Garnet Resources Corporation Reports Second Quarter Results and Status of Restructuring Efforts

Garnet Resources Corporation has reported its second quarter results for 1998, including a net loss of $2,503,176 and a decrease in oil sales to 833 barrels per day. Despite a 23% reduction in corporate general and administrative expenses, the company is facing significant financial challenges, including non-compliance with debt covenants and a substantial doubt about its ability to continue as a going concern. The company is exploring options to restructure its debt and may seek protection from its creditors under the Federal Bankruptcy Code if a business transaction or debt restructuring is not achieved.

Key Takeaways:

• Garnet Resources Corporation reported a net loss of $2,503,176 for the second quarter of 1998, compared to a net loss of $12,181,418 for the same period in 1997.
• The company's oil sales decreased to 833 barrels per day in the second quarter of 1998, from an average of 1,439 barrels per day in the second quarter of 1997.
• Corporate general and administrative expenses were lower by 23% compared to the same period in 1997 due to personnel reductions and austerity measures taken in 1997 and 1998.
• The company is not in compliance with the minimum net worth required under the covenants of its 9 1/2% convertible subordinated debentures and did not pay the quarterly interest payments due in March and June 1998.
• The company's management believes there is substantial doubt about its ability to continue as a going concern due to its financial challenges.

Statistics:

• Revenues for the second quarter of 1998 were $913,218, compared to $2,208,516 in the second quarter of 1997.
• Cash provided by operations for the second quarter was $206,876, compared to $198,544 in the comparable period in 1997.
• The company's net loss per share was $0.22 for the second quarter of 1998, compared to $1.06 for the same period in 1997.

Sources:

• Garnet Resources Corporation, "Garnet Reports Second Quarter Results," PRNewswire, August 14, 1998
• Garnet Resources Corporation, "Garnet Reports Second Quarter Results, Outstanding Matters and Proposed Merger with Aviva Petroleum Inc.," PRNewswire, August 14, 1998