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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
CHECK ONE
|X| Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 2005
or
|_| Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
COMMISSION FILE NUMBER 0-12500
ISRAMCO, INC.
(Exact Name of registrant as Specified in its Charter)
Delaware 13-3145265
(State or other Jurisdiction of I.R.S. Employer Number
Incorporation or Organization)
11767 KATY FREEWAY, HOUSTON, TX 77079
(Address of Principal Executive Offices)
713-621-5946
(Registrant's Telephone Number, Including Area Code)
Indicate by check whether the registrant: (1) filed all reports required to
be filed by Section 13 or 15(d) of the 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 |_|
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). | | Yes |X| No
The number of shares outstanding of the registrant's Common Stock as May
19, 2005 was 2,717,891.
INDEX
Page
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 2005 and
December 31, 2004 1
Consolidated Statements of Operations for the three months
ended March 31, 2005 and 2004 2
Consolidated Statements of Cash Flows for the three months
ended March 31, 2005 and 2004 3
Notes to Consolidated Financial Statements 4
Item 2. Management's discussion and analysis of financial statements 7
Item 3. Quantitative and Qualitative Disclosures about Market Risk 10
Item 4. Controls and Procedures 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 11
Item 3. Defaults upon senior securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
FORWARD LOOKING STATEMENTS
CERTAIN STATEMENTS MADE IN THIS QUARTERLY REPORT ON FORM 10-Q ARE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY
TERMINOLOGY SUCH AS "MAY", "WILL", "SHOULD", "EXPECTS", "INTENDS",
"ANTICIPATES", "BELIEVES", "ESTIMATES", "PREDICTS", OR "CONTINUE" OR THE
NEGATIVE OF THESE TERMS OR OTHER COMPARABLE TERMINOLOGY AND INCLUDE, WITHOUT
LIMITATION, STATEMENTS BELOW REGARDING EXPLORATION AND DRILLING PLANS, FUTURE
GENERAL AND ADMINISTRATIVE EXPENSES, FUTURE GROWTH, FUTURE EXPLORATION, FUTURE
GEOPHYSICAL AND GEOLOGICAL DATA, GENERATION OF ADDITIONAL PROPERTIES, RESERVES,
NEW PROSPECTS AND DRILLING LOCATIONS, FUTURE CAPITAL EXPENDITURES, SUFFICIENCY
OF WORKING CAPITAL, ABILITY TO RAISE ADDITIONAL CAPITAL, PROJECTED CASH FLOWS
FROM OPERATIONS, OUTCOME OF ANY LEGAL PROCEEDINGS, DRILLING PLANS, THE NUMBER,
TIMING OR RESULTS OF ANY WELLS, INTERPRETATION AND RESULTS OF SEISMIC SURVEYS OR
SEISMIC DATA, FUTURE PRODUCTION OR RESERVES, LEASE OPTIONS OR RIGHTS,
PARTICIPATION OF OPERATING PARTNERS, CONTINUED RECEIPT OF ROYALTIES, AND ANY
OTHER STATEMENTS REGARDING FUTURE OPERATIONS, FINANCIAL RESULTS, OPPORTUNITIES,
GROWTH, BUSINESS PLANS AND STRATEGY. BECAUSE FORWARD-LOOKING STATEMENTS INVOLVE
RISKS AND UNCERTAINTIES, THERE ARE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY THESE
FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT EXPECTATIONS
REFLECTED IN THE FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CANNOT GUARANTEE
FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS. MOREOVER, NEITHER THE COMPANY NOR
ANY OTHER PERSON ASSUMES RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS OF
THESE FORWARD-LOOKING STATEMENTS. THE COMPANY IS UNDER NO DUTY TO UPDATE ANY
FORWARD-LOOKING STATEMENTS AFTER THE DATE OF THIS REPORT TO CONFORM SUCH
STATEMENTS TO ACTUAL RESULTS.
ISRAMCO INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except for share information)
March 31, December 31,
2005 2004
----------- ------------
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,782 $ 2,087
Marketable securities, at market 6,351 6,203
Accounts receivable - Trade 537 776
Prepaid expenses and other current assets 249 193
----------- -----------
Total current assets 8,919 9,260
Property and equipment (successful efforts method for oil and gas
properties) 3,372 3,190
Real Estate 1,887 1,887
Marketable securities, at market 4,986 6,225
Investment in affiliates 12,696 12,044
Investment in Vessel 8,978 8,590
Other 162 162
----------- -----------
Total assets $ 41,000 $ 41,358
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 1,135 $ 1,261
Credit from Banks 466 676
Bank loan --- 733
----------- -----------
Total current liabilities 1,601 2,670
----------- -----------
Long -Term Liabilities
Asset Retirement Obligations 321 314
Deferred tax liability 3,181 2,889
Current portion of long-term bank loan 5,006 4,869
----------- -----------
Total Long-Term Liabilities 8,508 8,172
----------- -----------
Total Liabilities 10,109 10,842
----------- -----------
Commitments and contingencies
Shareholder's Equity
Common stock $.0l par value; authorized 7,500,000 shares;
issued 2,669,120 shares; outstanding
2,717,891 at March 31,2005 and 2,639,853 at December 31, 2004 27 27
Additional paid-in capital 26,240 26,240
Retained earnings 3,472 3,169
Accumulated other comprehensive income 1,316 1,244
Treasury stock, 29,267 shares at
March 31, 2004 and December 31, 2004 (164) (164)
----------- -----------
Total shareholders' equity 30,891 30,516
----------- -----------
Total liabilities and shareholders' equity $ 41,000 $ 41,358
=========== ===========
See notes to the consolidated financial statements.
-1-
ISRAMCO INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except for share information)
(Unaudited)
Three Months Ended
March 31,
---------------------------------
2005 2004
----------- -----------
REVENUES:
Operator fees from related party $ 18 $ 36
Oil and gas sales 845 834
Interest income 101 210
Office services to affiliate and other 183 195
Gain on marketable securities 226 --
Equity in net income of investees 800 588
Other income 29 30
----------- -----------
Total revenues 2,201 1,893
----------- -----------
COSTS AND EXPENSES:
Financial expenses 65 7
Depreciation, depletion and
amortization and impairment 507 155
Cost of revenue 297 --
Accretion expenses 4 11
Lease operating expenses and
severance taxes 305 191
Exploration costs -- --
Operator expense 223 219
General and administrative 340 336
Loss on marketable securities -- 59
----------- -----------
Total expenses 1,741 978
----------- -----------
Income before income taxes 460 915
Income taxes (156) (70)
----------- -----------
Net income $ 304 $ 845
=========== ===========
Earnings per common share-basic and diluted $ 0.11 $ 0.32
=========== ===========
Weighted average number of shares
outstanding-basic and diluted 2,717,891 2,639,853
=========== ===========
See notes to the consolidated financial statements.
-2-
ISRAMCO INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Three Months Ended March 31,
2005 2004
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 304 $ 845
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 507 155
Accretion expenses 4 11
Loss (gain) on marketable securities (226) 59
Gain on sale of oil any gas properties
Equity in net loss (gain) of investees (800) (588)
Deferred taxes 116 56
Changes in assets and liabilities:
Accounts receivable 239 402
Prepaid expenses and other current assets 54 56
Accounts payable and accrued liabilities (191) 159
-------- --------
Net cash provided by operating activities 9 1,155
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Addition to property and equipment (1,073) (453)
Purchase of vessel --- (8,095)
Purchase of marketable securities (1,456) (2,446)
Proceeds from sale of marketable securities 3,023 608
-------- --------
Net cash provided (used in)investing activities 494 (10,386)
-------- --------
Net cash from financing activities:
Proceeds from bank loan --- 7,501
Change in short term credit from bank (807)
-------- --------
Net cash provided by financing activities (807) 7,501
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (305) (1,730)
Cash and cash equivalents-beginning of year 2,087 2,429
-------- --------
Cash and cash equivalents-end of period $ 1,782 $ 699
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 65 $ 7
======== ========
Cash paid during the period for taxes $ --- $ ---
======== ========
See notes to the consolidated financial statements
-3-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
As used in these financial statements, the term "Company" refers to Isramco,
Inc. and subsidiaries.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of Management, all adjustments (consisting of only normal recurring adjustments)
considered necessary for a fair presentation have been included. Results for the
three month period ended March 31, 2005, are not necessarily indicative of the
results that may be expected for the year ended December 31, 2005. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2004. Certain re-classification of prior year amounts have
been made to conform to current presentation.
Stock-Based Compensation
We account for employee stock-based compensation granted under our long-term
incentive plans using the intrinsic value method prescribed by Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations. The Company did not have any compensation expense for
the three months periods ended March 31, 2005 and 2004, as there were no options
granted in either of the periods and options historically granted were fully
vested on the date of grant.
NOTE 2 - VESSEL LEASE
In March 2005, the Company leased its cruise liner Magic 1 under a bareboat
lease to a European-based tour operator for $8,000 per day during the period
from April 14, 2005 to October 31, 2005. The Operator will bear all maintenance
and operating costs.
-4-
NOTE 3 - SEGMENT INFORMATION
GEOGRAPHIC SEGMENT
------------------
UNITED TOTAL CONSOLIDATED
STATES ISRAEL OIL AND GAS VESSEL TOTAL
------ ------ ----------- ------ -----
Identifiable assets at March 31, 2005 $3,310 $ 23 $3,333 $8,978 $ 12,311
Cash and corporate assets 28,689
--------
$ 41,000
Total Assets at March 31, 2004 ========
Identifiable assets at December 31, 2004 $3,135 $ 59 $3,194 $8,590 $ 11,784
Cash and corporate assets 29,754
--------
Total Assets at December 31, 2004 $ 41,358
Three Months Ended March 31, 2005
Sales and other operating revenue $ 860 $ 153 $1,013 --- $ 1,013
Costs and operating expenses $ (565) $ (228) $ (793) $ (567) $ (1,360)
------ ------ ------ --------
Operating profit $ 295 $ (75) $ 220 $ (567) $ (347)
====== ====== ====== ====== ========
Interest Income 101
Financial expenses, net (65)
General corporate expenses (284)
Gain on marketable securities 226
equity in net Income of investees 800
Other income 29
Income Taxes (156)
--------
Net Income from continuing operations $ 304
========
Three Months Ended March 31, 2004
Sales and other operating revenue $ 881 $ 184 $ --- $ 1,065
Costs and operating expenses $ (328) $ (226) $ --- $ (565)
====== ====== ====== ========
Operating profit $ 542 $ (42) $ 500
Interest Income 199
Financial expenses, net (7)
General corporate expenses (336)
Gain on marketable securities and (59)
equity in net Income of investees 588
Other income 30
Income taxes (70)
Net Income from continuing operations
--------
$ 845
Net Income from continuing operations ========
-5-
NOTE 4 - COMPREHENSIVE INCOME
The Company's comprehensive income for the three month period ended March 31,
2005 and 2004 was as follows:
Three months
ended March 31,
2005 2004
---- ----
Net Income $ 304 $ 845
Other comprehensive gain (loss)
- -Unrealized gain (loss) on available-for-sale
securities 192 587
- -Foreign currency translation adjustments of
the Israeli Branch and the limited
partnerships (120) (236)
------ ------
Comprehensive income $ 376 $1,196
====== ======
-6-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING COMMENTARY SHOULD BE READ IN CONJUNCTION WITH THE
CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES CONTAINED ELSEWHERE IN THIS
REPORT ON FORM 10-Q. THE DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. THESE STATEMENTS RELATE TO FUTURE EVENTS OR OUR
FUTURE FINANCIAL PERFORMANCE. IN SOME CASES, YOU CAN IDENTIFY THESE
FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS "MAY," "WILL," "SHOULD,"
"EXPECT," "PLAN," "ANTICIPATE," "BELIEVE," "ESTIMATE," "PREDICT," "POTENTIAL,"
"INTEND," OR "CONTINUE," AND SIMILAR EXPRESSIONS. THESE STATEMENTS ARE ONLY
PREDICTIONS. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN
THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF A VARIETY OF FACTORS, INCLUDING,
BUT NOT LIMITED TO, THOSE SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS
REPORT ON FORM 10-Q.
OVERVIEW
Isramco, Inc., a Delaware company, is active in the exploration of oil
and gas in Israel and the United States. The Company acts as an operator of
certain leases and licenses and also hold participation interests in certain
other interests. The Company also holds certain non-oil and gas properties.
CRITICAL ACCOUNTING POLICIES
In response to the Release No. 33-8040 of the securities and Exchange
Commission, "Cautionary Advice Regarding Disclosure and Critical Accounting
Policies", the Company identified the accounting principles which it believes
are most critical to the reported financial status by considering accounting
policies that involve the most complex of subjective decisions or assessments.
The Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of customers to make required payments. If
the financial condition of customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required.
The Company records an investment impairment charge when it believes an
investment has experienced a decline in value that is other than is temporary.
Future adverse changes in market conditions or poor operating results of
underlying investments could result in losses or an inability to recover the
carrying value of the investment that may not be reflected in an investment's
current carrying value, thereby possibly requiring an impairment charge in the
future.
The Company records a valuation allowance to reduce its deferred tax
assets to the amount that is more likely than not to be realized. While the
Company has considered future taxable income and ongoing prudent and feasible
tax planning strategies in assessing the need for the valuation allowance, in
the event that the Company were to determine that it would be able to realize
its deferred tax assets in the future in excess of its net recorded amount, an
adjustment to the deferred tax asset would increase net income in the period
such determination was made.
The Company does not participate in, nor has it created, any off-balance
sheet special purpose entities or other off-balance sheet financing. In
addition, the Company does not enter into any derivative financial instruments.
The Company records a liability for asset retirement obligation at fair
value in the period in which it is incurred and a corresponding increase in the
carrying amount of the related long live assets.
LIQUIDITY AND CAPITAL RESOURCES
The Company finances its operations primarily from cash generated by
operations.
During the three months ended March 31, 2005, the Company's consolidated
cash and cash equivalents decreased by $305,000 from $2,087,000 at December 31,
2004 to $1,782,000 at March 31, 2005. The decrease in the Company's consolidated
cash and cash equivalents is
-7-
primarily attributable to investments of $648,000 in repairs and maintenance of
the Cruise Line Vessel, investments of $425,000 in oil and gas properties and
wells in the United States and the purchase of marketable securities in the
amount of $1,456,000, offset by net proceeds from the sales of marketable
securities in the amount of $3,023,000 and payment of a loan in a sum of
$807,000.
Net cash provided from investing activities for the three month period
ended March 31, 2005 was $405,000 as compared to $10,386,000 used during the
three month period ended March 31, 2004. Net cash used in investing activities
for the three months ended March 1, 2005 was $495,000 as compared to $10,386,000
net cash used during the three months ended March 31, 2004. The net cash used
during the three month period ended March 31, 2004 are primarily attributable to
the purchase of the vessel for aggregate consideration of $8,095,000. Capital
expenditures for property and equipment during the three months ended March 31,
2005 were $1,073,000 compared to $453,000 for the same period in 2004. Capital
expenditures in 2005 are primarily attributable to the cost of drilling of a new
well in Texas and for repairs of the vessel.
The Company believes that existing cash balances and cash flows from
activities will be sufficient to meet its financing needs. The Company intends
to finance its ongoing oil and gas exploration activities form working capital.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2005 Compared to the Three Months Ended
March 31, 2004.
The Company reported net income of $304,000 ($0.11 per share) for the
three-month period ended March 31, 2004 compared to net income of $845,000
($0.32 per share) for the same period in 2004.
Set forth below is a break-down of these results.
United States
Oil and Gas Revenues (in thousands)
Three Months ended March 31,
2005 2004
Oil Volume Sold (Bbl) 4 4
Gas Volume Sold (MCF) 110 132
Oil Sales ($) 167 137
Gas Sales ($) 640 697
Average Unit Price
Oil ($/Bbl) * $ 42.10 $ 32.13
Gas ($/MCF) ** $ 5.80 $ 5.27
* Bbl - Stock Market Barrel Equivalent to 42 U.S. Gallons
** MCF - 1,000 Cubic Feet
SUMMARY OF EXPLORATION EFFORTS IN ISRAEL
MED YAVNE LEASE
The Med Yavne Lease covers approximately 53 square kilometers
(approximately 12,000 acres). The Company's participation share of the Med Yavne
Lease is 0.4585%.
-8-
MED ASHDOD LEASE
The Med Ashdod Lease covers approximately 250 square kilometers
(approximately 62,000 acres). The Company serves as the operator of the Med
Ashdod Lease and holds a 0.3625% interest therein.
On February 28, 2005, the Company, on behalf of Isramco Negev 2 LP,
issued a Sole Risk notice to the other partners in the Lease to drill a gas well
("Gad 1" well) to a total depth of 2,600 meter (8,350 feet) at a total budget of
$13 million. As a result of the Sole Risk notice, the rights of partners who did
not respond to the notice was transferred to the partnership such that the right
of Isramco Negev 2 LP in the Gad 1 well are 85.103%. In April 2005 a drilling
contract was signed and the expected spud-date is September 15, 2005.
SUMMARY OF EXPLORATION EFFORTS IN THE UNITED STATES
The Company, through its wholly-owned subsidiaries, Jay Petroleum LLC
("Jay Petroleum") and Jay Management LLC ("Jay Management"), is involved in oil
and gas production in the United States. Jay Petroleum owns varying working
interests in oil and gas wells in Louisiana, Texas, Oklahoma and Wyoming.
Independent estimates of the reserves held by Jay Petroleum as of December 31,
2004 are approximately 140,000 net barrels of proved developed producing oil and
2,011 net MMCFs of proved developed producing natural gas. Jay Management acts
as the operator of certain of the producing oil and gas interests owned or
acquired by Jay Petroleum.
The Company joined the drilling of 2 wells in West Texas with 5% Working
Interest in each well. The first well was drilled to 13,000 feet and at present
the well is under testing. The second well is expected to reach 17,000 feet and
at present the well is in drilling phase.
OPERATOR'S FEES
During the three months ended March 31, 2005, the Company earned $18,000
in operator fees compared to $36,000 respect of the same period in 2004.
OIL & GAS REVENUES
For the three months ended March 31, 2005, the Company had oil and gas
revenues of $845,000 compared to $834,000 for the same period in 2004. The
increase in the 2005 period as compared to the same period in 2004 is primarily
attributable to increased oil and gas prices.
LEASE OPERATING EXPENSES AND SEVERANCE TAXES
Lease operating expenses and severance taxes were primarily in
connection with oil and gas fields in the United States. Oil and gas lease
operating expenses and severance taxes for the three months ended on March 31,
2005 were $305,000 compared to $191,000 for the same period in 2004. The
increase in the 2004 period is primarily attributable to a work over in one of
the well.
INTEREST INCOME
Interest income during the three months ended March 31, 2005 was
$101,000 compared to $210,000 for the same period in 2004. The decrease in
interest income earned by the company during the three months ended March 31,
2004 compared to the comparable period in 2005 is primarily attributable to
interest earned on marketable securities.
GAIN (LOSS) ON MARKETABLE SECURITIES
During the three months ended March 31, 2005, the Company recognized net
realized and unrealized gain on trading securities of $226,000 compared to net
realized and unrealized loss of $59,000 for the same period in 2004.
-9-
Increases or decreases in the gains and losses from marketable
securities are dependent on the market prices in general and the composition of
the portfolio of the Company.
OPERATOR EXPENSE
Operator expenses for the 2005 period were $223,000 compared to $219,000
for the 2004 period.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the three month period ended
March 31, 2005 were $340,000 as compared to $336,000 for the same period in
2004.
DEPRECIATION, DEPLETION AND AMORTIZATION
Depreciation depletion and amortization expenses are connected to the
producing wells in the United States and to the Cruise line vessel.
During three month ended March 31, 2005, the Company recorded $507,000
compared to $155,000 in the first quarter of 2004. The increase in 2005 compared
to 2004 is attributable to depreciation of the Vessel ($260,000) and increase of
$92,000 in the depreciation of the wells in the United Stated due to decline in
production of the gas wells.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risks relating to changes in interest rates and foreign currency
exchanges rates were reported in Item 7A of the Company's Annual Report on Form
10-K for the year ended December 31, 2004. There has been no material change in
these market risks since the end of the fiscal year 2004.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Company maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Company's Exchange Act reports is recoded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to management, including our Chief Executive Officer (and Principal Financial
Officer), as appropriate, to allow timely decisions regarding required
disclosure based closely on the definition of "disclosure controls and
procedures" in Rule 13 a- 14 c.
As of the end of the period covered by this report, the Company carried
out an evaluation, under the supervision and with participation of management,
including its Chief Executive Officer (and Principal Financial Officer), of the
effectiveness of the design and operation of the disclosure controls and
procedures. Based of the foregoing, the Company's Chief Executive Officer (and
Principal Financial Officer) concluded that the Company's disclosure controls
and procedures were effective.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING. During the
quarter ended March 31, 2005, there have been no changes in the Company's
internal controls over financial reporting that have materially affected, or are
reasonably likely to materially affect, these controls.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On February 10, 2004, the Company initiated a lawsuit in the Superior
Court of California, County of Los Angeles, against several named defendants
(collectively, the "Defendants"), alleging breach of contract and tort claims in
connection with an agreement between the Company and the Defendants to jointly
purchase and develop certain parcels of real estate outside Los Angeles. In its
lawsuit, the Company is seeding damages in excess of $50 million.
-10-
On March 2005 the defendants filed notion for summary Judgment in favor of the
defendants on the ground that there is no triable issue of any material fact and
defendants are entitled to judgment as a matter of law. A hearing date to
consider the motion has been set for May 25, 2005.
ITEM 2. CHANGE IN SECURITIES & USE OF PROCEEDS
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON 8-K
(i) Exhibits
31 Certification of Chief Executive and Principal Financial Officer
pursuant to Section 302 of Sarbanes-Oxley Act
32 Certification of Chief Executive and Principal Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley act of 2002
-11-
SIGNATURES
In accordance with 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.
ISRAMCO, INC.
DATE: MAY 20, 2005 BY /S/ HAIM TSUFF
CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE
AND PRINCIPAL
FINANCIAL OFFICER
-12-