TherapeuticsMD, Inc. - Quarter Report: 2008 June (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
x QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
quarterly period ended June 30, 2008
or
o TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Commission
File Number: 000-16731
CROFF
ENTERPRISES, INC.
(Exact
name of registrant as specified in its charter)
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Utah
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87-0233535
|
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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9903 Santa
Monica Blvd, Suite 287, Beverly Hills,
California
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90212
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(Address
of principal executive offices)
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(Zip
Code)
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(818)
735-0050
(Registrant's
telephone number, including area code)
Indicate by check mark whether the
registrant (1) has filed all 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 the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. YES x NO o
Indicate by checkmark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule12b-2 of the Exchange Act.
|
|
Large
accelerated filer o Accelerated
filer o Non-accelerated
filer o Smaller
reporting company x
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Indicate by checkmark whether the
registrant is a shell company (as defined by Rule12b-2 of the Exchange
Act).
YES x NO o
As of June 30, 2008, the registrant had
outstanding 1,016,799 shares of its $.10 par value common stock (its only class
of common stock), excluding 102,644 common shares held as treasury
stock.
CROFF
ENTERPRISES, INC.
INDEX TO
INFORMATION INCLUDED IN THE QUARTERLY REPORT ON FORM 10-Q
FOR THE
SIX MONTHS ENDED JUNE 30, 2008
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Page
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Number
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PART
I - FINANCIAL INFORMATION
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Item
1. Financial Statements.
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3 –
8
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Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations.
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9
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Item
3. Quantitative and Qualitative Disclosures About Market
Risk.
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11
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Item
4. Controls and Procedures.
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12
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PART
II - OTHER INFORMATION
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|
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Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds.
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12
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Item
5. Other Information.
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12
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Item
6. Exhibits.
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12
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Signatures
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13
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Certifications
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Attached
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-2-
NOTE
REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 10-Q and other
reports filed by Croff Enterprises, Inc. (“Croff” or the "Company") from
time-to-time with the Securities and Exchange Commission (collectively the
“Filings”) contain forward-looking statements and information that are based
upon beliefs of, and information currently available to, the Company's
management, as well as estimates and assumptions made by the Company's
management. When used in the Filings, the words "anticipate",
"believe", "estimate", "expect", "future", "intend", "plan" or the negative of
those terms and similar expressions as they relate to the Company or the
Company's management identify forward-looking statements. Such statements
reflect the current view of the Company with respect to future events and are
subject to risks, uncertainties, assumptions and other factors relating to the
Company's industry, operations and results of operations and any businesses that
may be acquired by the Company. Should one or more of those risks or
uncertainties materialize, or should the underlying assumptions prove incorrect,
actual results may differ significantly from those anticipated, believed,
estimated, expected, intended or planned.
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements.
The financial statements included
herein have been prepared in conformity with generally accepted accounting
principles. The statements are unaudited but reflect all adjustments, which, in
the opinion of management, are necessary to fairly present the Company’s
financial position and results of operations. All such adjustments are of a
normal recurring nature.
(Financial
Statements Commence on Following Page)
-3-
CROFF
ENTERPRISES, INC.
CONDENSED
BALANCE SHEETS
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June
30, 2008 (Unaudited)
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December
31, 2007
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|||||||
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ASSETS
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||||||||
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CURRENT
ASSETS
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||||||||
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Cash
and cash equivalents
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$ | 121,603 | $ | 408,634 | ||||
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Accounts
receivable
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- | 86,730 | ||||||
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TOTAL
CURRENT ASSETS
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121,613 | 495,364 | ||||||
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TOTAL
ASSETS
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$ | 121,613 | $ | 495,364 | ||||
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LIABILITIES
AND STOCKHOLDERS’ EQUITY
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||||||||
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LIABILITIES
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||||||||
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Accounts
payable
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$ | 12,433 | $ | 7,159 | ||||
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Dividends
payable
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32,076 | - | ||||||
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Accrued
liabilities
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- | 70,667 | ||||||
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TOTAL
LIABILITIES
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$ | 44,509 | $ | 77,826 | ||||
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STOCKHOLDERS’
EQUITY
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||||||||
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Class
A Preferred stock; no par value
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||||||||
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Authorized
– 10,000,000 shares
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||||||||
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Issued
and outstanding – 0 shares
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$ | - | $ | - | ||||
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Common
stock, par value $0.10 per share
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||||||||
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Authorized
– 50,000,000 shares
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||||||||
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Issued
and outstanding – 1,120,743 and 620,743, respectively
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112,064 | 62,064 | ||||||
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Additional
paid-in capital
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639,615 | 439,615 | ||||||
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Treasury
stock, at cost – 102,644 and 69,399 shares, respectively
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(154,364 | ) | (107,794 | ) | ||||
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Retained
(deficit) earnings
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(520,211 | ) | 23,653 | |||||
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TOTAL
STOCKHOLDERS’ EQUITY
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77,104 | 417,538 | ||||||
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TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 121,613 | $ | 495,364 | ||||
The
accompanying notes are an integral part of the financial statements
-4-
CROFF
ENTERPRISES, INC.
CONDENSED
STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three
Months
Ended
June
30, 2008
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Three
Months
Ended
June
30, 2007
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Six
Months
Ended
June
30, 2008
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Six
Months
Ended
June
30, 2007
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|||||||||||||
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(as
restated)
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(as
restated)
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|||||||||||||||
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EXPENSES
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||||||||||||||||
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General
and administrative
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$ | 55,453 | $ | 21,030 | $ | 90,575 | $ | 40,773 | ||||||||
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Consulting
fees, non-cash compensation
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250,000 | - | 250,000 | - | ||||||||||||
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TOTAL
EXPENSES
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305,453 | 21,030 | 340,575 | 40,773 | ||||||||||||
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(LOSS)
FROM OPERATIONS
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(305,453 | ) | (21,030 | ) | (340,575 | ) | (40,773 | ) | ||||||||
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OTHER
INCOME (EXPENSE)
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||||||||||||||||
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Interest
income
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988 | 11,279 | 3,429 | 22,428 | ||||||||||||
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OTHER
INCOME (EXPENSE)
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988 | 11,279 | 3,429 | 22,428 | ||||||||||||
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(LOSS)
FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
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(304,465 | ) | (9,751 | ) | (337,146 | ) | (18,345 | ) | ||||||||
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Provision
for income taxes
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- | - | - | - | ||||||||||||
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(LOSS)
FROM CONTINUING OPERATIONS
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(304,465 | ) | (9,571 | ) | (337,146 | ) | (18,345 | ) | ||||||||
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DISCONTINUED
OPERATIONS
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||||||||||||||||
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Income
discontinued operations
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- | 105,197 | - | 190,163 | ||||||||||||
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Provision
for income taxes
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- | 30,000 | - | 52,000 | ||||||||||||
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INCOME
FROM DISCONTINUED OPERATIONS
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- | 75,197 | - | 138,163 | ||||||||||||
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NET
(LOSS)
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$ | (304,465 | ) | $ | 65,626 | $ | (337,146 | ) | $ | 119,818 | ||||||
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NET
(LOSS) INCOME PER COMMON SHARE
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||||||||||||||||
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Basic
and diluted:
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||||||||||||||||
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Continuing
operations
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$ | (1.54 | ) | $ | (0.02 | ) | $ | (1.66 | ) | $ | (0.03 | ) | ||||
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Discontinued
operations
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- | 0.14 | - | 0.25 | ||||||||||||
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Net
(loss) income
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$ | (1.54 | ) | $ | 0.12 | $ | (1.66 | ) | $ | 0.22 | ||||||
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WEIGHTED
AVERAGE NUMBER OF
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||||||||||||||||
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COMMON
SHARES OUTSTANDING
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||||||||||||||||
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Basic
and diluted
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686,677 | 551,224 | 653,710 | 551,224 | ||||||||||||
The
accompanying notes are an integral part of the financial statements
-5-
CROFF
ENTERPRISES, INC.
CONDENSED
STATEMENT OF STOCKHOLDERS’ EQUITY
FOR
THE SIX MONTHS ENDED JUNE 30, 2008
(UNAUDITED)
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Common
Stock
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Additional
Paid-in
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Treasury
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Retained
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|||||||||||||||||||||
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Shares
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Amount
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Capital
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Stock
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Deficit
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Total
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|||||||||||||||||||
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Balance,
December 31, 2007
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620,743 | $ | 62,064 | $ | 439,615 | $ | (107,794 | ) | $ | 23,653 | $ | 417,538 | ||||||||||||
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Issuance
of common stock for
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||||||||||||||||||||||||
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deferred
consulting fees
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500,000 | 50,000 | 200,000 | - | - | 250,000 | ||||||||||||||||||
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Purchase
of treasury stock
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- | - | - | (46,570 | ) | - | (46,570 | ) | ||||||||||||||||
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Dividend
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- | - | - | - | (206,718 | ) | (206,718 | ) | ||||||||||||||||
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Net
(loss) for the six months
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||||||||||||||||||||||||
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Ended
June 30, 2008
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- | - | - | - | (337,146 | ) | (337,146 | ) | ||||||||||||||||
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Balance,
June 30, 2008
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1,120,743 | $ | 112,064 | $ | 639,615 | $ | (154,364 | ) | $ | (520,211 | ) | $ | 77,104 | |||||||||||
The
accompanying notes are an integral part of the financial statements
-6-
CROFF
ENTERPRISES, INC.
CONDENSED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Six
Months
Ended
June
30, 2008
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Six
Months
Ended
June
30, 2007
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|||||||
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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||||||||
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Net
(loss) from continuing operations
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$ | (337,146 | ) | $ | (18,345 | ) | ||
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Adjustments
to reconcile net (loss) to net cash
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||||||||
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(used)
by operating activities:
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||||||||
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Income
from discontinued operations
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- | 138,163 | ||||||
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Depletion,
depreciation and accretion
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- | 28,227 | ||||||
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Consulting
fees, non-cash compensation
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250,000 | - | ||||||
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Changes
in operating assets and liabilities:
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||||||||
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Accounts
receivable
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86,730 | 5,711 | ||||||
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Accounts
payable
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5,274 | (24,617 | ) | |||||
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Accrued
liabilities
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(70,667 | ) | (41,094 | ) | ||||
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NET
CASH (USED) PROVIDED BY OPERATING ACTIVITIES
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(65,809 | ) | 88,045 | |||||
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CASH
FLOWS FROM INVESTING ACTIVITIES:
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||||||||
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Acquisition
of property leases and improvements
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- | (22,845 | ) | |||||
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NET
CASH (USED) PROVIDED BY INVESTING ACTIVITIES
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- | (22,845 | ) | |||||
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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||||||||
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Dividends
paid
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(174,642 | ) | - | |||||
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Purchase
of treasury stock
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(46,570 | ) | - | |||||
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NET
CASH (USED) BY FINANCING ACTIVITIES
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(221,212 | ) | - | |||||
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NET
INCREASE (DECREASE) IN CASH
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||||||||
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AND
CASH EQUIVALENTS
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(287,021 | ) | 65,200 | |||||
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CASH
AND CASH EQUIVALENTS
|
||||||||
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AT
THE BEGINNING OF
THE
PERIOD
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408,634 | 985,729 | ||||||
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CASH
AND CASH EQUIVALENTS
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||||||||
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AT
THE END OF THE PERIOD
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$ | 121,613 | $ | 1,050,929 | ||||
The
accompanying notes are an integral part of the financial statements
-7-
CROFF
ENTERPRISES, INC.
NOTES TO
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Basis
of Preparation.
The condensed financial statements for
the six month periods ended June 30, 2008 and 2007 in this report have been
prepared by the Company without audit pursuant to the rules and regulations of
the Securities and Exchange Commission and reflect, in the opinion of the
management, all adjustments necessary to present fairly the results of the
operations of the interim periods presented herein. Certain information in
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been omitted pursuant to such rules and regulations, although the
Company believes the disclosures presented herein are adequate to make the
information presented not misleading. It is suggested that these condensed
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2007, which report has been filed with the Securities and
Exchange Commission. The Annual Report is available online at the Securities and
Exchange Commission’s website at www.sec.gov/edgar.
Discontinued
Operations.
As of December 31, 2007, pursuant to a
plan adopted by the shareholders, the Company had transferred its oil and gas
operations to a Company owned by the shareholders of the Preferred B Stock. The
affect of these discontinued operations on the Company are included in the
Schedule of Discontinued Operations as of June 30, 2007, set out
below:
SCHEDULE
OF DISCONTINUED OPERATIONS
For the
six months ended June 30, 2007
|
Revenues:
|
||||
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Oil
and natural gas sales
|
$
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422,121
|
||
|
Other
income
|
2,760
|
|||
|
$
|
424,881
|
|||
|
Expenses:
|
||||
|
Lease
operating expense including production taxes
|
138,423
|
|||
|
General
and administrative
|
68,068
|
|||
|
Accretion
expense
|
3,227
|
|||
|
Depletion
and depreciation
|
25,000
|
|||
|
234,718
|
||||
|
Income
from discontinued operations
|
190,163
|
|||
|
Provision
for income taxes
|
52,000
|
|||
|
Net
income from discontinued operations
|
$
|
138,163
|
||
-8-
Item
2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
Overview.
Croff Enterprises, Inc. (“Croff’ or the
“Company”) was incorporated in Utah in 1907. Due to the Spin-Off (as
described below), the Company currently has no business operations or revenue
source and has reduced its operations to a minimal level (although it
continues to file reports required under the Securities Exchange Act of
1934). As a result, the Company is a “shell company” under the
rules of the Securities and Exchange Commission (the “SEC”). As of
June 30, 2008, the Company had available cash and cash equivalents of $121,613,
which it believes will provide funding for its minimal operations until
approximately December 31, 2008. During that period, it is expected
that the Company’s management will seek opportunities for a merger or other
business combination with a privately-held operating company (on terms that may
or may not be favorable to the Company's existing
shareholders). Should the Company exhaust its available funds before
a merger or other business combination is completed and be unable to obtain
additional funds from the sale of debt or equity securities and/or other
financing sources (again on terms that may or may not be favorable to the
Company's existing shareholders), it is expected that the Company will be
required to discontinue operations entirely, seek protection under federal
bankruptcy laws, or both.
Restructure
of Operations.
In December 2007, Croff spun-off its
oil and gas assets, related bank accounts, and all related assets and
liabilities to a new wholly-owned subsidiary named Croff Oil Company, Inc. (the
“Spin-Off”). All shares of Croff Oil Company, Inc. were then
exchanged for Croff’s outstanding Series B preferred shares and the
Series B preferred shares were then cancelled. All of Croff’s oil and
gas assets, including perpetual mineral interests, had been pledged to its
Series B preferred shareholders at the creation of the Series B preferred class
in 1996. All shareholders of Croff at the date of issuance in 1996 were given an
equivalent number of shares of Series B preferred stock, while keeping their
common shares. Since that time, the Series B preferred stock has had
a limited trading market, as it is not listed on any exchange. Based
on the limited number of shareholders and small capitalization, Croff Oil
Company, Inc. is a private corporation.
The Spin-Off occurred approximately
three years after Croff’s Board of Directors had determined to review its
strategic alternatives with a view to obtain more liquidity for the Company’s
two classes of stock and to increase the value to its shareholders. In the first
quarter of 2005, the Board felt the combined value of $2.30 for a common share
plus a Series B preferred share did not reflect the total value of the Company.
Therefore, in the fourth quarter of 2007 the Board of Directors set the value of
a combined Series B preferred share and a common share at $5.25, allowing
shareholders to receive this cash buyout. Under the Utah Dissenting
Shareholder’s Rights Act, Croff’s common and Series B preferred shareholders had
the option to receive cash from the Company in exchange for their
shares. Common shares were redeemed at $1.00 per share and Series B
preferred shares were redeemed at $4.25 per share. If a shareholder did not
approve of the price, the shareholder was able to propose a different price with
justification. Pursuant to the buyout, 24,030 common shares of
Croff were redeemed at $1.00 per share, and an additional 10,415
common shares were redeemed at various prices from $1.00 to $2.70. In
addition, 35,930 shares of Series B preferred stock were redeemed, all for the
$4.25 per share price. As a result of shareholders exercising their rights, the
number of outstanding common shares was reduced from 551,244 to 516,799 by June
30, 2008.
Liquidity and Capital
Resources.
At June 30, 2008, the Company had
assets of $121,613 and current assets totaled $121,613 compared to current
liabilities of $44,509. At June 30, 2007, the Company had assets of $1,924,495
and current assets totaled $1,170,118 compared to current liabilities of
$49,420. During the six month period ended June 30, 2008, net cash used by
operations totaled $65,809, as compared to cash provided by operations of
$88,045 during the six months ended June 30, 2007. The decrease is due to the
Spin-Off, which left the Company with no active business in 2008. The Company
had no short-term or long-term debt outstanding at June 30,
2008. During the six months ended June 30, 2008, the Company
purchased 33,245 shares of its common stock at a cost of $46,570; all purchased
shares were included in the Company’s treasury stock at June 30,
2008.
-9-
Results
of Operations - Three months and six months ended June 30, 2008,
compared to three months and six months ended June 30, 2007.
The Company had a net loss for the
three months ended June 30, 2008, which totaled $304,465 compared to a net
income of $65,946 for the same period in 2007. As a result of the Spin-Off,
there was only interest income in the three months ended June 30, 2008, while
there were oil revenues in the three months ended June 30, 2007.
General and administrative expense, for
the three months ended June 30, 2008, totaled $55,453 compared to $21,303 for
the same period in 2007. This cost included the costs of the audit, expenses
relating to the division of the company, and additional accounting and legal
costs. During the three months ended June 30, 2008, the Company
issued 500,000 shares of its common stock valued at $0.50 per share based on the
fair market value in payment of consulting fees and recorded an expense of
$250,000. Provision for income taxes for the three months ended June 30, 2008,
was zero compared to $30,000 from the same period in 2007. This decrease is
attributable to the net loss for 2008.
The
Company had a net loss for the six months ended June 30, 2008, which totaled
$337,146 compared to a net income of $119,818 for the same period in 2007. As a
result of the Spin-Off, there was only interest income in the six months ended
June 30, 2008, while there were oil revenues in the six months ended June 30,
2007.
General and administrative expense, for
the six months ended June 30, 2008, totaled $90,575 compared to $40,773 for the
same period in 2007. This cost included the costs of the audit, expenses
relating to the division of the company, and additional accounting and legal
costs. During the six months ended June 30, 2008, the Company issued 500,000
shares of its common stock valued at $0.50 per share based on the fair market
value in payment of consulting fees and recorded an expense of $250,000.
Provision for income taxes for the six months ended June 30, 2008, was zero
compared to $52,000 from the same period in 2007. This decrease is attributable
to the net loss for 2008.
Results
of Discontinued Operations.
Total revenues for the three months
ended June 30, 2008, totaled $988 compared to $225,831 for the three months
ended June 30, 2007, a decrease due to the Spin-Off. Interest income decreased
to $988 during the three months ended June 30, 2008, from $11,279 during the
three months ended June 30, 2007, due to the purchase of Series B preferred
stock, cash accounts, and lower interest rates. Oil and gas revenues decreased
to $0 during the three months ended June 30, 2008, from $211,792 during the
three months ended June 30, 2007.
During the three months ended June 30,
2008, there were no lease operating expenses, compared to $62,927 incurred
during the three months ended June 30, 2007. This decrease was due to the
Spin-Off that occurred prior to December 31, 2007. Depreciation and depletion
expense during the three months ended June 30, 2008, was $0 compared to $12,500
during the three months ended June 30, 2007.
Total revenues for the six months ended
June 30, 2008, totaled $3,429 compared to $447,309 for the six months ended June
30, 2007, a decrease due to the Spin-Off. Interest income decreased to $3,429
during the six months ended June 30, 2008, from $22,428 during the six months
ended June 30, 2007, due to the purchase of Series B preferred stock, cash
accounts, and lower interest rates. Oil and gas revenues decreased to $0 during
the six months ended June 30, 2008, from $422,121 during the six months ended
June 30, 2007.
During the six months ended June 30,
2008, there were no lease operating expenses, compared to $138,423 incurred
during the six months ended June 30, 2007. This decrease was due to the Spin-Off
that occurred prior to December 31, 2007. Depreciation and depletion expense
during the six months ended June 30, 2008, was $0 compared to $25,000 during the
three months ended June 30, 2007.
-10-
Accounting Pronouncements Regarding
Interim Financial Statements.
SFAS 158 “Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans-an amendment of SFAS 87,
88, 106, and 132(R).” This statement requires an employer to recognize the
over-funded or under-funded status of a defined benefit postretirement plan
(other than a multi-employer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit organization. This
statement requires an employer to measure the funded status of a plan as of the
date of its year-end statement of financial position, with limited exceptions.
The Company does not maintain a defined benefit pension plan and offers no other
post-retirement benefits.
In February 2007, the Financial
Accounting Standards Board (“FASB”) issued SFAS No. 159, The Fair Value Option
for Financial Assets and Financial Liabilities—Including an Amendment of SFAS
No. 115 (“SFAS No. 159”), which becomes effective for fiscal periods beginning
after November 15, 2007. Under SFAS No. 159, companies may elect to measure
specified financial instruments and warranty and insurance contracts at fair
value on a contract-by-contract basis, with changes in fair value recognized in
earnings each reporting period. This election, called the “fair value option”,
will enable some companies to reduce volatility in reported earnings caused by
measuring related assets and liabilities differently. Croff does not
expect the impact of adoption to have a material impact on its consolidated
financial statements.
In December 2007, the FASB issued SFAS
141 (revised 2007), Business Combinations, (“SFAS 141 R”). SFAS 141 R
establishes principles and requirements for how an acquirer recognizes and
measures in its financial statements the identifiable assets acquired, including
goodwill, the liabilities assumed and any non-controlling interest in the
acquiree. SFAS 141 R also establishes disclosure requirements to
enable users of the financial statements to evaluate the nature and financial
effects of the business combination. SFAS 141R is effective for
business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008. The impact of adopting SFAS 141R will be dependent on the
future business combinations that the Company may pursue after its effective
date.
In December 2007, the SEC issued SAB
110 Share-Based Payment. SAB 110 amends and replaces Question 6 of Section D.2
of Topic 14, “Share-Based Payment,” of the Staff Accounting Bulletin
series. Question 6 of Section D.2 of Topic 14 expressed the views of
the staff regarding the use of the “simplified” method in developing an estimate
of the expected term of “plain vanilla” share options and allows usage of the
“simplified” method for share option grants prior to December 31, 2007. SAB 110
allows public companies which do not have historically sufficient experience to
provide a reasonable estimate to continue use for the “simplified” method for
estimating the expected term of “plain vanilla” share option grants after
December 31, 2007. SAB 110 became effective January 1,
2008. Croff currently uses the “simplified” method to estimate the
expected term for share option grants as it does not have enough historical
experience to provide a reasonable estimate. Croff will continue to use the
“simplified” method until it has enough historical experience to provide a
reasonable estimate of expected term in accordance with SAB
110. Croff does not expect SAB 110 will have a material impact on its
consolidated balance sheets, statements of income and cash flows.
Item
3. Quantitative and Qualitative Disclosures About
Market Risk.
As noted above in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations -
Overview,” the Company is a “shell company.” As of June 30, 2008, the
Company had available cash and cash equivalents of $121,613, which it believes
will provide funding for its minimal operations until approximately December 31,
2008. At this time, it is believed that the Company’s sole market
risk exposure is its ability to find and complete a suitable merger or other
business combination with a privately-held operating company prior to the
exhaustion of its available funds.
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Item
4. Controls and Procedures.
Evaluation of Disclosure Controls
and Procedures.
The Company maintains controls and
procedures designed to ensure that information required to be disclosed in its
filings with the SEC is recorded, processed, summarized and reported
within the time periods required by the SEC. As of June 30, 2008, the Company’s
management, under the supervision and with the participation of the Company’s
Chief Executive Officer, who is also the Company’s Chief Financial Officer,
evaluated the effectiveness of the design and operation of the Company’s
disclosure controls and procedures. Based on that evaluation, the
Company’s Chief Executive Officer and Chief Financial Officer concluded that, as
of the end of the fiscal quarter ended June 30, 2008, the Company’s disclosure
control and procedures are effective in alerting him to material information
that is required to be included its SEC filings.
Changes in Internal Control Over
Financial Reporting.
There have been no changes in the
Company’s internal control over financial reporting during the fiscal quarter
ended June 30, 2008, that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
PART
II - OTHER INFORMATION
Item
2. Unregistered Sales of Equity Securities and Use
of Proceeds.
For information regarding the
unregistered sale of equity securities during the quarter ended June 30, 2008,
see the Company’s current report on Form 8-K filed June 23, 2008.
Item
5. Other Information.
For information during the quarter
ended June 30, 2008, regarding (i) the Company’s entry into a material
definitive agreement, (ii) changes in control of the Company and (iii) the
departure of directors or principal officers, election of directors and the
appointment of principal officers, see the Company’s current reports on Form 8-K
filed June 13, 2008 (amended July 2, 2008), June 19, 2008, and June 23,
2008.
Item
6. Exhibits.
The following Exhibits are attached
hereto:
|
|
10
|
Share
Issuance Agreement between the Company and Terrace Lane LLC dated as of
June 18, 2008.
|
|
|
31
|
Rule
13a-14(a)/15d-14(a) Certification.
|
|
|
32
|
Section
1350 Certification.
|
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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.
|
Dated:
August 8, 2008
|
CROFF
ENTERPRISES, INC.
|
| By:/s/ GREGORY R. WOODHILL | |
| Gregory R. Woodhill, President and | |
| Chief Financial Officer |
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EXHIBIT
INDEX
|
|
Exhibit
Number
|
Description
|
| 10 | Share Issuance Agreement between the Company and Terrace Lane LLC dated as of June 18, 2008. | |
| 31 | Rule 13a-14(a)/15d-14(a) Certification. | |
| 32 | Section 1350 Certification. |
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