ASPG - Still making goo money...
NEWS
10KSB: ASPEN GROUP RESOURCES CORP
(EDGAR Online via COMTEX) -- ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FISCAL YEAR 2001 AS COMPARED TO FISCAL YEAR 2000
During the fiscal year ended June 30, 2001, the Company had net earnings of $2,100,524 on revenues of $10,549,274 as compared with net earnings of $94,116 on revenues of $3,481,718 for the fiscal year ended June 30, 2000.
Revenue for the 2001 fiscal year was $10,549,274 compared to $3,481,718 for 2000, an increase of $7,067,556 or 203%. This increase is primarily attributable to an 190% increase in oil and gas sales during the 2001 year. The increase in oil and gas sales is a result of the acquisition of oil and gas properties and higher energy prices.
Expenses for the 2001 fiscal year amounted to $7,397,721 compared to $2,709,973 for 2000, an increase of $4,687,748 or 173%. The increase is attributable to:
an increase in oil and gas production expenses associated with the increased number of wells in which the company has participation. an increase in general and administrative expenses of $1,385,634 mostly related to additional staff. an increase of $1,833,559 in oil and gas production costs related to increased oil and gas sales and an increase of $1,125,097 in depreciation and depletion directly related to increased oil and gas sales.
Operating income was $3,151,553 in 2001 compared to an operating income of $771,745 in 2000 as a result of increased sales.
Interest and financing expense for the 2001 fiscal year was $1,085,286 compared to $665,362 in 2000, an increase of $419,924 or 63%. This increase is attributable to bank debt incurred and a note payable given in connection with the acquisition and development of oil and gas properties.
FISCAL YEAR 2000 AS COMPARED TO FISCAL YEAR 1999
During the fiscal year ended June 30, 2000, the Company had net earnings of $94,116 on revenues of $3,481,718 as compared with a net loss of $11,479,086 on revenues of $980,966 for the fiscal year ended June 30, 1999. During 1999, the Company recorded a loss on disposal of assets of $9,807,576 and provided for further loss of $1,262,000 in respect of impairment in the value of oil and gas properties. These two items comprise 96.4% of the 1999 loss.
Revenue for the 2000 fiscal year was $3,481,718 compared to $980,966 for 1999, an increase of $2,500,752 or 254.9%. This increase is attributable to an 1200.3% increase in oil and gas sales offset by decreased equipment sales. During the 2000 year, the Company ceased its equipment sales operations. The increase in oil and gas sales is a result of the acquisition of oil and gas properties and higher energy prices.
Expenses for the 2000 fiscal year amounted to $2,709,973 compared to $2,478,161 for 1999, an increase of $231,812 or 9.4%. The increase is attributable to:
- a decrease in equipment sales related expenses of $592,475 resulting from the cessation of this business activity, - a decrease in general and administrative expenses of $869,219 mostly related to the elimination of penalties associated with a failure to register certain convertible debentures in 1999, - more than offset by an increase of $737,757 in oil and gas production costs related to increased oil and gas sales, - an increase of $956,720 in depreciation and depletion directly related to increased oil and gas sales.
Operating income was $771,745 in 2000 compared to an operating loss of $1,497,195 in 1999 as a result of increased sales.
Interest and financing expense for the 2000 fiscal year was $665,362 compared to $399,289 in 1999, an increase of $266,073 or 66.6%. This increase is attributable to bank debt incurred and a note payable given in connection with the acquisition and development of oil and gas properties.
LIQUIDITY AND CAPITAL RESOURCES
On June 30, 2001, the Company had cash of $907,794 and a working capital deficit of $928,794 calculated by subtracting current liabilities of $4,831,424 from current assets of $3,902,450. Included in the working capital deficit is a $2,321,243 current maturities of long term debt that management expects will be refinanced within the next 12 months.
The Company intends to fund its 2001 development activities from the proceeds of private placements of equity instruments, exercise of outstanding options and warrants, traditional bank debt and institutional reserves based financing. There is no assurance the Company will be successful in these efforts.
OTHER MATTERS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities. SFAS No. 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 2001. The Company does not anticipate a material impact on its financial position or results of operations.
In June 2000, the FASB issued SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities. This statement amends the accounting and reporting standards of SFAS No. 133 for certain instruments and certain hedging activities. SFAS No. 138 also amends SFAS No. 133 for decisions made by the Board relating to the Derivative Implementation Group (DIG) process. Certain decisions arising from the DIG process that required specific amendments to SFAS No. 133 are incorporated in this Statement. The statement is effective concurrently with SFAS No. 133 according to the provisions of paragraph 48 of SFAS No. 133. The Company does not anticipate a material impact on its financial position or results of operations.
In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101 which summarizes certain of the staff's views in applying generally accepted accounting principles to revenue recognition in financial statements. SAB No. 101 did not have a material impact on the Company's financial position or results of operations.
In June 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets, collectively, the Statements. These Statements drastically change the accounting for business combinations, goodwill and intangible assets. Statement 141 eliminates the pooling-of-interests method of accounting for business combinations except for qualifying business combinations that were initiated prior to July 1, 2001. Statement 141 also changes the criteria to recognize intangible assets apart from goodwill. Under Statement 142, goodwill and indefinite lived intangible assets are no longer amortized but are reviewed annually for impairment, or more frequently if impairment indicators arise. Separable intangible assets that have finite lives will continue to be amortized over their useful lives. The amortization provisions of Statement 142 apply to goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, the amortization provisions of Statement 142 are affective upon adoption of Statement 142. Pre-existing goodwill and intangibles will be amortized during the transition period until adoption. Companies are required to adopt Statement 142 in their fiscal year beginning after December 15, 2001. Early adoption is permitted for companies with fiscal years beginning after March 15, 2001. The Company does not anticipate a material impact on its financial position or results of operations.
ESTIMATED RESERVES
A slight majority of Aspen's oil and gas properties are proved undeveloped reserves. Aspen emphasizes that reserve estimates of new discoveries or undeveloped properties are more imprecise than those of producing oil and gas properties. Accordingly, these estimates are expected to change materially as future information becomes available.
(c) 1995-2001 Cybernet Data Systems, Inc. All Rights Reserved
Received by Edgar Online Sep 28, 2001 |
