ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
September 30, 2006 (Unaudited)
(Expressed in US Dollars)
|
| September 30, 2006 (unaudited) |
| December 31, 2005 (audited) |
ASSETS |
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Current Assets |
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|
Cash | $ | 227,102 | $ | 3,602 |
Cash - restricted |
| 1,000,000 |
| 1,000,000 |
Accounts receivable net of allowances |
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|
|
|
Trade |
| 1,909,731 |
| 1,640,630 |
Other |
| 59,863 |
| 109,435 |
Material and supplies inventory |
| 53,461 |
| 326,573 |
Prepaid expenses |
| 85,367 |
| 32,000 |
Assets held for resale |
| 627,620 |
| 600,390 |
Total current assets |
| 3,963,144 |
| 3,712,630 |
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|
|
Proved Oil & Gas Properties (full cost method) |
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|
|
net of accumulated depletion of $20,807,214 and $19,404,018 |
| 8,220,634 |
| 6,679,977 |
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|
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Property and Equipment |
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|
|
net of accumulated depreciation of $2,369,608 and $2,274,260 |
| 553,275 |
| 655,337 |
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|
|
Other Assets |
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|
|
Notes receivable and prepaids |
| 435,488 |
| 44,584 |
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|
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Total Assets | $ | 13,172,541 | $ | 11,092,528 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities |
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Accounts payable | $ | 6,504,084 | $ | 2,767,071 |
Net liabilities of discontinued operations |
| 192,360 |
| 192,359 |
Accrued expenses |
| 200,000 |
| 353,400 |
Notes payable - banks |
| 543,130 |
| - |
Current maturities of long-term debt |
| 31,124 |
| 31,770 |
Total current liabilities | $ | 7,470,698 | $ | 3,344,600 |
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|
|
|
|
Long-Term Debt, less Current Maturities |
| 202,101 |
| 225,131 |
|
|
|
|
|
Asset Retirement Obligations |
| 927,011 |
| 866,749 |
|
|
|
|
|
Deferred income taxes |
| - |
| - |
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|
|
Stockholders’ Equity |
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|
Preferred stock, no par value, authorized-unlimited, issued – none |
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Common stock, no par value, authorized-unlimited, |
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|
issued 74,763,037 shares in 2006 and 74,763,307 in 2005 |
| 63,769,721 |
| 63,769,721 |
Less treasury stock – at cost |
| (97,798) |
| (97,798) |
Foreign currency translation adjustment |
| (245,565) |
| (277,987) |
Accumulated deficit |
| (58,853,627) |
| (56,737,888) |
Total stockholders’ equity |
| 4,572,731 |
| 6,656,048 |
|
|
|
|
|
Total Liabilities and Stockholders’ Equity |
| 13,172,541 |
| 11,092,528 |
“signed Robert Calentine”
“signed Allan Thorne”
Robert L. Calentine, Director and CEO
Allan C. Thorne, CFO
See accompanying notes to these unaudited consolidated financial statements
ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Expressed in US Dollars)
| Period from July 1, 2006 to Sept 30, 2006 (unaudited) | Period from July 1, 2005 to Sept 30, 2005 (unaudited) | Period from January 1, 2006 to Sept 30, 2006 (unaudited) | Period from January 1, 2005 to Sept 30, 2005 (unaudited) | ||||
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REVENUE: |
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Oil and gas sales (net of royalties) | $ | 519,189 | $ | 860,577 | $ | 1,778,212 | $ | 2,043,083 |
Product and service revenues |
| 374,561 |
| 291,441 |
| 988,873 |
| 619,547 |
Other income |
| 17,136 |
| - |
| 36,344 |
| 26,860 |
Total revenue | $ | 910,886 | $ | 1,152,018 | $ | 2,803,429 | $ | 2,689,490 |
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EXPENSES: |
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Oil and gas production | $ | 305,925 | $ | 268,391 | $ | 926,793 | $ | 784,941 |
Operating expenses |
| 272,438 |
| 217,264 |
| 749,419 |
| 499,572 |
General and administrative |
| 544,991 |
| 1,249,143 |
| 1,731,416 |
| 2,674,222 |
Depreciation, depletion and accretion expense |
| 548,778 |
| 306,708 |
| 1,521,445 |
| 903,836 |
Stock issued compensation |
| - |
| - |
| - |
| 419,309 |
Total expenses | $ | 1,672,132 | $ | 2,041,506 | $ | 4,929,073 | $ | 5,281,880 |
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EARNINGS (LOSS) FROM OPERATIONS | $ | (761,246) | $ | (889,488) | $ | (2,125,644) | $ | (2,592,390) |
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OTHER |
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Interest and financing expense |
| (7,609) |
| (7,491) |
| (19,254) |
| (33,158) |
Recovery of income taxes |
| 29,160 |
| - |
| 29,160 |
| - |
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NET EARNINGS (LOSS) | $ | (739,695) | $ | (896,979) | $ | (2,115,738) | $ | (2,625,548) |
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NET EARNINGS (LOSS) PER SHARE | $ | (0.01) | $ | (0.01) | $ | (0.03) | $ | (0.04) |
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WEIGHTED AVERAGE SHARES |
| 74,763,037 |
| 74,335,896 |
| 74,763,037 |
| 74,335,896 |
See accompanying notes to these unaudited consolidated financial statements
ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Expressed in US Dollars)
| Period from July 1, 2006 to Sept 30, 2006 (unaudited) | Period from July 1, 2005 to Sept 30, 2005 (unaudited) | Period from January 1, 2006 to Sept 30, 2006 (unaudited) | Period from January 1, 2005 to Sept 30, 2005 (unaudited) | ||||
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net earnings (loss) | $ | (739,696) | $ | (896,979) | $ | (2,115,739) | $ | (2,625,548) |
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: |
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Stock based compensation |
| - |
| - |
| - |
| 419,309 |
Depreciation and depletion |
| 517,951 |
| 299,543 |
| 1,475,643 |
| 882,339 |
Accretion Expense |
| 7,926 |
| 7,491 |
| 22,901 |
| 21,823 |
Cash flow from operations | $ | (213,819) | $ | (589,945) | $ | (617,195) | $ | (1,302,077) |
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Change in assets and liabilities net of effects from: |
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Accounts receivable |
| (591,661) |
| 489,519 |
| (269,101) |
| 1,279,438 |
Materials and supplies inventory |
| (6,036) |
| - |
| 273,112 |
| (279,148) |
Accounts payable and accrued liabilities |
| 3,341,672 |
| 672,271 |
| 3,730,520 |
| (261,228) |
Prepaid expenses |
| (452,639) |
| 90,001 |
| (449,139) |
| 85,512 |
Other |
| (86,119) |
| (427) |
| 22,342 |
| (427) |
Net cash provided by operating activities | $ | 1,991,398 | $ | 661,419 | $ | 2,690,539 | $ | (477,930) |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Proceeds from sale of equipment | $ | - | $ | - | $ | - | $ | 16,617 |
Proceeds from sale of oil and gas properties |
| - |
| - |
| 2,131,240 |
| - |
Exploration and development cost capitalized |
| (2,360,562) |
| (1,515,124) |
| (5,067,544) |
| (3,265,987) |
Acquisitions of office furniture and equipment |
| - |
| - |
| (835) |
| - |
Other assets |
| - |
| (41,000) |
| - |
| (41,000) |
Net cash provided by (used by) investing activities | $ | (2,360,562) | $ | (1,556,124) | $ | (2,937,139) | $ | (3,290,370) |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Bank loan advances | $ | 403,440 | $ | - | $ | 493,130 | $ | - |
Sale of common stock |
| - |
| - |
| - |
| 994,803 |
Repayment of notes payable and long-term debt |
| (11,778) |
| (377,692) |
| (23,030) |
| (732,207) |
Net cash provided by (used by) financing activities | $ | 391,662 | $ | (377,692) | $ | 470,100 | $ | 262,596 |
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NET INCREASE (DECREASE) | $ | 22,498 | $ | (1,272,397) | $ | 223,500 | $ | (3,505,704) |
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CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD |
| 204,604 |
| 2,762,878 |
| 3,602 |
| 4,996,185 |
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CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 227,102 | $ | 1,490,481 | $ | 227,102 | $ | 1,490,481 |
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SUPPLEMENTAL INFORMATION - CASH PAID INTEREST | $ | 8,063 | $ | 7,491 | $ | 19,708 | $ | 33,158 |
See accompanying notes to these unaudited consolidated financial statements
ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in US Dollars)
NATURE OF BUSINESS AND BASIS OF PREPARATION AND PRESENTATION
Nature of Business
Aspen Group Resources Corporation is an independent energy company engaged in the acquisition, development, and exploration of oil and gas properties with a geographic focus in major oil and gas producing regions in the United States and Canada.
Financial Statement Presentation
The unaudited consolidated financial statements of Aspen Group Resources Corporation and its subsidiaries (collectively the "Company" or "Aspen") included herein have been prepared by Aspen without audit. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted U. S. accounting principles have been condensed or omitted, since Aspen believes that the disclosures included are adequate to make the information presented not misleading. In the opinion of Management, the Condensed Consolidated Financial Statements include all adjustments consisting of normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows as of the dates and for the periods presented. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included for the fiscal year ended December 31, 2005.
Restricted Cash
During the period the Company was required to continue to keep in place a $1.0 million bond along with a court of appeal application to appeal a lawsuit decision. The bond issuer required $1.0 million cash as collateral.
EARNINGS PER SHARE
Diluted earnings per share for the nine month period ending September 30, 2006 and 2005 are the same as basic earnings per share because the exercise of potentially dilutive securities would not have an effect.
COMMON STOCK ISSUED
| 2006 | 2005 | ||||
| Number of Shares |
| Amount | Number of Shares |
| Amount |
Balance, beginning of period | 74,763,037 | $ | 63,769,721 | 71,203,307 | $ | 62,656,769 |
Transactions during the period |
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Private Placement |
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Exercised Purchase Warrants | - | $ | - | 3,560,000 | $ | 963,072 |
Issued for Stock Based Compensation | - |
| - | - |
| 149,880 |
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Balance, end of period | 74,763,037 | $ | 63,769,721 | 74,763,037 | $ | 63,769,721 |
#
ASPEN GROUP RESOURCES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in US Dollars)
OPERATIONS
The Company's operations for the nine month periods are carried on in the following geographic locations:
|
| US |
| Canada |
| Total |
September 30, 2006 |
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Total assets |
| 1,769,849 |
| 11,402,692 |
| 13,172,541 |
Gross revenue |
| 1,025,259 |
| 1,778,170 |
| 2,803,429 |
Net earnings (loss) |
| (1,090,705) |
| (1,025,033) |
| (2,115,738) |
Earnings per share (loss) |
| (0.02) |
| (0.01) |
| (0.03) |
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September 30, 2005 |
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Total assets |
| 5,387,780 |
| 6,206,241 |
| 11,594,021 |
Gross revenue |
| 646,407 |
| 2,043,083 |
| 2,689,490 |
Net earnings (loss) |
| (2,901,671) |
| 276,123 |
| (2,625,548) |
Earnings (loss) per share |
| (0.04) |
| (0.00) |
| (0.04) |
OTHER INFORMATION
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
Certain statements in this filing, and elsewhere (such as in other filings by Aspen Resources with the Commission, press releases, presentations by Aspen Resources Corporation or its management and oral statements) constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Aspen Resources Corporation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, (i) significant variability in Aspen’s quarterly revenues and results of operations as a result of variations in the Aspen’s production in a particular quarter while a significant percentage of its operating expenses are fixed in advance, (ii) changes in the prices of oil and gas, (iii) Aspen’s ability to obtain capital and (iv) other risk factors commonly faced by small oil and gas companies.
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