Back to GetFilings.com

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

For the quarterly period ended December 31, 2003

OR

For the transition period from              to             

Commission file number 1-9083

TREECON RESOURCES, INC.

(Exact name of registrant as specified in its charter)

6004 South U.S. Highway 59

Lufkin, Texas 75901

(Address of principal executive offices)

(936) 634-3365

(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  ¨    No  x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.).    Yes  ¨    No  x

As of July 14, 2004, there were 18,615,464 shares of the issuer’s common stock, $.01 par value, outstanding.

Table of Contents

TREECON RESOURCES, INC.

FORM 10-Q

QUARTER ENDED DECEMBER 31, 2003

TABLE OF CONTENTS

- 1 -

Table of Contents

TREECON RESOURCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part

of these condensed financial statements.

- 2 -

Table of Contents

TREECON RESOURCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

The accompanying notes are an integral part

of these condensed financial statements.

- 3 -

Table of Contents

TREECON RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

The accompanying notes are an integral part

of these condensed financial statements.

- 4 -

Table of Contents

TREECON RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

The accompanying notes are an integral part

of these condensed financial statements.

- 5 -

Table of Contents

TREECON RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited)

Supplemental Schedule of Noncash Investing and Financing Activities:

On October 31, 2003, the Company determined that two customers were no longer related parties, and therefore reclassified amounts due from them to accounts and sales contracts receivable ($9,000) and current notes receivable ($581,000) from related party receivables. The customers had previously been considered related parties because they had owned minority interests in Southern Forest Products and Wood Forest Products. Wood Forest Products ceased operations during fiscal year ended September 30, 2003. The Company purchased the minority interest in Southern Forest Products effective September 30, 2002.

During the three months ended December 31, 2002, the Company completed the spin-off of its subsidiary, Overhill Farms, Inc., and recorded a charge against retained earnings (accumulated deficit) of approximately $134,000, representing the Company’s net investment in Overhill Farms at the time of distribution.

The accompanying notes are an integral part

of these condensed financial statements.

- 6 -

Table of Contents

TREECON RESOURCES, INC.

NOTES TO CONDENSED CONSOLDIATED FINANCIAL STATEMENTS

December 31, 2003

(Unaudited)

TreeCon Resources, Inc., formerly Overhill Corporation and Polyphase Corporation (the “Company”), is a holding company that, through its subsidiaries, currently operates in forestry and timber related businesses. These operations are conducted through the Company’s wholly owned subsidiary Texas Timberjack, Inc. (“Timberjack” or “TTI”) and TTI’s subsidiaries Southern Forest Products, LLC (“SFP”) and Wood Forest Products, LLC (“WFP”). “). The operations of WFP ceased during fiscal 2003. Through these entities, the Company distributes, leases and provides financing for industrial and logging equipment and is also engaged in the harvesting and processing of timber products.

The Company’s Board of Directors, in August 2001, approved a plan to spin off all of its shares of Overhill Farms, Inc. (“Overhill Farms”) to the holders of the Company’s common stock. This spin-off was completed in October 2002. Overhill Farms has been accounted for as a discontinued operation in the accompanying financial statements.

The condensed consolidated financial statements include the continuing operations of the Company, its wholly owned subsidiaries and its majority owned subsidiaries. All material intercompany accounts and transactions were eliminated. Certain prior year amounts have been reclassified to conform to the current period presentation.

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. 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 normal recurring accruals) considered necessary for a fair presentation have been included. Additionally, a nonrecurring adjustment was made for the quarter ended December 31, 2002 to recognize a valuation allowance on parent company notes receivable from two former directors of the Company and from an attorney who performed services for the Company and Overhill Farms, Inc. in the past. This adjustment reduced the carrying amount of the notes to the fair market value of the underlying collateral. The net effect of the adjustment was to reduce assets and increase SG&A expenses by $176,000. Operating results for the three months ended December 31, 2003 are not necessarily indicative of the results that may be expected for the year ended September 30, 2004 or for any other period.

The condensed consolidated balance sheet at September 30, 2003 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

- 7 -

Table of Contents

For further information, refer to the financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended September 30, 2003.

Inventories are summarized as follows: