For the Quarterly Period Ended March 31, 2013
|
Commission File No. 000-22750
|
California
|
33-0224120
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer o
|
Accelerated filer o
|
Non-accelerated filer o
|
Smaller reporting company x
|
PART I
|
FINANCIAL INFORMATION
|
1
|
Item 1.
|
1
|
|
Item 2.
|
10
|
|
Item 3.
|
12
|
|
Item 4.
|
12
|
|
PART II
|
OTHER INFORMATION
|
13
|
Item 1.
|
13
|
|
Item 1A.
|
13
|
|
Item 6.
|
13
|
|
14
|
March 31, 2013
|
December 31, 2012
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and Cash Equivalents
|
$
|
1,639,071
|
$
|
1,489,930
|
||||
Accounts Receivable, net
|
1,377,805
|
3,969,160
|
||||||
Prepaid Expenses
|
1,041,498
|
469,038
|
||||||
Inventory
|
612,464
|
612,464
|
||||||
Total Current Assets
|
4,670,838
|
6,540,592
|
||||||
Other Assets
|
6,946
|
6,946
|
||||||
Oil and Gas Properties, at cost, (successful efforts basis),
Equipment and Fixtures
|
10,824,822
|
10,955,797
|
||||||
Total Assets
|
$
|
15,502,606
|
$
|
17,503,335
|
March 31, 2013
|
December 31, 2012
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts Payable and Accrued Expenses
|
$
|
4,247,908
|
$
|
4,932,468
|
||||
Current Portion of Long-Term Debt
|
1,253,418
|
2,258,668
|
||||||
Current Portion of Deferred Tax Liability
|
1,775
|
1,775
|
||||||
Deferred Revenue from Turnkey Drilling
|
8,714,373
|
8,693,743
|
||||||
Total Current Liabilities
|
14,217,474
|
15,886,654
|
||||||
Noncurrent Liabilities:
|
||||||||
Asset Retirement Obligation
|
956,667
|
954,088
|
||||||
Total Noncurrent Liabilities
|
956,667
|
954,088
|
||||||
Total Liabilities
|
15,174,141
|
16,840,742
|
||||||
Stockholders' Equity:
|
||||||||
Common Stock, no par value, authorized 20,000,000 shares,
13,045,465 and 12,545,465 shares issued; 13,045,465 and
12,545,465 shares outstanding, respectively
|
34,269,240
|
33,247,571
|
||||||
Convertible preferred stock, Series AA, no par value,
147,500 shares authorized; 52,784 and 52,784 shares
issued and outstanding, respectively
|
154,014
|
154,014
|
||||||
Accumulated (Deficit)
|
(35,542,727
|
)
|
(34,186,930
|
)
|
||||
Paid in Capital
|
1,447,938
|
1,447,938
|
||||||
Total Stockholders' Equity
|
328,465
|
662,593
|
||||||
Total Liabilities and Stockholders' Equity
|
$
|
15,502,606
|
$
|
17,503,335
|
2013
|
2012-Restated
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Revenues:
|
||||||||
Sale of Oil and Gas
|
$ | 330,895 | $ | 496,894 | ||||
Supervisory Fees and Other
|
140,771 | 204,684 | ||||||
Total Revenues
|
471,666 | 701,578 | ||||||
Costs and Expenses:
|
||||||||
General and Administrative
|
860,013 | 1,019,952 | ||||||
Turnkey Drilling and Development
|
43,143 | 70,400 | ||||||
Lease Operating
|
292,822 | 295,510 | ||||||
Geological and Geophysical Expense
|
0 | 359,029 | ||||||
Inventory Write Down
|
0 | 62,744 | ||||||
Legal and Accounting
|
171,631 | 270,303 | ||||||
Marketing
|
37,626 | 154,219 | ||||||
Depreciation, Depletion and Amortization
|
221,360 | 363,462 | ||||||
Total Costs and Expenses
|
1,626,595 | 2,595,619 | ||||||
Gain on Sale of Assets
|
0 | 1,307 | ||||||
Loss From Operations
|
(1,154,929 | ) | (1,892,734 | ) | ||||
Other Income (Expense):
|
||||||||
Interest Expense
|
(200,868 | ) | (32,738 | ) | ||||
Loss Before Income Tax Expense
|
(1,355,797 | ) | (1,925,472 | ) | ||||
Income Tax Benefit
|
0 | (558,617 | ) | |||||
Net Loss
|
$ | (1,355,797 | ) | (1,366,855 | ) | |||
Basic Loss Per Share
|
$ | (0.11 | ) | $ | (0.13 | ) | ||
Diluted Loss Per Share
|
$ | (0.11 | ) | $ | (0.13 | ) | ||
Other Comprehensive Income
|
||||||||
Unrealized Gain on Equity Securities
|
$ | 0 | $ | 1,672 | ||||
Other Comprehensive Income, before tax
|
0 | 1,672 | ||||||
Income Tax Expense Related to Items of Other Comprehensive Income
|
0 | 485 | ||||||
Other Comprehensive Income, net of tax
|
0 | 1,187 | ||||||
Comprehensive Loss
|
$ | (1,355,797 | ) | $ | (1,365,668 | ) |
2013
|
2012-Restated
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net Loss
|
$
|
(1,355,797
|
)
|
$
|
(1,366,855
|
)
|
||
|
||||||||
Adjustments to Reconcile Net Loss to Net
Cash Provided by Operating Activities:
|
||||||||
Depreciation, Depletion and Amortization
|
221,360
|
363,462
|
||||||
Gain on Sale of Assets
|
0
|
(1,307
|
)
|
|||||
Inventory Write Down
|
0
|
62,744
|
||||||
Stock-Based Compensation, net of adjustments
|
0
|
9,815
|
||||||
Debt Discount Amortization, net of adjustments
|
178,083
|
0
|
||||||
Decrease (Increase) in:
|
||||||||
Accounts Receivable
|
2,591,355
|
270,719
|
||||||
Prepaid Expenses and Other Assets
|
(572,460
|
)
|
39,398
|
|||||
Increase (Decrease) in:
|
||||||||
Accounts Payable and Accrued expenses
|
(681,981
|
)
|
284,224
|
|||||
Deferred Revenues - DWI
|
20,630
|
1,199,939
|
||||||
Deferred Income Tax expense (benefit)
|
0
|
(558,617
|
)
|
|||||
Net Cash Provided by Operating Activities
|
401,190
|
303,522
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Expenditures for Oil and Gas Properties and Other Capital Expenditures
|
(90,384
|
)
|
(345,891
|
)
|
||||
Proceeds from Sale of Assets
|
0
|
1,307
|
||||||
Net Cash Used by Investing Activities
|
(90,384
|
)
|
(344,584
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Principal Payments on Long-Term Debt
|
(1,183,333
|
)
|
(400,000
|
)
|
||||
Proceeds from Stock Option and Warrant Exercises
|
0
|
299,499
|
||||||
Proceeds from Sale of Common Stock
|
1,021,668
|
286,339
|
||||||
Net Cash Used by Financing Activities
|
(161,665
|
)
|
185,838
|
|||||
Net Increase in Cash and Cash Equivalents
|
149,141
|
144,776
|
||||||
Cash at Beginning of Year
|
$
|
1,489,930
|
$
|
2,946,131
|
||||
Cash at End of Period
|
$
|
1,639,071
|
$
|
3,090,907
|
||||
Cash Paid for Interest
|
$
|
22,785
|
$
|
32,738
|
||||
Cash Paid for Taxes
|
$
|
800
|
$
|
800
|
For the Three Months ended
March 31, 2013
|
||||||||||||
Loss
(Numerator)
|
Shares
(Denominator)
|
Per-Share
Amount
|
||||||||||
Basic Loss Per Share:
|
||||||||||||
Net loss available to common stock
|
$
|
(1,355,797
|
)
|
12,673,243
|
$
|
(0.11
|
)
|
|||||
Diluted Loss Per Share:
|
||||||||||||
Effect of dilutive securities and stock options
|
0
|
0
|
0
|
|||||||||
Net loss available to common stock
|
$
|
(1,355,797
|
)
|
12,673,243
|
$
|
(0.11
|
)
|
For the Three Months ended
March 31, 2012 - Restated
|
||||||||||||
Loss
(Numerator)
|
Shares
(Denominator)
|
Per-Share
Amount
|
||||||||||
Basic Loss Per Share:
|
||||||||||||
Net income available to common stock
|
$
|
(1,366,855
|
)
|
10,846,102
|
$
|
(0.13
|
)
|
|||||
Diluted Loss Per Share:
|
||||||||||||
Effect of dilutive securities and stock options
|
0
|
0
|
0.00
|
|||||||||
Net loss available to common stock
|
$
|
(1,366,855
|
)
|
10,846,102
|
$
|
(0.13
|
)
|
March 31, 2013
(Unaudited)
|
December 31, 2012
(Unaudited)
|
|||||||
Oil and Gas
|
||||||||
Producing properties, including drilling costs
|
$
|
24,364,562
|
$
|
24,327,806
|
||||
Undeveloped properties
|
4,086,079
|
4,034,292
|
||||||
Lease and well equipment
|
9,724,602
|
9,724,602
|
||||||
38,175,243
|
38,086,700
|
|||||||
Accumulated depletion, depreciation & amortization
|
(27,964,970
|
)
|
(27,756,493
|
)
|
||||
10,210,273
|
10,330,207
|
|||||||
Commercial and Other
|
||||||||
Real estate, including furniture and fixtures
|
$
|
502,344
|
$
|
502,344
|
||||
Vehicles
|
151,669
|
151,669
|
||||||
Furniture and equipment
|
1,299,300
|
1,299,300
|
||||||
1,953,313
|
1,953,313
|
|||||||
Accumulated depreciation
|
(1,338,764
|
)
|
(1,327,723
|
)
|
||||
614,549
|
625,590
|
|||||||
$
|
10,824,822
|
$
|
10,955,797
|
Oil and Gas
|
||||||||||||
Producing
|
Turnkey
|
|||||||||||
and
|
Drilling
|
|||||||||||
Exploration
|
Services
|
Total
|
||||||||||
Three Months Ended March 31, 2013:
|
||||||||||||
Revenues from External Customers
|
$
|
330,895
|
0
|
330,895
|
||||||||
Supervisory Fees
|
140,670
|
0
|
140,670
|
|||||||||
Interest Revenue
|
0
|
101
|
101
|
|||||||||
Interest Expense
|
100,434
|
100,434
|
200,868
|
|||||||||
Operating Expenses for Segment Assets
|
901,492
|
503,743
|
1,405,235
|
|||||||||
Depreciation, Depletion and Amortization
|
210,292
|
11,068
|
221,360
|
|||||||||
Gain on Sale of Assets
|
0
|
0
|
0
|
|||||||||
Income Tax Benefit
|
0
|
0
|
0
|
|||||||||
Total Assets
|
$
|
14,727,476
|
775,130
|
15,502,606
|
||||||||
Net Loss
|
$
|
(740,653
|
)
|
(615,144
|
)
|
(1,355,797
|
)
|
Oil and Gas
|
||||||||||||
Producing
|
Turnkey
|
|||||||||||
and
|
Drilling
|
|||||||||||
Exploration
|
Services
|
Total
|
||||||||||
Three Months Ended March 31, 2012 - Restated:
|
||||||||||||
Revenues from External Customers
|
$
|
496,894
|
$
|
0
|
$
|
496,894
|
||||||
Supervisory Fees
|
202,079
|
0
|
202,079
|
|||||||||
Interest Revenue
|
0
|
2,605
|
2,605
|
|||||||||
Interest Expense
|
16,369
|
16,369
|
32,738
|
|||||||||
Expenditures for Segment Assets
|
1,478,534
|
753,623
|
2,232,157
|
|||||||||
Depreciation, Depletion and Amortization
|
345,289
|
18,173
|
363,462
|
|||||||||
Gain on Sale of Assets
|
1,307
|
0
|
1,307
|
|||||||||
Income Tax Benefit
|
(330,711
|
)
|
(227,906
|
)
|
(558,617
|
)
|
||||||
Total Assets
|
$
|
20,007,211
|
$
|
1,053,011
|
$
|
21,060,222
|
||||||
Net Loss
|
$
|
(809,201
|
)
|
$
|
(557,654
|
)
|
$
|
(1,366,855
|
)
|
As Previously
|
||||||||
Reported
|
As Restated
|
|||||||
Balance sheet as of March 31, 2012:
|
||||||||
Deferred Tax Asset-Noncurrent
|
$ | 6,541,634 | $ | 6,614,420 | ||||
Total Assets
|
20,987,436 | 21,060,222 | ||||||
Deferred Revenue from Turnkey Drilling
|
5,828,910 | 6,079,792 | ||||||
Total Current Liabilities
|
13,004,809 | 13,255,691 | ||||||
Total Liabilities
|
13,583,213 | 13,834,095 | ||||||
Accumulated Deficit
|
22,100,521 | 22,278,617 | ||||||
Total paid in capital and accumulated deficit
|
6,941,780 | 6,763,684 | ||||||
Total Stockholder’s Equity
|
7,404,223 | 7,226,127 | ||||||
Total Liabilities and Stockholder’s Equity
|
20,987,436 | 21,060,222 | ||||||
Statement of Comprehensive Loss for the period ended March 31, 2012:
|
||||||||
Turnkey Drilling
|
250,882 | 0 | ||||||
Total Revenues
|
952,460 | 701,578 | ||||||
Income From Operations
|
(1,641,852 | ) | (1,892,734 | ) | ||||
Income Before Income Tax Expense
|
(1,674,590 | ) | (1,925,472 | ) | ||||
Income Tax Benefit
|
(485,831 | ) | (558,617 | ) | ||||
Net Loss
|
(1,188,759 | ) | (1,366,855 | ) | ||||
Comprehensive Loss
|
(1,187,572 | ) | (1,365,668 | ) |
31.1
|
||
31.2
|
||
32.1
|
||
32.2
|
||
101.INS*
|
XBRL Instance Document
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase
|
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase
|
ROYALE ENERGY, INC.
|
||
Date: May 15, 2013
|
/s/ Donald H. Hosmer
|
|
Donald H. Hosmer, Co-President and Co-Chief Executive Officer
|
||
Date: May 15, 2013
|
/s/ Stephen M. Hosmer
|
|
Stephen M. Hosmer, Co-President, Co-Chief Executive Officer, and Chief Financial Officer
|