-looking statement or any forward-looking statement in its entirety and therefore disclaim any resulting liability for potentially related damages.

 

 

The financial statements included herein have been prepared in conformity with generally accepted accounting principles. The statements are unaudited but reflect all adjustments, which, in the opinion of management, are necessary to fairly present the Company’s financial position and results of operations. All such adjustments are of a normal recurring nature.

* less than $0.01 per common share.

See accompanying notes to unaudited condensed financial statement.

 

See accompanying notes to unaudited condensed financial statement

See accompanying notes to unaudited condensed financial statement.

CROFF ENTERPRISES, INC.

The condensed financial statements for the three and nine month periods ended September 30, 2006 and 2007 in this report have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission and reflect, in the opinion of the management, all adjustments necessary to present fairly the results of the operations of the interim periods presented herein.  Certain information in footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although the Company believes the disclosures presented herein are adequate to make the information presented not misleading.  It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2006, which report has been filed with the Securities and Exchange Commission.  The Annual Report is available from the Company’s website at  www.croff.com, and online at the Securities and Exchange Commission website at www.sec.gov/edgar.

Croff Enterprises, Inc. (“Croff’ or the “Company”) was incorporated in Utah in 1907.  Croff is an independent energy company engaged in the business of oil and natural gas exploration and production, primarily through the acquisition of producing oil and natural gas leases as well as the ownership of perpetual mineral interests.  Other companies operate almost all of the wells from which Croff receives revenues and Croff has no control over the factors which determine royalty or working interest revenues, such as markets, prices and rates of production.  Today, Croff participates as a working interest owner in approximately 42 wells or units of several wells.  Croff holds small royalty interests in approximately 212 wells.

The Company’s discussion and analysis of its financial condition and results of operation are based upon financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year.  The Company analyzes its estimates, including those related to oil and natural gas revenues, oil and natural gas properties, marketable securities, income taxes and contingencies.

The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances.  Actual results may differ from these estimates under different assumptions or conditions.  The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its financial statements and the uncertainties that it could impact results of operations, financial conditions and cash flows.  The Company accounts for its oil and natural gas properties under the successful efforts method of accounting.  Depletion, depreciation and amortization of oil and natural gas properties and the periodic assessments for impairment are based on underlying oil and natural gas reserve estimates and future cash flows using then current oil and natural gas prices combined with operating and capital development costs. There are numerous uncertainties inherent in estimating quantities of proved oil and natural gas reserves and in projecting future rates of production and timing of development expenditures. Historically, oil and natural gas prices have experienced significant fluctuations and have been particularly volatile in recent years. Price fluctuations can result from variations in weather, levels of regional or national production and demand, availability of transportation capacity to other regions of the country and various other factors. Increases or decreases in oil and natural gas prices received could have a significant impact on future results.

At September 30, 2007, the Company had assets of $2,036,367 and current assets totaled $1,253,126 compared to current liabilities of $66,743.  Working capital at September 30, 2007 totaled $1,176,383 an increase of 18.17% compared to $995,498 at December 31, 2006.  The Company had a current ratio at September 30, 2007, of approximately 19:1. During the nine month period ended September 30, 2007, net cash provided by operations totaled $207,464, as compared to $316,439 for the same period in 2006. This decrease was due primarily to a one time sale, providing the additional cash in 2006. The Company’s cash flow from operations is highly dependent on oil and natural gas prices.  The Company had no short-term or long-term debt outstanding at September 30, 2007.

The Company believes that borrowings from financial institutions, projected operating cash flows and the cash on hand will be sufficient to cover its working capital requirements for the next 12 months, if continuing its current oil and gas activities.  In connection with consummating any significant acquisition or funding an exploratory or development drilling program, additional debt or equity financing will be required, which may or may not be available on terms that are acceptable to the Company.

While certain costs are affected by the general level of inflation, factors unique to the oil and natural gas industry result in independent price fluctuations. Over the past five years, significant fluctuations have occurred in oil and natural gas prices. Although it is particularly difficult to estimate future prices of oil and natural gas, price fluctuations have had, and will continue to have, a material effect on the Company.  Overall, it is management’s belief that inflation is generally favorable to the Company since it does not have significant operating expenses.

The Company had a net income for the third quarter of 2007 which totaled $92,936 compared to a net income of $154,153 for the same period in 2006.  This decrease in income from 2006 was due to gain from the one time sale of leases in 2006 and one time higher interest income in the third quarter of 2006.  Oil and gas operations produced more income in the third quarter of 2007 than in the same quarter of 2006. The company expects lease operating expenses to remain relatively stable and general and administrative expenses to be higher due to strategic corporate changes.

Oil and natural gas sales for the third quarter of 2007 totaled $242,863, a 5.1% increase from the same period in 2006.  Increased oil prices were mostly offset with lower natural gas prices in the current quarter.  The Company’s average sales price of oil in the third quarter of 2007 was approximately $5 per barrel higher than the same period in 2006.  The Company’s average sales price of natural gas in the third quarter of 2006 was approximately $5.50 per Mcf (Mcf equates to one thousand cubic feet), approximately the same as the third quarter of 2007.

For the third quarter of 2007, lease operating expenses, which include all production related taxes, totaled $74,372 compared to $73,394 incurred for the same period in 2006.

Estimated depreciation and depletion expense for the third quarter of 2007 totaled $12,500 and for 2006, totaled $12,000.

General and administrative expense, including overhead expense paid to a related party, for the third quarter of 2007 totaled $50,506 compared to $55,366 for the same period in 2006.  This decrease related primarily to the costs incurred in the TRBT acquisition and proxy in 2006. The Company has incurred additional costs during the third quarter in both 2006 and 2007, associated with compliance with the Sarbanes-Oxley Act of 2002, and anticipated augmented compliance in 2008.

Provision for income taxes for the third quarter of 2007 totaled $22,000 compared to $72,000 for the same period in 2006.  In the third quarter of 2006 the Company made a one time larger estimate for income taxes.

Net income for the nine months ended September 30, 2007 and 2006 totaled $212,754 and $291,276 respectively. This decrease in the net income was due to no gain on sale of assets in 2007.

Oil and gas sales for the nine months ended September 30, 2007 totaled $664,984 a .01% decrease from the $666,286 for the same period in 2006. This slight decrease in oil and gas sales in 2007 compared to 2006 is primarily attributed to a decrease in natural gas prices.

Lease operation expense which includes all production related taxes for the nine months ended September 30, 2007 totaled $212,795 an 8.3% increase from $196,552 in 2006. This increase was primarily due to higher oilfield service costs in 2007.

Depletion and depreciation expense for the nine months ended September 30, 2007 totaled $37,500 from the sum of $36,500 incurred for the same period in 2006. This increase was due to the small increase in producing assets in 2007.

General and administrative expenses, including overhead expense paid to related party, for the nine months ended September 30, 2007 totaled $159,347 compared to $178,636 for the same period in 2006. Overhead expense paid to related party for the nine months ended September 30, 2007 totaled $41,257 compared to $43,464 incurred for the same period in 2006. The decrease in overhead expenses is primarily attributed to timing of professional fees in the cancelled TRBT acquisition.  The Company has also incurred additional costs during both 2006 and 2007 with respect to strategic planning and Sarbanes Oxley compliance.

Provision for income taxes for the nine months ending September 30, 2007 totaled $74,000 compared to $110,000 from the same period in 2006. This increase is primarily attributable to the gain on the sale of assets in 2006.

 

Further, there were no changes in our internal control over financial reporting during the first two fiscal quarters that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting

(b)   The following reports on Form 8-K were filed by Registrant during the quarter ended September 30, 2007:

         None

SIGNATURES

                                                                         

 

 

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