** **

**U.S. SECURITIES AND EXCHANGE COMMISSION**

**Washington, D. C. 20549**

 

**FORM 10-QSB**

 

| **ý****   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)  OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-----------------------------------------------------------------------------------------------------------------|

** **

**For the quarterly period ended June 30, 2002**

** **

| **o****   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT** |
|----------------------------------------------------------------------------------|

** **

**For the transition period from                to                 **

** **

**Commission File No. 1-4766**

** **

**GATEWAY ENERGY CORPORATION**

(Exact name of smallbusiness issuer as specified in its charter)

 

| **Delaware**                                                     |   | **44-0651207**                           |
|------------------------------------------------------------------|--------|------------------------------------------|
| (State or other  jurisdiction of  incorporation or organization) |   | (I.R.S. Employer  Identification Number) |
|                                                             |   |                                     |
| **500  Dallas Street, Suite 2615  Houston, TX  77002**      |
| (Address of principal  executive offices)                        |
|                                                             |
| **(713)  336-0844**                                              |
| (Issuer’s telephone  number)                                |

 

APPLICABLE ONLY TOCORPORATE ISSUERS

 

As of August 10, 2002,the Issuer had 15,426,318 shares of its common stock outstanding.

 

Transitional SmallBusiness Disclosure Format:  Yes o  No ý

 

 

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**FORM 10-QSB**

**Part  I**

** **
|         |                                                                                                                        |
|--------------|-----------------------------------------------------------------------------------------------------------------------------|
| **Item  1.** | **Financial  Statements**                                                                                                   |
|         |                                                                                                                        |
|         | Unaudited Consolidated  Balance Sheet as of June 30, 2002                                                                   |
|         |                                                                                                                        |
|         | Unaudited  Consolidated Statements of Operations for the three months and six months  ended June 30, 2002 and June 30, 2001 |
|         |                                                                                                                        |
|         | Unaudited  Consolidated Statements of Cash Flows for the six months ended June 30, 2002  and June 30, 2001                  |
|         |                                                                                                                        |
|         | Notes to  Consolidated Financial Statements                                                                                 |

 

2

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**GATEWAYENERGY CORPORATION AND SUBSIDIARIES**

**CONSOLIDATEDBALANCE SHEET**

**June 30, 20****02**

**(Unaudited)**

 
| **ASSETS**                                                                                                   |   |        |      |
|--------------------------------------------------------------------------------------------------------------|--------|-------------|-----------|
| Current Assets                                                                                               |   |        |      |
| Cash and cash equivalents                                                                                    |   | $           | 341,762   |   |
| Certificates of deposit                                                                                      |   | 653,595     |      |
| Trade accounts receivable, net of reserve of $130,832                                                        |   | 892,979     |      |
| Note receivable                                                                                              |   | 56,395      |      |
| Inventories, at average cost                                                                                 |   | 56,788      |      |
| Prepaid expenses and other assets                                                                            |   | 279,797     |      |
| Total current assets                                                                                         |   | 2,281,316   |      |
|                                                                                                         |   |        |      |
| Property and Equipment, at cost                                                                              |   |        |      |
| Gas gathering, processing and transportation                                                                 |   | 10,055,874  |      |
| Office furniture and other equipment                                                                         |   | 799,414     |      |
|                                                                                                         |   | 10,855,288  |      |
| Less accumulated depreciation and amortization                                                               |   | 4,282,685   |      |
|                                                                                                         |   | 6,572,603   |      |
| Other Assets                                                                                                 |   |        |      |
| Investment in AET license, net of accumulated  amortization of $78,128                                       |   | 342,923     |      |
| Other                                                                                                        |   | 64,602      |      |
|                                                                                                         |   | 407,525     |      |
|                                                                                                         |   | $           | 9,261,444 |   |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**                                                               |   |        |      |
| Current Liabilities                                                                                          |   |        |      |
| Accounts payable                                                                                             |   | $           | 830,563   |   |
| Accrued expenses and other liabilities                                                                       |   | 84,865      |      |
| Notes payable                                                                                                |   | 623,514     |      |
| Current maturities of long-term debt                                                                         |   | 563,296     |      |
| Total current liabilities                                                                                    |   | 2,102,238   |      |
|                                                                                                         |   |        |      |
| Long-term Debt, less current maturities                                                                      |   | 1,577,569   |      |
|                                                                                                         |   |        |      |
| Stockholders’ Equity                                                                                    |   |        |      |
| Preferred stock – $1.00 par value; 10,000 shares authorized; no shares  issued and outstanding          |   | —      |      |
| Common stock – $0.25 par value; 35,000,000 shares authorized;  15,426,318 shares issued and outstanding |   | 3,856,577   |      |
| Additional paid-in capital                                                                                   |   | 15,989,102  |      |
| Accumulated deficit                                                                                          |   | (14,264,042 | )         |
|                                                                                                         |   | 5,581,637   |      |
|                                                                                                         |   | $           | 9,261,444 |   |

 

Theaccompanying notes are an integral part of this statement.

 

3

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## **GATEWAY ENERGY CORPORATION ANDSUBSIDIARIES**

**CONSOLIDATEDSTATEMENTS OF OPERATIONS**

**(Unaudited)**

 
|                                                   |   | **Three  Months Ended  June 30,** |      | **Six Months  Ended  June 30,** |   |
|--------------------------------------------------------|--------|-----------------------------------|-----------|---------------------------------|--------|
|                                                   |   | **2002**                          |      | **2001**                        |   | **2002** |   | **2001** |   |
| Operating  revenues                                    |   |                              |      |                            |   |   |   |   |   |
| Natural gas  sales                                     |   | $                                 | 1,593,686 |                            | $      | 2,311,441 |   | $ | 3,058,253 |   | $ | 6,317,545 |   |
| Transportation of natural gas and liquids              |   | 233,320                           |      | 290,757                         |   | 433,556 |   | 458,866 |   |
| Treating and other                                     |   | 44,469                            |      | 194,954                         |   | 108,147 |   | 262,098 |   |
|                                                   |   | 1,871,475                         |      | 2,797,152                       |   | 3,599,956 |   | 7,038,509 |   |
| Operating costs  and expenses                          |   |                              |      |                            |   |   |   |   |   |
| Cost of natural gas purchased                          |   | 1,365,910                         |      | 2,038,850                       |   | 2,392,452 |   | 5,491,750 |   |
| Operation and maintenance                              |   | 241,736                           |      | 345,217                         |   | 493,244 |   | 626,710 |   |
| Depreciation and amortization                          |   | 151,770                           |      | 172,242                         |   | 332,992 |   | 344,762 |   |
| Dry hole cost                                          |   | —                            |      | —                          |   | — |   | 89,940 |   |
| General and  administrative                            |   | 493,413                           |      | 505,484                         |   | 981,839 |   | 993,849 |   |
|                                                   |   | 2,252,829                         |      | 3,061,793                       |   | 4,200,527 |   | 7,547,011 |   |
| Operating loss                                         |   | (381,354                          | )         | (264,641                        | )      | (600,571 | ) | (508,502 | ) |
|                                                   |   |                              |      |                            |   |   |   |   |   |
| Other income  (expense)                                |   |                              |      |                            |   |   |   |   |   |
| Interest income                                        |   | 11,442                            |      | 11,382                          |   | 27,013 |   | 23,971 |   |
| Interest expense                                       |   | (54,701                           | )         | (73,206                         | )      | (102,625 | ) | (105,516 | ) |
| Interest  capitalized                                  |   | 11,322                            |      | —                          |   | 14,401 |   | — |   |
| Other income  (expense), net                           |   | 18,234                            |      | 7,916                           |   | 37,594 |   | 31,422 |   |
|                                                   |   | (13,703                           | )         | (53,908                         | )      | (23,617 | ) | (50,123 | ) |
|                                                   |   |                              |      |                            |   |   |   |   |   |
| Net loss                                               |   | $                                 | (395,057  | )                               | $      | (318,549 | ) | $ | (624,188 | ) | $ | (558,625 | ) |
|                                                   |   |                              |      |                            |   |   |   |   |   |
| Basic and  diluted loss per share                      |   | $                                 | (0.03     | )                               | $      | (0.02 | ) | $ | (0.04 | ) | $ | (0.04 | ) |
|                                                   |   |                              |      |                            |   |   |   |   |   |
| Weighted average  number of common shares outstanding: |   |                              |      |                            |   |   |   |   |   |
| Basic and  diluted                                     |   | 15,373,719                        |      | 15,324,395                      |   | 15,364,351 |   | 15,318,295 |   |

 

The accompanying notesare an integral part of these statements.

 

4

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**GATEWAYENERGY CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

** **
|                                                                         |   | **Six Months Ended June 30,** |     |
|------------------------------------------------------------------------------|--------|-------------------------------|----------|
|                                                                         |   | **2002**                      |     | **2001** |   |
| **INCREASE  (DECREASE) IN CASH AND CASH EQUIVALENTS**                        |   |                          |     |   |   |
|                                                                         |   |                          |     |   |   |
| Cash flows from operating activities                                         |   |                          |     |   |   |
| Net loss                                                                     |   | $                             | (624,188 | ) | $ | (558,625 | ) |
| Adjustments to reconcile net loss to net cash used in operating  activities: |   |                          |     |   |   |
| Depreciation and amortization                                                |   | 332,992                       |     | 344,762 |   |
| Gain on sale of properties                                                   |   | (919                          | )        | (2,500 | ) |
| Other non-cash expenses, net                                                 |   | 13,834                        |     | 69,524 |   |
| Change in assets and liabilities:                                            |   |                          |     |   |   |
| Trade accounts receivable                                                    |   | 32,614                        |     | 655,680 |   |
| Inventories                                                                  |   | (441                          | )        | 959 |   |
| Prepaid expenses and other current assets                                    |   | (124,049                      | )        | (19,261 | ) |
| Accounts payable                                                             |   | 139,872                       |     | (1,047,845 | ) |
| Accrued expenses and other liabilities                                       |   | (41,859                       | )        | 71,781 |   |
| Net cash used in operating activities                                        |   | (272,144                      | )        | (485,525 | ) |
|                                                                         |   |                          |     |   |   |
| Cash flows from investing activities                                         |   |                          |     |   |   |
| Capital expenditures                                                         |   | (701,960                      | )        | (102,840 | ) |
| Proceeds from sale of properties                                             |   | 1,000                         |     | 2,500 |   |
| Note receivable                                                              |   | 54,465                        |     | — |   |
| Decrease in certificate of deposit                                           |   | 17,569                        |     | 20,223 |   |
| Net cash used in investing activities                                        |   | (628,926                      | )        | (80,117 | ) |
|                                                                         |   |                          |     |   |   |
| Cash flows from financing activities                                         |   |                          |     |   |   |
| Proceeds from borrowings                                                     |   | 1,396,473                     |     | 1,236,826 |   |
| Payments on borrowings                                                       |   | (294,978                      | )        | (701,428 | ) |
| Net cash provided by financing activities                                    |   | 1,101,495                     |     | 535,398 |   |
|                                                                         |   |                          |     |   |   |
| Net increase (decrease) in cash and cash equivalents                         |   | 200,425                       |     | (30,244 | ) |
| Cash and cash equivalents at beginning of period                             |   | 141,337                       |     | 171,367 |   |
|                                                                         |   |                          |     |   |   |
| Cash and cash equivalents at end of period                                   |   | $                             | 341,762  |   | $ | 141,123 |   |
|                                                                         |   |                          |     |   |   |
| Supplemental Disclosures of Cash Flow Information:                           |   |                          |     |   |   |
| Cash paid for interest (including capitalized interest in 2002)              |   | $                             | 76,344   |   | $ | 49,771 |   |

** **

The accompanying notesare an integral part of these statements.

 

5

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**GATEWAY ENERGY CORPORATION ANDSUBSIDIARIES**

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

**(1)           Principles of Consolidation andNature of Business**

 

The consolidated financial statements include theaccounts of Gateway Energy Corporation and its wholly owned subsidiarycompanies, Gateway Pipeline Company, Gateway Offshore Pipeline Company, GatewayEnergy Marketing Company, Fort Cobb Fuel Authority, L.L.C. (“Fort Cobb”) andGateway Processing Company, plus a small amount of activity in one jointventure.  Based on its ownership, theCompany proportionally consolidates its joint venture interest. All significantintercompany transactions have been eliminated in consolidation.

 

The accompanying consolidated financial statementshave been prepared by the Company, without audit.  In the opinion of management, such financial statements reflectall adjustments necessary for a fair presentation of the financial position andresults of operations in accordance with generally accepted accountingprinciples. The financial statements should be read in conjunction with thefinancial statements and the Notes thereto included in the Company’s AnnualReport on Form 10-KSB for the year ended December 31, 2001.

 

The Company owns and operates natural gas gathering,transportation and distribution systems and related facilities in Texas,Oklahoma and Louisiana, and offshore in Texas and federal waters of the Gulf ofMexico.  The Company also owns theexclusive U.S. license to a state-of-the-art, patented, absorption basedtechnology to remove nitrogen from natural gas.

 

**(2)           Summary of Significant AccountingPolicies**

 

A summary of the significant accounting policiesconsistently applied in the preparation of the accompanying consolidatedfinancial statements follows.

 

# *RevenueRecognition Policy*

 

The Company’s sales revenues are generated underback-to-back purchase and sales contracts. Sales revenues are recognized at the redelivery point, which is thepoint at which title to the gas transfers. The Company’s transportation revenues are generated under contractswhich have a stated fee per unit of production (Mcf, MMBtu, or Bbl) gathered ortransported.  Transportation revenuesare recognized at the redelivery point, which is the point at which anotherparty takes physical custody of the gas.

 

# *Propertyand Equipment*

 

Property and equipment is stated at cost, pluscapitalized interest costs on major pipeline projects during their constructionperiod.  Additions and improvements thatadd to the productive capacity or extend the useful life of an asset arecapitalized.  Expenditures formaintenance and repairs are charged to expense as incurred.  Depreciation is provided using thestraight-line method over estimated useful lives ranging from 6 to 30 years forpipeline systems, gas plant and processing equipment, and from 2 to 10 yearsfor office furniture and other equipment. Upon disposition or retirement of pipeline components or gas plantcomponents, any gain or loss is charged or credited to accumulated

 

6

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depreciation.  When entirepipeline systems, gas plants or other property and equipment are retired orsold, any resulting gain or loss is credited to or charged against operations.

 

The Companyfollows the successful efforts method of accounting.  At June 30, 2002 the Company had no oil and gas operations.  Under successful efforts accounting, costs(both tangible and intangible) of productive wells and development dry holes,as well as the cost of prospective acreage, are capitalized.  The costs of drilling and equippingexploratory wells which do not find proved reserves are expensed upondetermination that the well does not justify commercial development.  Other exploratory costs, includinggeological and geophysical costs and delay rentals, are charged to expense asincurred.

 

Depletion and depreciation of proved properties arecomputed on an individual field basis using the unit-of-production method basedupon proved oil and gas reserves attributable to the field.

 

Impairment losses are recognized for long-lived assetsused in operations when indicators of impairment are present and theundiscounted cash flows are not sufficient to recover the assets’ carryingvalue.  The amount of impairment ismeasured by comparing the fair value of the asset to its carrying amount.

 

***Other Assets***

 

The Company’s primary other asset, its license for apatented process to remove nitrogen from natural gas, is being amortized toexpense over the average 17-year life of the underlying patents.  Investment in the license was $342,923 atJune 30, 2002, net of accumulated amortization of $78,128.

 

*Cash Equivalents*

 

For purposes of the consolidated statements of cashflows, the Company considers all highly liquid debt instruments purchased withoriginal maturities of three months or less to be cash equivalents.

 

# *IncomeTaxes*

 

Deferred tax assets and liabilities are recognized forthe expected future tax consequences of events that have been included in the financialstatements or income tax returns. Under this method, deferred tax assets andliabilities are determined based on the difference between the financialstatement and tax bases of assets and liabilities as measured by the enactedtax rates expected to apply when these differences reverse. Deferred tax assetsare reduced by a valuation allowance when it is more likely than not that theywill not be realized.  The deferred taxprovision is the result of changes in deferred tax assets and liabilities.

 

# *Stock-BasedCompensation*

 

Compensation for stock-based awards to employees ismeasured using the intrinsic method. This method recognizes compensation over the vesting period when thefair value of the underlying common stock exceeds the exercise price of theinstrument at the date of grant.

 

7

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# *EarningsPer Share*

 

Basic earnings per share is computed by dividing netearnings or loss by the weighted average number of common shares outstandingduring the period.  Diluted earnings pershare is computed by dividing net earnings or loss by the weighted average numberof shares outstanding, after giving effect to potentially dilutive common shareequivalents outstanding during the period. For the three-month and six-month periods ended June 30, 2002 and 2001,the diluted loss per common share is the same as basic since the effect ofpotentially dilutive common shares arising from outstanding stock options andwarrants was anti-dilutive.  For thethree-month periods ended June 30, 2002 and 2001 the potentially dilutivecommon share equivalents totaled 33,281 and 115,623.  For the six-month periods ended June 30, 2002 and 2001, thepotentially dilutive common share equivalents totaled 33,128 and 111,150.

 

The Company issued 71,429 shares of common stock toits directors in June 2002 as part of their annual compensation.

 

*Recent Accounting Pronouncements and Legislation*

 

In April 2002 the Financial Accounting Standards Board(“FASB”) issued Statement on Financial Accounting Standards (“SFAS”) No. 145,“Recission of FASB Statements No. 4, 44, and 64, Amendment of FASB StatementNo. 13, and Technical Corrections”, to eliminate an inconsistency between therequired accounting for sale-leaseback transactions and the required accountingfor certain lease modifications that are similar to sale-leasebacktransactions.  The statement also amendsother existing pronouncements.  Thisstatement is effective for fiscal years beginning after May 15, 2002.  The impact of adopting this statement on theconsolidated financial position or results of operations is not expected to bematerial.

 

In June 2002 the FASB issued SFAS No. 146, “Accountingfor Costs Associated with Exit or Disposal Activities”, which addressesaccounting and reporting for costs associated with exit and disposal activitiesand replaces Emerging Issues Task Force Issue No. 94-3, “Liability Recognitionfor Certain Employee Termination Benefits and Other Costs to Exit an Activity(including Certain Costs Incurred in a Restructuring)”.  This statement is effective for exit ordisposal activities that are initiated after December 31, 2002.  The impact of adopting this statement on theconsolidated financial position or results of operations is not expected to bematerial.

 

Effective July 30, 2002, the Sarbanes-Oxley Act of2002 (the “Act”) was signed into law. The Act encompasses a broad range of newlegislation designed to increase accountability of public companies andinvestor confidence.  The Actestablishes a new regulatory body, the “Public Company Accounting OversightBoard”, under the auspices of the Securities and Exchange Commission (the“SEC”) to oversee audits of companies offering equity or debt securities to thepublic, and further regulates and redefines the relationship between aregistered public accounting firm and its audit clients.  The Act establishes new disclosurerequirements for public companies, financial certification standards for publiccompany CEOs and CFOs, restrictions on the ability of officers and directors toengage in certain types of transactions, accelerated reporting of certain typesof transactions and new rules of professional responsibility on professionalsinvolved with securities, including attorneys, accountants and securitiesanalysts.  In addition, the Act enhancesa number of criminal penalties and enforcement

 

8

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measures available for securities related offenses.  In the coming months, the SEC is directed tostudy and issue reports on a number of topics and the rules are expected toevolve as the guidance provided becomes more specific.  The Company intends to fully comply with thenew rules effective immediately with this filing.

 

*Use of Estimates*

 

The preparation of financial statements in conformitywith generally accepted accounting principles requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities and the disclosure of contingent assets and liabilities at the dateof the financial statements and the reported amounts of revenues and expensesduring the reporting period.  Actualresults could differ from those estimates.

 

**(3)****                                 DryHole Cost**

 

During the first quarter of 2001, Gateway ProcessingCompany participated as a non-operating working interest owner in the drillingof a natural gas well on a prospect in the Sacramento Basin, California.  The well was expected to yield high-nitrogennatural gas reserves and employ the Company’s licensed nitrogen rejectionprocess to meet pipeline quality specifications.  The well was determined to be uneconomic and was abandoned.  The accompanying consolidated statement ofoperations for the six months ended June 30, 2001 includes an impairment chargeagainst earnings of $89,940 reflecting the abandonment of this project.

 

**(4)****                                 Debt**

 

*Notes Payable*

 

The Company’s operating line of credit provides formaximum borrowings of $500,000 through June 20, 2003.  Interest is payable monthly at 5.3% per annum and principal isdue on demand, or if no demand is made, at maturity.  The line is collateralized by a $500,000 certificate of depositearning interest at 4.3% per annum.  AtJune 30, 2002, the Company had available borrowings of $7,486 under theagreement.

 

The Company’s revolving credit agreement provides formaximum available borrowings of up to $250,000 through May 22, 2003.  Principal outstanding under the agreementaccrues interest at a variable rate, based on the bank’s prime rate index plus1.25%, with a minimum rate of 8%.  Thebalance under the agreement is due upon demand, or if no demand is made, atmaturity and is renewable annually. Costs of obtaining this debt totaled $4,932 and are being charged tointerest expense ratably over the maturity period of the note.  Fort Cobb uses the proceeds from time totime for general working capital purposes. The agreement, along with the Fort Cobb term note, is collateralizedwith the assets of Fort Cobb and guaranteed by the Company.  The Company had $119,000 of availableborrowings under the agreement as of June 30, 2002.

 

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*Long-termDebt*

 

Long-term debt as of June 30, 2002 consisted of thefollowing:

 

| Subordinated notes             |   | $         | 422,536   |   |
|--------------------------------|--------|-----------|-----------|--------|
| Term note – Fort Cobb     |   | 718,329   |      |
| Term note –  Madisonville |   | 1,000,000 |      |
|                           |   | 2,140,865 |      |
| Less current  maturities       |   | 563,296   |      |
|                           |   | $         | 1,577,569 |   |

 

Effective February 21, 2002, Gateway Pipeline Company and Gateway ProcessingCompany (the “Borrowers”) entered into a term credit agreement with abank.   Under the agreement, theBorrowers may borrow through July 31, 2002 up to $1.5 million in one or moreadvances.   Principal outstanding underthe note accrues interest at a fixed rate of 71⁄4% and the note matures January31, 2005.  The monthly note paymentsthrough July 31, 2002 represent interest only, and thereafter the note requiresmonthly payments of principal and interest ranging from $9,063 to $54,819 ifthe maximum available under the agreement is borrowed.  If less than the maximum amount is borrowed,the monthly payments are proportionately reduced.  The Borrowers are using the proceeds to finance the constructionof gathering and sales pipelines servicing the Madisonville Plant, ashereinafter defined.  The agreement iscollateralized with the Company’s economic interest in the Madisonville Plantand pipelines and the Waxahachie distribution system, and the Company has guaranteedthe loan and pledged the common stock of the Borrowers.  The Company had $1,000,000 outstanding underthe agreement as of June 30, 2002. Interest of $14,401 related to this project was capitalized through June30, 2002.

 

As described more fully in Note (5) below,construction of the Madisonville project has been delayed and the totalavailable under the term loan was not drawn before July 31, 2002.  The Company is currently negotiating withthe bank to amend the credit agreement to allow for extension of time duringwhich the proceeds of the loan may be borrowed, and a corresponding extensionof time after which principal payments must be made.  While the Company is confident that the bank will allow the timeextensions, the ultimate form of the amendment to the credit agreement cannotbe determined at this time.  Costs ofsecuring this debt, as amended, are expected to total approximately $40,000 andare being charged to interest expense ratably over the maturity period of thenote.

 

*Letters of Credit*

 

As of June 30, 2002, the Company had outstandingletters of credit totaling $548,595.

 

**(5)           Commitments and Contingencies**

 

On June 18, 2001,the Company announced that Gateway Processing Company entered into a long-termagreement with a producer to purchase non-pipeline quality natural gas nearMadisonville, Texas.  Concurrently,Gateway Processing entered into an agreement with Hanover Compression LimitedPartnership (“Hanover”), an affiliate of The Hanover Company, under whichHanover will treat the gas to remove impurities from the gas to enable the gasto meet pipeline sales quality specifications.

 

10

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Of significance to Gateway, Hanover is employing thestate-of-the-art, patented, absorption based technology developed by AET, forwhich Gateway has the exclusive U.S. license, to remove the nitrogen from thegas.

 

Hanover’s facilities (the “Madisonville Plant”) aredesigned initially to treat 18,000 Mcf per day, and Gateway Pipeline Companywill construct the gathering system upstream of the Plant, and the ten–inchsales pipeline to transport the treated residue gas.  The Company expects its capital commitment in this project to beapproximately $2.0 million, about $500,000 more than it has currently availableunder the term loan for the project. The estimated total costs have increased mainly due to an increase inthe diameter of the sales pipeline and an increase in the length of the salespipeline.  The additional requiredcapital is expected to come from internally generated funds or additional bankborrowings.  As of August 10, 2002 theCompany has purchased approximately 98% of the right-of-way associated with thesales pipeline, and has begun condemnation proceedings on the remainder.

 

Installation of the Madisonville Plant has been delayedby negotiations to acquire appropriate sites for the Plant and the injectionwell required to properly dispose of the impurities removed from the gas.  Site selections are now complete and thesites have been acquired.  Although theproducer has successfully completed and tested the natural gas well on whichthe initial phase of the project is based, the producer must drill, completeand test the injection well before either Hanover or the Company is required toinstall any facilities or pipelines at the sites.  The Company will install the gathering and sales pipelinescoincident with Hanover’s installation of the Plant.  Drilling of the injection well is expected to take place in thesecond half of 2002, and it is therefore expected that the Madisonville Plantwill commence operations during the first half of 2003.  See Note (4) for a description of theCompany’s financing related to this project.

 

The Company and its subsidiaries are parties tolitigation and claims arising in the normal course of business.  Management, after consultation with legalcounsel, believes that the liabilities, if any, arising from such litigationand claims, will not be material to the Company’s financial position, resultsof operations or cash flows.

 

**(6)****                                 SegmentDisclosures**

 

All of the Company’s operations are in the domesticU.S. and the Gulf of Mexico in Texas and federal waters.  The Company’s management reviews andevaluates the operations separately of three main segments—Onshore Operations,Offshore Operations and Fort Cobb Operations. Each segment is an aggregation of operations subject to similar economicand regulatory conditions such that they are likely to have similar long-termprospects for financial performance. Onshore Operations include natural gas gathering, transportation anddistribution activities in Texas, Oklahoma and Louisiana.  Offshore Operations include natural gasgathering and transportation activities in the Gulf of Mexico in Texas andfederal waters.  The principal marketsfor both of these segments are affiliates of large intrastate and interstatepipeline companies.  Fort CobbOperations are comprised of a local natural gas distribution company inOklahoma.  This segment supplies naturalgas to approximately 2,350 customers, principally for irrigation and cropdrying fuel for farming cooperatives, and residential fuel.

 

11

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The accounting policies of the reportable segments arethe same as those described in Note 2 to the Consolidated Financial Statements.  The Company evaluates the segments based onoperating margin, defined as revenues less cost of purchased gas and operatingand maintenance expenses.  Such amountsare before general and administrative expense, depreciation, interest income orexpense or income taxes.  Inter-segmentsales of $93,226 and $140,802 were eliminated during consolidation for thethree months ended June 30, 2002 and 2001. Inter-segment sales of $307,141 and $743,069 were eliminated duringconsolidation for the six months ended June 30, 2002 and 2001.

 

Summarized financial information of the Company’sreportable segments, and a reconciliation of operating margin to consolidatednet loss, is presented below:

 
|                           |   | **Three  Months Ended  June 30,** |       | **Six Months  Ended  June 30,** |       |
|--------------------------------|--------|-----------------------------------|------------|---------------------------------|------------|
|                           |   | **2002**                          |       | **2001**                        | ** ** | **2002** | ** ** | **2001** | ** ** |
| **Onshore Operations**         |   |                              |       |                            |       |   |   |   |   |
| Revenues                       |   | $                                 | 1,475,777  |                            | $          | 2,169,099 |   | $ | 2,475,942 |   | $ | 5,382,522 |   |
| Operating margin               |   | 147,746                           |       | 203,568                         |       | 283,858 |   | 549,419 |   |
| Depreciation and  amortization |   | 67,091                            |       | 88,473                          |       | 163,332 |   | 176,495 |   |
| Total assets                   |   | 5,264,576                         |       | 4,816,293                       |       | 5,264,576 |   | 4,816,293 |   |
|                           |   |                              |       |                            |       |   |   |   |   |
| **Offshore Operations**        |   |                              |       |                            |       |   |   |   |   |
| Revenues                       |   | 206,132                           |       | 399,359                         |       | 408,164 |   | 571,937 |   |
| Operating margin               |   | 143,510                           |       | 260,034                         |       | 279,956 |   | 307,861 |   |
| Depreciation and  amortization |   | 35,413                            |       | 34,322                          |       | 70,826 |   | 69,437 |   |
| Total assets                   |   | 1,849,029                         |       | 1,945,172                       |       | 1,849,029 |   | 1,945,172 |   |
|                           |   |                              |       |                            |       |   |   |   |   |
| **Fort Cobb Operations**       |   |                              |       |                            |       |   |   |   |   |
| Revenues                       |   | 189,566                           |       | 228,694                         |       | 715,850 |   | 1,084,050 |   |
| Operating margin               |   | (27,427                           | )          | (50,517                         | )          | 150,446 |   | 62,769 |   |
| Depreciation and  amortization |   | 49,266                            |       | 49,447                          |       | 98,834 |   | 98,830 |   |
| Total assets                   |   | 2,177,839                         |       | 2,434,175                       |       | 2,177,839 |   | 2,434,175 |   |
|                           |   |                              |       |                            |       |   |   |   |   |
| **Total**                      |   |                              |       |                            |       |   |   |   |   |
| Revenues                       |   | 1,871,475                         |       | 2,797,152                       |       | 3,599,956 |   | 7,038,509 |   |
| Operating margin               |   | 263,829                           |       | 413,085                         |       | 714,260 |   | 920,049 |   |
| Depreciation and  amortization |   | 151,770                           |       | 172,242                         |       | 332,992 |   | 344,762 |   |
| Total assets                   |   | 9,261,444                         |       | 9,195,640                       |       | 9,291,444 |   | 9,195,640 |   |
|                           |   |                              |       |                            |       |   |   |   |   |
| **Reconciliation to net loss** |   |                              | ** ** |                            | ** ** |   | ** ** |   | ** ** |
| Operating margin               |   | $                                 | 263,829    |                            | $          | 413,085 |   | $ | 714,260 |   | $ | 920,049 |   |
| Depreciation and  amortization |   | 151,770                           |       | 172,242                         |       | 332,992 |   | 344,762 |   |
| Dry hole cost                  |   | —                            |       | —                          |       | — |   | 89,940 |   |
| General &  administrative  |   | 493,413                           |       | 505,484                         |       | 981,839 |   | 993,849 |   |
| Other income  (expense), net   |   | (13,703                           | )          | (53,908                         | )          | (23,617 | ) | (50,123 | ) |
| Net loss                       |   | $                                 | (395,057   | )                               | $          | (318,549 | ) | $ | (624,188 | ) | $ | (558,625 | ) |

 

12

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**Item 2.****           Management’sDiscussion and Analysis of Financial Condition and****Results of Operations.**

 

The following management’s discussion and analysiscontains trend analysis and other forward-looking statements within the meaningof Section 27A of the Securities Act of 1933, as amended, and Section 21E ofthe Securities Exchange Act of 1934, as amended.  Actual results could differ materially from those projected inthe forward-looking statements throughout this document as a result of the riskfactors set forth below in the section entitled *Factors Affecting Future Results*and elsewhere in this document.

 

**Resultsof Operations**

 

***General***

 

The Company evaluates each of its activities based onthe operating margin it produces.  TheCompany defines operating margin as revenues, less the cost of purchased gasand operating and maintenance expenses. Management reviews and evaluates the operations of three main segments —Onshore operations, Offshore operations and Fort Cobb operations.  The Company continues to actively pursueopportunities in all three segments.

 

**Three Months Ended June 30, 2002Compared to June 30, 2001**

 

# *Total Operations*

 

The following table sets forth information for thethree months ended June 30, 2002 and 2001:

 
|                           |   | **2002** |      | **2001** |   |
|--------------------------------|--------|----------|-----------|----------|--------|
| Revenues                       |   | $        | 1,871,475 |     | $      | 2,797,152 |   |
| Operating margin               |   | 263,829  |      | 413,085  |   |
| Depreciation and  amortization |   | 151,770  |      | 172,242  |   |
|                                |        |          |           |          |        |  |  |

 

Operating margin for the three months ended June 30,2002 decreased $149,000 compared to the same period of the prior year.  Offshore operating margin decreased$116,000, Onshore operating margin decreased $56,000, and Fort Cobb operatingmargin increased $23,000.  Revenues werelower than the prior period due to lower average sales prices.  The average Henry Hub index price was $3.38for the three months, compared to $4.65 for the prior period.  Operating margin was not proportionallyaffected due to the corresponding decrease in the cost of purchased gas.  These segments are discussed individuallybelow in greater detail.

#  

# *Onshore Operations*

 

The following table sets forth information for thethree months ended June 30, 2002 and 2001:

 

13

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|                           |   | **2002** |      | **2001** |   |
|--------------------------------|--------|----------|-----------|----------|--------|
| Revenues                       |   | $        | 1,475,777 |     | $      | 2,169,099 |   |
| Operating margin               |   | 147,746  |      | 203,568  |   |
| Depreciation and  amortization |   | 67,091   |      | 88,473   |   |
|                                |        |          |           |          |        |  |  |

 

Operating margin for Onshore operations decreased inthe second quarter by $56,000 from the same period of the prior year, mainlydue to changes in gas transportation terms imposed by a major natural gaspipeline.  The Company has constructednew facilities to allow access to another pipeline and additional supplysources.

 

# *Offshore Operations*

 

The following table sets forth information for thethree months ended June 30, 2002 and 2001:

 
|                           |   | **2002** |    | **2001** |   |
|--------------------------------|--------|----------|---------|----------|--------|
| Revenues                       |   | $        | 206,132 |     | $      | 399,359 |   |
| Operating margin               |   | 143,510  |    | 260,034  |   |
| Depreciation and  amortization |   | 35,413   |    | 34,322   |   |
|                                |        |          |         |          |        |  |  |

 

Operating margin for Offshore operations decreased inthe second quarter by $116,000 over the same period of the prior year. Thedecrease was primarily due to declines in natural gas and liquids volumestransported for producers in the area of Galveston Blocks 144L, 190L and 213L,and High Island Block 98L. Galveston Block 144L is currently shut in, but isexpected to return to production.

 

# *Fort Cobb Operations*

 

The following table sets forth information for thethree months ended June 30, 2002 and 2001:

 
|                           |   | **2002** |    | **2001** |   |
|--------------------------------|--------|----------|---------|----------|--------|
| Revenues                       |   | $        | 189,566 |     | $      | 228,694 |   |
| Operating margin               |   | (27,427  | )       | (50,517  | )      |
| Depreciation and  amortization |   | 49,266   |    | 49,447   |   |
|                                |        |          |         |          |        |  |  |

 

Operating margin for Fort Cobb operations increased$23,000 in the three months ended June 30, 2002 from the same period of theprior year, due to a higher weighted average effective tariff and lower gaslost/unaccounted for.  Fort Cobb’sbusiness peaks in the third and fourth quarters because a significant portionof its load comes from supplying irrigation and crop-drying customers.

 

# *Operations Support*

 

The following table sets forth information for thethree months ended June 30, 2002 and 2001:

 
|                         |   | **2002** |    | **2001** |   |
|------------------------------|--------|----------|---------|----------|--------|
| General and  administrative  |   | $        | 493,413 |     | $      | 505,484 |   |
| Interest income              |   | 11,442   |    | 11,382   |   |
| Interest expense             |   | (54,701  | )       | (73,206  | )      |
| Interest  capitalized        |   | 11,322   |    | —   |   |
| Other income  (expense), net |   | 18,234   |    | 7,916    |   |
|                              |        |          |         |          |        |  |  |

 

14

----

 

General and administrative expenses for the quarterare 2% lower than for the same period of last year, due primarily to lowerlegal and professional fees.

 

Interest income varies directly with the balance ondeposit in the Company’s certificates of deposit and short-term money marketaccounts.  Interest expense for thethree months ended June 30, 2001 includes $43,000 related to the contingentpayable on the Waxahachie system. Otherwise, it fluctuates directly with the amount of outstanding long–termdebt and the amount of borrowings under the Company’s operating line of creditand revolving credit agreement.

 

Other income for the periods includes late fees andpenalties charged by Fort Cobb and miscellaneous adjustments.

#  

# **Six Months Ended June 30, 2002 Compared to June 30, 2001**

# * *

# *Total Operations*

 

The following table sets forth information for the sixmonths ended June 30, 2002 and 2001:

** **
|                           |   | **2002** |      | **2001** |   |
|--------------------------------|--------|----------|-----------|----------|--------|
| Revenues                       |   | $        | 3,599,956 |     | $      | 7,038,509 |   |
| Operating margin               |   | 714,260  |      | 920,049  |   |
| Depreciation and  amortization |   | 332,992  |      | 344,762  |   |
|                                |        |          |           |          |        |  |  |

 

Operating margin for the six months ended June 30,2002 decreased $206,000 compared to the same period of the prior year.  Onshore operating margin decreased $266,000,Offshore operating margin decreased $28,000, and Fort Cobb operating marginincreased $88,000.  Revenues were lowerthan the prior period due to lower average sales prices.  The average Henry Hub index price was $2.86for the six months, compared to $5.85 for the prior period.  Operating margins were not proportionallyaffected due to the corresponding decrease in the cost of purchased gas.  These segments are discussed individuallybelow in greater detail.

#  

# *Onshore Operations*

 

The following table sets forth information for the sixmonths ended June 30, 2002 and 2001:

** **
|                           |   | **2002** |      | **2001** |   |
|--------------------------------|--------|----------|-----------|----------|--------|
| Revenues                       |   | $        | 2,475,942 |     | $      | 5,382,522 |   |
| Operating margin               |   | 283,858  |      | 549,419  |   |
| Depreciation and  amortization |   | 163,332  |      | 176,495  |   |
|                                |        |          |           |          |        |  |  |

 

Operating margin for onshore operations decreased$266,000 in the six months ended June 30, 2002 from the same period of theprior year, mainly due to changes in gas transportation terms imposed by amajor natural gas pipeline.  The Companyhas constructed new facilities to allow access to another pipeline andadditional supply sources.

 

# *Offshore Operations*

 

The following table sets forth information for the sixmonths ended June 30, 2002 and 2001:

 

15

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|                           |   | **2002** |    | **2001** |   |
|--------------------------------|--------|----------|---------|----------|--------|
| Revenues                       |   | $        | 408,164 |     | $      | 571,937 |   |
| Operating margin               |   | 279,956  |    | 307,861  |   |
| Depreciation and  amortization |   | 70,826   |    | 69,437   |   |
|                                |        |          |         |          |        |  |  |

 

Operating margin for Offshore operations decreased$28,000 in the six months ended June 30, 2002 from the same period of the prioryear.  The decrease was primarily due todeclines in natural gas and liquids volumes transported for producers in thearea of Galveston Blocks 144L, 190L and 213L, and High Island Block 98L.Galveston Block 144L is currently shut in, but is expected to return toproduction.

 

# *Fort Cobb Operations*

 

The following table sets forth information for the sixmonths ended June 30, 2002 and 2001:

 
|                           |   | **2002** |    | **2001** |   |
|--------------------------------|--------|----------|---------|----------|--------|
| Revenues                       |   | $        | 715,850 |     | $      | 1,084,050 |   |
| Operating margin               |   | 150,446  |    | 62,769   |   |
| Depreciation and  amortization |   | 98,834   |    | 98,830   |   |
|                                |        |          |         |          |        |  |  |

 

Operating margin for Fort Cobb operations increased$88,000 in the six months ended June 30, 2002 from the same period of the prioryear, due to a higher weighted average effective tariff and lower gaslost/unaccounted for.  Fort Cobb’sbusiness peaks in the third and fourth quarters because a significant portionof its load comes from supplying irrigation and crop-drying customers.

 

# *Operations Support*

 

The following table sets forth information for the sixmonths ended June 30, 2002 and 2001:

 
|                         |   | **2002** |    | **2001** |   |
|------------------------------|--------|----------|---------|----------|--------|
| General and  administrative  |   | $        | 981,839 |     | $      | 993,849 |   |
| Interest income              |   | 27,013   |    | 23,971   |   |
| Interest expense             |   | (102,625 | )       | (105,516 | )      |
| Interest  capitalized        |   | 14,401   |    | —   |   |
| Other income  (expense), net |   | 37,594   |    | 31,422   |   |
|                              |        |          |         |          |        |  |  |

 

General and administrative expenses decreased 1% inthe six months ended June 30, 2002 compared to the same period of the prioryear, primarily due to lower legal and professional fees.

 

Interest income varies directly with the balance ondeposit in the Company’s certificates of deposit and short-term money marketaccounts.  Interest expense for the sixmonths ended June 30, 2002 includes $43,000 related to the contingent payableon the Waxahachie system.  Otherwise, itfluctuates directly with the amount of outstanding long-term debt and theamount of borrowings under the Company’s operating line of credit and revolvingcredit agreement.

 

Other income for the periods includes late fees andpenalties charged by Fort Cobb and miscellaneous adjustments.

 

16

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## **Liquidity and Capital Resources**

 

Net cash used in operating activities totaled $272,000for the six months ended June 30, 2002, compared to $486,000 used in operatingactivities for the same period last year. The change was due to changes in current asset and liability accounts of$345,000, partially offset by the decrease in operating margins between the twoperiods which is discussed by segment in the preceding section.

 

The Company has cash and cash equivalents andcertificates of deposit totaling $995,357 at June 30, 2002.  The Company’s operating line of creditagreement with a bank provides for maximum borrowings of $500,000, through June20, 2003, and is collateralized with a certificate of deposit for the sameamount.  The Company’s revolving creditagreement provides for maximum borrowings of $250,000 through May 22,2003.  The Company had available borrowingsof $7,486 and $119,000 as of June 30, 2002 under the two agreements.

 

As discussed in Note (5) to the financial statements,Gateway Processing entered into long-term agreements with a producer and withHanover Compression Limited Partnership, an affiliate of The Hanover Company,under which the Company expects to invest a total of approximately $2.0million.  The funds for this commitmentare expected to come from available cash and from outside financing. TheCompany’s Madisonville term note provides for maximum borrowings of $1.5 million,and the Company had $500,000 available under that agreement as of June 30,2002.

 

Construction of the Madisonville project has beendelayed and the total available under the term loan was not drawn before July31, 2002.  The Company is currentlynegotiating with the bank to amend the credit agreement to allow for extensionof time during which the proceeds of the loan may be borrowed, and acorresponding extension of time after which principal payments must bemade.  While the Company is confidentthat the bank will allow the time extensions, the ultimate form of theamendment to the credit agreement cannot be determined at this time.

 

At June 30, 2002, the Company’s long-term debt tototal capitalization was approximately 22%, which should still allowopportunity for the Company to utilize conventional long-term financing to fundacquisitions or construction projects.

 

Absent acquisitions or significant developmentprojects, the Company will continue to fund its operations through internallygenerated funds and available cash and certificates of deposit, plus availablebank borrowings.  The Company believesits cash flows from operations and other available cash will be sufficient tofund its ongoing operations for the foreseeable future.  Any significant property acquisitions ordevelopment projects will require outside project financing.

 

**FactorsAffecting Future Results**

 

One of the principal objectives of the Company is toenhance stockholder value through the execution of certain strategies. Thesestrategies include, among other things: (i) focusing on gathering,transporting, distributing and treating natural gas; (ii) expanding theCompany’s asset base in core geographic areas; (iii) participating in thedevelopment of sub-quality high nitrogen natural gas reserves to create demandfor our services, and; (iv) acquiring or constructing properties in one or morenew core areas.

 

The Company must provide services to its customers,primarily producers, at a competitive price. Therefore, in order to besuccessful the Company must contain its costs in line with industrycompetitors. The Company’s access to reasonably priced long-term capital willhave a significant effect

 

17

----

 

on its ability to acquire additional properties to increase operatingmargin, enabling fixed overhead costs to be spread over a larger asset base.The Company believes its experienced personnel will allow the Company to accesscapital and find properties which can provide attractive returns. However,there can be no assurance that the Company will be successful in this endeavor.

 

The Company’s ability to generate long-term value forthe common stockholder is dependent in part upon the successful acquisition ofadditional assets which compliment the Company’s core business at costs whichprovide for reasonable returns. There are many companies participating in themidstream segment of the natural gas industry, many with resources greater thanthe Company. Greater competition for profitable operations can increase pricesand make it more difficult to acquire assets at reasonable multiples of cashflow.

 

The Company believes that it will be able to competein this environment and will be able to find attractive investments whichcompliment its existing properties; however, it is not possible to predictcompetition or the effect this will have on the Company’s operations.

 

The Company intends to pursue projects that employ itsnitrogen rejection technology, and is actively evaluating several suchprojects.  These projects are located ingeographic areas with well known concentrations of high nitrogen natural gasreserves.  The Company has atechnological advantage in this niche, due to its exclusive U.S. license forthe nitrogen rejection process. Additionally, a substantial portion of the natural gas reserves in thelower 48 states contains nitrogen, either alone or in conjunction with othercontaminants, in excess of the maximum percentage by volume acceptable to mostpipeline companies.   Successfulcompletion of these projects will depend upon the ability of the Company tomarket the technology to the producer community, and to obtain financing onterms satisfactory to the Company for construction of nitrogen rejection plantsand/or acquisition of working interests in the high nitrogen properties.

 

The Company’s operations are also significantlyaffected by factors which are outside the control of the Company. Gas gatheringand processing is dependent on throughput volume. Throughput on the Company’ssystems is dependent on natural gas production which is significantly affectedby natural gas prices as prices affect the willingness of producers to investthe required capital to obtain geological and geophysical information, to drilldevelopment or exploratory wells, and to rework or maximize production onexisting wells. Natural gas prices are currently at levels which should provideadequate incentive to producers; however, there is no assurance that suchprices will remain at current levels, and that producers will continue to reactpositively to the current prices.

 

The Company’s revenues, particularly in its retailoperations, are also affected by weather. Much of the retail demand is for cropirrigation and drying.  Above normalprecipitation in the growing season and hot, dry weather in the fall cansignificantly reduce demand for natural gas.

 

**Part II**

 

**Item 1.****                                                           LegalProceedings**

None

 

**Item 2.****                                                           Changesin Securities**

None

18

----

 

**Item 3.****                                                           DefaultsUpon Senior Securities**

None

 

**Item 4.****                                                           Submissionof Matters to a Vote of Security Holders**

At the Annual Meeting of Stockholders held on May 22,2002, the following directors were elected to serve for the upcoming year:

 
| **Name**               |   | **Votes For** |   | **Votes  Against** |   | **Votes  Withheld** |   |
|------------------------|--------|---------------|--------|--------------------|--------|---------------------|--------|
| Michael T.  Fadden     |   | 9,311,467     |   | 160,547            |   | 0                   |   |
| John B. Ewing,  Jr.    |   | 9,318,479     |   | 153,535            |   | 0                   |   |
| Scott D. Heflin        |   | 9,318,479     |   | 153,535            |   | 0                   |   |
| Earl P. Hoffman        |   | 9,318,479     |   | 153,535            |   | 0                   |   |
| Charles A.  Holtgraves |   | 9,318,479     |   | 153,535            |   | 0                   |   |
| Larry J. Horbach       |   | 9,318,479     |   | 153,535            |   | 0                   |   |
| Gary A. McConnell      |   | 9,318,479     |   | 153,535            |   | 0                   |   |
| Abe Yeddis             |   | 9,300,008     |   | 172,006            |   | 0                   |   |

 

At the Annual Meeting of Stockholders held on May 22,2002, the stockholders ratified the appointment of Deloitte & Touche LLP asthe Company’s auditors with a vote of 9,290,425 for, 44,639 against and 136,950votes withheld.

 

**Item 5.****                                                           OtherInformation**

None

 

**Item 6.****                                                           Exhibitsand Reports on Form 8-K.**

a)              Exhibits:

99.1                           OfficerCertification

 

b)             Reports on Form 8-K:

None

 

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15 (d) of the SecuritiesExchange Act of 1934, the Registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

 
|            | /s/ Michael T. Fadden                 |   | /s/ Scott D. Heflin                   |   |
|-----------------|---------------------------------------|--------|---------------------------------------|--------|
|            | Chief Executive Officer and President |   | Chief Financial Officer and Treasurer |   |
|            |                                  |   |                                  |
| August 14, 2002 |                                  |   |                                  |   |
| (Date)          |                                  |   |                                  |   |
|                 |                                       |        |                                       |        |  |

 

19

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