<PAGE> 1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended - December 31, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) F
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________.
Commission file number 0-21811
QUINTESSENCE OIL COMPANY
(Exact name of Company as specified in its charter)
Wyoming 83-0317306
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
4424 Skylane Avenue
Riverton, Wyoming 92501
(Address of principal executive offices, including postal code.)
(307) 856-0375
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Common Stock
Securities registered pursuant to Section 15(d) of the Act:
Title of each class None
Indicate by check mark whether the Company (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Company was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. YES [ ] NO [ x ]
<PAGE> 2
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of the Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The number of shares outstanding each of the Registrant's
classes of Common Stock, as of December 31, 1997 was 1,000,000.
<PAGE> 3
PART I
ITEM 1. BUSINESS
General
Quintessence Oil Company (the "Company") is a development stage
enterprise formed under the laws of the State of Wyoming on June 26,
1996, for the purpose of purchasing, developing and operating oil
and gas leases.
The Company has acquired one undeveloped oil and gas lease
and intends to acquire additional leases prior to deciding where to
initiate drilling operations.
Selection of Target Areas for Acquisition
The Company's proposed plans call for it to consider several
factors in choosing a region for acquisition of oil and gas leases.
First, the Company considers those regions in which one or more
of its anagement or other technical personal have field of experience.
The Company anticipates that additional prospects to be acquired will
be located within Wyoming. At the present time the Company has not
targeted any additional oil and gas leases for acquisition. The Company
intends to acquire additional oil and gas leases from other oil and gas
companies.
The Company will determine which leases it is interested in
acquiring based upon the analysis of technical and production data, on
site verification of any well equipment and production capability, and
verification of ownership of lease hold rights. The Company anticipates
that it will take from four to six months to acquire additional leasehold
interests. Further, the Company intends upon diversifying its production
portfolio with respect to both reservoir production characteristics and
to market access. The Company believes that the overall effect of these
two unrelated characteristics is to significantly lower the overall risk
of the Company strategy.
Geological and Geophysical Techniques
The Company may employ detailed geological interpretation combined
with advanced seismic exploration techniques to identify the most
promising leases. Geological interpretation is based upon data recovered
from existing oil and gas wells in an area and other sources. Such
information is either purchased from the company that drilled the wells
or becomes public knowledge through state agencies after a period of
years. Through analysis of rock types, fossils and the electrical and
chemical characteristics of rocks from existing wells, the Company can
construct a picture of rock layers in the area. Further, the Company
will have access to the logs from the existing operating wells which will
allow the Company to extrapolate a decline curve and make an estimation
of the number of recoverable barrels of oil existing beneath a particular
lease.
The Company has not purchased, leased, or entered into any
agreements to purchase or lease any of the equipment necessary to
conduct the geological or geophysical testing referred to herein
and will only be able to do so upon raising additional capital
through loans or the sale of equity securities.
<PAGE> 4
Market for Oil and Gas Production
The market for oil and gas production is regulated by both the
state and federal governments. The overall market is mature and with the
exception of gas, all producers in a producing region will receive the
same price. The major oil companies will purchase all crude oil offered
for sale at posted field prices. There are price adjustments for quality
difference from the Bench Mark. Oil sales are normally contracted with a
gatherer who will pick-up the oil at the well site. In some instances
there may be deductions for transportation from the well head to the
sales point. At this time the majority of crude oil purchasers do not
charge transportation fees, unless the well is outside their service
area. The oil gatherer will usually handle all check disbursements to
both the working interest and royalty owners. The Company will be a
working interest owner. By being a working interest owner, the Company
is responsible for the payment of its proportionate share of the
operating expenses of the well. Royalty owners and over-riding royalty
owners receive a percentage of gross oil production for the particular
lease and are not obligated in any manner whatsoever to pay for the costs
of operating the lease. Therefore, the Company, in most instances, will
be paying the expenses for the oil and gas revenues paid to the royalty
and over-riding royalty interests.
Gas sales are by contract. The gas purchaser will pay the well
operator 100% of the sales proceeds on or about the 25th of each and
every month for the previous months sales. The operator is responsible
for all checks and distributions to the working interest and royalty
owners. There is no standard price for gas. Prices will fluctuate with
the seasons and the general market conditions. It is the Company's
intention to utilize this market when ever possible in order to maximize
revenues. The Company does not anticipate any significant change in the
manner production is purchased, however, no assurance can be given at
this time that such changes will not occur.
Acquisition of Future Leases
The principal activity for the Company in the future will be the
acquisition of producing oil and gas leases. The acquisition process may
be lengthy because of the amount of investigation which will be required
prior to submitting a bid to a major oil company. Verification of each
property and the overall acquisition process can be divided into three
phases, as follows:
Phase 1. Field identification. In some instances the seller will
have a formal divestiture department that will provide a sales catalog of
leases which will be available for sale. Review of the technical filings
made to the states along with a review of the regional geological
relationships, released well data and the production history for each
lease will be utilized. In addition a review of the proprietary
technical data in the sellers office will be made and calculation of a
bid price for the field.
Phase 2. Submission of the Bid. Each bid will be made subject to
further verification of production capacity, equipment condition and
status, and title.
<PAGE> 5
Phase 3. Closing. Final price negotiation will take place. Cash
transfer and issuance of title opinions. Tank gauging and execution of
transfer orders.
After closing has occurred, the newly acquired property will be
turned over to the Company for possible work-overs or operational changes
which will in the Company's estimation increase each well's production.
In connection with the acquisition of an oil and gas lease for
work-over operations, the Company is able to assume 100% ownership of the
working-interest and surface production equipment facilities with only
minor expenses. In exchange for an assignment of the lease, the Company
agrees to assume the obligation to plug and abandon the well in the event
the Company determines that reworking operations are either to expensive
or will not result in production in paying quantities. The cost of
plugging a well can run from $500 to $15,000, depending on the condition
of the well. The Company believes that the obligation to plug an
existing well will in no way jeopardize its operations, and in the long
run is economically worth the risk involved compared with the possibility
of acquiring existing production. Utilizing these systems the Company
will be able to acquire oil and gas leases from large and small oil and
gas firms with little costs. The Company also believes that it may be
able to plug the wells in question, at no cost to the Company, in
exchange for the production tubing and casing which will be removed
during the plugging process.
Several major oil companies have recently placed numerous oil and
gas properties out for competitive bidding. The Company currently does
not have sufficient revenues or funds available to it to make a bid for
such properties. The Company intends to raise additional capital through
loans or the sale of equity securities in order to have sufficient funds
to make a bid for such properties. There is no assurance that the
Company will very raise such additional capital and if the Company is
unable to raise such capital, it may have to cease operations. At the
present time, the Company has not identified any specific oil and gas
leases which it intends to acquire and will only be able to make such
determination upon raising said capital.
Net Production
As of the date hereof, the Company has acquired a 100% working
interest, in one non-producting oil and gas lease. See "Item 2.
Description of Properties."
Competition
The oil and gas industry is highly competitive. The Company's
competitors and potential competitors include major oil companies and
independent producers of varying sizes of which are engaged in the
acquisition of producing properties and the exploration and development
of prospects. Most of the Company's competitors have greater financial,
personnel and other resources than does the Company and therefore have a
greater leverage to use in acquiring prospects, hiring personnel and
marketing oil and gas. Accordingly, a high degree of competition in
these areas is expected to continue.
<PAGE> 6
Governmental Regulation
The production and sale of oil and gas is subject to regulation by
state, federal and local authorities. In most areas there are statutory
provisions regulating the production of oil and natural gas under which
administrative agencies may set allowable rates of production and
promulgate rules in connection with the operation and production of such
wells, ascertain and determine the reasonable market demand of oil and
gas, and adjust allowable rates with respect thereto.
The sale of liquid hydrocarbons was subject to federal regulation
under the Energy Policy and Conservation Act of 1975 which amended
various acts, including the Emergency Petroleum Allocation Act of 1973.
These regulations and controls included mandatory restrictions upon the
prices at which most domestic crude oil and various petroleum products
could be sold. All price controls and restrictions on the sale of crude
oil at the wellhead have been withdrawn. It is possible, however, that
such controls may be reimposed in the future but when, if ever, such
reimposition might occur and the effect thereof on the Company
cannot be predicted.
The sale of certain categories of natural gas in interstate
commerce is subject to regulation under the Natural Gas Act and the
Natural Gas Policy Act of 1978 ("NGPA"). Under the NGPA, a comprehensive
set of statutory ceiling prices applies to all first sales of natural gas
unless the gas is specifically exempt from regulation (i.e., unless the
gas is "deregulated"). Administration and enforcement of the NGPA
ceiling prices are delegated to the FERC. In June 1986, the FERC issued
Order No. 451, which, in general, is designed to provide a higher NGPA
ceiling price for certain vintages of old gas. It is possible, though
unlikely, that the Company may in the future acquire significant
amounts of natural gas subject to NGPA price regulations and/or FERC
Order No. 451.
Depressive Nature of Petroleum Industry
Because of the depressed nature of the oil and gas business, the
Company is considering abandoning its oil and gas business.
Company's Office
The Company's offices are located at 4424 Skylane Avenue, Riverton,
Wyoming 82501. The Company leases the space from Nucor, Inc., as well
as, equipment including computers, office computer programs, fax
machines, small copy machines, a scanner, telephones, desks, files and
fixtures. The lease payment is at the rate of $400.00 per month, plus
out-of-pocket expenses, on a month-to-month basis. Nucor, Inc. is a
corporation owned and operated by Nick Bebout, the Company's President.
The transaction with Nucor is no less favorable to the Company than can
be obtained from independent third parties.
Employees
The Company is a development stage company and currently has no
employees other than its Officers and Directors.
<PAGE> 7
ITEM 2. PROPERTIES
The Company owns one undeveloped oil and gas lease, more
particularly described as the S 1/2, SW 1/4, SW 1/4 of Section 24
and the N 1/2, NE 1/4 and the NE 1/4, NW 1/4 of Section 33 all
located in Township 37 North, Range 91 West, 6th Prime Meridian
containing 140 acres more or less. The foregoing lease has
never produced oil or gas.
ITEM 3. LEGAL PROCEEDINGS
No material legal proceedings are pending to which the Company is a
party or of which any of the Company' property is the subject matter.
Further no legal proceedings are known to be contemplated by governmental
authorities and no officer or director of the Company is a party o any
litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted during the fourth quarter of the calendar
year covered by this report to a vote of security holders.
ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
At December 31, 1997, the Company had 10 shareholders of record of
its Common Stock.
The Company has not paid any dividends since its inception
and does not anticipate paying any dividends on its Common Stock
in the foreseeable future.
The Company's securities are traded over-the-counter on the
Bulletin Board operated by the National Association of Securities
Dealers, Inc. under the symbol "QTSN." The Company's Common
Stock began trading during the fourth quarter of 1997.
Quarter Ended Bid
High Low
December 31, 1997 0.00 0.00
March 31, 1998 0.00 0.00
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data presented below has been derived from
the financial statements of the Company. The following table summarizes
certain financial information and should be read in conjunction with
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" and the Financial Statements and related notes
included elsewhere in this Statement.
<PAGE> 8
Statement of Operations and Accumulated Deficit Data:
Income $ -
Net Loss $ (4,059)
Net Loss per Share $(0.0041)
Balance Sheet Data:
Total Assets $ 35,608
Liabilities $ -
Stockholders' equity $ 35,608
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
The Company is considered to be in the development stage as defined in
Statement of Financial Accounting Standards No. 7. There have been
limited operations to date consisting of raising capital and the
acquisition of one oil and gas lease.
Liquidity and Capital Resources
The Company sold 1,000,000 shares of its Common Stock pursuant to Reg.
504 of the Securities Act of 1933 (the "Act") to officers, directors and
others, and raised $50,000. The foregoing funds were used for
organizational matters and to acquire one oil and gas lease. The Company
has $27,983 in cash as of December 31, 1997.
<PAGE> 9
ITEM 8. FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Quintessence Oil Company, a Wyoming Corporation
We have audited the balance sheet of Quintessence Oil Company, a Wyoming
Corporation, (A Development Stage Company) as of December 31, 1997 and
1996 and the related statements of operations, changes in stockholders'
equity and cash flows for the year ended December 31, 1997 and from the
date of inception (June 26, 1996) through December 31, 1996. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Quintessence
Oil Company, a Wyoming Corporation, (A Development Stage Company) at
December 31, 1997 and 1996 and the results of its operations, changes in
stockholders' equity and changes in its cash flows for the year ended
December 31, 1997 and from the date of inception (June 26, 1996) through
December 31, 1996 in conformity with generally accepted accounting
principles.
Hocker, Lovelett, Hargens & Yennie, P.C.
Certified
Public Accountants
Riverton, Wyoming
April 10, 1998
F-1
<PAGE> 10
QUINTESSENCE OIL COMPANY
A Wyoming Corporation
(A Development Stage Company)
BALANCE SHEETS
December 31, 1997 and 1996
ASSETS
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
CURRENT ASSETS
Cash $ 27,983 $ 30,542
PROPERTY AND EQUIPMENT
Oil & Gas Working Interest 2,000 2,000
OTHER ASSETS (Note 1)
Organization costs - net 5,625 7,125
Total Assets $ 35,608 $ 39,667
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
None $ - $ -
STOCKHOLDERS' EQUITY (Notes 1 and 2)
Common Stock - $.00001 par value,
50,000,000 shares authorized,
1,000,000 shares issued
and outstanding 10 10
Additional paid in capital 42,490 42,490
Retained earnings (deficit) (6,892) (2,833)
Total Liabilities
and Stockholders' Equity $ 35,608 $ 39,667
========= ========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE> 11
QUINTESSENCE OIL COMPANY
A Wyoming Corporation
(A Development Stage Company)
STATEMENT OF OPERATIONS
for the year ended December 31, 1997 and for the period
from inception (June 26, 1996) through December 31, 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
INCOME
None $ - $ -
OPERATING EXPENSES
General and Administrative
Expenses 2,559 2,458
Amortization 1,500 375
-------- --------
NET INCOME (LOSS) $ (4,059) $ (2,833)
======== ========
NET INCOME (LOSS)
PER SHARE $ (.0041) $(.0028)
======== =======
</TABLE>
The company is in the development stage and has not commenced
operations.
See accompanying notes to financial statements.
F-3
<PAGE> 12
QUINTESSENCE OIL COMPANY
A Wyoming Corporation
(A Development Stage Company)
STATEMENTS OF CASH FLOW
for the year ended December 31, 1997 and for the period
from inception (June 26, 1996) through December 31, 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
CASH FLOWS PROVIDED (USED)
IN OPERATIONS
Net loss $ (4,059) $ (2,833)
Adjustments to reconcile net income to
Net cash provided by operating activities:
amortization 1,500 375
-------- --------
(2,559) (2,458)
-------- --------
CASH FLOWS PROVIDED (USED)
IN INVESTING ACTIVITIES
Organization Costs - (7,500)
Purchase of Oil &
Gas Working Interest - (2,000)
-------- --------
- (9,500)
-------- --------
CASH FLOWS PROVIDED (USED)
IN FINANCING ACTIVITIES
Proceeds from sale of stock - 50,000
Payment made for legal fees
on registration costs - (7,500)
-------- --------
- 42,500
-------- --------
NET INCREASE (DECREASE)
IN CASH (2,559) 30,542
CASH BEGINNING OF PERIOD 30,542 -
-------- --------
CASH END OF PERIOD $ 27,983 $ 30,542
======== ========
Income Taxes Paid $ - $ -
======== ========
Interest Paid $ - $ -
======== ========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 13
QUINTESSENCE OIL COMPANY
A Wyoming Corporation
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
June 26, 1996 (Inception) through December 31, 1997
<TABLE>
<CAPTION>
Additional Retained
Common Stock Paid-in Earnings
Shares Amount Capital (Deficit)
<S> <C> <C> <C> <C>
BALANCE
(Inception) June
26, 1996 - $ - $ - $ -
ADD:
Sale of 900,000 shares
of common stock for
$18,000 cash 900,000 9 17,991 -
Sale of 100,000 shares
of common stock for
$32,000 cash less
$7,500 Registration
Costs 100,000 1 24,449
Net (Loss) for the period
(2,833)
--------- ------ --------- --------
BALANCE, December
31, 1996 1,000,000 $ 10 $ 42,490 $ (2,833)
Net (Loss) for
the period
(4,059)
--------- ------ --------- --------
BALANCE, December
31, 1997 1,000,000 $ 10 $ 42,490 $ (6,892)
========= ====== ========= ========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 14
QUINTESSENCE OIL COMPANY
A Wyoming Corporation
(A Development Stage Company)
Notes to Financial Statements
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICES:
Organization:
Quintessence Oil Company was incorporated on June 26, 1996, under
the laws of the State of Wyoming. The Company has adopted a year
ending of December 31.
The Company was organized to engage in the development, production and
sale of oil and gas. Since its inception, the Company has been largely
inactive and has conducted no significant operations The Company does
not own any oil and gas leases.
Because of the speculative nature of the Company, there are significant
risks which are summarized as follows:
Newly formed company with no operating history and minimal
assets.
Limited funds available for exploration and development.
Conflict-of-interest, as all employees have other part-time or full-time
employment.
The Company is considered to be in the development stage as defined in
Statement of Financial Accounting Standards No. 7. There have been no
operations since incorporation.
Summary of Significant Accounting Principles:
Registration and organization costs will include fee payments
for legal expenses relating to the public stock offering. The offering
was successful, and $7,500 of legal fees were charged to additional
paid-capital. The Company amortizes registration and organization
costs over 60 months using the straight line method.
F-6
<PAGE> 15
QUINTESSENCE OIL COMPANY
A Wyoming Company
(A Development Stage Company)
Notes to Financial Statements
NOTE 2 - STOCKHOLDERS' EQUITY
Public Stock Offering:
The Common Stock is being offered and sold pursuant to an exemption from
registration contained in Reg. 504 of the Securities Act of 1993, as
amended, (the "Act"). Reg. 504 provides that the Company can sell
securities with an aggregate offering price not exceeding $1,000,000
within a twelve (12) month period without registration with the
Securities and Exchange Commission.
The shares so issued will be without restriction and may be resold in
compliance with the Act. Applicable state laws, however, may impose
restrictions on sales and resales. Pursuant to Reg. 504, the Company is
not required to furnish any information to purchasers.
NOTE - 3 OFFICES AND EMPLOYEES
The Company's office will be located at 4424 Skylane Avenue, Riverton,
Wyoming.
The Company currently has no employees other than certain of its officers
and directors and does not anticipate a need to engage any full-time
employees so long as it is seeking and evaluating business opportunities.
the company has no retirement, pension, profit sharing or insurance plans
covering its officers and directors.
NOTE - 4 INCOME TAXES
The Company has incurred a net operating loss of $6,892 which can be
carried forward to future years. The net operating loss will begin to
expire in the year 2012.
F-7
<PAGE> 16
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in and/or disagreements with the
Company's independent public accountants.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS
Officers and Directors
Name Age Position
Nick Bebout 44 President, Treasurer and a member of the
Board of Directors
Tom Kerr 64 Vice President and a member of the Board of
Directors
Tom Swanson 44 Secretary and a member of the Board of
Directors
All directors hold office until the next annual meeting of
shareholders or until their successors have been elected and
qualified. The Company's officers are elected by the Board
of Directors at the annual meeting after each annual meeting
of the Company's shareholders and hold office until their death,
or until they resign or have been removed from office.
Nick Bebout - President, Treasurer and a member of the Board of
Directors
Mr. Bebout is a founder, President, Treasurer and a Directors of the
Company. Since 1988, Mr. Bebout has been a member of the Board of
Directors of U.S. Energy, Inc., a NASDAQ traded public company engaged in
the oil and gas industry. From January 1988 to August 1995, Mr. Bebout
was President, Treasurer and a member of the Board of Directors of S.W.
Financial Corp., a Washington blank check corporation. Since June 1984,
Mr. Bebout has been President of Nucor, Inc., an oil, gas and mineral
exploration and development corporation. From January 1979 to December
1983, Mr. Bebout was Vice President of Corkill Drilling, a corporation
which specialized in oil, gas and mineral exploration.
Thomas K. Kerr - Vice President and a member of the Board of Directors
Mr. Kerr is a founder, Vice President and a member of the Board of
Directors of the Company. From January 1988 to August 1995, Mr. Kerr was
Vice President, Secretary and a member of the Board of Directors of S.W.
Financial Corp., a Washington blank check corporation. From August 1958
to January 1988, Mr. Kerr was a sales representative with Massachusetts
Mutual Life Insurance Company, Mr. Kerr was also a District Manager, From
January 1988 to June 1988, Mr. Kerr was employed with Independent
Insurance Agents & Brokers of Spokane and Walla Walla. Since June 1988,
Mr. Kerr has been a sales representative with Guardian Life Insurance
Company of America.
<PAGE> 17
Tom Swanson - Secretary and a member of the Board of Directors
Mr. Swanson is a founder, Secretary and a member of the Board of
Directors of the Company. From July 1985 to the present, Mr. Swanson has
been exploration manager for Farleigh Oil Properties, an independent oil
company based in Casper, Wyoming. Farleigh Oil Properties is a privately
held company involved in oil field acquisition and exploration in seven
Rocky Mountain states and Texas. From November 1991 to the present, Mr.
Swanson has been the business manager for Paradigm Technologies, LLC,
located in Casper, Wyoming. Paradigm Technologies is a research and
development company that develops downhole sensory instrumentation for
oil well drilling applications. From December 1990 to July 1995, Mr.
Swanson was Vice President of Scientific Geochemical Services, LLC, an
oil field service company specializing in exploration and environmental
geochemistry. Scientific Geochemical Service was located in Casper,
Wyoming until it was sold in mid-1995.
Compliance with Section 16(a) of the Securities Exchange Act of
1934.
Section 16(a) of the Securities and Exchange Act of 1934 requires
certain defined person to file reports of and changes in beneficial
ownership of a registered security with the Securities and Exchange
Commission and the National Association of Securities Dealers in
accordance with the rules and regulations promulgated by the Securities
and Exchange Commission to implement the provisions of Section 16. Under
the regulatory procedure, officers, directors and persons who own more
than ten percent of a registered class of a company's equity securities
are also required to furnish the Company with copies of all Securities
16(a) forms they filed.
Based on review, none of the officers and directors have filed Forms
3, 4 or 5 with the Securities and Exchange Commission.
Indemnification of Officers and Directors
Section 42:01 et al. of the Wyoming Revised Statutes and certain
provisions of the Company's Articles of Incorporation under certain
circumstances provide for indemnification of the Company's Officers,
Directors and controlling persons against liabilities which they may
incur in such capacities. A summary of the circumstances in which such
indemnification is provided for is contained herein, but this description
is qualified in its entirety by reference to the Company's Articles of
Incorporation and to the statutory provisions.
In general, any Officer, Director, employee or agent may be
indemnified against expenses, fines, settlements or judgments arising in
connection with a legal proceeding to which such person is a party, if
that person's actions were in good faith, were believed to the be in the
Company's best interest, and were not unlawful. Unless such person is
successful upon the merits in such an action, indemnification may be
awarded only after a determination by independent decision of the Board
of Directors, by legal counsel, or by a vote of the shareholders, that
the applicable standard of conduct was met by the person to be
indemnified.
The circumstances under which indemnification is granted in connection
with an action brought on behalf of the Company is generally the same as
those set forth above; however, with respect to such actions,
<PAGE> 18
indemnification is granted only with respect to expenses actually
incurred in connection with the defense or settlement of the action. In
such actions, the person to be indemnified must have acted in good faith
and in a manner believed to have been in the Company's best interest, and
have not been adjudged liable for negligence or misconduct.
Indemnification may also be granted pursuant to the terms of
agreements which may be entered in the future or pursuant to a vote of
shareholders or Directors. The statutory provision cited above and the
Company's Articles of Incorporation also grant the power to the Company
to purchase and maintain insurance which protects its Officers and
Directors against any liabilities incurred in connection with their
service in such a position, and such a policy may be obtained by the
Company.
ITEM 11. EXECUTIVE COMPENSATION
The Company anticipates entering into employment agreements with its
officers in the near future, the terms of which are undecided at the
present time. Directors do not receive compensation for their services
as directors and are not reimbursed for expenses incurred in attending
board meetings. The Company has not paid any salaries in 1997 and will
not initiate the payment of salaries until it becomes profitable to do
so.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of November 25, 1996, the Common
Stock ownership of each person known by the Company to be the beneficial
owner of five percent or more of the Company's Common Stock, each
director individually and all officers and directors of the Company as a
group. Each person has sole voting and investment power with respect to
the shares of Common Stock shown, and all ownership is of record and
beneficial.
<TABLE>
<CAPTION>
Name and address Number of Percent
of owner Shares Position of Class
- -------------------------------------------------------------------
<S> <C> <C> <C>
Nick Bebout 218,750 President, Treasurer 21.88%
1606 Major Avenue and a member of the
Riverton, Wyoming 82501 Board of Directors
Tom Kerr 0 Vice President and a 0.00%
P. O. Box 3973 member of the Board
Spokane, Washington 99220 of Directors
Tom Swanson 175,000 Secretary and a member 17.50%
P. O. Box 3215 of the Board of Directors
Casper, Wyoming 82601
All officers and 393,750 39.38%
directors as a
group (3 persons)
<PAGE> 19
Eli Bebout 118,750 11.88%
112 Big Bend
Riverton, Wyoming 82501
Bebout Family
Trust [1] 37,500 3.75%
112 Big Bend
Riverton, Wyoming 82501
Bebout Land & Livestock,
Co. [2] 37,500 3.75%
112 Big Bend
Riverton, Wyoming 82501
John E. Orr and Linda
E. Erkkila 175,000 17.50%
200 Columbine Drive
Casper, Wyoming 82604
Michael D.
Zwickl 195,000 19.50%
137 North Beech
Casper, Wyoming 82601
[1] Eli Bebout, the brother of Nick Bebout, is the Trustee of the
Bebout Family Trust.
[2] Eli Bebout, the brother of Nick Bebout, is the President of Bebout
Land & Livestock, Co.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 2, 1996, the Company issued 900,000 shares of Common Stock to
the following individuals and corporations in consideration of the
payment of $0.02 per share in cash.
Name Total Consideration Shares Acquired
Eli Bebout $ 2,000.00 100,000
112 Big Bend
Riverton, Wyoming 82501
Bebout Family Trust $ 750.00 37,500
112 Big Bend
Riverton, Wyoming 82501
Bebout Land &
Livestock Co. $ 750.00 37,500
112 Big Bend
Riverton, Wyoming 82501
John E. Orr and
Linda E. Erkkila $ 3,500.00 175,000
200 Columbine Drive
Casper, Wyoming 82604
<PAGE> 20
Tom Swanson $ 3,500.00 175,000
P. O. Box 3215
Casper, Wyoming 82601
Michael D. Zwickl $ 3,500.00 175,000
137 North Beech
Casper, Wyoming 82601
Nick Bebout $ 4,000.00 200,000
1606 Major Avenue
Riverton, Wyoming 82501
TOTAL $ 18,000.00 900,000
On October 9, 1996, the Company issued 100,000 shares of Common Stock
to the following individuals and corporations in consideration of the
payment of $0.32 per share in cash.
Name Total Consideration Shares Acquired
Eli Bebout $ 6,000.00 18,750
112 Big Bend
Riverton, Wyoming 82501
Nick Bebout $ 6,000.00 18,750
1606 Major Avenue
Riverton, Wyoming 82501
<PAGE> 21
Bill Farleigh $ 6,400.00 20,000
P. O. Box 3215
Casper, Wyoming 82602
Ken Freemole $ 6,400.00 20,000
4831 Dexter
Casper, Wyoming 82609
Hayden Investments $ 800.00 2,500
675 Fairview Drive
Suite 246
Carson City, Nevada 89701
Michael D. Zwickl $ 6,400.00 20,000
137 North Beech
Casper, Wyoming
TOTAL $ 32,000.00 100,000
On November 6, 1996, the Company acquired, by assignment, a 100%
working interest from Edward Calvert in and to an undeveloped oil and gas
lease between the United States of America and Edward D. Calvert covering
the following described real property:
S 1/2, SW 1/4, SW 1/4 of Section 24 and the N 1/2, NE 1/4 and the
NE 1/4, NW 1/4 of Section 33 all located in Township 37 North,
Range 91 West, 6th Prime Meridian containing 140 acres more or
less.
<PAGE> 21
The consideration for the assignment of the foregoing lease was $2,000
which has been paid and a 5% overriding royalty. The foregoing lease has
never produced oil and/or gas and there is no assurance that the lease
will ever produce oil and/or gas or that the Company will ever explore
for oil and/or gas on the foregoing lease. Mr. Calvert is not affiliated
with the Company or any of its officers and directors.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) Financial Statements are contained in Item 8.
(b) Reports on Form 8-K
No reports on Form 8-K have been during the year ended December 31,
1997.
(c) Exhibits.
Exhibit
No. Description
The following documents are incorporated herein by reference from the
Company's Form 10, file number 0-21811, filed with the Securities and
Exchange Commission on December 3, 1996.
3.1 Articles of Incorporation.
3.2 Bylaws of the Company.
The following documents are filed as part of this December 31, 1997
Form 10-K.
27 Financial Data Schedule
<PAGE> 22
SIGNATURE PAGE
Pursuant to the requirements of Section 12 of the Exchange Act of
1934, the Registrant has duly caused this Form 10-K to be signed on its
behalf by the undersigned, thereunto duly authorized, in Riverton,
Wyoming, on this 11th day of May, 1998.
QUINTESSENCE OIL COMPANY
(Company)
BY: /s/ Nick Bebout, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person on behalf of
the Company and in the capacities and on this 11th day of May, 1998.
SIGNATURES TITLE DATE
/s/ Nick Bebout President, Treasurer May 11, 1998
Nick Bebout and a member of the
Board of Directors
/s/ Tom Kerr Vice President and a May 11, 1998
Tom Kerr member of the Board
of Directors
/s/ Tom Swanson Secretary and a member May 15, 1998
Tom Swanson of the Board of Directors
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Audited Statement of Financial Condition at December 31, 1997 and the
Audited Statement of Income for the twelve months ended December 31, 1997
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 27,983
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,983
<PP&E> 7,625
<DEPRECIATION> 0
<TOTAL-ASSETS> 35,608
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 10
<OTHER-SE> 35,598
<TOTAL-LIABILITY-AND-EQUITY> 35,608
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,059
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,059)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,059)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,059)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
