Colorado
|
84-1014610
|
(State
or
other jurisdiction of incorporation)
|
(IRS
Employer
Identification No.)
|
|
|
1660
Lincoln
Street, Suite 2700, Denver, Colorado
|
80264-2701
|
(Address
of
principal executive offices)
|
(Zip
code)
|
|
|
[
]
|
Written
communications pursuant to Rule 245 under the Securities Act (17
CFR
230-425)
|
||
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[
]
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
|
||
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(a)
|
Financial
statements of businesses
acquired.
|
Independent
Auditors’ Report
|
3
|
|
|
Consolidated
Financial Statements
|
|
|
|
Consolidated Balance Sheets
|
4
|
|
|
Consolidated Statements of Operations
|
6
|
|
|
Consolidated Statement of Members’ Equity (Deficit)
|
6
|
|
|
Consolidated Statements of Cash Flows
|
7
|
|
|
Notes
to
Consolidated Financial Statements
|
8
|
|
|
|
|
December
31,
|
|
||||
|
|
2005
|
|
2004
|
|
||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
52,444
|
|
$
|
58,887
|
|
Accounts receivable
|
|
|
221,590
|
|
|
-
|
|
Inventory
|
|
|
86,000
|
|
|
-
|
|
Prepaid expenses
|
|
|
53,053
|
|
|
-
|
|
Total current assets
|
|
|
413,087
|
|
|
58,887
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment:
|
|
|
|
|
|
|
|
Underground equipment
|
|
|
5,750,583
|
|
|
-
|
|
Surface equipment
|
|
|
4,640,470
|
|
|
|
|
Deferred mine development
|
|
|
5,755,233
|
|
|
179,612
|
|
|
|
|
16,146,286
|
|
|
179,612
|
|
Accumulated
depreciation, depletion and amortization
|
|
|
(175,000
|
)
|
|
-
|
|
Property, plant and equipment, net
|
|
|
15,971,286
|
|
|
179,612
|
|
|
|
|
|
|
|
|
|
Other
assets:
|
|
|
|
|
|
|
|
Advance royalties
|
|
|
132,030
|
|
|
89,940
|
|
Other
|
|
|
24,730
|
|
|
-
|
|
Deferred financing costs, net
|
|
|
100,122
|
|
|
-
|
|
Total other assets
|
|
|
256,882
|
|
|
89,940
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
16,641,255
|
|
$
|
328,439
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
||||
|
|
2005
|
|
2004
|
|
||
LIABILITIES
AND MEMBERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
2,458,735
|
|
$
|
372
|
|
Asset retirement obligations
|
|
|
615,000
|
|
|
-
|
|
Total current liabilities
|
|
|
3,073,735
|
|
|
372
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
Notes payable - financial institutions
|
|
|
14,499,979
|
|
|
-
|
|
Notes payable - members
|
|
|
2,500,000
|
|
|
-
|
|
Total long-term liabilities
|
|
|
16,999,979
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
20,073,714
|
|
|
372
|
|
|
|
|
|
|
|
|
|
Commitments
(Note 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Members’
equity (deficit)
|
|
|
(3,432,459
|
)
|
|
328,067
|
|
|
|
|
|
|
|
|
|
Total liabilities and members’ equity (deficit)
|
|
$
|
16,641,255
|
|
$
|
328,439
|
|
|
|
|
|
|
|
|
|
|
|
For
the year
ended
December
31,
|
|
||||
|
|
2005
|
|
2004
|
|
||
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Coal sales
|
|
$
|
871,062
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
Cost of coal sales
|
|
|
3,476,988
|
|
|
-
|
|
Depreciation, depletion and amortization
|
|
|
175,000
|
|
|
-
|
|
Selling, general and administrative expenses
|
|
|
767,305
|
|
|
18,813
|
|
Other expenses
|
|
|
24,120
|
|
|
-
|
|
|
|
|
4,443,413
|
|
|
18,813
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(3,572,351
|
)
|
|
(18,813
|
)
|
|
|
|
|
|
|
|
|
Other
income
(expense):
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(347,939
|
)
|
|
-
|
|
Amortization of deferred financing costs
|
|
|
(8,056
|
)
|
|
-
|
|
Miscellaneous income
|
|
|
57,820
|
|
|
-
|
|
Total other income (expense)
|
|
|
(298,175
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(3,870,526
|
)
|
$
|
(18,813
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
January 1, 2004
|
|
$
|
201,880
|
|
|
|
|
|
|
Capital contributions
|
|
|
145,000
|
|
Net loss
|
|
|
(18,813
|
)
|
|
|
|
|
|
Balance,
December 31, 2004
|
|
|
328,067
|
|
|
|
|
|
|
Capital contributions
|
|
|
110,000
|
|
Net loss
|
|
|
(3,870,526
|
)
|
|
|
|
|
|
Balance,
December 31, 2005
|
|
$
|
(3,432,459
|
)
|
|
|
|
|
|
|
|
For
the year
ended December 31,
|
|
||||
|
|
2005
|
|
2004
|
|
||
|
|
|
|
|
|
||
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(3,870,526
|
)
|
$
|
(18,813
|
)
|
Adjustments
to reconcile net loss to net cash used for operating
activities:
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
175,000
|
|
|
-
|
|
Amortization of deferred financing costs
|
|
|
8,056
|
|
|
-
|
|
Changes
in
operating assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(221,590
|
)
|
|
-
|
|
Inventory
|
|
|
(86,000
|
)
|
|
-
|
|
Prepaid expenses
|
|
|
(53,053
|
)
|
|
-
|
|
Accounts payable and accrued liabilities
|
|
|
1,763,538
|
|
|
372
|
|
Net cash used for operating activities
|
|
|
(2,284,575
|
)
|
|
(18,441
|
)
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(14,656,850
|
)
|
|
(22,734
|
)
|
Advance royalties
|
|
|
(42,089
|
)
|
|
(42,554
|
)
|
Other assets
|
|
|
(24,730
|
)
|
|
-
|
|
Net cash used for investing activities
|
|
|
(14,723,669
|
)
|
|
(65,288
|
)
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
Bank overdraft
|
|
|
-
|
|
|
(2,384
|
)
|
Deferred financing costs
|
|
|
(108,178
|
)
|
|
-
|
|
Proceeds from notes payable - financial institutions
|
|
|
14,499,979
|
|
|
-
|
|
Proceeds from notes payable - members
|
|
|
2,500,000
|
|
|
-
|
|
Capital contributions
|
|
|
110,000
|
|
|
145,000
|
|
Net cash provided by financing activities
|
|
|
17,001,801
|
|
|
142,616
|
|
|
|
|
|
|
|
|
|
Net
increase
(decrease) in cash and cash equivalents
|
|
|
(6,443
|
)
|
|
58,887
|
|
Cash
and cash
equivalents:
|
|
|
|
|
|
|
|
Beginning of year
|
|
|
58,887
|
|
|
-
|
|
End of year
|
|
$
|
52,444
|
|
$
|
58,887
|
|
|
|
|
|
|
|
|
|
Supplement
disclosures of cash flow information:
|
|
|
|
|
|
|
|
Cash paid during the year for interest, net of amounts capitalized
|
|
$
|
234,990
|
|
$
|
-
|
|
Supplement
schedule of non-cash investing and financing
activities:
|
|
|
|
|
|
|
|
Non-cash addtitions to deferred mine development costs
|
|
$
|
694,825
|
|
$
|
-
|
|
Asset retirement obligations
|
|
$
|
615,000
|
|
$
|
-
|
|
Balance,
December 31, 2004
|
|
$
|
-
|
|
Additions
|
|
615,000
|
|
|
Accretion
|
|
|
-
|
|
Settlements
|
|
|
-
|
|
Revisions to previous estimates
|
|
|
-
|
|
Balance,
December 31, 2005
|
|
$
|
615,000
|
|
|
|
|
|
|
Unaudited
Consolidated Financial Statements
|
|
|
|
Unaudited Consolidated Balance Sheets
|
16
|
|
|
Unaudited Consolidated Statements of Operations
|
18
|
|
|
Unaudited Consolidated Statements of Cash Flows
|
19
|
|
|
Notes
to
Unaudited Consolidated Financial Statements
|
20
|
|
|
|
|
March
31,
|
|
||||
|
|
2006
|
|
2005
|
|
||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1,662,366
|
|
$
|
77,499
|
|
Accounts receivable
|
|
|
691,840
|
|
|
-
|
|
Inventory
|
|
|
36,756
|
|
|
-
|
|
Prepaid expenses
|
|
|
83,370
|
|
|
-
|
|
Total current assets
|
|
|
2,474,332
|
|
|
77,499
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment:
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
11,763,990
|
|
|
5,765,049
|
|
Deferred mine development
|
|
|
6,693,785
|
|
|
331,241
|
|
|
|
|
18,457,775
|
|
|
6,096,290
|
|
Accumulated
depreciation, depletion and amortization
|
|
|
(728,000
|
)
|
|
-
|
|
Property, plant and equipment, net
|
|
|
17,729,775
|
|
|
6,096,290
|
|
|
|
|
|
|
|
|
|
Other
assets:
|
|
|
|
|
|
|
|
Advance royalties
|
|
|
135,534
|
|
|
99,271
|
|
Other
|
|
|
29,373
|
|
|
2,130
|
|
Deferred financing costs, net
|
|
|
96,670
|
|
|
-
|
|
Total
other assets
|
|
|
261,577
|
|
|
101,401
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
20,465,684
|
|
$
|
6,275,190
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
||||
|
|
2006
|
|
2005
|
|
||
LIABILITIES
AND MEMBERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Notes payable - Hallador Petroleum Company
|
|
$
|
7,000,000
|
|
$
|
-
|
|
Accounts payable and accrued liabilities
|
|
|
1,844,815
|
|
|
4,751,026
|
|
Asset retirement obligations
|
|
|
615,000
|
|
|
-
|
|
Total current liabilities
|
|
|
9,459,815
|
|
|
4,751,026
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
Notes payable - financial institutions
|
|
|
14,419,000
|
|
|
678,500
|
|
Notes payable - members
|
|
|
2,500,000
|
|
|
474,985
|
|
Total long-term liabilities
|
|
|
16,919,000
|
|
|
1,153,485
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
26,378,815
|
|
|
5,904,511
|
|
|
|
|
|
|
|
|
|
Commitments
(Note 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Members’
equity (deficit)
|
|
|
(5,913,131
|
)
|
|
370,679
|
|
|
|
|
|
|
|
|
|
Total liabilities and members’ equity (deficit)
|
|
$
|
20,465,684
|
|
$
|
6,275,190
|
|
|
|
|
|
|
|
|
|
|
|
For
the three
months ended March 31,
|
|
||||
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
||
Revenue:
|
|
|
|
|
|
|
|
Coal sales
|
|
$
|
3,016,301
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
Cost of coal sales
|
|
|
4,189,549
|
|
|
-
|
|
Depreciation, depletion and amortization
|
|
|
553,000
|
|
|
-
|
|
Selling, general and administrative expenses
|
|
|
183,402
|
|
|
15,681
|
|
Other expenses
|
|
|
94,380
|
|
|
69,332
|
|
|
|
|
5,020,331
|
|
|
85,013
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(2,004,030
|
)
|
|
(85,013
|
)
|
|
|
|
|
|
|
|
|
Other
income
(expense):
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(473,190
|
)
|
|
(5,625
|
)
|
Amortization of deferred financing costs
|
|
|
(3,452
|
)
|
|
-
|
|
Miscellaneous income
|
|
|
-
|
|
|
-
|
|
Total other income (expense)
|
|
|
(476,642
|
)
|
|
(5,625
|
)
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(2,480,672
|
)
|
$
|
(90,638
|
)
|
|
|
|
|
|
|
|
|
|
|
For
the three
months ended March 31,
|
|
||||
|
|
2006
|
|
2005
|
|
||
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(2,480,672
|
)
|
$
|
(90,638
|
)
|
Adjustments
to reconcile net loss to net cash provided by (used for) operating
activities:
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
553,000
|
|
|
-
|
|
Amortization of deferred financing costs
|
|
|
3,452
|
|
|
-
|
|
Other
|
|
|
-
|
|
|
23,250
|
|
Changes
in
operating assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(470,250
|
)
|
|
-
|
|
Inventory
|
|
|
49,244
|
|
|
-
|
|
Prepaid expenses
|
|
|
(30,316
|
)
|
|
-
|
|
Accounts payable and accrued liabilities
|
|
|
(8,097
|
)
|
|
105,907
|
|
N Net
cash provided by (used for) operating activities
|
|
|
(2,383,639
|
)
|
|
38,519
|
|
|
|
|
|
|
|
|
4
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(2,917,312
|
)
|
|
(1,271,931
|
)
|
Advance royalties
|
|
|
(3,505
|
)
|
|
(9,331
|
)
|
Other assets
|
|
|
(4,643
|
)
|
|
(2,130
|
)
|
Net
cash used for investing activities
|
|
|
(2,925,460
|
)
|
|
(1,283,392
|
)
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
Proceeds from notes payable - financial institutions
|
|
|
-
|
|
|
678,500
|
|
Payments of notes payable - financial institutions
|
|
|
(80,979
|
)
|
|
-
|
|
Proceeds from notes payable - Hallador Petroleum
|
|
|
7,000,000
|
|
|
-
|
|
Proceeds from notes payable - members
|
|
|
-
|
|
|
474,985
|
|
Capital contributions
|
|
|
-
|
|
|
110,000
|
|
Net
cash provided by financing activities
|
|
|
6,919,021
|
|
|
1,263,485
|
|
|
|
|
|
|
|
|
|
Net
increase
(decrease) in cash and cash equivalents
|
|
|
1,609,922
|
|
|
18,612
|
|
Cash
and cash
equivalents:
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
52,444
|
|
|
58,887
|
|
End of period
|
|
$
|
1,662,366
|
|
$
|
77,499
|
|
|
|
|
|
|
|
|
|
Supplement
disclosures of cash flow information:
|
|
|
|
|
|
|
|
Cash paid during the year for interest, net of amounts capitalized
|
|
$
|
402,241
|
|
|
-
|
|
Supplement
schedule of non-cash investing and financing
activities:
|
|
|
|
|
|
|
|
Non-cash additions to deferred mine development
costs
|
|
$
|
-
|
|
$
|
4,644,748
|
|
Balance,
January 1, 2006
|
|
$
|
615,000
|
|
Additions
|
|
|
-
|
|
Accretion
|
|
|
-
|
|
Settlements
|
|
|
-
|
|
Revisions to previous estimates
|
|
|
-
|
|
Balance,
March 31, 2006
|
|
$
|
615,000
|
|
(b)
|
Pro
forma
financial information.
|
· |
The
acquisition of the 60% interest in Sunrise;
and
|
· |
The
sale of
Hallador common stock to Yorktown to fund the acquisition of the
60%
interest in Sunrise.
|
· |
The
acquisition of the 60% interest in
Sunrise.
|
· |
The
acquisition of the 32% interest in Savoy from Yorktown;
and
|
· |
The
sales of
Hallador common stock to Yorktown to fund the acquisition of the
60%
interest in Sunrise and the 32% interest in
Savoy.
|
|
|
Hallador
|
|
Sunrise
|
|
Adjustments
|
|
Pro
Forma
|
|
||||
Current
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
12,203,000
|
|
$
|
1,662,366
|
|
$
|
(500,000)
|
(b)
|
$
|
365,366
|
|
|
|
|
|
|
|
|
|
|
(13,000,000)
|
(b)
|
|
|
|
Accounts
receivable - trade
|
|
|
919,000
|
|
|
691,840
|
|
|
|
|
|
1,610,840
|
|
Accounts receivable - Sunrise
|
|
|
7,083,000
|
|
|
-
|
|
|
(7,083,000)
|
(a)
|
|
-
|
|
Inventory
|
|
|
-
|
|
|
36,756
|
|
|
-
|
|
|
36,756
|
|
Prepaid expenses
|
|
|
-
|
|
|
83,370
|
|
|
-
|
|
|
83,370
|
|
Total current assets
|
|
|
20,205,000
|
|
|
2,474,332
|
|
|
(20,583,000)
|
|
|
2,096,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
5,368,000
|
|
|
18,457,775
|
|
|
13,500,000
|
(b)
|
|
40,835,576
|
|
|
|
|
|
|
|
|
|
|
3,413,131
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
96,670
|
(f)
|
|
|
|
Accumulated
depreciation, depletion and amortization
|
|
|
(1,790,000
|
)
|
|
(728,000
|
)
|
|
-
|
|
|
(2,518,000
|
)
|
Property,
plant and equipment, net
|
|
|
3,578,000
|
|
|
17,729,775
|
|
|
17,009,801
|
|
|
38,317,576
|
|
Other
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity investments
|
|
|
6,774,000
|
|
|
-
|
|
|
-
|
|
|
6,774,000
|
|
Advance royalties
|
|
|
-
|
|
|
135,534
|
|
|
-
|
|
|
135,534
|
|
Other
|
|
|
271,000
|
|
|
29,373
|
|
|
-
|
|
|
300,373
|
|
Deferred financing costs, net
|
|
|
-
|
|
|
96,670
|
|
|
(96,670)
|
(f)
|
|
-
|
|
Total other assets
|
|
|
7,045,000
|
|
|
261,577
|
|
|
(96,670)
|
|
|
7,209,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
30,828,000
|
|
$
|
20,465,684
|
|
$
|
(3,669,869)
|
|
$
|
47,623,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
1,735,000
|
|
|
1,844,815
|
|
|
(83,000)
|
(a)
|
|
3,496,815
|
|
Asset retirement obligations
|
|
|
-
|
|
|
615,000
|
|
|
-
|
|
|
615,000
|
|
Income taxes payable
|
|
|
292,000
|
|
|
-
|
|
|
-
|
|
|
292,000
|
|
Total current liabilities
|
|
|
2,027,000
|
|
|
2,459,815
|
|
|
(83,000)
|
|
|
4,403,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable - financial institutions
|
|
|
-
|
|
|
14,419,000
|
|
|
-
|
|
|
14,419,000
|
|
Notes payable - Hallador
|
|
|
-
|
|
|
7,000,000
|
|
|
(7,000,000)
|
(a)
|
|
-
|
|
Notes payable - members
|
|
|
-
|
|
|
2,500,000
|
|
|
(2,500,000)
|
(c)
|
|
-
|
|
Total long-term liabilities
|
|
|
-
|
|
|
23,919,000
|
|
|
(9,500,000)
|
|
|
14,419,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
2,027,000
|
|
|
26,378,815
|
|
|
(9,583,000)
|
|
|
18,822,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity/members’ deficit
|
|
|
28,801,000
|
|
|
(5,913,131
|
)
|
|
5,913,131
|
(c)
|
|
28,801,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and shareholders’ equity/members deficit
|
|
$
|
30,828,000
|
|
$
|
20,465,684
|
|
$
|
(3,669,869)
|
|
$
|
47,623,815
|
|
|
|
Hallador
|
|
Sunrise
|
|
Adjustments
|
|
Pro
Forma
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas sales
|
|
$
|
293,000
|
|
$
|
-
|
|
$
|
-
|
|
$
|
293,000
|
|
Coal sales
|
|
|
-
|
|
|
3,016,301
|
|
|
(3,016,301)
|
(k)
|
|
-
|
|
Interest income
|
|
|
180,000
|
|
|
-
|
|
|
(83,000)
|
(d)
|
|
97,000
|
|
Equity investment income
|
|
|
373,000
|
|
|
-
|
|
|
-
|
|
|
373,000
|
|
|
|
|
846,000
|
|
|
3,016,301
|
|
|
(3,099,301)
|
(k)
|
|
763,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expense
|
|
|
56,000
|
|
|
-
|
|
|
-
|
|
|
56,000
|
|
Cost of coal sales
|
|
|
-
|
|
|
4,189,549
|
|
|
(4,189,549)
|
(k)
|
|
-
|
|
Depreciation, depletion and amortization
|
|
|
-
|
|
|
553,000
|
|
|
(553,000)
|
(k)
|
|
-
|
|
Selling, general and administrative expenses
|
|
|
374,000
|
|
|
183,402
|
|
|
-
|
|
|
557,402
|
|
Other expenses
|
|
|
189,000
|
|
|
94,380
|
|
|
-
|
|
|
283,380
|
|
|
|
|
619,000
|
|
|
5,020,331
|
|
|
(4,742,549)
|
|
|
896,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
|
|
227,000
|
|
|
(2,004,030
|
)
|
|
1,643,248
|
|
|
(133,782
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
-
|
|
|
(473,190
|
)
|
|
83,000
|
(d)
|
|
-
|
|
390,190 | (k) | - | |||||||||||
Amortization of deferred financing costs
|
|
|
-
|
|
|
(3,452
|
)
|
|
(3,452)
|
(k)
|
|
-
|
|
Total other expense
|
|
|
-
|
|
|
(476,642
|
)
|
|
476,642
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss)
before taxes
|
|
|
227,000
|
|
|
(2,480,672
|
)
|
|
2,119,890
|
|
|
(133,782
|
)
|
Income
taxes
|
|
|
(84,000
|
)
|
|
-
|
|
|
84,000
|
(e)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
(loss)
|
|
$
|
143,000
|
|
$
|
(2,480,672
|
)
|
$
|
2,203,890
|
|
$
|
(133,782
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss)
from continuing operations per share
|
|
$
|
.01
|
|
|
|
|
|
|
|
$
|
(.01
|
)
|
Weighted
average shares outstanding
|
|
|
10,330,000
|
|
|
|
|
|
1,838,135
|
(g)
|
|
12,168,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hallador
|
|
Sunrise
|
|
Adjustments
|
|
Pro
Forma
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas sales
|
|
$
|
1,102,000
|
|
$
|
-
|
|
$
|
-
|
|
$
|
1,102,000
|
|
Coal sales
|
|
|
-
|
|
|
871,062
|
|
|
(871,062)
|
(k)
|
|
-
|
|
Interest income
|
|
|
544,000
|
|
|
-
|
|
|
-
|
|
|
544,000
|
|
Equity investment income
|
|
|
-
|
|
|
-
|
|
|
1,538,000
|
(h)
|
|
1,299,000
|
|
-
|
-
|
(239,000)
|
(j)
|
-
|
|||||||||
|
|
|
1,646,000
|
|
|
871,062
|
|
|
427,938
|
|
|
2,945,000
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expenses
|
|
|
227,000
|
|
|
|
|
|
-
|
|
|
227,000
|
|
Cost of coal sales
|
|
|
|
|
|
3,476,988
|
|
|
(3,476,988)
|
(k)
|
|
-
|
|
Depreciation, depletion and amortization
|
|
|
43,000
|
|
|
175,000
|
|
|
(175,000)
|
(k)
|
|
43,000
|
|
Impairment
|
|
|
183,000
|
|
|
|
|
|
-
|
|
|
183,000
|
|
Selling, general and administrative expenses
|
|
|
612,000
|
|
|
767,305
|
|
|
-
|
|
|
1,379,305
|
|
Other expenses
|
|
|
160,000
|
|
|
24,120
|
|
|
-
|
|
|
184,120
|
|
|
|
|
1,225,000
|
|
|
4,443,413
|
|
|
(3,651,988)
|
|
|
2,016,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss)
from continuing operations
|
|
|
421,000
|
|
|
(3,572,351
|
)
|
|
4,079,926
|
|
|
928,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
-
|
|
|
(347,939
|
)
|
|
347,939
|
(k)
|
|
-
|
|
Amortization of deferred financing costs
|
|
|
-
|
|
|
(8,056
|
)
|
|
8,056
|
(k)
|
|
-
|
|
Miscellaneous income
|
|
|
-
|
|
|
57,820
|
|
|
-
|
|
|
57,820
|
|
Total other income (expense)
|
|
|
-
|
|
|
(298,175
|
)
|
|
355,995
|
|
|
57,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss)
from continuing operations before
minority interest
|
|
|
421,000
|
|
|
(3,870,526
|
)
|
|
4,435,921
|
|
|
986,395
|
|
Minority
interest
|
|
|
(84,000
|
)
|
|
-
|
|
|
-
|
|
|
(84,000
|
)
|
Income
(loss)
from continuing operations before taxes
|
|
|
337,000
|
|
|
(3,870,526
|
)
|
|
4,435,921
|
|
|
902,395
|
|
Income
tax -
current
|
|
|
(145,000
|
)
|
|
-
|
|
|
(243,000)
|
(e)
|
|
(388,000
|
)
|
Income
(loss)
from continuing operations
|
|
$
|
192,000
|
|
$
|
(3,870,526
|
)
|
$
|
4,192,921
|
(d)
|
$
|
514,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss)
from continuing operations per share
|
|
$
|
.03
|
|
|
|
|
|
|
|
$
|
.04
|
|
Weighted
average shares outstanding
|
|
|
7,155,000
|
|
|
|
|
|
3,181,816
|
(g)
|
|
12,229,985
|
|
|
|
|
|
|
|
|
|
|
1,893,169
|
(i)
|
|
|
|
(a)
|
Eliminate
intercompany receivable and payable, and accrued interest receivable
and
payable,
to
consolidate Sunrise Coal, LLC with Hallador Petroleum
Company.
|
(b)
|
Reflect
acquisition by Hallador of a 60% interest in Sunrise Coal, LLC for
$20,500,000, including initial injection of cash of $7,500,000 (of
which
$7,000,000 was previously contributed in the form of a note that
was
extinguished at the date of acquisition), additional amounts to be
contributed of $13,000,000.
|
|
The
purchase
consideration and purchase price allocation are as
follows:
|
Purchase Price
|
|
|
|
Cash paid
|
|
$
7,500,000
|
|
Future required contributions
|
|
13,000,000
|
|
Liabilities assumed
|
|
16,878,815
|
|
|
|
$37,378,815
|
|
Purchase Price Allocation
|
|
|
|
Current assets
|
|
$
2,474,332
|
|
Property, plant
and
equipment
|
|
34,771,560
|
|
Other assets
|
|
132,923
|
|
|
|
$37,378,815
|
|
(c)
|
Eliminate
predecessor entity accumulated deficit in excess of contributed capital
at
the date of acquisition with a corresponding charge to property,
plant and
equipment,
in
accordance with purchase accounting.
|
(d)
|
Eliminate
intercompany interest income and interest expense to
consolidate Sunrise Coal, LLC with Hallador Petroleum
Company.
|
(e)
|
To
reflect income tax expense at an effective tax rate of
43%.
|
(f)
|
To
expense
deferred financing costs.,as
required
by EITF 96-19.
|
(g)
|
To
reflect
the additional shares issued to Yorktown Energy Partners VI, L.P.
used
to
fund
the
$7,000,000 advance to Sunrise Coal,
LLC.
|
(h)
|
Equity
in
income of Savoy Energy, L.P. (Savoy) equal to the product of Savoy's
net
income of $4,807,000 and Hallador's 32% ownership interest.
Included in
Savoy's net income of $4,807,000 was a gain on sale of proved properties
of $3,133,000 of which $1,003,000 would be attributable to Hallador's
32%
interest
|
(i)
|
To
reflect
the additional shares issued to Yorktown Energy Partners VI, L.P.
for
which proceeds were used to partially fund the acquisition of Hallador's
32% interest in Savoy.
|
(j)
|
Hallador Petroleum Company’s purchase price exceeded its pro rata share of
the equity of Savoy Energy, L.P. The
excess
was attributed to Savoy’s oil and gas properties. The adjustment
reflects the depreciation, depletion and amortization
|