SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the Quarterly Period Ended March 31, 1997
or
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from __________to__________
Commission file number 0-21591
MASON OIL COMPANY, INC.
(Name of small business issuer as specified in its charter)
Utah 87-1099747
(State of Incorporation) (I.R.S. Employer
Identification No.)
6337 Ravenwood Drive
Sarasota, Florida 34243
(Address of principal executive offices)
(941) 351-3102
(IssuerOs telephone number)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No __
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS
Not applicable
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest practicable
date:
May 15, 1997
There were 10,850,454 shares of the Issuers common stock at a par
value of $.001 per share, outstanding as of May 15, 1997
MASON OIL COMPANY, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $1,798,125 $ 12,277
Accounts receivable 4,550 47
Total Current Assets 1,802,675 12,324
Property and Equipment:
Unproved Oil and Gas
Properties - full cost 178,891 176,460
Office Equipment 1,369 -
Total Property & Equip 180,260 176,460
Other Assets:
Deposits 23,700 23,700
Organizational Costs 1,406 1,406
Total Other Assets 25,106 25,106
TOTAL ASSETS $2,008,041 $ 213,890
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 48,863 $ 6,249
Total Current Liabilities 48,863 6,249
Long-term Liabilities:
Notes Payable - Stockholders 261,801 207,988
Stockholders' Equity:
Common Stock, $.001 par value,
50,000,000 shares authorized;
10,850,454 shares issued and
outstanding at March 31, 1997 10,850 -
Common Stock, $1 par value,
50,000 shares authorized; 100
issued and outstanding at
September 30, 1996 - 100
Additional paid-in capital 1,874,172 900
Accumulated Deficit (186,736) (1,116)
Foreign Currency Translation (909) (231)
Total Equity 1,697,377 (347)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,008,041 $ 213,890
See notes to consolidated financial statements
</TABLE>
MASON OIL COMPANY, INC.
Consolidated Statements of Operations
For the Three Months and Nine Months
Ended March 31, 1997
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
March 31, March 31,
1997 1997
<S> <C> <C>
Costs and expenses:
Selling, general and
administrative $ 126,323 $ 177,030
Total operating costs
and expenses 126,323 177,030
Other (income) expense:
Interest income (5,843) (5,942)
Interest expense 4,160 9,706
Net loss $(124,640) $ (180,794)
Loss per share $ (.01) $ (.02)
Weighted average number of
shares outstanding 9,767,121 9,406,010
</TABLE>
See notes to consolidated financial statements.
MASON OIL COMPANY, INC.
Consolidated Statements of Cash Flows
For the Three Months and Nine Months Ended March 31, 1997
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
March 31, March 31,
1997 1997
<S> <C> <C>
Cash flows used for operating
activities
Net (loss) $ (124,640) $ (180,794)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Stock and options issued
for services 24,797 24,797
Accrued interest to
related parties 4,160 9,706
Accounts payable 30,264 48,587
Accounts receivable (4,503) (4,503)
Net cash used for operating
activities (69,922) (102,207)
Cash flows used by investing
activities
Oil and gas exploration expenses - (2,431)
Purchase of equipment (1,369) (1,369)
Net cash used for investing
activities (1,369) (3,800)
Cash flows from financing
activities
Advances from shareholders 15,000 44,107
Proceeds from sale of stock, net 1,848,500 1,848,500
Net cash provided by
financing activities 1,863,500 1,892,607
Net effect of currency
fluctuations on cash (372) (752)
Net increase in cash 1,791,837 1,785,848
Beginning cash balances 6,288 12,277
Ending cash balances $ 1,798,125 $1,798,125
</TABLE>
Supplemental non-cash flow disclosures:
During the quarter ended December 31, 1996, a shareholder of the
Company forgave a note in the amount of $2,500 which was
recorded as additional paid-in capital.
During the quarter ended December 31, 1996, IAN Holdings,
Limited exchanged all 100 shares issued and outstanding for
6,000,000 newly issued unregistered shares of Mason Oil Company.
During the quarter ended March 31, 1997, consultants performing
services for the Company received 150,000 shares of common
stock and options to purchase 225,000 shares of the Company's
common stock for such services. The common stock issued
was valued at $15,000 and the Company recorded $9,797 as
consulting expense associated with the stock options issued
for services.
MASON OIL COMPANY, INC.
Notes to Consolidated Financial Statements
Note 1 - Summary of Accounting Policies
The summary of the Company's significant accounting policies are
incorporated by reference to the Company's June 30, 1996 financial
statements filed with Form 8-K/A dated October 14, 1996.
The accompanying unaudited condensed financial statements and
disclosures reflect all adjustments which, in the opinion of
management are necessary for a fair presentation of the results of
operations, financial position and cash flows. The results of
operations for the periods indicated are not necessarily indicative
of the results for a full year.
Note 2 - Going Concern
The Company has had no revenues from operations in either of the
last two fiscal years resulting in net losses and negative cash flow
from operations. However, the Company completed an equity financing
agreement with FAI overseas investments pty. ltd. based in Sydney,
Australia during this fiscal quarter. Pursuant to the agreement,
Mason Oil issued FAI 1,475,000 new common shares which represent a
fourteen percent (14%) equity interest in the Company and
received net proceeds of approximately $1.85 million. The
Company intends to pursue additional financing alternatives
including a possible secondary offering or private placement in
an effort to fund future exploration expenses.
Note 3 - Stock and Options Issued for Consulting Services
During the quarter ended March 31, 1997, the Company entered into
an agreement with four consultants for the performance of certain
services. Under such agreement, the Company issued 150,000 shares
of common stock to one consultant for services through March 31, 1997.
The agreement has since been terminated as to such consultant as the
services to be provided by such consultant have been fulfilled.
The Company also issued stock options to three other consultants, which
will vest and become exercisable progressively and cumulatively in equal
quarterly increments as set forth in the table below, contingent upon
the continued affiliation of the consultants with the Company.
In all, the Company has issued options to purchase 225,000 shares of
common stock during the quarter ended March 31, 1997, which options
are intended as consideration for services previously provided and to be
provided by the three consultants through December 31, 1998.
<TABLE>
<CAPTION>
<S> <C>
Date of Grant Number of Shares
September 30, 1997 112,500
December 31, 1997 112,500
March 31, 1998 112,500
June 30, 1998 112,500
September 30, 1998 112,500
December 31, 1998 112,500
675,000
</TABLE>
Note 3 - Stock and Options Issued for Consulting Services (continued)
All options may be exercised from time to time through June 30, 1999, in whole
or in part, to the extent such options have become vested and exercisable,
for shares of the Company's common stock at an exercise price of $.02 per
share.
Note 4 - Results of Operations
The Company is currently in the exploration stage. During the fiscal
quarter ended March 31, 1997, the Company received interest income of
$5,843. Expenses during this quarter totaled $130,483 and the
Company sustained a net loss during this quarter of $124,640.
Item 2. Management's Discussion and Analysis or Plan of Operation.
The Company continues to pursue its primary goal of exploiting
South Australian Petroleum Exploration Licenses 61 and 63 (the
"PELs"), granted by the Department for Mines and Energy of South
Australia ("MESA"), and currently held by Hemley Exploration Pty.
Ltd., an Australian company and wholly-owned subsidiary of the
Company. For a more detailed report on the nature of the PELs and
the Company's interest therein, reference should be made to the
Company's Form 10-QSB Quarterly Report for the quarter ending
December 31, 1996, and the Company's Form 8-K Current Report, filed
by the Company with the Securities and Exchange Commission on October
31, 1996. In addition, the Company has recently embarked on an
expanded business plan designed to diversify the Company's business
operations and enlarge the Company's asset base.
In March, 1997, the Company opened an office in Adelaide, South
Australia, at 174 Greenhill Road, Parkside, Adelaide, S.A., Australia
5063. The Adelaide office is managed by John Naylor, the Company's
Vice-President. One additional staff member has been retained to
assist in supervising the Company's anticipated South Australian and
Pacific Rim endeavors, and the Company is in the process of
configuring the Adelaide office computer and information systems.
The Company has leased vehicles suitable to access remote drilling
locations, as well as an equipment yard and field office in Marla, a
village located within the Company's proposed initial exploration
area.
Petroleum Exploration
The Company continues to plan a comprehensive exploration
program for the PELs. Management believes the proposed exploration
program is appropriately designed to minimize risk while providing a
reasonable start on development of the extensive area covered by the
PELs.
Initial Exploration Plan and Related Funding Issues.
The Company's exploration plan calls for total initial funding
of $3.5 million. In this regard, on February 28, 1997, the Company
received a Subscription Agreement and Investment Representation (the
"Subscription Agreement") from FAI Overseas Investments Pty. Ltd., an
Australian company. Pursuant to the Subscription Agreement, FAI
purchased 1,475,000 shares of the Company's common stock at a price
of $1.40 per share. After payment by the Company of expenses
relating directly to such sale, the Company realized a net amount of
approximately $1.85 million under the Subscription Agreement. A copy
of the Subscription Agreement is attached hereto as an exhibit. The
Company continues to seek additional necessary financing through
corporate partnerships with other petroleum exploration and
production companies. In addition, the Company is considering other
financing alternatives, including a private offering of the Company's
common stock.
At present, the Company has not commenced its planned initial
exploration program. However, the Company's currently available
funds may be used to commence exploration under the Company's initial
exploration plan, with completion of the initial exploration plan
contingent on the Company's ability to obtain approximately $1.7
million in additional funding. If such funding is obtained, the
Company's initial exploration plan would entail drilling three
stratigraphic wells in the areas covered by the PELs. The depth of
these wells is projected to be approximately 1600 meters each,
drilling a 8 1/2" hole configuration. Coring will be undertaken in
the major reservoir and source formations.
Commencement of the Company's planned initial exploration
program is also contingent on the successful conclusion of the
Company's continuing negotiations for a drilling operations contract
with an experienced operator. Negotiations for a drilling operations
contract with the Philippine National Oil Company, disclosed in the
Company's Form 10-QSB Quarterly Report for the quarter ended December
31, 1996, have been discontinued by the Company for lack of favorable
terms. At present, the Company is conducting negotiations with other
parties and hopes to conclude an economical drilling operations
contract soon.
The Company projects that one of the three exploratory wells
will encounter producible oil, and that such well will be completed
to become a producing well. Within a reasonable time after
completion of the first well, two additional production wells will be
drilled to offset the discovery well. Starting with the last quarter
of the first year of exploration, three producing wells are projected
to be in operation.
Each of the first three prospects covers an area of
approximately 8,000 acres, and will support a number of additional
wells. Such additional wells are the subject of subsequent
exploration plans envisioned by the Company. The Company projects
that the capital cost of drilling these additional wells will be
approximately $4.5 million, which amount the Company intends to
obtain from revenues generated by petroleum production if any of the
first three wells prove to be successful and, if necessary, from
future stock sales and other financing methods.
Aboriginal Claims.
As a result of the Australian High Court's decision in the Wik
case, which was issued in 1996, there has recently arisen some
uncertainty in Australia regarding the claim of aboriginals to the
lands covered by petroleum exploration and production licenses
granted by the government. The Australia Federal Government has
adopted a "Ten Point Plan" intended to resolve the aboriginal claims
to such lands in a manner acceptable to all parties involved.
Nevertheless, as a result of the uncertainties related to aboriginal
claims on PEL 63, MESA has agreed to ease the Company's exploration
program commitments associated with both PELs 61 and 63. In addition,
MESA has recently informed the Company that both PELs are in good
standing, and has indicated a commitment to assist the Company in
resolving any aboriginal claims as they may arise.
Additional legislation to resolve such claims has been proposed,
but it cannot be predicted what legislation will actually be
implemented, if any. In light of this uncertainty, the Company
previously has negotiated and obtained an Access Agreement with the
Pitjantjatjara aboriginal tribe, which effectively resolves the
aboriginal claim with respect to PEL 61. The Company has also
entered negotiations with the aboriginals that may have claim to
lands covered by PEL 63. Counsel for the aboriginals has indicated
that an Access Agreement, similar to the one applicable to PEL 61,
will be an acceptable resolution, and the Company intends to proceed
to conclude such an agreement shortly.
Consulting Services
In an effort to diversify its business operations, the Company
plans to explore opportunities for corporate partnerships with other
petroleum exploration and production companies. The Company is
currently exploring corporate partnerships with companies in
Southeast Asia. Under such a partnership arrangement, the Company
would provide consulting services and possibly investment capital
(should such resources be available to the Company) to operating
petroleum production companies in exchange for a portion of the
revenues generated from the production and sale of petroleum from
existing wells.
Results of Operations.
The Company is currently at the development stage, and during
the quarterly period ended March 31, 1997, the Company received no
revenue from operations. The Company received approximately $1.85
million from the sale of 1,475,000 shares of the Company's common
stock. Operating expenses during this period totaled $130,483 and
the Company had a net loss during this period of $124,640.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 2. Changes in Securities.
None; not applicable.
Item 3. Defaults upon Senior Securities.
None; not applicable.
Item 4. Submissions of Matters to Vote of Security Holders.
No matter was submitted to a vote of security holders of the Company
during the period covered by this Report, whether through the
solicitation of proxies or otherwise.
Item 5. Other information.
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit 10.1: Subscription Agreement and Investment
Representation, dated February 28, 1997, delivered to
the Company by FAI Overseas Investments Pty. Ltd, an
Australian company.
Exhibit 10.2: Amendment No. 1 to Consulting Fee Agreement dated
May 8, 1997, amending the Consulting Fee Agreement
dated February 28, 1997, and previously filed with the
Securities and Exchange Commission on a Form S-8
Registration Statement dated March 25, 1997.
(b) Forms 8-K Filed During Last Quarter.
None; not applicable.
SIGNATURES
Pursuant to the requirement 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.
MASON OIL COMPANY, INC.
Date: May 20, 1997 /s/ Paul B. Ingram, Director and
President/Treasurer
1
#41295
MASON OIL COMPANY, INC.
SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION
THE SECURITIES BEING SUBSCRIBED TO HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR
UNDER APPLICABLE STATE SECURITIES LAWS DUE TO THE APPLICATION
OF REGULATIONS PROMULGATED BY THE U.S. SECURITIES AND EXCHANGE
COMMISSION UNDER THE PROVISIONS OF THE SECURITIES ACT OF 1933,
AS AMENDED.
FURTHER, THE SECURITIES BEING SUBSCRIBED TO MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO TRANSACTIONS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR COMPLIANCE
THEREWITH.
Name of Subscriber: FAI Overseas Investments Pty. Ltd.
Number of Shares: 1,475,000
Total Amount Paid: $US 2,065,000
Consideration Given: $1.40
To: THE BOARD OF DIRECTORS
MASON OIL COMPANY, INC.
SALT LAKE CITY, UTAH
Gentlemen:
1. CONSIDERATION FOR PURCHASE. The undersigned (the
"Purchaser") hereby elects to purchase that number of shares of
the common stock of Mason Oil Company, Inc., a Utah, U.S.A.,
corporation (the "Stock" and the "Company", respectively), noted
immediately above at the indicated purchase price.
2. UNDERSTANDINGS OF THE PURCHASER. The Purchaser
acknowledges, understands and agrees that:
(a) The Company reserves the right to reject all or any
part of this or any other subscription in its sole discretion.
(b) Upon termination of this offering, the Purchaser will
be promptly notified by the Company whether this subscription has
been accepted either in whole or in part, and if not accepted in
whole, agrees to accept the return of a proportionate part of the
funds tendered to the Company therewith as a refund or a return,
and in either case without interest.
(c) The Stock shall not be deemed issued to, or owned by,
the Purchaser until the Company shall issue in the name of the
Purchaser a stock certificate evidencing ownership of such
shares; further, the Company may withhold delivery of the
Purchaser's stock certificate if it is reasonably likely, in the
judgment of the Company's management, that the shares may be
required to be escrowed by any federal or state regulatory
agency.
(d) The certificate evidencing the Stock will bear a legend
restricting its transfer for a period of forty (40) days;
further, the Stock is subject to the restrictions on transfer
described in the foregoing sentence; and further, the Stock, if
this subscription is accepted, either in whole or in part, will
be issued in that name set forth under the signature line below.
(e) The Stock has not been registered under the Securities
Act of 1933, as amended, or any applicable state law
(collectively the "Securities Act"); further, the Stock may not
be sold, offered for sale, transferred, pledged, hypothecated or
otherwise disposed of except in compliance with the Securities
Act; further, the Company has no obligation, and does not intend,
to cause any of the Stock sold in this offering to be registered
under the Securities Act, or to comply with any exemption under
the Securities Act that would permit a sale or sales of the
Stock; further, the legal consequences of the foregoing mean that
the Purchaser must bear the economic risk of the investment in
the Stock for an indefinite period of time; further, if the
Purchaser desires to sell or transfer all or any part of the
Stock, the Company may require the Purchaser's counsel to provide
a legal opinion that transfer may be made without registration
under the Securities Act (the cost of such opinion to be that of
the Purchaser); further, other restrictions discussed elsewhere
herein may be applicable; and further, the Purchaser is subject
to the restriction on transfer described herein and the Company
will issue stop transfer orders with the Company's transfer
agents to enforce such restrictions.
(f) No federal or state agency has made any findings or
determination as to the fairness of an investment in the Company,
or made or given any recommendation or endorsement of this
investment.
(g) There is presently only a limited market for the resale
of the Stock and no market may exist in the future for any sale
or sales.
(h) The Company will probably need additional financing in
the near future, the availability of which is not secured;
further, the Stock is a speculative investment that involves a
substantial risk which may result in the loss of this entire
investment.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser hereby represents and warrants to the Company as
follows:
(a) My commitment to investments that are not readily
marketable is not disproportionate to my net worth, and my
investment in the Stock will not cause such overall commitment to
become excessive.
(b) I have the financial ability to bear the economic risks
of my investment in the Stock, have adequate means of providing
for my current needs and personal contingencies, and have no need
for liquidity in this investment.
(c) I have evaluated the risks of investing in the Stock
and have such knowledge in financial and business matters in
general and in particular with respect to this type of investment
that I am capable of evaluating the merits and risks of an
investment in the Stock.
(d) I have been given the opportunity to ask questions of
and receive answers from the Company concerning the terms and
conditions of this investment, and to obtain additional
information necessary to verify the accuracy of the information I
desired in order to evaluate my investment, and in evaluating the
suitability of an investment in the Stock I have not relied upon
any representations or other information (whether oral or
written) other than that furnished to me by the Company or its
representatives.
(e) I have had the opportunity to discuss with my
professional legal, tax and financial advisors the suitability of
an investment in the Stock for my particular tax and financial
situation and all information that I have provided to the Company
concerning myself and my financial position is correct and
complete as at the date set forth below, and if there should be
any material change in such information prior to my admission as
a shareholder of the Company, I will immediately provide such
information to the Company.
(f) The residence set forth below is my true and correct
residence, and I have no present intention of becoming a resident
or domiciliary of any other state or jurisdiction.
(g) In making the decision to purchase the Stock, I have
relied solely upon independent investigations made by me or on my
behalf.
(h) I am acquiring the Stock solely for my own personal
account, for investment purposes only, and am not purchasing the
Stock with a view to, or for, the resale, distribution,
subdivision or fractionalization thereof.
(i) I am neither a member of, nor am I affiliated with or
employed by a member of, the National Association of Securities
Dealers, Inc., nor am I employed by or affiliated with a broker-
dealer registered with Securities and Exchange Commission nor
with any similar agency of any state.
The foregoing representations, warranties, agreements,
undertakings and acknowledgments are made by me with the intent
that they be relied upon in determining my suitability as a
Purchaser of the Stock. In addition, I agree to notify the
Company immediately of any change in any representation,
warranty, or other information. If more than one person is
signing this
Agreement, each representation, warranty and undertaking herein
shall be a joint and several representation, warranty and
undertaking of each such person. If the Purchaser is a
partnership, corporation, trust or other entity, the Purchaser
further represents and warrants that (i) there has been enclosed
with this Agreement, appropriate evidence of the authority of the
individual executing this Agreement to act on behalf of the
Purchaser, and (ii) the entity was not specifically formed to
acquire the Stock. If the Purchaser is a partnership, the
Purchaser further represents that the funds utilized to make this
investment were not derived from additional capital contributions
by the partners of such partnership.
4. FURTHER REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
TO THE COMPANY.
(a) The offer leading to the within sale and the sale
evidenced hereby were made in an "offshore transaction" for
purposes of Regulation S. An "offshore transaction" as defined
under Regulation S is any offer or sale of securities if: the
offer is not made to a person in the United States; and either
(A) at the time the buy order is originated, the Purchaser is
outside the United States, or the Company and any person acting
on its behalf reasonably believe that the Purchaser is outside
the United States; or (B) the transaction is executed in, on or
through the facilities of a "designated offshore securities
market", and neither the Company nor any person acting on its
behalf knows that the transaction has been pre-arranged with the
Purchaser in the United States. A "designated offshore
securities market" is defined under Regulation S to be the
Eurobond market as regulated by the Association of International
Bond Dealers; the Amsterdam Stock Exchange; the Australian Stock
Exchange Limited; the Bourse de Bruxelles, the Frankfurt Stock
Exchange; The Stock Exchange of Hong Kong Limited; The
International Stock Exchange of the United Kingdom and the
Republic of Ireland, Ltd; the Johannesburg Stock Exchange; the
Bourse de Luxembourg; the Sorna Valori di Milan; the Montreal
Stock Exchange; the Bourse de Paris; the Stockholm Stock
Exchange; the Tokyo Stock Exchange; the Toronto Stock Exchange;
the Vancouver Stock Exchange; and the Zurich Stock Exchange. In
regards to this representation and warranty, and notwithstanding
the above, offers and sales of securities of persons excluded
from the definition of "U.S. person" are offshore transactions.
A "U.S. person" for purposes of Regulation S is: (i) any natural
person resident in the United States; (ii) any partnership or
corporation organized or incorporated under the laws of the
United States; (iii) any estate of which any executor or
administrator is a U.S. person; (iv) any trust of which any
trustee is a U.S. person; (v) any agency or branch of a foreign
entity located in the United States; (vi) any non-discretionary
or similar account (other than an estate or trust) held by a
dealer or other fiduciary organized, incorporated, or (if an
individual) resident in the United States; (vii) any
discretionary or similar account (other than an estate or trust)
held by a dealer or other fiduciary organized, incorporated or
(if an individual) resident in the United States; and (viii) any
partnership or corporation if: (A) organized and incorporated
under the laws of any foreign jurisdiction; and (B) formed by a
U.S. person principally for the purpose of investing in
securities not registered under the Securities Act, unless it is
organized or incorporated, and owned, by accredited investors who
are not natural persons, estates or trusts.
(b) Neither the Company nor the Purchaser, nor any
affiliate or either, nor any person acting on their behalf, has
made any "directed selling efforts" in the United States, as
defined in Regulation S to be: any activity undertaken for the
purpose of, or that could reasonably be expected to have the
effect of, conditioning the market in the United States for any
of the securities being purchased hereby.
(c) The Purchaser understands that the Company is the
issuer of the securities which are the subject of this agreement,
and then, for purposes of Regulation S, a "distributor" is any
underwriter, dealer or other person who participates, pursuant to
a contractual arrangement, in the distribution of securities
offered or sold in reliance on Regulation S and that an
"affiliate" is any partner, officer, director or any person
directly or indirectly controlling, controlled by, or under
common control with the person in question. In this regard, the
Purchaser shall not, during the 40-day period set forth under
Rule 903(c)(2), act as a distributor, either directly or through
any affiliate, nor shall he sell, transfer, hypotheses or
otherwise convey the Stock or interest therein, other than to a
non-U.S. person.
(d) No one, including the Purchaser, is receiving any fee
or other remuneration from the Company or otherwise in respect of
the transaction evidenced hereby.
5. REPRESENTATION AND WARRANTY OF THE COMPANY TO THE
PURCHASER. The Company hereby represents and warrants to the
Purchaser that it is a "reporting issuer" for purposes of
Regulation S.
6. INDEMNITY BY PURCHASER. The Purchaser understands and
acknowledges that the Company is relying upon the
representations, warranties and agreements made by the Purchaser
to and with the Company herein, and thus, hereby agrees to
indemnify the Company, its officers and directors, agents,
attorneys and employees, and agrees to hold each of them harmless
from and against any and all loss, damage, liability, or expense,
including reasonable attorneys' fees, that it or any of them may
suffer, sustain or incur by reason of or in connection with any
misrepresentation or breach of warranty or agreement made by the
Purchaser under this Agreement, or in connection with the sale or
distribution by the Purchaser of the Stock in violation of the
Securities Act or any other applicable law.
7. MISCELLANEOUS PROVISIONS.
(a) Further Awareness. At any time and from time to time
after the date of this Agreement, each party shall execute such
additional agreements and take such other and further action as
may be reasonably requested by any other party to confirm or
perfect title to any property transferred hereunder or otherwise
to carry out the purpose and intent of this Agreement.
(b) Waiver. Any failure on the part of any party hereunder
to comply with any of their obligations, agreements or conditions
hereunder may be waived in writing by the party to whom such
compliance is owed; however, waiver on one occasion does not
operate to effectuate a waiver on any other occasion.
(c) Brokers. Each party represents to every other party
that no broker or finder has acted for it in connection with this
agreement. Each party agrees to indemnity, save, defend and hold
the other party harmless from and against any fee, loss or
expense arising out of claims by brokers or finders employed or
alleged to have been employed by it. Further, the employing
party of any such broker or finder shall obtain the release of
any and all claims which they may have or which may accrue
against the non-employing prices.
(d) Entire Agreement. This Agreement constitutes the
entire agreement between the parties and supersedes and cancels
any other agreement, representation or communication, whether
oral or written, between the parties hereto relating to the
transactions evidenced hereby or the subject matter hereof:
(e) Headings. The article and paragraph headings in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
(f) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State
of Utah.
(g) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed to be an original, but all of which together shall
constitute one and the same instrument.
(h) No Oral Modifications. This Agreement may be amended
only and solely in writing, and only after the mutual agreement
of the parties affected thereby.
(i) Survival of Representations, Warranties and Covenants.
The representations, warranties, covenants and agreements
contained herein shall serve the date and execution of this
Agreement.
(j) Irrevocable Nature of Agreement. This Agreement is
irrevocable for a period of ninety (90) days following the date
set forth below.
FAI Overseas Investments Pty. Ltd. [FAI Overseas Investments Pty. Ltd.
corporate
Name of Subscriber (please print) seal affixed here]
/s/ corporate stamp 28/02/97
Signature of Subscriber Date
Level 12, 185 MacQuarie St.
Street Address
P. O. Box or Suite Number
Sydney N.S.W. 2000
City State Zip
Social Security or Tax Identification Number
#40414
AMENDMENT NO. 1 TO CONSULTING FEE AGREEMENT
This Amendment No. 1 (the "Amendment") to the Consulting Fee
Agreement dated February 28, 1997 (the "Agreement") between Mason
Oil Company, Inc. (the "Company"), and Carl L. Smith, III,
Matthew A. Veal, and Peg Quisenberry (collectively, the
"Consultants"), is made and entered into this 8th day of May,
1997, by and between the Company and the Consultants.
R E C I T A L S
WHEREAS, the Company and the Consultants are parties to the
Agreement, whereby the Consultants were engaged by the Company to
perform certain consulting services in connection with the
Company's corporate organizational and public relations matters.
Also party to the Agreement was another consultant, David Wood,
as to whom the Agreement has already expired according to its
terms; and
WHEREAS, pursuant to the Agreement, the Company agreed to
pay the Consultants as compensation, for services rendered and to
be rendered by the Consultants thereunder, certain shares of the
Company's common stock, in varying amounts with respect to each
Consultant; and
WHEREAS, the Agreement provides for a single distribution of
the Shares to the Consultants, which method of distribution was
not the intention of the parties thereto, and the parties desire
to modify the Agreement to instead provide for the issuance of
options to be exercisable in eight equal increments on a
quarterly basis over aperiod of two years, subject to the terms
and conditions set forth in this Amendment;
NOW THEREFORE, for and in consideration of the mutual
covenants and promises set forth herein and other good and
valuable consideration, the receipt and sufficiency of which the
parties expressly acknowledge, the parties hereto agree as
follows:
1. Use of Terms. Unless otherwise indicated herein, all
capitalized terms used herein shall have the same meanings as
ascribed to them in the Agreement.
2. Return of Shares. With respect to Paragraph 2 of the
Agreement, and notwithstanding the provisions of Paragraph 4 of
the Agreement, the Consultants shall not be entitled to receive a
single distribution of the Shares otherwise provided for by
Paragraph 2 of the Agreement, and each Consultant shall, promptly
following execution of this Amendment, return and deliver to the
Company any and all certificates representing the previously
issued Shares, duly endorsed for transfer to the Company. All
rights arising under Paragraph 2 of the Agreement are hereby
terminated in their entirety.
3. Cancellation of Option. The parties agree that the
Option provided for in Paragraph 3 of the Agreement is hereby
canceled, and any and all certificates representing any Option
Shares that have been issued upon the exercise of each Option or
any part thereof shall be returned and delivered to the Company
by the applicable Consultant, duly endorsed for transfer to the
Company.
4. Grant of Options. All rights arising under Paragraph 4
of the Agreement are hereby terminated in their entirety. In
order to recognize and reflect the ongoing nature of the services
to be rendered by the Consultants, and in consideration for such
services, the Company hereby grants an option to each the
Consultants, exercisable for the purchase of up to the number of
shares of the Company's common stock as set forth on the
following schedule (the "Options"), at a purchase price of $0.02
per share, which Options may be exercised in accordance with the
terms of Paragraph 5 of this Amendment:
Name of Consultant Total Number of Shares
Carl L. Smith, III 350,000
Matthew A. Veal 350,000
Peg Quisenberry 200,000
5. Excercise of Options; Expiration. The Options shall
mature and become exercisable to purchase shares of the Company's
common stock in seven progressive increments over a period of two
years. The following schedule sets forth the incremental
maturation of the Options, and shows the total number of shares
for which the Options may be exercised as of and after the dates
shown, assuming that no shares of the Company's common stock have
been purchased by exercise of the Options prior to any such date:
Total Shares Eligible to be Purchased as of:
<TABLE>
<CAPTION>
Amendment
Name of Effective Septem- Decem- March 31, June 30, Septem- Decem-
Consultant Date ber 30, ber 31, ber 30, ber 31,
<S> <C> <C> <C> <C> <C> <C> <C>
Carl L.
Smith, III 87,500 131,250 175,000 218,750 262,500 306,250 350,000
Mathew A.
Veal 87,500 131,250 175,000 218,750 262,500 306,250 350,000
Peg
Quisenberry 50,000 75,000 100,000 125,000 150,000 175,000 250,000
</TABLE>
The "Amendment Effective Date" shall mean the date first set
forth above. No Options shall mature and become exercisable
until the Amendment Effective Date. Moreover, no Consultant may
exercise any Options to purchase any shares of the Company's
common stock following termination of the Agreement as to such
Consultant in accordance with the terms and provisions of
Paragraph 10 of the Agreement; provided, however, that any
Consultant may exercise Options to purchase shares of the
Company's common stock which had become exercisable in accordance
with the foregoing table prior to the date of such termination of
the Agreement. The Options may be exercised in whole in or in
part, so long as the total number of shares issued to any
Consultant upon exercise of the Options does not exceed the
number of shares that such Consultant is eligible to receive
according to the foregoing table at the time of any exercise.
Notwithstanding anything herein or in the Agreement to the
contrary, all Options shall expire and shall no longer be
exercisable on and after June 30, 1999 or as to any individual
Consultant, at the time of such Consultant's death, whichever is
earlier.
6. Effect of Agreement. The Agreement, as amended hereby,
shall continue in full force and effect in accordance with its
terms and provisions. All terms and provisions of the Agreement,
unless expressly amended herein, are hereby confirmed and
ratified and shall remain in full force and effect. Unless
expressly amended hereunder, all terms and provisions of the
Agreement, including without limitation Paragraph 11 thereof,
shall apply to the Serial Options and the rights and obligations
associated therewith as if the Serial Options were the Shares,
Options or Option Shares, as applicable, under the Agreement.
7. Term of the Agreement. With respect to Paragraph 10 of
the Agreement, the term of the Agreement shall be from the date
of its effectiveness until December 31, 1998, at which time the
Agreement will expire as to all of the Consultants, unless
earlier terminated with respect to any or all of the Consultants
in accordance with the provisions for termination set forth in
Paragraph 10 of the Agreement. Notwithstanding anything herein
to the contrary, however, the Consultants rights to exercise the
Options shall extend to June 30, 1999 or such earlier date as may
apply under the terms of Paragraph 5 of this Amendment.
8. Scope of Amendment. The Agreement, as amended hereby,
shall continue in full force and effect in accordance with its
terms and provisions. All terms and provisions of the Agreement,
unless expressly amended herein, are hereby confirmed and
ratified and shall remain in full force and effect.
9. Execution Required. This Amendment shall not be
effective and binding unless fully executed by all parties
hereto.
IN WITNESS WHEREOF, the parties have duly executed this
Amendment as of the date first written above.
MASON OIL COMPANY, INC. CONSULTANTS:
/s/ Paul B. Ingram /s/ Carl L. Smith III
Paul B. Ingram, President Carl L. Smith, III
/s/ Matthew A. Veal
Matthew A. Veal
/s/ Peg Quisenberry
Peg Quisenberry
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1996
<PERIOD-END> MAR-31-1997 MAR-31-1997
<CASH> 1,798,125 1,798,125
<SECURITIES> 0 0
<RECEIVABLES> 4,550 4,550
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 180,260 180,260
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 2,008,041 2,008,041
<CURRENT-LIABILITIES> 48,863 48,863
<BONDS> 0 0
0 0
0 0
<COMMON> 10,850 10,850
<OTHER-SE> 1,686,527 1,686,527
<TOTAL-LIABILITY-AND-EQUITY> 2,008,041 2,008,041
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 126,343 177,030
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 5,843 5,942
<INCOME-PRETAX> (124,640) (180,794)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (124,640) (180,794)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (124,640) (180,794)
<EPS-PRIMARY> (.01) (.02)
<EPS-DILUTED> (.01) (.02)
</TABLE>
