UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q/A
(Amendment
No. 1)
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the
quarterly period ended September
30,
2006
o |
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
OF 1934
|
For
the
transition period from ________________ to _________________
Commission
file number 1-4668
COASTAL
CARIBBEAN OILS & MINERALS, LTD.
(Exact
name of registrant as specified in its charter)
BERMUDA
|
NONE
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
|
Clarendon
House, Church Street, Hamilton, Bermuda
|
HM
11
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(850)
653-2732
(Registrant's
telephone number, including area code)
________________________________________________________________________________
(Former
name, former address and former fiscal year, if changed since last
report)
Indicate
by check mark whether the registrant (l) has filed all reports required to
be
filed by Section 13 or 15 (d) of the Securities Exchange Act of l934 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 filing requirements
for
the past 90 days. T
Yes
¨
No
Indicate
by check mark whether the registrant is an accelerated filer (as defined in
Rule
12b-2 of the Exchange Act). ¨
Yes T
No
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). ¨
Yes T
No
The
number of shares outstanding of the issuer's single class of common stock as
of
October 26, 2005 was 46,211,604.
COASTAL
CARIBBEAN OILS & MINERALS, LTD.
FORM
10-Q/A
(Amendment
No. 1)
SEPTEMBER
30, 2006
Table
of Contents
PART
I - FINANCIAL INFORMATION
|
|
|
Page
|
ITEM
1
|
Financial
Statements
|
|
|
|
|
|
|
|
Consolidated
balance sheets at September 30, 2006 and December 31, 2005
|
|
3
|
|
|
|
|
|
Consolidated
statements of operations for the three and nine month periods ended
September 30, 2006 and 2005 and for the period from January 31, 1953
(inception) to September 30, 2006
|
|
4
|
|
|
|
|
|
Consolidated
statements of cash flows for the nine month periods ended September
30,
2006 and 2005 and for the period from January 31, 1953 (inception)
to
September 30, 2006
|
|
5
|
|
|
|
|
|
Notes
to consolidated financial statements
|
|
6
|
|
|
|
|
ITEM
2
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
|
|
|
|
|
ITEM
3
|
Quantitative
and Qualitative Disclosure About Market Risk
|
|
|
|
|
|
|
ITEM
4
|
Controls
and Procedures
|
|
10
|
|
|
|
|
|
PART
II - OTHER INFORMATION
|
|
|
|
|
|
|
ITEM
5
|
Other
Information
|
|
|
|
|
|
|
ITEM
6
|
Exhibits
|
|
11
|
|
|
|
|
|
Signatures
|
|
12
|
Explanatory
Note:
Coastal
Caribbean Oils and Minerals, Ltd. (the “Company”) is hereby amending its
previously filed Quarterly Report on Form 10-Q for the quarter ended September
30, 2006 (the “Original Report”). This
Amendment No. 1 is being filed to amend Part I - Financial
Information
Item 1
Financial
Statements
by
adding Note 6. New
Accounting Pronouncements;
and to
amend the language in Item 4. Controls
and Procedures
to
conform to the disclosure requirements of Item 307 and 308(c) of Regulation
S-K.
Conforming changes have also been made to Exhibits 31.1 and 32.1 included in
the
Original Report, which are being currently dated and have been changed from
those filed in the Original Report in order to comply with the current format
set forth in Item 601(b)(31) of Regulation S-K. No
other
changes to the Original Report have been made. This Amendment No. 1 does not
reflect events occurring after the filing of the Original Report or modify
or
update disclosures therein in any way other than as described
above.
Part
I - Financial Information
ITEM
1
- Financial
Statements
CONSOLIDATED
BALANCE SHEETS
(Expressed
in U.S. dollars)
(A
Bermuda Corporation)
A
Development Stage Company
|
|
|
|
|
|
|
|
(Unaudited)
|
|
(Note)
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
641,545
|
|
$
|
2,250,236
|
|
Income
taxes receivable
|
|
|
35,000
|
|
|
-
|
|
Prepaid
expenses and other
|
|
|
-
|
|
|
199,754
|
|
Total
current assets
|
|
|
676,545
|
|
|
2,449,990
|
|
|
|
|
|
|
|
|
|
Certificate
of deposit
|
|
|
125,830
|
|
|
75,000
|
|
Well
drilling costs
|
|
|
961,698
|
|
|
-
|
|
Petroleum
leases
|
|
|
2,122,384
|
|
|
1,860,614
|
|
Equipment,
net
|
|
|
10,234
|
|
|
1,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
3,896,691
|
|
$
|
4,387,375
|
|
|
|
|
|
|
|
|
|
Liabilities
and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
56,408
|
|
$
|
27,526
|
|
Income
taxes payable
|
|
|
-
|
|
|
35,000
|
|
Total
current liabilities
|
|
|
56,408
|
|
|
62,526
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
|
|
Common
stock, par value $.12 per share:
|
|
|
|
|
|
|
|
Authorized
- 250,000,000 shares
|
|
|
|
|
|
|
|
Outstanding
- 46,211,604, respectively
|
|
|
5,545,392
|
|
|
5,545,392
|
|
Capital
in excess of par value
|
|
|
32,137,811
|
|
|
32,137,811
|
|
|
|
|
37,683,203
|
|
|
37,683,203
|
|
Deficit
accumulated during the development stage
|
|
|
(33,842,920
|
)
|
|
(33,358,354
|
)
|
Total
shareholders’ equity
|
|
|
3,840,283
|
|
|
4,324,849
|
|
Total
liabilities and shareholders’ equity
|
|
$
|
3,896,691
|
|
$
|
4,387,375
|
|
Note:
The
balance sheet at December 31, 2005 has been derived from
the
audited consolidated financial statements at that date.
See
accompanying notes.
COASTAL
CARIBBEAN OILS & MINERALS, LTD.
FORM
10-Q
PART
I - FINANCIAL INFORMATION
ITEM
1
- Financial
Statements
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Expressed
in U.S. dollars)
(A
Bermuda Corporation)
A
Development Stage Company
(unaudited)
|
|
Three
months ended
September
30,
|
|
Nine
months ended
September
30,
|
|
For
the
period
from
Jan.
31, 1953
(inception)
to
September
30,
|
|
|
|
2006
|
|
2005
|
|
2006
|
|
2005
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal
fees and costs
|
|
|
49,951
|
|
|
76,011
|
|
|
161,610
|
|
|
90,068
|
|
|
17,216,677
|
|
Administrative
expenses
|
|
|
75,739
|
|
|
52,320
|
|
|
272,406
|
|
|
130,811
|
|
|
10,209,946
|
|
Personnel
|
|
|
39,050
|
|
|
44,291
|
|
|
104,150
|
|
|
93,810
|
|
|
3,971,981
|
|
Shareholder
communications
|
|
|
11,924
|
|
|
12,524
|
|
|
16,776
|
|
|
24,584
|
|
|
4,092,685
|
|
Write
off of unproved properties
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,560,494
|
|
Exploration
costs
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
247,465
|
|
Lawsuit
judgments
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,941,916
|
|
Minority
interests
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(632,974
|
)
|
Other
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
364,865
|
|
Contractual
services
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,155,728
|
|
|
|
|
176,664
|
|
|
185,146
|
|
|
554,942
|
|
|
339,273
|
|
|
45,128,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
on settlement (Note 4)
|
|
|
-
|
|
|
8,125,900
|
|
|
-
|
|
|
8,125,900
|
|
|
8,124,016
|
|
Goodwill
impairment
|
|
|
-
|
|
|
(801,923
|
)
|
|
-
|
|
|
(801,923
|
)
|
|
(801,923
|
)
|
Interest
and other income
|
|
|
8,913
|
|
|
21,657
|
|
|
35,376
|
|
|
21,657
|
|
|
3,963,670
|
|
|
|
|
8,913
|
|
|
7,345,634
|
|
|
35,376
|
|
|
7,345,634
|
|
|
11,285,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax benefit (expense)
|
|
|
35,000
|
|
|
(35,000
|
)
|
|
35,000
|
|
|
(35,000
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
(132,751
|
)
|
$
|
7,125,488
|
|
$
|
(484,566
|
)
|
$
|
6,971,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
accumulated during
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the
development stage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(33,842,920
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding
(basic & diluted)
|
|
|
46,221,604
|
|
|
46,221,604
|
|
|
46,221,604
|
|
|
46,221,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share (basic & diluted)
|
|
$
|
(.00
|
)
|
$
|
.15
|
|
$
|
(.01
|
)
|
$
|
.15
|
|
|
|
|
See
accompanying notes.
COASTAL
CARIBBEAN OILS & MINERALS, LTD.
FORM
10-Q
PART
I - FINANCIAL INFORMATION
ITEM
1
- Financial
Statements
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Expressed
in U.S. Dollars)
(A
Bermuda Corporation)
A
Development Stage Company
(Unaudited)
|
|
Nine
months ended
September
30,
|
|
For
the period from
Jan.
31, 1953
(inception)
to September 30,
|
|
|
|
2006
|
|
2005
|
|
2006
|
|
|
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
(484,566
|
)
|
$
|
6,971,361
|
|
$
|
(33,842,920
|
)
|
Adjustments
to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
|
|
used
in operating activities:
|
|
|
|
|
|
|
|
|
|
|
Goodwill
impairment
|
|
|
-
|
|
|
801,923
|
|
|
801,823
|
|
Gain
on settlement
|
|
|
-
|
|
|
(8,125,900
|
)
|
|
(8,124,016
|
)
|
Write
off of unproved properties
|
|
|
-
|
|
|
-
|
|
|
5,619,741
|
|
Depreciation
|
|
|
2,100
|
|
|
-
|
|
|
2,220
|
|
Minority
interest
|
|
|
-
|
|
|
-
|
|
|
(632,974
|
)
|
Common
stock issued for services
|
|
|
-
|
|
|
-
|
|
|
119,500
|
|
Compensation
recognized for stock option grant
|
|
|
-
|
|
|
-
|
|
|
75,000
|
|
Recoveries
from previously written off properties
|
|
|
-
|
|
|
-
|
|
|
252,173
|
|
Net
change in:
|
|
|
|
|
|
|
|
|
|
|
Income
taxes receivable
|
|
|
(35,000
|
)
|
|
-
|
|
|
(35,000
|
)
|
Prepaid
expenses and other
|
|
|
199,754
|
|
|
14,438
|
|
|
-
|
|
Accounts
payable and accrued liabilities
|
|
|
28,882
|
|
|
(2,337,420
|
)
|
|
56,408
|
|
Income
taxes payable
|
|
|
(35,000
|
)
|
|
35,000
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) operating activities
|
|
|
(323,830
|
)
|
|
(2,640,598
|
)
|
|
35,708,045
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
|
|
Additions
to oil, gas, and mineral properties
|
|
|
|
|
|
|
|
|
|
|
net
of assets acquired for common stock and reimbursements
|
|
|
(333,907
|
)
|
|
(143,023
|
)
|
|
(5,934,703
|
)
|
Well
drilling costs
|
|
|
(889,561
|
)
|
|
-
|
|
|
(889,561
|
)
|
Drilling
advances from joint interest owners
|
|
|
632,432
|
|
|
-
|
|
|
-
|
|
Net
proceeds from settlement
|
|
|
-
|
|
|
8,125,900
|
|
|
8,124,016
|
|
Proceeds
from relinquishment of surface rights
|
|
|
-
|
|
|
-
|
|
|
246,733
|
|
Purchase
of certificate of deposit
|
|
|
(50,830
|
)
|
|
(10,000
|
)
|
|
(125,830
|
)
|
Purchase
of minority interest in CPC
|
|
|
-
|
|
|
(801,923
|
)
|
|
(801,823
|
)
|
Equipment
purchases
|
|
|
(10,563
|
)
|
|
(1,891
|
)
|
|
(74,103
|
)
|
Net
cash provided by (used in) investing activities
|
|
|
(1,284,861
|
)
|
|
7,169,063
|
|
|
544,729
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
|
|
Loans
from officers
|
|
|
-
|
|
|
31,500
|
|
|
111,790
|
|
Repayment
of loans to officers
|
|
|
-
|
|
|
(111,790
|
)
|
|
(111,790
|
)
|
Sale
of common stock net of expenses
|
|
|
-
|
|
|
-
|
|
|
30,380,612
|
|
Proceeds
from exercise of options
|
|
|
-
|
|
|
-
|
|
|
884,249
|
|
Sale
of shares by subsidiary
|
|
|
-
|
|
|
-
|
|
|
820,000
|
|
Sale
of subsidiary shares
|
|
|
-
|
|
|
-
|
|
|
3,720,000
|
|
Net
cash provided by (used in) financing activities
|
|
|
-
|
|
|
(80,290
|
)
|
|
35,804,861
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
(1,608,691
|
)
|
|
4,448,175
|
|
|
641,545
|
|
Cash
and cash equivalents at beginning of period
|
|
|
2,250,236
|
|
|
179
|
|
|
-
|
|
Cash
and cash equivalents at end of period
|
|
$
|
641,545
|
|
$
|
4,448,354
|
|
$
|
641,545
|
|
See
accompanying notes.
COASTAL
CARIBBEAN OILS & MINERALS, LTD.
FORM
10-Q/A
(Amendment
No. 1)
PART
I - FINANCIAL INFORMATION
ITEM
1 Financial
Statements
Note
1. Basis
of Presentation
The
accompanying unaudited consolidated financial statements include Coastal
Caribbean Oils & Minerals, Ltd. (the Company’s), its wholly owned
subsidiary, Coastal Petroleum Company (Coastal Petroleum) and Coastal
Petroleum’s wholly owned subsidiary, Williston Basin, Inc., and have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01
of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. All such adjustments
are
of a normal recurring nature. Operating results for the three and nine month
periods ended September 30, 2006 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2006. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2005.
Note
2. Going
Concern
As
of
September 30, 2006, the Company had no revenues, had recurring losses from
operations and has had an accumulated deficit during the development
stage. We, along with various other parties, settled several
lawsuits in 2005, which were filed by the Company, our subsidiary Coastal
Petroleum Company and others against the State of Florida (See Notes 3 and
5).
All of these lawsuits were related to the State’s actions limiting oil and
gas exploration and development activities on land covered by
our subsidiary's leases and by royalties held by the Company and
others. The cost of that litigation was substantial. Management
believes its current cash position will allow the Company to move forward to
explore and develop profitable oil and gas operations, although there is no
assurance these efforts will be successful.
Note
3. Litigation
Florida
Case
In
June
2005, the Company and others agreed to a final settlement of all claims and
rights with the State of Florida (the State) for $12.5 million (the Agreement).
The State paid out the settlement through an intermediary in July 2005. The
total settlement and the amount received by the Company was as
follows:
Gross
settlement proceeds
|
|
$
|
12,500,000
|
|
|
|
|
|
|
Distribution
to other parties:
|
|
|
|
|
Lykes
Mineral Corporation
|
|
|
1,390,000
|
|
Outside
Royalty Holders
|
|
|
2,540,000
|
|
Settlement
Consultant
|
|
|
465,000
|
|
|
|
|
|
|
Gross
proceeds to Coastal
|
|
|
8,105,000
|
|
|
|
|
|
|
Purchase
of other CPC shares
|
|
|
802,000
|
|
Paid
to Coastal Creditors
|
|
|
2,431,000
|
|
|
|
|
|
|
Net
proceeds to Company
|
|
$
|
4,872,000
|
|
COASTAL
CARIBBEAN OILS & MINERALS, LTD.
FORM
10-Q/A
(Amendment
No. 1)
PART
I - FINANCIAL INFORMATION
ITEM
1 Financial
Statements (Continued)
Note
3. Litigation
(Continued)
As
part
of the settlement, the Company acquired the remaining minority interests in
its
subsidiary, Coastal Petroleum for $802,000. As Coastal Petroleum had no tangible
or intangible assets at the time the shares were acquired, the full purchase
price was assigned to goodwill. The Company reviewed its goodwill related to
Coastal Petroleum for impairment and determined the goodwill was fully impaired.
Therefore, an impairment charge of $802,000 was made during the quarter ending
September 30, 2005. The Company now owns 100% of Coastal Petroleum Company.
For
the
quarter ending September 30, 2005, the Company recorded a gain on its share
of
the settlement of $8,126,000 after deducting all direct settlement costs and
costs to cancel various royalty rights related to the Florida
leases.
Lease
Taking Case (Lease 224-A)
This
proceeding has been dismissed as part of the Agreement with the
State.
Royalty
Taking Case
This
proceeding has been dismissed as part of the Agreement with the
State.
Lease
Taking Case (Lease 224-B)
This
proceeding has been dismissed as part of the Agreement with the
State.
Note
4.
Net
income (loss) per share
Net
income (loss) per share is based upon the weighted average number of common
and
common equivalent shares outstanding during the period. The Company’s basic and
diluted calculations of EPS are the same because the exercise of options is
not
assumed in calculating diluted EPS, as the result would be anti-dilutive (for
2006, the Company reported a net loss; for 2005, the fair value of the common
stock exceeded the option price at September 30, 2005).
Note
5.
Oil
& Gas Development Activity
Drilling
Activity
The
Company began drilling its initial well in north central Montana in January
2006
under a farm-in agreement with the mineral owner on acreage in Blaine County.
The Company has capitalized $773,000 in drilling costs through
September 30, 2006 and is currently in the process of completing and
testing the well. The well hit the target Lodgepole reef, but the reef had
been
flushed with fresh water. Several other formations were drilled through that
were prospective for oil or gas and all but one of them have been tested. The
remaining formation will be tested after the Company completes the drilling
of
the twin well in Valley County which is currently the Company’s primary focus.
Drilling results will remain confidential until that process is complete.
COASTAL
CARIBBEAN OILS & MINERALS, LTD.
FORM
10-Q/A
(Amendment
No. 1)
PART
I - FINANCIAL INFORMATION
ITEM
1 Financial
Statements (Continued)
Note
5.
Oil
& Gas Development Activity
(Continued)
The
Company has participated in and is acting as operator in a twin well to the
only
known well to produce from the Lodgepole in Montana. Drilling on the well began
in early September and was expected to be completed within the month. However,
delays and equipment difficulties have extended the drilling time and added
to
the cost of the well. The Company is still in the process of finishing the
project and will provide results of the drilling when the project is complete
and the results are available. The Company estimates its participation costs
in
the twin well to be $200,000. The total cost of the well is estimated to be
$1
Million. The well is located in Valley County and the Company will be the
operator until the well has reached production.
Montana
Leases
The
Company’s primary presence in Montana is in Valley County, where it holds leases
covering 137,163.26 net acres, which the Company acquired in three separate
acquisitions between July 2005 and February 2006. The leases acquired in those
acquisitions are contiguous to each other and are referred to collectively
as
“the Valley County Leases.”
The
first
acquisition of the Valley County Leases was in July 2005, when the Company
acquired the rights to drill two 6,500 foot wells to test Mississippian
Lodgepole Reefs in Valley County, in northeast Montana for a one time fee of
$50,000 from an entity controlled by one of the Company’s Directors. That
acquisition included a small amount of acreage and the option to drill fifty
additional prospects in the Valley County area.
The
second acquisition of the Valley County Leases was in November 2005, when the
Company acquired a group of oil and gas lease rights to approximately 109,423.26
net acres in eastern Montana for $1,568,000 from EOG Resources, Inc. and Great
Northern Gas Company. These leases are subject to various overriding royalty
interests to others ranging up to 19.5%. These leases expire in years from
2007
to 2014.
The
final
acquisition of acreage within the Valley County Leases was in February 2006,
when the Company acquired additional oil and gas leases in eastern Montana
covering 27,740 net acres contiguous to its existing Montana leases. These
leases were acquired from the Bureau of Land Management and United States
Department of the Interior.
The
Company has an agreement with a consultant entity, controlled by one of the
Company’s Directors, to identify Mississippian Lodgepole Reef prospects to be
drilled on and near its Valley County Leases. Previously under the agreement,
the Company was required to drill a test well on an identified Lodgepole Reef
prospect by a certain time, however, there is no longer a drilling obligation
under the agreement.
The
Company has received four permits to drill on its Valley County Leases. The
Company estimates the cost to drill a test well on the Valley County Leases
to
be approximately $800,000 and the Company is seeking partners to participate
for
the bulk of expenditures.
COASTAL
CARIBBEAN OILS & MINERALS, LTD.
FORM
10-Q/A
(Amendment
No. 1)
PART
I - FINANCIAL INFORMATION
ITEM
1 Financial
Statements (Continued)
Note
5.
Oil
& Gas Development Activity
(Continued)
North
Dakota Leases
In
July
2005, the Company acquired leases to the deeper rights in approximately 21,688
net acres in and near Slope County, North Dakota for a one time fee of $50,000
from an entity controlled by one of the Company’s Directors. Since that time,
some of the leases have expired and the Company currently holds leases on
7,671.68 gross and net acres in Slope County. The Company is obligated to drill
a test well before January 15, 2007, and has the option to drill the remaining
Lodgepole Reef prospects on these leases. The Company intends to partner with
other entities to share the cost of the initial 9,700 foot test well the total
estimated drilling cost of which is estimated to be $1,200,000.
Florida
Leases
The
Florida Leases were surrendered to Florida as a part of the 2005 Agreement
with
Florida and are no longer held by the Company.
Prior
to
2005, Coastal Petroleum held three unproved and nonproducing oil, gas and
mineral leases granted by the Trustees of the Internal Improvement Fund of
the
State of Florida (Trustees). These leases covered submerged and unsubmerged
lands, principally along the Florida Gulf Coast, and certain inland lakes and
rivers throughout the State. The two leases bordering the Gulf Coast were
divided into three areas, each running the entire length of the coastline from
Apalachicola Bay to the Naples area. Coastal Petroleum held certain royalty
interests in the inner area, no interest in the middle area and a 100% working
interest in the outside area. Coastal Petroleum also held a 100% working
interest in Lake Okeechobee, and a royalty interest in other areas. Coastal
Petroleum had agreed not to conduct exploration, drilling, or mining operations
on said lake, except with prior approval of the Trustees.
Note
6.
New
Accounting Pronouncements
In
December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
123 (Revised 2004), Share-Based
Payments,
which
requires companies to expense stock options and other share-based payments.
SFAS
No. 123R supersedes SFAS No. 123, which permitted either expensing stock options
or providing pro-forma disclosure. The provisions of SFAS No. 123R, which are
effective for fiscal periods beginning after December 15, 2005, apply to all
awards granted, modified, canceled, or repurchased after December 15, 2005,
as
well as the unvested portion of the prior awards.
The
Company adopted the provisions of SFAS No. 123R effective January 1, 2006,
which
did not have a material financial impact on the Company’s financial
statements.
Note
7.
Income
Taxes
For
the
three and nine months ended September 30, 2006, the Company reported a loss
for
both financial statement reporting and income tax purposes. For the three and
six months ended September 30, 2005, the Company reported a net income for
financial statement reporting, but reported a net loss for income tax purposes
due to the utilization of net operating loss carryforwards. The Company has
provided a 100% valuation allowance on its deferred tax asset
as
a result of its net operating loss carry-forwards. The Company has approximately
$8,800,000 in net operating loss carry-forwards at December 31,
2005.
COASTAL
CARIBBEAN OILS & MINERALS, LTD.
FORM
10-Q/A
(Amendment
No. 1)
PART
I - FINANCIAL INFORMATION
ITEM
1Financial
Statements (Continued)
Note
8. Related
Party Transactions
Pursuant
to a written agreement with respect to the Valley County Leases, the Company
uses an entity controlled by an individual who is a shareholder, officer and
director of the company to perform geotechnical analysis of potential drilling
sites at a cost of $1,000 per site. The Company capitalized $60,720 and $36,341
paid to this entity for the nine months ended September 30, 2006 and 2005,
respectively.
The
Company pays a monthly retainer to the law firm of Angerer & Angerer. The
principals of the law firm include two individuals who are collectively
shareholders, officers and
a
director of the Company. The Company expensed $108,000 and $36,000 in legal
fees
for the nine months ended September 30, 2006 and 2005,
respectively.
The
Company has retained the law firm of Igler & Dougherty, P.A. as securities
counsel. One of the Company’s directors is a shareholder in the law firm. The
Company has expensed $43,640 and $33,785 in legal fees and costs for the nine
months ended September 30, 2006 and 2005 respectively.
ITEM
4 Controls
and Procedures
|
a.
|
Evaluation
of disclosure controls and procedures.
The Company maintains controls and procedures designed to ensure
that
information required to be disclosed in the reports that the Company
files
or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified
in
the rules and forms of the Securities and Exchange Commission. As
required by Rule 13a-15(b) under the Exchange Act, our Chief Executive
Officer who is also our Chief Financial Officer carried out an evaluation
of the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by this
report. The Company’s Chief Executive Officer has concluded that the
Company’s disclosure controls and procedures, as of September 30, 2006
were effective.
|
|
b. |
Changes
in internal controls.
The Company made no changes in its internal control over financial
reporting that occurred during the Company’s third fiscal quarter that has
materially affected, or which is reasonably likely to materially
affect
the Company’s internal control over financial
reporting.
|
COASTAL
CARIBBEAN OILS & MINERALS, LTD.
FORM
10-Q/A
(Amendment
No. 1)
PART
II - OTHER INFORMATION
September
30, 2006
ITEM
6 - Exhibits
|
31.1 |
Certification
pursuant to Rule 13a-14 by Phillip W.
Ware
|
|
32.1
|
Certification
pursuant to Section 906 by Phillip W.
Ware
|
COASTAL
CARIBBEAN OILS & MINERALS, LTD.
FORM
10-Q/A
(Amendment
No. 1)
September
30, 2006
SIGNATURES
Pursuant
to the requirements 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.
|
|
|
|
COASTAL CARIBBEAN OILS & MINERALS,
LTD.
Registrant
|
|
|
|
Date: January
31, 2007 |
By |
/s/ Phillip
W. Ware |
|
Phillip W. Ware
Chief
Executive Officer,
President
and Principal Financial Officer
|