UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2002
OR
( ) 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: 1-5673
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RANGER INDUSTRIES, INC.
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Exact name of Registrant as specified in its charter
Connecticut 06-0768904
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State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
3400 82nd Way North, St. Petersburg, FL 33710
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Address of principal executive offices Zip Code
Registrant's telephone number, including area code: (727) 381-4904
Former name, former address and former fiscal year, if changed since last
report:
Indicate by check mark whether Ranger (1) has filed all annual, quarterly and
other reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that Ranger was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
The number of shares outstanding of each of the issuer's classes of common
stock, as of May 8, 2002, were 15,610,463 shares, $0.01 par value.
RANGER INDUSTRIES, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED BALANCE SHEETS
PART I. FINANCIAL INFORMATION
ASSETS
March 31, 2002 December 31,
(Unaudited) 2001
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Current assets:
Cash and cash equivalents $ 11,617 $ 101,234
Restricted cash and cash equivalents 8,500,000 --
Marketable equity securities 21,000 22,200
Prepaid expenses and other current assets 50,000 25,000
Accrued interest receivable 17,419 17,419
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Total current assets 8,600,036 165,853
Property and equipment, net of accumulated operations of $2,105 8,873 6,589
Restricted cash and cash equivalents -- 8,500,000
Investment in oil and gas properties 589,482 555,115
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$ 9,198,391 $ 9,227,557
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LIABILITES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 123,169 $ 154,417
Accrued expenses, related party 3,482 9,886
Accrued expenses, other -- 3,022
Note payable, bank 8,500,000 --
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Total current liabilities 8,626,651 167,325
Note payable, bank -- 8,500,000
Other liabilities 100,000 100,000
Due to related parties 345,366 198,449
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9,072,017 8,965,774
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Minority interest -- --
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Stockholders' equity:
Common stock 199,986 199,986
Capital in excess of par 9,487,981 9,487,981
Deficit accumulated during development stage (768,731) (659,522)
Less treasury stock (4,388,181 shares at cost) (8,776,362) (8,776,362)
Other comprehensive income (16,500) 9,700
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126,374 261,783
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$ 9,198,391 $ 9,227,557
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(*) $.01 par value 20,000,000 shares authorized; 2001, 19,998,644 shares issued, 15,610,463
shares outstanding
See notes to condensed consolidated financial statements.
RANGER INDUSTRIES, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months From Inception
Ended March 31, (March 18, 1998)
---------------------------- through
2002 2001 March 31, 2002
------------ ------------ --------------
Consulting income $ -- $ -- $ 150,000
------------ ------------ ------------
Operating costs and expenses
Loss on investment in oil and gas activities -- -- 156,130
Administrative 8,985 7,899 85,770
Salaries and wages 30,000 30,000 200,000
Stock-based compensation -- -- 19,919
Legal and professional fees 21,479 107,414 201,942
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60,464 145,313 663,761
------------ ------------ ------------
Other income and (expenses):
Interest income 92,698 104,886 446,386
Interest expense (141,443) (66,489) (627,958)
Other income -- -- 2,711
Other expense -- -- (87,895)
------------ ------------ ------------
(48,745) 38,397 (266,756)
------------ ------------ ------------
Loss before income taxes (109,209) (106,916) (780,517)
Income taxes -- -- --
Minority interest in loss of joint venture -- -- 12,000
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Net loss (109,209) (106,916) (768,517)
------------ ------------ ------------
Basic loss per share ($ .01) ($ .01) ($ .14)
============ ============ ============
Weighted average shares outstanding 15,610,463 11,248,140 5,642,244
============ ============ ============
See notes to condensed consolidated financial statements.
RANGER INDUSTRIES, INC. AND SUBSIDARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months From Inception
Ended March 31, (March 18, 1998)
---------------------------- through
2002 2001 March 31, 2002
------------ ------------ --------------
Cash flows from operating activities:
Net loss ($ 109,209) ($ 106,916) ($ 768,731)
------------ ------------ ------------
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock-based compensation -- -- 19,919
Depreciation 458 -- 2,105
Minority interest in loss of joint venture -- -- (12,000)
Change in assets and liabilities:
Prepaid expenses and other assets (25,000) (6,975) (14,980)
Accrued interest receivable -- (15,736) 23,503
Accounts payable and accrued expenses (30,788) (611,889) (456,322)
------------ ------------ ------------
Total adjustments (55,330) (634,600) (437,775)
------------ ------------ ------------
Net cash used in operating activities (164,539) (741,516) (1,206,506)
------------ ------------ ------------
Cash flows from investing activities:
Acquisition of marketable equity securities (25,000) -- (37,500)
Acquisition of property and equipment (2,742) -- (10,978)
Acquisition of oil and gas properties (34,367) (176,046) (477,482)
Cash acquired in business combination -- 10,233,478 10,233,478
Deposits to restricted cash -- (8,677,440) (8,500,000)
------------ ------------ ------------
Net cash provided by investing activities (62,109) 1,379,992 1,207,518
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from issuance of stock -- -- 1
Proceeds from notes payable -- 8,500,000 8,500,000
Acquisition of treasury shares -- (8,776,362) (8,776,362)
Advances from related party 137,031 (55,817) 286,966
------------ ------------ ------------
Net cash used in financing activities 137,031 (332,179) 10,605
------------ ------------ ------------
Net increase in cash and cash equivalents (89,617) 306,297 11,617
Cash and cash equivalents at beginning of period 101,234 85 --
------------ ------------ ------------
Cash and cash equivalents at end of period
(exclusive of restricted cash of $8,500,000) $ 11,617 $ 306,382 $ 11,617
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 136,000 $ 66,489 $ 622,155
============ ============ ============
See notes to condensed consolidated financial statements.
RANGER INDUSTRIES, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
AND FROM INCEPTION (MARCH 18, 1998) THROUGH MARCH 31, 2002
(UNAUDITED)
1. Nature of business, basis of presentation and summary of significant
accounting policies:
Interim financial statements:
The interim financial statements of Ranger Industries, Inc. and
Subsidiaries which are included herein are unaudited and have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. In the
opinion of management, these interim financial statements include all the
necessary adjustments to fairly present the results of the interim periods,
and all such adjustments are of a normal recurring nature. The interim
results reflected in the accompanying financial statements are not
necessarily indicative of the results of operations for a full fiscal year.
Nature of business and basis of presentation:
Bumgarner Enterprises, Inc. ("Bumgarner" or the "Company") was incorporated
under the laws of the State of Florida in March 1998. There was no
significant business activity from inception through October 2000. Since
October 2000, the Company acquired assets in the oil and gas industry
through joint venture investments and has subsequently pursued exploration
and development of those and other similar properties.
In February 2001, Bumgarner merged with Ranger Industries, Inc.'s ("Ranger"
or the "Registrant") subsidiary (BEI Acquisition Corporation) in
consideration of Ranger's issuance of 14,720,000 shares for 100% of
Bumgarner's issued and outstanding stock. This transaction was accounted
for in accordance with reverse acquisition accounting principles as though
it were a re-capitalization of Bumgarner and a sale of shares by Bumgarner
in exchange for the net assets of Ranger. In February 2001, Bumgarner
completed a tender offer for 4,225,000 shares of Ranger common stock at
$2.00 per share. Simultaneously, Bumgarner acquired an additional 163,181
shares pursuant to the terms of a related merger and acquisition agreement.
The acquisition was financed through a bank loan in the amount of
$8,500,000, which is collateralized by an equivalent amount in cash and
cash equivalents.
The accompanying statements of operations for the three months ended March
31, 2002 and 2001 include the results of operations and cash flows of
Bumgarner for those periods and the results of operations and cash flows of
Ranger from the date of acquisition (February 6, 2001) through March 31,
2002.
RANGER INDUSTRIES, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
AND FROM INCEPTION (MARCH 18, 1998) THROUGH MARCH 31, 2002
(UNAUDITED)
2. Oil and gas properties:
Supplemental information with respect to oil and gas properties is as
follows:
Capitalized costs relating to oil and gas exploration and development
activities at March 31, 2002:
Property acquisition exploration costs $115,724
Development costs 473,758
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$589,482
========
Costs incurred in oil and gas exploration and development activities for
the three months ended March 31, 2002:
Property acquisition costs:
Proved $ 8,186
Unproved 750
Exploration costs 25,431
Development costs --
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$34,367
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Note: Substantially all oil and gas costs incurred are attributable to the
majority interest in the joint venture.
3. Related party transactions:
Other fees:
One of the partners in the Joint Venture- Henryetta (Inter-Oil & Gas Group,
Inc. - "Interoil") manages the joint venture and is reimbursed for any
costs it incurs in that regard. Total amounts due to Interoil and an
officer of that Company aggregated $66,800 at March 31, 2002, all of which
were capitalized as investment in oil and gas properties. There were no
expenditures in this regard during the first quarter of 2001.
In addition to the aforementioned fees, that same partner will earn $25,000
as an operating fee in connection with the two initial wells to be drilled
in Coal County and $12,000 for the wells to be drilled in Okfuskee County.
RANGER INDUSTRIES, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
AND FROM INCEPTION (MARCH 18, 1998) THROUGH MARCH 31, 2002
(UNAUDITED)
3. Related party transactions (continued):
Due to related parties:
Due to related parties represent unsecured advances from the President of
the Company and entities affiliated through partial common ownership. These
advances generally bear interest at 8% and mature December 31, 2003. Of
these amounts $69,669 which represents accrued payroll to the President of
the Company, payment of which has been deferred to December 31, 2003.
Interest expense on related party advances aggregated $4,209 for the three
months ended March 31, 2002.
4. Income taxes:
Income taxes consist of the following:
Deferred tax benefit of operating loss carryforward $40,000
Increase in valuation allowance (40,000)
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Income tax expense $ --
=======
Income tax expense differs from that which would result from applying
statutory tax rates to pre-tax loss due to the increase in the valuation
allowance.
Deferred tax assets consist of the deferred tax benefit from the operating
loss carryforward of $276,000, reduced by a $276,000 valuation allowance
since management cannot presently determine that it is more likely than not
that such deferred tax assets will be realized.
ITEM 2. Management's Discussion and Analysis or Plan of Operation
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The following discussion should be read in conjunction with Item 1 above,
and the Financial Statements, including the Notes thereto. The following
discussion should also be read in conjunction with the financial statements and
the Plan of Operations contained in the report on Form 10-KSB Ranger Industries,
Inc. ("Ranger") filed with the Securities and Exchange Commission for the year
ended December 31, 2001 (our "Annual Report"). Ranger has had no revenues from
its primary business activities in either of its two most recent fiscal years or
the subsequent fiscal quarter. Consequently Ranger is providing a Plan of
Operations as required by Item 303(a) of Regulation S-B in lieu of a
Management's Discussion and Analysis.
Plan of Operations
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Background. Prior to its acquisition of Bumgarner through a merger that occurred
in February 2001, Ranger did not have any business activity. At the time of that
merger, Ranger's financial resources were solely its cash on hand.
As described more completely in our Annual Report, Ranger's business
activities changed in February 2001 when it acquired Bumgarner. Bumgarner had
acquired a 74.415% interest in the Henryetta Joint Venture and in December 2001
commenced participation in the OK'ee Mac Joint Venture, in each case with the
same affiliated company. In addition to its primary business activities, Ranger
has engaged in consulting activities that resulted in revenues of $150,000 in
2001 and no revenues during the first three months of 2002.
Anticipated Operations in 2002. Ranger's principal goal during 2002 is to meet
its obligations to the Henryetta Joint Venture, and to provide the Joint Venture
with sufficient capital so that it can achieve its drilling objectives. At March
31, 2002, however, Ranger has insufficient available working capital to
accomplish these objectives, as described in the following table:
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Current Assets $ 100,036
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Restricted Cash $8,500,000
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Current Liabilities $8,626,651
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Working Capital Deficit ($ 26,615)
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Current liabilities include Ranger's obligation to Guaranty Bank & Trust
Company of $8,500,000 which becomes due on January 29, 2003. Ranger does have
sufficient restricted cash pledged to repay the amount due to Guaranty Bank, but
would prefer to find other sources to repay Guaranty Bank so that Ranger can use
the restricted cash for its operations.
Ranger has generated losses since inception and has not yet generated
revenues from its primary business activities. Currently management can control
expenses and has drastically curtailed expenditures and drilling activities
until such time as funding can be obtained. If Ranger does not achieve any
funding, Ranger will only finance its administrative activities; Ranger believes
it has adequate resources to fund administrative costs at these reduced levels
at least through 2002. Ranger is actively seeking to acquire funding in excess
of $2,000,000 to permit the Company to actively resume development of oil and
gas properties in Henryetta Joint Venture and to resume acquisition of leases
and exploratory development operations with OK'ee Mac Joint Venture. Without
that funding and successful drilling of one or more wells capable of producing
oil and gas in commercial quantities, it is not likely that Ranger will be able
to achieve a positive cash flow.
Management is pursuing several opportunities for funding including several
merger opportunities and lending arrangements, any one of which, if successful,
can be expected to produce the cash required to undertake the drilling necessary
to produce oil and gas from the proved reserves reflected in the geological
surveys. In addition, management is actively involved in several business
consulting opportunities which may yield revenues sufficient to support an
increased level of operating costs in 2002. Although management believes it will
be successful, there can be no assurances that the Company will achieve its
objectives in these financing and consulting endeavors.
A promissory note exists within the consolidated group and funds
transferred in payment of that obligation are used to fund the oil and gas
investment. Should the Company's efforts relating to merger and consulting
endeavors be unsuccessful, management expects to obtain extensions of the
maturity of the promissory note to the Henryetta Joint Venture, and has received
an oral commitment in that regard.
Ranger (including its wholly-owned subsidiary, Bumgarner) has no current
plans to hire additional employees, and its only capital commitments are to
complete its obligations under the promissory note to the Henryetta Joint
Venture which will provide the funds to the Joint Venture necessary for its
anticipated drilling operations.
Note of Caution Regarding Forward-looking Statements: This report on Form
10-QSB, including the information incorporated by reference herein, contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Certain statements contained in this report using
the term "may", "expects to", and other terms denoting future possibilities, are
forward looking statements. These statements include, but are not limited to,
those statements relating to development of new products, the financial
condition of Ranger (including its lack of working capital and negative cash
flow). The accuracy of these statements cannot be guaranteed as they are subject
to a variety of risks that are beyond Ranger's ability to predict or control and
which may cause actual results to differ materially from the projections or
estimates contained herein. The business and economic risks faced by Ranger and
Ranger's actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors as described herein.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
--------------------------
There are no material pending legal or regulatory proceedings against
Ranger, and it is not aware of any that are known to be contemplated.
Item 2. Changes in Securities and Use of Proceeds.
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None.
Item 3. Defaults Upon Senior Securities.
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None.
Item 4. Submission of Matters to a Vote of Security Holders.
------------------------------------------------------------
No matter was submitted during the first quarter of the fiscal year covered
by this report to a vote of security holders, through the solicitation of
proxies or otherwise.
Item 5. Other Information.
--------------------------
None.
ITEM 6. Exhibits and Reports on Form 8-K
----------------------------------------
(a) Exhibits:
15. Letter from Aidman Piser & Company, P.A. dated May 8, 2002 on
Interim Unaudited Financial Information
(b) Reports on Form 8-K:
The Company filed no reports on Form 8-K during the quarter ended
March 31, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Ranger
Industries, Inc. has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 15, 2002 /s/ Charles G. Masters
--------------------------------
Charles G. Masters, President,
Principal Executive Officer and
Principal Financial and Accounting
Officer