Raptor Capital Catches Up With SEDAR Filings

Raptor Capital Corporation [NEX: RCP.H], a company whose stock has been suspended since May 9th of this year and which joined the NEX as of August 14th, has filed financials and management discussions & analyses with SEDAR for the 2006 fiscal year and the first two quarters of FY '07. It was originally suspended for failure to file financial statements on time.

The audited annual report for FY '06 [PDF file], with an unqualified opinion as to the fairness of the financials, show a company whose cash and cash equivalents ("cash") have shrunk considerably during FY 2006. As of December 31, 2005, Raptor had $1,086,474 of cash, but this amount had diminished to $138,247 as of December 31, 2006. Current assets shrunk by a comparable amount, from $1,189,592 at the end of FY '05 to $194,436 as of the end of FY '06; current liabilities increased from $795,503 to $1,201,550 respectively. Thus, Raptor went from having $394,089 in working capital to a working-capital deficit of $980,343. Current liabilites were pushed up by a $306,047 increase in accounts payable and accrued liabilites, and a $100,000 increase in convertible debentures coming due within a year of the respective dates. Book value went from positive 1.3 cents/share to negative 0.0735 cents/share from FY '05 to '06.

Raptor had income in FY '06, enough to rate an income statement instead of an expenses statement. Net revenues, derived from sale of oil and gas net of royalties, fell from $470,863 in FY '05 to $183,503 in FY '06. Operating expenses fell from $254,009 to $152,333, but depletion and amortization expenses shot up from $132,043 to $986,910. The loss for FY '06 was $1,078,791, or 1.35 cents/share, versus a loss of $295,199, or 0.41 cents/share, for the previous FY. (Both per-share figures are rounded down, to -2 cents/share and -1 cent/share respectively, in the FY '06 annual report.) The drop in cash noted above was caused by the spending of $1,125,186 on property and plant & equipment additions. Net proceeds of $395,375 from issuance of common shares and warrants, down from $996,501 in FY '05, kept the company's cash up. Interestingly, despite the widening of the net loss, net cash flow from operations went from -$216,760, or -0.301 cents/share, to -$30,248, or -0.0377 cents/share, from FY '05 to FY '06.

The accompanying Management Discussion & Analysis for FY '06 [PDF file], though, starts off by noting that "'cash flow' and 'cash flow per share'... are not recognized measures under Canadian generally accepted accounting principles ('GAAP')," cautions that such figures are supplemental to net income or net loss and are not computed by the same methodology by all Canadian companies, and then specifies Raptor's own. It also specifies that the revenue drop was due to the sale of one of Raptor's oil and gas properties, as of June 1, 2005.

The other two sets of financial statements and M D & As, for 1Q and 2Q '07, are interim and unaudited. The financial statements for the first quarter [PDF file] show Raptor's cash shrinking even more, to $54,662. The working capital deficit increased to $1,325,232 thanks to a $64,200 increase in accounts payable and accrued liabilities, and a $325,000 increase in long-term debt becoming current. Book value, though, went from negative to slightly positive, despite a 1Q loss of $141,322 or 0.169 cents/share, due to the issue of $225,000 in common shares and warrants. The accompanying M D & A [PDF file] notes in its "Liquidity and Solvency" section that "At December 31, 2006, the majority of the Company's proved reserves are in one gas property.
The future of the Company is dependent upon the successful commercialization of this property, its ability to raise capital through the issuance of common shares or other means and the continued forbearance of the convertible debenture holders. At December 31, 2006 certain of the debenture holders did not extend the maturity date of the debentures and as a result, the Company was in default of the debenture agreements. There is no certainty that the exploitation of the gas property, raising addition capital or the forbearance of the convertible debenture holders will occur or will be sufficient to permit the Company to continue beyond December 31, 2006."

In the second quarter of FY '07, according to the interim unaudited financial statements for that period [PDF file], the cash shrink continued. Cash as of June 30th was $28,124. The working capital deficit, though, shrunk to $1,104,247 thanks largely to a $152,887 decline in accounts payable and accrued liabilities. Book value went back to shrinking, to -$541,493 or -0.639 cents/share. Revenues were $38,533, as compared to $39,840 in 2Q '07, but operating costs rose to $33,124 as compared with $25,847, for a gross profit of $5,409 as compared with $13,993 in 2Q '06. The quarterly loss before other items, though, shrunk to $115,067 as compared with $117,317 thanks to an offsetting decrease of $43,220 in general and administrative expenses. A $450,719 loss on disposition of oil and gas assets put the quarterly loss for FY '07 at $562,677, or 0.664 cents/share. The loss in 2Q '06 was $113,757, or 0.158 cents/share. There was no financing in 2Q '07: the cash part of the loss was mostly made up for by $300,000 in proceeds from that disposition. Spending of $39,575 on acquisition of capital assets and $3,897 on abandonment deposits brought the amount of cash generated by investment activities down to $256,528. At the end of the accompanying M D & A [PDF file], in the "Outlook for 2007" section, it is stated that "The Company is planning a reorganization by undertaking a possible roll back of the number of common shares issued and outstanding, converting convertible debentures into equity, selling certain oil and gas properties, raising equity through private placements and attempting to merge with other companies. Certain of the debenture holders have agreed to the conversion into equity, however such conversion and the roll back of common shares are subject to shareholder and regulatory approval." RCP.H last traded at 2 cents/share, on May 8th.