SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act
of 1934 [Fee Required] for the fiscal year ended December 31, 1998 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required] for the transition period from ____ to ____
Commission file number 0-21811
QUINTESSENCE OIL COMPANY
- --------------------------------------------------------------------------------
(Exact Name of Registrant 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, P. O. Box 112
Riverton, WY 82501
- ------------------------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (307) 856-0375
-----------------------------
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.00001 par value
--------------------------------
(Title of Class)
Indicate by check mark whether the Registrant (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
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of March 19, 1998 computed by reference to the average of the
bid and asked prices for the Registrant's common stock as reported by National
Quotation Bureau on Pink Sheets for the week then ended, was $-0-.
Class Outstanding at March 19, 1999
- --------------------------------------- ------------------------------------
Common Stock, $0.00001 par value 1,000,000 shares
Documents incorporated by reference: None
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. [ ]
<PAGE>
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 purchase, 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 management or other
technical personnel 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. 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.
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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.
Phase 3. Closing. Final price negotiation will take place. Cash transfer
and issuance of title opinions. Tank gauging and execution of transfer orders.
3
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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 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- producing 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.
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
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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. Due to the limited operations and minimal expenses incurred by
the Company, the office space and use of office equipment is being donated by
Nucor, Inc., a corporation operated by Nick Bebout, the Company's President.
EMPLOYEES
The Company is a development stage company and currently has no
employees other than its Officers and Directors.
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.
5
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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 to 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, 1998, 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 and as of the date of this Report and for each quarter during
the most recently completed fiscal year the bid price was zero.
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.
Statement of Operations and Accumulated Deficit Data:
Income $ -
Net Loss $ (3,692)
Net Loss per Share $ (0.0037)
Balance Sheet Data:
Total Assets $ 31,916
Liabilities $ -
Stockholders' equity $ 31,916
6
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
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
WORKING CAPITAL COMPONENTS
Net cash used in operating activities was $2,192 for the year ended May
31, 1998. During fiscal 1996, 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. A portion of the foregoing funds were
used for organizational matters and to acquire one oil and gas lease.
The Company has $25,791 cash on hand as of December 31, 1998.
CAPITAL RESOURCES
The primary source of the Company's capital resources for fiscal 1999
will be cash on hand at December 31, 1998.
CAPITAL REQUIREMENTS
The primary requirements for the Company's working capital during fiscal
1999 are expected to be the costs associated with maintaining its oil and gas
lease, and general and administrative expenses.
RESULTS OF OPERATIONS
FISCAL 1998 COMPARED TO FISCAL 1997
There were no revenues in fiscal 1998 or 1997.
General and administrative expenses decreased by $467 from $2,559 in
fiscal 1997 to $2,192 in fiscal 1998.
Operations resulted in net loss of $3,692 or $.0037 per share in fiscal
1998 as compared to a net loss of $4,059 or $.0041 per share in fiscal 1997.
ITEM 8. FINANCIAL STATEMENTS
Financial statements meeting the requirements of Regulation S-X for the
Company follow immediately.
7
<PAGE>
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, 1998 and 1997 and
the related statements of operations, changes in stockholders' equity and cash
flows for the years then ended. 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, 1998 and 1997
and the results of its operations, changes in stockholders' equity and changes
in its cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Hocker, Lovelett, Hargens & Yennie, P.C.
Certified Public Accountants
Riverton, Wyoming
March 10, 1999
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<PAGE>
QUINTESSENCE OIL COMPANY
A Wyoming Corporation
(A Development Stage Company)
BALANCE SHEETS
December 31, 1998 and 1997
<TABLE>
<CAPTION>
ASSETS
1998 1997
---- ----
CURRENT ASSETS
<S> <C> <C>
Cash $25,791 $27,983
PROPERTY AND EQUIPMENT
Oil and gas working interest 2,000 2,000
OTHER ASSETS (Note 1)
Organization costs - net 4,125 5,625
------- -------
Total Assets $31,916 $35,608
======= =======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
<S> <C> <C>
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) (10,584) (6,892)
-------- --------
Total Liabilities and Stockholders' Equity $ 31,916 $ 35,608
======== ========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
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QUINTESSENCE OIL COMPANY
A Wyoming Corporation
(A Development Stage Company)
STATEMENT OF OPERATIONS
for the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
INCOME
<S> <C> <C>
None $ -- $ --
OPERATING EXPENSES
General and administrative expenses 2,192 2,559
Amortization 1,500 1,500
------- -------
NET INCOME (LOSS) $(3,692) $(4,059)
======= =======
NET INCOME (LOSS) PER SHARE $(.0037) $(.0041)
======= =======
The Company is in the development stage and has not commenced operations.
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
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QUINTESSENCE OIL COMPANY
A Wyoming Corporation
(A Development Stage Company)
STATEMENT OF CASH FLOW
for the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
CASH FLOWS PROVIDED BY
(USED IN) OPERATIONS
<S> <C> <C>
Net loss $ (3,692) $ (4,059)
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization 1,500 1,500
-------- --------
(2,192) (2,559)
-------- --------
CASH FLOWS PROVIDED BY
(USED IN) INVESTING ACTIVITIES
None -- --
CASH FLOWS PROVIDED BY
(USED IN) FINANCING ACTIVITIES
None -- --
INCREASE (DECREASE) IN CASH (2,192) (2,559)
CASH BEGINNING OF PERIOD 27,983 30,542
-------- --------
CASH END OF PERIOD $ 25,791 $ 27,983
======== ========
Income taxes paid $ -- $ --
======== ========
Interest paid $ -- $ --
======== ========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
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QUINTESSENCE OIL COMPANY
A Wyoming Corporation
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY June 26, 1996
(Inception) through December 31, 1998
<TABLE>
<CAPTION>
Additional Retained
Common Stock Paid-in Earnings
Shares Amount Capital (Deficit)
------ ------ ------- ---------
BALANCE
<S> <C> <C> <C> <C>
(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)
Net (loss) for the period (3,692)
--------- ------ -------- ---------
BALANCE, December 31, 1998 1,000,000 $ 10 $ 42,490 $ (10,584)
========= ====== ======== ==========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
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QUINTESSENCE OIL COMPANY
A Wyoming Corporation
(A Development Stage Company)
Notes to Financial Statements
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
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 has a
100% working interest in one undeveloped oil and gas lease.
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-in
capital. The Company amortizes registration and organization costs over
60 months using the straight line method.
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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 1933, 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 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 is 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 $10,584 which can be
carried forward to future years. The net operating loss will begin to
expire n the year 2012.
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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 47 President, Treasurer and a member of the
Board of Directors
Tom Kerr 65 Vice President and a member of the Board
of Directors
Tom Swanson 46 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 minerals
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.
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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. Washington. Since June 1988, Mr. Kerr has been a sales
representative with Guardian Life Insurance Company of America.
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
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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, 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 1998 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 March 15, 1999, 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.
17
<PAGE>
<TABLE>
<CAPTION>
Name and address Number of Percent
of owner Shares of Class
- ---------------- ------ --------
Officers and Directors
- ----------------------
<S> <C> <C>
Nick Bebout 218,750 21.88%
1606 Major Avenue
Riverton, Wyoming 82501
Tom Kerr 0 0.00%
P. O. Box 3973
Spokane, Washington 99220
Tom Swanson 175,000 17.50%
P. O. Box 3215
Casper, Wyoming 82601
All officers and 393,750 39.38%
directors as a
group (3 persons)
<CAPTION>
Other Beneficial Holders
- ------------------------
<S> <C> <C>
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%
123 S. Durbin
Casper, Wyoming 82601
<FN>
[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.
</FN>
</TABLE>
18
<PAGE>
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.
<TABLE>
<CAPTION>
Name Total Consideration Shares Acquired
- ---- ------------------- ---------------
<S> <C> <C>
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
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
</TABLE>
19
<PAGE>
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.
<TABLE>
<CAPTION>
Name Total Consideration Shares Acquired
- ---- ------------------- ---------------
<S> <C> <C>
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
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
123 S. Durbin
Casper, Wyoming
TOTAL $32,000.00 100,000
</TABLE>
LEASE PURCHASE FROM EDWARD CALVERT
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.
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 Nick Bebout's brother-in-law.
20
<PAGE>
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 31,1998.
(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 a part of this December 31, 1998
Form 10-K
27 Financial Data Schedule.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
QUINTESSENCE OIL COMPANY
(Company)
Date: March 22, 1999 By: /s/ Nick Bebout
-------------------------------------
NICK BEBOUT, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: March 22, 1999 By: /s/ Nick Bebout
-------------------------------------
NICK BEBOUT, Director, President
and Treasurer
Date: March 22, 1999 By: /s/ Tom Kerr
-------------------------------------
TOM KERR, Director and Vice President
Date: March 22, 1999 By: /s/ Tom Swanson
-------------------------------------
TOM SWANSON, Director and Secretary
22
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF FINANCIAL CONDITION AT DECEMBER 31, 1998 AND THE STATEMENT OF
INCOME FOR THE 12 MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001018675
<NAME> QUINTESSENCE OIL COMPANY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 25,791
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 25,791
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,791
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 10
<OTHER-SE> 42,490
<TOTAL-LIABILITY-AND-EQUITY> 31,916
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,692
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,692)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,692)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,692)
<EPS-PRIMARY> (.004)
<EPS-DILUTED> (.004)
</TABLE>
