10-Q 1 f10q-63004.txt Form 1O-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended June 30, 2004 Commission File No. 0-1392 Central Natural Resources, Inc. Incorporated in State of Delaware IRS Number: 44-0195290 911 Main Street, Suite 1710 Kansas City, Missouri 64105 Phone: 816-842-2430 The registrant (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months, and (2) has been subject to such filing requirements for the past ninety days. Yes [X] No [ ] Indicate by checkmark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Exchange Act) Yes [ ] No [X] Common stock outstanding as of July 31, 2004 $1 par value; 493,637 shares CENTRAL NATURAL RESOURCES, INC. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheets - June 30, 2004 and December 31, 2003 Consolidated Statements of Earnings and Retained Earnings - Three months ended June 30, 2004 and 2003 and six months ended June 30, 2004 and 2003 Consolidated Statements of Comprehensive Income -Three months ended June 30, 2004 and 2003 and six months ended June 30, 2004 and 2003 Consolidated Statements of Cash Flows - Six months ended June 30, 2004 and 2003 Notes to Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures PART II - OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities, and Use of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CENTRAL NATURAL RESOURCES, INC. Consolidated Balance Sheets June 30, 2004 and December 31, 2003 (Unaudited) (amounts in unit dollars)

See accompanying notes to consolidated financial statements.

CENTRAL NATURAL RESOURCES, INC. Consolidated Statements of Earnings and Retained Earnings Six months ended June 30, 2004 and 2003 and three months ended June 30, 2004 and 2003 (Unaudited) (amounts in unit dollars)

CENTRAL NATURAL RESOURCES, INC. Consolidated Statements of Comprehensive Income Six months ended June 30, 2004 and 2003 and three months ended June 30, 2004 and 2003 (Unaudited) (amounts in unit dollars)

CENTRAL NATURAL RESOURCES, INC. Consolidated Statements of Cash Flows Six months ended June 30, 2004 and 2003 (Unaudited) (amounts in unit dollars)

CENTRAL NATURAL RESOURCES INC. Notes to Unaudited Consolidated Financial Statements June 30, 2004 Basis of Presentation In the opinion of Central Natural Resources, Inc. (the Company), the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of June 30, 2004, and the results of operations and cash flows for the periods ended June 30, 2004 and 2003. The consolidated financial statements are presented in accordance with the requirements of Form 10-Q and, consequently, do not include all the disclosures required by accounting principles generally accepted in the United States of America. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003. On June 30, 2004 the Company announced in an 8-K filing that it had filed Form 15 with the SEC to cease to be an SEC reporting company, as it was eligible to do so under applicable SEC regulations. Unless this Form 15 filing is denied by the SEC, the Company will no longer be required to make quarterly and yearly filings of reports with the Securities and Exchange Commission. The Company uses the Successful Efforts method of accounting for revenue and expenses from oil and gas production that has been detailed in the Company's 10-K and previous reports. Revenue and expenses associated with oil and gas production is accrued in the period the revenue or expenses are generated. Revenue and expenses from oil and gas production in the period ended June 30, 2004 was generated by working interests in oil and gas properties acquired in February 2003 and working interests in unproved properties acquired in July 2002. Exploration expenses, including geological and geophysical costs, rental and exploratory dry holes, are charged against income as incurred. Costs of successful wells and related production equipment and developmental dry holes are capitalized and amortized by field using the unit-of-production method as the oil and gas are produced. Undeveloped acreage costs are capitalized and amortized at rates that provide full amortization on abandonment of unproductive leases. Costs of abandoned leases are charged to the accumulated amortization accounts, and costs of productive leases are transferred to the developed property accounts. Other - Property, plant and equipment is stated at cost less reserves for depreciation, depletion and amortization. Maintenance and repairs are expensed as incurred, except that costs of replacements or renewals that improve or extend the lives of existing properties are capitalized. Impairment of Long-Lived Assets - Proved oil and gas properties are reviewed for impairment on a field-by-field basis when facts and circumstances indicate that their carrying amounts may not be recoverable. In performing this review, future cash flows are estimated by applying estimated future oil and gas prices to estimated future production, less estimated future expenditures to develop and produce the reserves. If the sum of these estimated future cash flows (undiscounted and without interest charges) is less than the carrying amount of the property, an impairment loss is recognized for the excess of the carrying amount over the estimated fair value of the property based on estimated future cash flows. CENTRAL NATURAL RESOURCES INC. Notes to Unaudited Consolidated Financial Statement Results of operations for interim periods are not necessarily indicative of results to be expected for a full year. Stock Based Compensation In the first quarter of 2004 the Company granted 3,000 shares of restricted stock to an employee of the Company, vesting in equal amounts over three years. The employee purchased the 3,000 restricted shares at $1 per share and the difference between the purchase price and the then fair market value of the stock was recorded in shareholders equity as unearned restricted stock. The unearned restricted stock is amortized ratably to expense over the three-year vesting period. Also in the first quarter of 2004, the Company granted 2,000 options, vesting in equal amounts over four years, to another employee of the Company. In the second quarter of 2004, the Company granted stock options in the amount of 1,250 shares to each non-employee Director under the Company's "Director Nonqualified Stock Option Agreement". The Company applies the intrinsic value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its fixed plan stock options. As such, compensation expense would be recorded on the date of grant only if the then current market price of the underlying stock exceeded the exercise price. Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to continue to apply the intrinsic value- based method of accounting described above, and has adopted the disclosure requirements of SFAS No. 123. The following table illustrates the effect on net income (loss) if the fair value based method had been applied to all outstanding and unvested awards in each period:

CENTRAL NATURAL RESOURCES INC. Notes to Unaudited Consolidated Financial Statements Options outstanding at June 30, 2004 and June 30, 2003 are not considered dilutive as the exercise price was greater than the market price at the close of each period under consideration. However, if the market price were to increase in a future period to be greater than the exercise price, these options could become dilutive. (2) Investment Securities: The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value for held-to-maturity and available-for-sale securities by major security type at June 30, 2004 and December 31, 2003 are as follows:

CENTRAL NATURAL RESOURCES INC. Notes to Unaudited Consolidated Financial Statements Investment income (loss) consists of the following for each of the periods ended June 30:

Investments in debt securities are classified as held-to-maturity securities, which are carried at amortized cost. Investments in marketable equity securities are classified as available-for-sale securities, which are carried at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. A decline in the market value of any available-for-sale or held-to-maturity security below cost that is deemed to be other than temporary results in a reduction in carrying amount to fair value. The impairment is charged to earnings and a new cost basis for the security is established. Other than temporary impairment is analyzed quarterly on an individual security basis based on the length of time and the extent to which market value has been less than cost; the financial condition and any specific events which effect the issuer; and the Company's intent and ability to hold the security. During the six months ended June 30, 2004, the Company recognized no impairment charge for marketable equity securities. Other investments represent an equity interest in non-marketable securities for which the Company does not possess significant influence. These investments are accounted for at cost. An impairment charge was recognized in the amount of $87,282 to reflect an impairment in these securities in the first quarter of 2003. (3) Oil and Gas Activity Through the first six months of 2004, a wholly owned subsidiary of the Company had committed to participate in the drilling of ten gas wells in south and east Texas. At June 30, 2004, four wells had been successfully completed, one well was in the process of being completed, two wells were in the process of being drilled and commitments had been made to participate in three additional wells on which drilling activity had not yet begun. Oil and gas property recorded on the balance sheet is comprised of property that is both proved and unproved, although currently all costs carried on the balance sheet relate to proved property. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview The six months ended June 30, 2004 exhibit the results of the Company's expanded efforts to increase oil and gas production through aggressive exploration and development. Successful well completions and workovers since the acquisition of producing properties in the first quarter of 2003 resulted in the more than doubling of revenue from oil and gas production during this time. To date in 2004, the Company, through its wholly-owned subsidiary, CNR Production L.L.C. (CNR), has participated in, or approved the participation in, 10 wells to further explore and develop its working interest properties. In addition to exploration and development, CNR will continue to evaluate potential additions to its oil and gas properties through acquisitions. While no assurance can be given, assuming commodity prices remain strong, and subject to other uncertainties set forth in the section captioned "Forward-Looking Statements" below, management expects that earnings will continue to grow as revenue from production increases during 2004 with the addition of successful wells. The cost of maintaining a public, SEC reporting company continues to rise and is reflected in the Company's General and Administrative expenses discussed below. While these costs are borne by companies of all sizes, the burden from both an expense and a management time standpoint is often disproportionate for smaller companies such as the Company. On June 30, 2004 the Company announced in an 8-K filing that it had filed Form 15 with the SEC to cease to be an SEC reporting company, as it was eligible to do so under applicable SEC regulations. While the Company believes that this filing will not be denied by the SEC, there is a 90-day review period during which the SEC may deny the filing. Management believes that, due to the cessation of SEC reporting requirements, the Company will be able to achieve savings in General and Administrative expenses and will avoid what was deemed by management as a certain increase in both costs and time associated with future requirements. That said, further government requirements that mandate additional disclosures or specific procedures may increase costs in the future, as would the need to hire outside experts as well as the need to hire additional internal financial personnel to assist with the implementation of these regulations. Management continues to position the Company to take advantage of extractive mineral opportunities and expects further revenue, expenses and capital expenditures to be generated in these endeavors in 2004, as they were in the first six months of 2004. In recent periods, the Company has benefited from extremely strong commodity oil and gas prices. While prices may remain at an elevated level, a reduction in commodity oil and gas prices would have a negative impact upon the Company's revenues and profitability. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued Results of Operations Total operating revenue increased substantially in the first six months of 2004 over the first six months of 2003, and in the second quarter of 2004 over the second quarter of 2003, due to increased revenues from oil and gas production which was the result of an increase in the volume of oil and gas produced during the current periods under comparison, coupled with an increase in average prices during the comparable periods. Although revenue from mineral royalties increased slightly in the three months ended June 30, 2004 over the year prior period, revenue from mineral royalties in the first six months of 2004 decreased slightly from 2003. The table below shows gas production volume and average pricing for the periods under comparison:

*Note - Rounding may cause calculated totals to be slightly different than above. General and administrative expenses increased in both the first six months of 2004 over the first six months of 2003, and in the second quarter of 2004 over the second quarter of 2003 due primarily to increases in auditing and legal fees. Oil and gas operating expenses, which include lease operating costs, increased in the first six months of 2004 over the first six months of 2003, and in the second quarter of 2004 over the second quarter of 2003 due to the substantial amount of additional developmental work completed in recent months. Although total oil and gas operating expenses increased during this period, the ratio of expenses to production revenue remained relatively constant. Depletion, depreciation and amortization increased in both the 2004 periods under comparison from the prior year's periods due to the increased production in the corresponding periods. There was positive non-operating income in the first six months of 2004 compared to a non-operating loss in the first six months of 2003. Non-operating income increased slightly in the second quarter of 2004 compared to the second quarter of 2003. In the first six months of 2003 the Company recognized an impairment charge of $87,282 on the carrying value of an investment in non-marketable securities held by the Company. There were no impairments or write-downs taken during the first six months of 2004. The Company recorded an increase in income tax expense in the first six months of 2004 versus the same period in 2003 due to higher net taxable earnings generated in 2004 versus the same period of 2003. The increase in income tax expense was also greater in the second quarter of 2004 than the comparable period in 2003 due to the increase in earnings generated in 2004 versus the prior period under comparison. Financial Condition - Liquidity and Capital Resources The financial condition of the Company continued to be strong through the end of the first six months of 2004 as it was at the end of the fiscal year in 2003, with substantial liquid assets, no debt and positive net earnings. The Company continues to utilize available liquidity to fund exploration and development of its working interests in south Texas and east Texas through CNR. The liquidity of the Company continues to be high as is evidenced by a continuing favorable ratio of current assets to current liabilities of over 50:1, and the fact that a significant portion of the Company's stock holders' equity continues to be represented by liquid assets. Although, liquidity of the Company continues to be favorable, it is affected by cash flows. The Consolidated Statement of Cash Flows in the accompanying Consolidated Financial Statements illustrates that there was a net decrease in cash and cash equivalents during the first six months of 2004 and in the same period in 2003, although the decrease was much greater in 2003 than the current period under comparison. Summary cash flows for the two periods under comparison are shown on the table below:

Contributing to the cash used in operating activities for both periods was an increase in the amount of accounts receivable and advances to operators. Accounts receivable is increasing as gas production rates continue to increase. Advances to operators have increased in conjunction with drilling obligations. Also contributing to the differences in cash from operating activities was an adjustment for a non-cash impairment charge taken in 2003 and differences in Federal and State income taxes. A significant use of cash from investing activities in the 2003 periods under comparison was the acquisition of working interests in oil and gas properties as well as differences in the amount of proceeds from the sale of equity securities and purchase of equity securities. Contractual Obligations, Commitments and Off-Balance Sheet Arrangements The Company continues to have no bank debt or other lender liability outstanding and no significant other liabilities. There are no off balance sheet arrangements. In addition, since the Company carries no inventory and has low amounts of accounts receivable and accounts payable, its working capital needs are minimal, and since it has significant liquid assets, and there are no current known material demands, commitments or contractual obligations, Management believes that liquidity should continue to be favorable and the financial condition of the Company strong. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued Regarding future capital expenditures, as reported in prior filings, CNR is participating in an oil and gas exploration and development venture in east Texas and continues to expand developmental efforts on its south Texas properties. Through the first six months ended June 30, 2004, CNR had committed to participate in a total of ten wells as mentioned in Note 3, and CNR believes that additional exploratory and developmental well potential exists in these areas. CNR expects that in the near term, these activities will require additional funds that, although uncertain in amount at the present time, should be provided for by the current liquid assets of the Company. With regard to CNR's working interests in oil and gas properties described above, it will be called upon, from time to time, to pay its pro-rata share of expenses and capital expenditures associated with the projects. Management believes that, based upon the CNR's current liquidity level and the expected future revenue from these ventures, sufficient financial resources will be available to meet any and all funding requirements required by these projects. A tabular presentation of Contractual Obligations is presented below:

*The entire amount shown in Purchase Obligations is for Authorizations For Expenditures that were approved prior to June 30, 2004. Other than these projects, the Company has no specific commitment for material expenditures at the present time. Management does, however, continue to actively pursue other business opportunities which may result in a more productive deployment of its assets and ultimately increase earnings, and in pursuit of that objective has focused on the possible acquisition of additional mineral properties or working interests in selected oil and gas operations. In addition, Management continues to aggressively pursue development of its currently owned oil and gas and coal properties and to attempt to lease more of its mineral properties in order to generate additional rental, bonus and royalty income. The only continuing commercial commitment is the operating lease for general office space of the Company and commitments with respect to the Texas oil and gas projects referred to above. Accounting Policies, Recent Accounting Pronouncements and Other Matters A summary of significant accounting policies was contained in Note 1 to the consolidated financial statements of the Company filed with Form 10-K for the year ended December 31, 2003. One example of a judgment made in applying a critical accounting policy is the impairment charge made relative to the decline in market value of certain securities that is deemed to be other than temporary as is referred to above. The impairment of the value of securities is analyzed quarterly on an individual security basis based on the length of time (generally six months), and the extent to which market value has been less than cost; the financial condition and any specific events which affect the issuers; and the Company's intent and ability to hold the security. There could be materially different reported results if different assumptions or conditions were to prevail. FASB's Emerging Issues Task Force has issued new guidance on "Other- Than-Temporary Impairment" that is effective for reporting periods beginning after June 15, 2004 and requires disclosure for annual reporting periods ending after June 15, 2004. The new guidance creates a model for many judgements and additional evidence gathering and applies to investments in debt and equity securities. Management has a system in place to periodically review its investments in debt and equity securities for such impairments and does not foresee that the new requirements will materially impact the Company in the near future although fluctuations in the market values of securities may prove otherwise. Another example of a judgment made in applying a critical accounting policy is the periodic review of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. This accounting policy has been applied in the past, for example, in downward adjustments to the carrying value of the Company's coal properties. However, this accounting policy does not permit an upward adjustment in such carrying values, when Management believes the current fair market value of an asset is greater than the carrying value on the balance sheet and in fact Management believes that this may be the case with respect to the carrying value of certain assets on the balance sheet carried at their historical cost. Yet another example of judgment exercised in applying a critical accounting policy is the election, approved by the Board of Directors of the Company, to utilize the "Successful Efforts" method of accounting with respect to the operation of the oil and gas working interests described above. "Successful Efforts" typically results in more of the costs of operations being deducted as incurred rather than those expenditures being capitalized. The Company uses the units-of-production method to amortize oil and gas properties. This method requires the Company to amortize the capitalized costs incurred in developing a property in proportion to the amount of oil and gas produced as a percentage of the amount of proved reserves contained in the property. Accordingly, any changes in reserve estimates as described above will cause corresponding changes in depletion expense recognized in periods subsequent to the reserve estimate revision. Although every reasonable effort is made to ensure that reserve estimates reported represent the most accurate assessments possible, the subjective decisions and variances in available data for various fields make these estimates generally less precise than other estimates included in the financial statement disclosures. Data for given fields may change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history and continual reassessment of the viability of production under varying economic conditions. As a result, material revisions to existing reserve estimates may occur from time to time. A cash dividend of $0.10 per share was paid in each of the first and second quarters of 2004, and a cash dividend of the same amount was paid in each quarter of 2003. Forward-Looking Statements This report contains forward-looking statements that are based on current expectations, estimates, forecasts, and projections about the business segment in which the Company operates, Management's beliefs, and assumptions made by Management. These and other written or oral statements that constitute forward-looking statements may be made by or on behalf of the Company. These statements are not guarantees of future performance and involve assumptions and certain risks and uncertainties that are difficult to predict, such as future changes in energy prices, including fluctuations in prevailing prices for oil and gas, the Company's ability to participate in or co-venture successful exploration or production of natural resources (such as oil, gas, coal and other minerals), results of drilling and other exploration and development activities, uncertainties regarding future political, economic, regulatory, fiscal, and tax policies and practices as well as assumptions concerning a relatively stable national economy, and the absence of a major disruption such as a domestic act of terrorism and the uncertainties of even routine litigation in which the Company is involved from time-to-time in the ordinary course of its business operations. In addition, the Company relies on professional and management services provided by third parties in certain of its operating activities. Therefore, actual outcomes and results may differ materially from what is expressed, implied, or forecast in such forward-looking statements. The Company does not, by including this statement, assume any obligation to review or revise any particular forward-looking statement referenced herein in light of future events. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The primary market risk exposures of the Company relate to changes in interest rates, changes in equity security prices, and changes in certain commodity prices. The Company's exposure to market risk for changes in interest rates relates solely to its fixed income portfolio which consists of U. S. government agency securities. All such securities are held-to-maturity and have original maturities of less than one year. The Company does not use derivative financial instruments to hedge interest rates on its fixed income investment securities. The Company's exposure to market risk for changes in equity security prices relates solely to its marketable equity investment portfolio which consists primarily of common stocks of domestic, publicly held enterprises. The Company's exposure to market risk for changes in commodity prices relates to changes in the prices of coal, oil, and natural gas, and the effect thereof on its mineral royalties and oil and gas production, as is discussed in more detail in Management's Discussion and Analysis of Financial Condition and Results of Operations, set forth in Part 1, Item 2 of this report. The Company does not use derivative commodity instruments to hedge its commodity risk exposures. ITEM 4. CONTROLS AND PROCEDURES As of June 30, 2004, the Company's management, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of Central Natural Resources, Inc.'s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, the Company's management, including its Chief Executive Officer and its Chief Financial Officer, concluded that its disclosure controls and procedures were effective in timely alerting management, including the Chief Executive Officer and the Chief Financial Officer, of material information about the Company required to be included in periodic Securities and Exchange Commission filings. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. There have been no changes in the Company's internal control over financial reporting or other factors that occurred during the quarter ended June 30, 2004 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting. PART II - OTHER INFORMATION Item 1. Legal Proceedings - None Item 2. Changes in Securities - None Item 3. Defaults Upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders - Attached Item 5. Other Information - None Item 6(a). Exhibits - Attached 31.1 Certification required by Rule 13a-14(a) or Rule 15d-14(a) for Chief Executive Officer 31.2 Certification required by Rule 13a-14(a) or Rule 15d-14(a) for Chief Financial Officer 32.1 Section 1350 Certification for Chief Executive Officer 32.2 Section 1350 Certification for Chief Financial Officer Item 6(b). Reports on Form 8-K - Attached PART II, ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The Annual Meeting of Stockholders was held April 30, 2004. in Pasadena, CA. (b) The meeting involved the election of Directors, and the following are the Directors elected at that meeting: Bruce L. Franke Ray A. Infantino Patrick J. Moran James R. Ukropina Phelps C. Wood Phelps M. Wood There were no other Directors whose term of office as a Director continued after the meeting. (c)(i) For the election of Directors, the votes received by all nominees were as follows: Bruce L. Franke 400,426 Ray A. Infantino 400,426 Patrick J. Moran 400,426 James R. Ukropina 400,426 Phelps C. Wood 400,426 Phelps M. Wood 400,426 Cumulative voting is not permitted. (ii) At the same meeting, the Stockholders ratified the appointment by the Audit Committee of the accounting firm KPMG LLP as independent public accountants to examine the financial statements of the Company for the year ending December 31, 2004 and to perform other appropriate accounting services. The holders of 397,634 shares cast their votes in favor of that appointment, the votes of 266 shares were cast against it, and the holders of 3,384 shares abstained. (d) There were no settlements between the Company and any other participants terminating any solicitation subject to Rule 14a-11. PART II, ITEM 6. - Exhibits and Reports on Form 8-K (a) Exhibits required by Item 601 of Regulation S-K are as follows: Exhibit 31.1 - Certification required by Rule 13a-14(a) or Rule 15d-14(a) for Chief Executive Officer (Attached as Exhibit 31.1 hereto). Exhibit 31.2 - Certification required by Rule 13a-14(a) or Rule 15d-14(a) for Chief Financial Officer (Attached as Exhibit 31.2 hereto). Exhibit 32.1 - Section 1350 Certification for Chief Executive Officer (Attached as Exhibit 32.1 hereto). Exhibit 32.2 - Section 1350 Certification for Chief Financial Officer (Attached as Exhibit 32.2 hereto). PART II, ITEM 6(b). REPORTS ON FORM 8-K On June 30, 2004, the Company filed an 8-K announcing the filing of a Form 15 with the SEC to terminate registration of its common stock under the Securities Exchange Act of 1934. SIGNATURES Pursuant to 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. CENTRAL NATURAL RESOURCES INC. (Registrant) Date: August 12, 2004 ____________________________ By: /s/ Leonard L. Noah ____________________________ Leonard L. Noah, Chief Financial Officer Date: August 12, 2004 ____________________________ By: /s/ Phelps C. Wood ____________________________ Phelps C. Wood President, and Chief Executive Officer

CENTRAL NATURAL RESOURCES INC 10-Q