U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
___________________
FORM 10-KSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended December 31, 1996.
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 0-28686
OILEX, INC.
(Exact Name of Small Business Issuer as specified in its charter)
Nevada 33-0194489
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3050 Post Oak Blvd.,Suite 1760 Houston, Texas 77056
(Address of Principal Executive Offices) (Zip Code)
713.629.5998
(Issuer's telephone number, including area code)
OILEX INTERNATIONAL INVESTMENTS, INC.
(Former name, former address and former fiscal year, if changed
since last report)
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 No X
The aggregate number of shares outstanding of the Issuer's Common
Stock, its sole class of common equity, was 24,726,775 as of
December 31, 1996.
This report consists of 48 pages.
<PAGE>
TABLE OF CONTENTS
Page
Part I
Item 1. Description of Business 3
Item 2. Description of Property 4
Reserves (Guide Item 2) 4
Production (Guide Item 3) 4
Undeveloped Acreage (Guide Item 5) 13
Drilling Activities (Guide Item 6) 16
Present Activities (Guide Item 7) 17
Delivery Commitments (Guide Item 8) 17
Item 3. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of
Security Holders 17
Part II
Item 5. Market for Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . 17
Item 6. Management's Discussion and Analysis or Plan of
Operation . . . . . . . . . . . . . . . .. . . . . . 18
Description of Productive
Properties (Guide Item 4) . . . . . . . . . . 23
Item 7. Financial Statements . . . . . . . . . . . . . . . . 26
Item 8. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure . . . . . . . . 45
Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance With Section 16(a)
of the Exchange Act . . . . .. . . . . . . . . . . . 45
Item 10. Executive Compensation. . .. . . . . . . . . . . . . 46
Item 11. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . 46
Item 12. Certain Relationships and Related Transactions 47
Item 13. Exhibits and Reports on Form 8-K. . .. . . . . . . . 48
PART I
Item 1. Description of Business General
Oilex, Inc. (the "Company")was incorporated under the laws of the
State of Nevada on June 10, 1986 under the name of "Akteck, Inc."
The Company later changed its name to Oilex International
Investments, Inc. on December 31, 1991 and to Oilex, Inc. on July
3, 1996.
Oilex, Inc is an oil and gas exploration and production company.
Present management acquired controlling interest in Oilex in
November 1994, including $5.4 million in tax loss carry-forwards
along with a minority lease interest (2%) in five wells in Clark
and Smith Counties, Mississippi (which are under contract for
sale in 1996). Oilex is a non-operating participant in these
wells. In 1995 management began acquiring additional assets, and
since December 1995 the company has added oil, gas and mineral
leases and wells in Texas, Colorado, Utah and West Virginia
through acquisitions and lease purchases.
In December, 1995, the Company acquired the fee mineral
interest in and under 83,751 acres situated in Greenbrier and
Pocahontas Counties, West Virginia. Also in December, 1995, the
Company acquired 35 existing oil and gas wells together with 780
acres of leasehold property on which to conduct future
operations. The company has further acquired 11,535 acres of
leasehold interest under the White River Dome NE Prospect in Rio
Blanco County, Colorado in 1996. Exploration activities are
scheduled to begin in the fourth quarter, 1996.
The Company acquired approximately 5,885 leasehold acres in
Carbon, San Juan and Uintah Counties, Utah, in 1996.
The Company recently has acquired an additional 935 acres
with 19 existing oil and gas wells in the Big Foot Field, Frio
County, Texas adjacent to its initial Big Foot Field holdings.
Management is continuing to add to reserves through
acquisitions while it undertakes drilling programs, the first of
which is slated to begin in August, 1997, in the Big Foot field
in Frio County, Texas.
Products
The Company intends to conduct exploratory drilling
activities with the aim of producing and selling oil, casinghead
gas (produced in conjunction with oil) and natural gas from its
holdings in Texas, Utah and Colorado.
Expansion Strategy
The Company intends to continue its acquisition of oil and
gas properties and leases primarily in, but not limited to,
Texas, Utah and Colorado.
Competition
The search for viable oil and gas prospects and leases is
intensely competitive. It is likely that in seeking future
acquisitions, the company will compete with firms which have
substantially greater financial and management resources than the
company.
Employees
The Company currently employs four full time people,
including the President, Secretary/Treasurer and support staff.
The President and Secretary/Treasurer of the Company have not
drawn a salary to date and do not intend to do so until the
Company is profitable. None of the Company's employees is
represented by a labor union. The Company has experienced no
work stoppages and believes that its employee relations are good.
Item 2. Description of Property
The Company's executive offices occupy approximately 2,200
square feet of office space in Houston, Harris County, Texas,
under a multi year lease which provides for rent of approximately
$2,150 per month. These facilities are adequate for the
Company's purposes. In the event additional space is required,
the Company believes it will be readily available.
The company's main business is in the location, development
and production of oil and gas, and therefore the following
information is provided pursuant to Guide 2 of the Securities and
Exchange Commission's "Industry Guides":
Guide 2: Item 1: (deleted)
Guide 2: Item 2: RESERVES REPORTED TO OTHER AGENCIES
None.
Guide 2: Item 3: PRODUCTION
Mississippi Leases
Operated under Joint Venture Agreement; net income
(after expenses not material to business operations).
Texas
Frio County
1994 - None
1995 - None
1996 - Through 12-96; 1720 barrels of oil; Price per
barrel: $19.90; average lifting cost: $12.00
per barrel)
Pecos County
1994-1996 - None
Scurry County
1994-1996 - None
Potentially productive wells:
Scurry County
A 75% Working Interest and a 56.25% Net Revenue Interest in and
to the following Oil, Gas and Mineral Leases included within the
bounds of the Revilo Glorieta Unit, Scurry County, Texas.
Lessor: Alex Collins, et al
Lessee: Stanolind Oil and Gas Company
Dated: September 27, 1948
Recorded: Volume 45, Page 5 of the oil and Gas Records
of Scurry County, Texas
Lessor: Alex Collins, et al
Lessee: C. R. Craig
Dated: March 2, 1949
Recorded: Volume 54, Page 219 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Alex Collins, et al
Lessee: C. R. Craig
Dated: March 2, 1949
Recorded: Volume 54, Page 219 of the Oil and
Gas Records of Scurry County, Texas
Lessor: Alex Collins, et al
Lessee: Sun Oil Company
Dated: April 8, 1949
Recorded: Volume 38, Page 243 of the Oil and Gas
Records of Scurry County, Texas
Lessor: A. G. Mitchell, et ux
Lessee: Sun Oil Company
Dated: February 26, 1948
Recorded: Volume 37, Page 193 of the Oil and Gas
Records of Scurry County, Texas
Lessor: A. G. Mitchell, et ux
Lessee: Sun Oil Company
Dated: April 12, 1948
Recorded: Volume 37, Page 387 of the Oil and Gas
Records of Scurry County, Texas
Lessor: John W. Nichols, et al
Lessee: Intex Oil Company
Dated: March 7, 1955
Recorded: Volume 157, Page 37 of the Oil and Gas
Records of Scurry County, Texas
Lessor: A. M. Wright
Lessee: Intex Oil Company
Dated: March 7, 1955
Recorded: Volume 157, Page 39 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Ernst M. Loosen, et al
Lessee: Intex Oil Company
Dated: March 7, 1955
Recorded: Volume 160, Page 279 of the Oil and Gas
Records of Scurry County, Texas
Lessor: H. A. Dever, et ux
Lessee: Sun Oil Company
Dated: February 27, 1948
Recorded: Volume 37, Page 177 of the Oil and Gas
Records of Scurry County, Texas
Lessor: C. E. Eastman, et ux
Lessee: Sun Oil Company
Dated: April 14, 1948
Recorded: Volume 37, Page 393 of the Oil and Gas
Records of Scurry County, Texas
Lessor: T. H. Eastman, et ux
Lessee: Sun Oil Company
Dated: April 22, 1948
Recorded: Volume 37, Page 445 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Ruth S. Davis
Lessee: Sun Oil Company
Dated: February 27, 1948
Recorded: Volume 37, Page 163 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Roy G. Woods
Lessee: Sun Oil Company
Dated: June 26, 1953
Recorded: Volume 137, Page 319 of the Oil and Gas
Records of Scurry County, Texas
Lessor: F. M. Walker
Lessee: Sun Oil Company
Dated: February 10, 1956
Recorded: Volume 170, Page 414 of the Oil and Gas
Records of Scurry County, Texas
Lessor: C. E. Eastman, et al
Lessee: Ohio Oil Company
Dated: April 3, 1946
Recorded; Volume 29, Page 273 of the Oil and Gas
Records of Scurry County, Texas
Lessor: C. E. Eastman, et al
Lessee: Ohio Oil Company
Dated: April 3, 1946
Recorded: Volume 29, Page 273 of the Oil and Gas
Records of Scurry County, Texas
Lessor: C. E. Eastman, et al
Lessee: Ohio Oil Company
Dated: April 3, 1946
Recorded: Volume 29, Page 273 of the Oil and Gas
Records of Scurry County, Texas
Lessor: C. E. East, et al
Lessee: Ohio Oil Company
Dated: April 3, 1946
Recorded: Volume 29, Page 273 of the oil and Gas
Records of Scurry County, Texas
Lessor: George W. Bynum, et al
Lessee: Magnolia Petroleum Company
Dated: September 28, 1948
Recorded: Volume 42, Page 351 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Hugh Boren, et al
Lessee: Magnolia Petroleum Company
Dated: October 4, 1948
Recorded: Volume 43, Page 91 of the Oil and Gas Records
of Scurry County, Texas
Lessor: W. R. Bowden, et al
Lessee: Magnolia Petroleum Company
Dated: October 6, 1948
Recorded: Volume 43, Page 435 of the Oil and Gas
Records of Scurry County, Texas
Lessor: George W. Bynum, et al
Lessee: Magnolia Petroleum Company
Dated: September 28, 1948
Recorded: Volume 42, Page 351 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Hugh Boren, et al
Lessee: Magnolia Petroleum Company
Dated: October 4, 1948
Recorded: Volume 43, Page 91 of the Oil and Gas Records
of Scurry County, Texas
Lessor: W. R. Bowden, et al
Lessee: Magnolia Petroleum Company
Dated: October 6, 1948
Recorded: Volume 43, Page 435 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Geraldine Davis
Lessee: J. C. Davis, Jr.
Dated: July 11, 1955
Recorded: Volume 164, Page 259 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Ruth Bell Davis
Lessee: J. C. Davis, Jr.
Dated: June 27, 1955
Recorded: Volume 164, Page 261 of the Oil and Gas
Records of Scurry County, Texas
Lessor: W. A. Vaughn, et ux
Lessee: Intex Oil Company
Dated: February 23, 1955
Recorded: Volume 157, Page 31 of the Oil and Gas
Records of Scurry County, Texas
Lessor: George L. Brumley, et al
Lessee: Intex oil Company
Dated: February 23, 1955
Recorded: Volume 157, Page 33 of the Oil and Gas
Records of Scurry County, Texas
Lessor: George L. Brumley, et al
Lessee: Intex Oil Company
Dated: February 23, 1955
Recorded: Volume 157, Page 33 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Bart Branson, et ux
Lessee: Intex Oil Company
Dated: June 28, 1955
Recorded: Volume 162, Page 285 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Jeanne Bullard, et vir
Lessee: Intex Oil Company
Dated: May 10, 1955
Recorded: Volume 163, Page 290 of the Oil and Gas
Records of Scurry County, Texas
Lessor: R. J. Randals, et ux
Lessee: Sun Oil Company
Dated: June 28, 1948
Recorded: Volume 40, Page 289 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Lone Star Producing Company
Lessee: Landa Oil Company
Dated: April 16, 1956
Recorded: Volume 173, Page 84 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Lone Star Producing Company
Lessee: Landa Oil Company
Dated. June 12, 1956
Recorded: Volume 175, Page 54 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Lone Star Producing Company
Lessee: Landa Oil Company
Dated: October 1, 1956
Recorded: Volume 178, Page 145 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Lone Star Producing Company
Lessee: Landa Oil Company
Dated: December 28, 1956
Recorded: Volume 180, Page 435 of the Oil and Gas
Records of Scurry County, Texas
Lessor: R. J. Randals
Lessee: James G. White
Dated: July 21, 1945
Recorded: Volume 28, Page 33 of the Oil and Gas Records
of Scurry County, Texas
Lessor: R. J. Randals
Lessee: Sun Oil Company
Dated: June 28, 1948
Recorded: Volume 40, Page 209 of the Oil and Gas
Records of Scurry County, Texas
Lessor: R. J. Randals
Lessee: Sun Oil Company
Dated: July 12, 1948
Recorded: Volume 41, Page 231 of the Oil and Gas
Records of Scurry County, Texas
Lessor: Von Roeder, Myers
Lessee: A. J. Slagter, Jr.
Dated: May 22, 1947
Recorded: Volume 42, Page 311 of the Oil and Gas
Records of Scurry County, Texas
Lessor: R. J. Randals
Lessee: James G. White
Dated: July 21, 1945
Recorded: Volume 28, Page 33 of the Oil and Gas Records
of Scurry County, Texas
Lessor: Charles S. Stewart, et al
Lessee: James G. White
Dated: June 26, 1945
Recorded: Volume 27, Page 613 of the Oil and Gas
Records of Scurry County, Texas
Pecos County, Texas
An 87.5% Gross Working Interest and a 61.25% Net Revenue Interest
in and to the following Oil, Gas and Mineral Leases included
within the bounds of the Walker (Queen) Field Unit, Pecos County,
Texas.
White & Baker 'A" Lease
(1) Oil and Gas Lease executed by G. R. White and J. T. Baker, as
Lessors, to R. L. Walker, as Lessee, dated November 3, 1939,
recorded in Volume 127, Page 101, Lease Records of Pecos County,
Texas
(2) Oil and Gas Lease executed by Indian Territory Illuminating
Oil Company and Foster Petroleum Corporation, as Lessors, to R.L.
Walker, as Lessee, dated November 3, 1939, recorded in Volume
127, Page 58, Lease Records of Pecos County, Texas
(3) Oil and Gas Lease executed by Indian Territory Illuminating
Oil Company and Foster Petroleum Corporation, as Lessors, to R.L.
Walker, as Lessee, dated November 3, 1939, recorded In Volume
127, Page 64, Lease Records of Pecos County, Texas
(4) Oil and Gas Lease executed by Indian Territory Illuminating
Oil Company and Poster Petroleum, as Lessors, to R.L. Walker, as
Losses, dated November 3, 1939, recorded in Volume 127, Page 69,
Lease Records of Pecos County, Texas
White & Baker B" Lease
(1) Oil and Gas Lease executed by G.R. White and I.T. Baker, as
Lessors, to R.L. Walker, an Lessee, dated November 3, 1939,
recorded in Volume 127, Page 101, Lease Records of Pecos County,
Texas
(2) Oil and Gas Lease executed by Indian Territory Illuminating
Oil Company and Poster Petroleum Corporation, as Lessors, to R.L.
Walker, an Lessee, dated November 3, 1939, recorded in Volume
127, Page 64, Lease Records of Pecos County, Texas
White & Baker C Lease
(1) Oil and Gas Lease executed by G.R. White and J.T. Baker, an
Lessors, to R.L. Walker, an Lessee, dated November 3, 1939,
recorded in Volume 127, Page 101, Lease Records of Pecos County,
Texas
(2) Oil and Gas Lease executed by Cities Service Oil Company, as
Lessor, to N.V. Hardin, E.L. Martin, and Derwood Langston, as
Lessees, dated November 1, 1969, recorded in Volume 386, Page 33,
Lease Records of Pecos County, Texas
White & Baker "D Lease
(1) Oil and Gas Lease dated November 3, 1939, recorded in Volume
127, Page 101, Lease Records of Pecos County, Texas, from G.R.
White, et al, as Lessors, to R.L. Walker, an Lessee; and
(2) Oil and Gas Lease dated November 3, 1939, recorded in Volume
127, Page 64, Lease Records of Pecos County, Texas, from Indian
Territory Illuminating Oil Company, et al, as Lessors, to R.L.
Walker, as Lessee;
White & Baker E Lease
(1) Oil and Gas Lease dated November 3, 1939, recorded in Volume
127, Page 101, Lease Records of Pecos County, Texas, from G.R.
White, at al, as Lessors, to R.L. Walker, as Lessee; and
(2) Oil and Gad Leads dated November 3, 1939, recorded in Volume
127, Page 64, Lease Records of Pecos County, Texas, from Indian
Territory illuminating Oil Company, et al, an Lessors, to R.L.
Walker, as Lessee;
White & Baker G Lease
(1) Oil and Gas Lease executed by G.R. White, et al, as Lessors,
to R.L. Walker, as Lessee, dated November 3, 1939, recorded in
Volume 127, Page 101, Lease Records of Pecos County, Texas
(2) Oil and Gas Lease executed by Cities Service Oil company, et
al, am Lessors, to R. Kirk Johnson, as Lessee, dated February 20,
1956, recorded in Volume 229, Page 206, Lease Records of Pecos
County, Texas
White & Baker H Lease
(1) Oil and Gas Lease executed by G.R. White, et al, an Lessors,
to Cardinal Oil Company, an Lessee, dated September 9, 1936,
recorded in Volume 110, Page 129, Lease Records of Pecos County,
Texas
(2) Oil and Gas Lease executed by Cities Service Oil company, et
al, an Lessors, to F. Kirk Johnson, as Lessee, dated February 20,
1956, recorded in Volume 229, Page 206, Lease Records of Pecos
County, Texas
White & Baker J Lease
(1) Oil and Gas Lease executed by G.R. White, et al, as Lessors,
to R.L. Walker, as Lessee, dated November 3, 1939, recorded in
Volume 127, Page 101, Lease Records of Pecos County, Texas
White & Baker K Lease
(1) Oil and Gas Lease executed by O.R. White, et al, as Lessor,
to R.L. Walker, an Lease&, dated November 3, 1939, recorded in
Volume 127, Page 101, Lease Records of Pecos County, Texas
White & Baker L Lease
(1) Oil and Gas Loans executed by G.R. White, at al, as Lessors,
to R.L. Walker, as Lessee, dated November 3, 1939, recorded in
Volume 127, Page 101, Loan* Records of Pecos County, Texas
White & Baker M Lease
(2) Oil and Gas Lease executed by G.R. White, at al, as Lessor,
to R.L. Walker, as Lessee, dated November 3, 1939, recorded in
Volume 127, Page 101, Lease Records of Pecos County, Texas
White & Baker N Lease
(1) Oil and Gas Lease executed by G.R. White, et al, as Lessors,
to R.L. Walker, as Lessee, dated November 3, 1939, recorded in
Volume 127, Page 101, Lease Records of Pecos County, Texas
(2) Oil and Gas Lease executed by Indian Territory illuminating
Oil Company and Poster Petroleum Corporation, as Lessors, to R.L.
Walker, as Lessee, dated November 3, 1939, recorded in Volume
127, Page 64, Lease Records of Pecos County, Texas
White & Baker O Lease
(1) Oil and Gas Lease executed by G.R. White, at al, as Lessors,
to R.L. Walker, as Lessee, dated November 3, 1939, recorded in
Volume 127, Page 101, Lease Records of Pecos County, Texas
White & Baker P Lease
(1) Oil and Gas Lease executed by G.R. White, et al, as Lessors,
to R.L. Walker, as Lessee, dated November 3, 1939, recorded in
Volume 127, Page 101, Lease Records of Pecos County, Texas
(2) Oil and Gas Lease executed by Indian Territory Illuminating
Oil Company and Foster Petroleum Corporation, as Lessors, to R.L.
Walker, as Lessee, dated November 3, 1939, recorded in Volume
127, Page 64, Lease Records of Pecos County, Texas;
White and Baker Lease
The Southeast 40 acres and the Northwest 40 acres of the South
160 acres of Section 84, Block 194, GC&SF Ry. Co. Survey, Pecos
County, Texas, said leasehold interest being the same as recorded
in the office of the County Clerk of Pecos County, Texas, at
Volume 580, Page 175, of the lease records of said County and
whereas the said lease and all rights thereunder or incident
thereto are now owned by Sam Chadic, dba Black Badger
Exploration, to a depth of 3,000 feet from the surface thereof
University "B" Lease
State Lease Number 26751 and being Section 24, Block 16,
University Land Survey, Pecos County, Texas.
University "G" Lease
State Lease Number 96991 and being the NE/4 of Section 25, Block
16, University Land Survey, Pecos County, Texas.
Guide 2: Item 5: UNDEVELOPED ACREAGE
Colorado Leases
Rio Blanco County
A One Hundred Percent (100%) Gross Working Interest and
an Eighty Percent (80%) Net Revenue Interest in and to
the following Oil, Gas And Mineral Leases:
1. United States Department of the Interior Lease
Number C-49415, effective January 1, 1989, covering T2N-R96W, 6th
P.M., Sec. 33: S/2SE/4, Sec 34: S/2NE/4, SW/4, Surface to the
Base of the Mesa Verde;
2. United States Department of the Interior Lease
Number C-42236, effective February 1, 1986, covering T2N-R96W,
6th P.M., Sec. 17: NE /4, Sec 22: N/2NW/4, SE/4NW/4, N/2 SE/4,
Surface to the Base of the Mesa Verde;
3. United States Department of the Interior Lease
Number C-50981, effective February 1, 1990, covering T2N-R95W,
6th P.M., Sec. 7: Lots 1 through 4,5,7, W/2E/2, E/2W/2, Surface
to the Base of the Mesa Verde;
4. United States Department of the Interior Lease
Number C-50983, effective February 1, 1990, covering T2N-R95W,
6th P.M., Sec. 18: Lots 1 through 4, E/2W/2, Surface to the Base
of the Mesa Verde;
5. United States Department of the Interior Lease
Number C-50984, effective February 1, 1990, covering T2N-R95W,
6th P.M., Sec. 19: Lots 1 and 2, E/2NW/4, Surface to the Base of
the Mesa Verde;
6. United States Department of the Interior Lease
Number C-50987, effective February 1, 1990, covering T2N-R95W,
6th P.M., Sec. 30: Lots 1 through 4, E/2NW/4, NE/4SW/4, Surface
to the Base of the Mesa Verde;
7. United States Department of the Interior Lease
Number C-38050, effective March 1, 1984, covering T2N-R96W, 6th
P.M., Sec. 1: Lots 15 and 26, E/2SE/4, Sec. 3: Lots 5
through 8,15, SE/4NE/4, SW/4NW/4, SE/4Sw/4, Se/4, Sec: 4: Lots 5
through 8, S/2N/2, S/2, Sec. 5: Lots 5 through 8, S/2N/2, S/2,
Sec. 6: Lots 8 through 12, S/2NE/4, SE/4NW/4, SE/4, Sec. 9: NE/4,
W/2, W/2SE/4, SE/4SE/4, Sec. 10: E/2, E/2W/2, SW/4SW/4, Sec. 12:
Lots 1,4,10 NE/4NE/4, S/2NE/4, S/2, Sec. 13: N/2, SE/4, Sec. 14:
NE/4, Sec. 15: S/2, Sec. 16: SW/4NE/4, Surface to the Base of the
Mesa Verde;
8. United States Department of the Interior Lease
Number C-46794, effective March 1, 1988, covering T2N-R96W, 6th
P.M., Sec. 22: N/2NE/4, Surface to the Base of the Mesa Verde;
9. United States Department of the Interior Lease
Number C-56261, effective March 1, 1988, covering T2N-R96W, 6th
P.M., Sec. 34: SE, Surface to the Base of the Mesa Verde;
10. United States Department of the Interior Lease Number
C-37308, effective July 1, 1987, covering T2N-R96W, 6th P.M.,
Sec. 1: Lots 5 through 8,11,14,20,21,23, SE/4NE/4, SW/4NW/4,
NW/4SW/4, Sec. 2: Lots 5 through 8, S/2N/2, S/2, Sec. 22: All,
Sec. 25: SE/4, Surface to the Base of the Mesa Verde;
11. United States Department of the Interior Lease
Number C-50227, effective August 1, 1989, covering T2N-R96W, 6th
P.M., Sec. 23: E/2, NW/4, E/2SW/4, SW/4SW/4, Sec. 24: W/2, Sec.
26: NE/4, N/2SE/4, SW/4SE/4, Surface to the Base of the Mesa
Verde;
12. United States Department of the Interior Lease
Number C-48855, effective November 1, 1988, covering T2N-R96W,
6th P.M., Sec. 14: W/2, Sec. 16: N/2N/2, SE/4NE/4, Sec. 22:
S/2NE/4, Surface to the Base of the Mesa Verde;
13. United States Department of the Interior Lease
Number C-56910, effective October 1, 1994, covering T2N-R96W, 6th
P.M., Sec. 24: E/2, Sec. 25: N/2, SW/4, Sec. 26: SE/4SE/4,
Surface to the Base of the Mesa Verde;
Texas Leases
Jackson County
A One Hundred Percent (100%) Gross Working Interest and an
Eighty Percent (72%) Net Revenue Interest in and to an undivided
Fifty Percent (50%) of the acreage covered by the following Oil,
Gas And Mineral Lease:
1. Oil, Gas and Mineral Lease dated August 11, 1995,
executed by Allen N. Burditt, Brenda L. Burditt Miller, B. R.
Burditt Taylor and Allen L. Burditt, II, as Lessors, in favor of
Phoenix Reserves, Inc., As Lessee, covering Lessor's undivided
one-half interest in and to 534.55 acres, being out of the John
Brown League, Abstract No. 10, Jackson County, Texas, the said
574.55 acres being more particularly described in a Deed from
Mrs. Mary Dulaney, et al to Allen L. Burditt, dated January 14,
1944, recorded in Volume 150, Page 269, Deed Records of Jackson
County, Texas.
Utah Leases
Carbon County
A One Hundred Percent (100%) Gross Working Interest and an
Eighty Five Percent (85%) Net Revenue Interest in and to the
following Oil, Gas And Mineral Leases:
1. Utah State Mineral Lease dated December 26, 1983, in
favor of Anchor Resources, Inc., Mineral Lease Number ML-46477,
covering 1939.42 acres of land described as Township 13 South,
Range 7 East, SLB&M, Sec. 1: Lots 3,4,5,6,S/2N/2, S/2 (All), Sec.
2: Lots 1,2,3,4,5,6,7, S/2NE/4, SE/4NW/4, E/2SW/4, SW/4 (All),
Sec. 3: Lots 1,2,5, SW/4NE/4, Sec. 22: NE/4SE/4, Sec. 23:
SW/4NE/4, Sec. 24: S/2E/4, Sec. 26: E/2NW/4, NW/4SW/4, SE/4SW/4,
Sec. 34: SE/4NE/4, Sec. 35: NW/4NW/4
San Juan County
A One Hundred Percent (100%) Gross Working Interest and an
Eighty Six and One Half Percent (86.5%) Net Revenue Interest in
and to the following Oil, Gas And Mineral Leases:
1. United States Department of the Interior Lease
Number UTU 69084 effective January 1, 1992 covering TOWNSHIP 27
SOUTH, RANGE 22 EAST, SLM being 776.00 acres, more or less, in
San Juan County, Utah being described as Sec. 3, lot 1, SENE
(excluding Wilderness Study Area); Sec. 9, SWNE, N/2NW, SENW,
N/2SE, SWSE (excluding Wilderness Study Area); Sec. 10, SWSW
(excluding Wilderness Study Area); Sec. 11, NE (excluding
Wilderness Study Area); Sec. 12, W/2SW, SESW (excluding
Wilderness Study Area); Sec. 13, , W/2NE, SENE, NENW, SE
(excluding Wilderness Study Area); Sec. 14, W/2NW, (excluding
Wilderness Study Area); Sec. 15, SWNE, N/2NW (excluding
Wilderness Study Area), SENW; Sec. 24, lot 1, SENE, SENW
(excluding Wilderness Study Area).
2. United States Department of the Interior Lease
Number UTU 69085 effective January 1, 1992 covering TOWNSHIP 35
SOUTH, RANGE 22 EAST, SLM being 789.59 acres, more or less, in
San Juan County, Utah being described as Sec. 19, lots 1,2, NE,
E/2NW, Sec. 20: NENE, W/2E/2, SESE, Sec. 21: NW, E/2SW
Uintah County
A One Hundred Percent (100%) Gross Working Interest and an Eighty
Six and One Half Percent (86.5%) Net Revenue Interest in and to
the following Oil, Gas And Mineral Leases:
1. United States Department of the Interior Lease Number
UTU 68645 effective October 1, 1991 covering TOWNSHIP 6 SOUTH,
RANGE 22 EAST, SLM being 720 acres, more or less, situated in
Uintah County, Utah, described as Sec. 21: all, Sec. 22: W/2SW/4.
2. United States Department of the Interior Lease Number
UTU 68707 effective October 1, 1991 covering TOWNSHIP 4 SOUTH,
RANGE 22 EAST, SLM being 640 acres, more or less, situated in
Uintah County, Utah, described as Sec. 21: SESW, W/2SE, SESE,
Sec. 22: N/2NE, NENW, Sec. 28: W/2NE, NW, N/2SW, NWSE.
3. United States Department of the Interior Lease Number
UTU 69083 effective January 1, 1992, covering TOWNSHIP 4 SOUTH,
RANGE 22 EAST, SLM being 159.57 acres, more or less, situated in
Uintah County, Utah, described as Sec. 26: Lots 4 and 5, N/2SW.
4. United States Department of the Interior Lease Number
UTU 68703 effective October 1, 1991 covering TOWNSHIP 4 SOUTH,
RANGE 21 EAST, SLM being 235.5 acres, more or less, situated in
Uintah County, Utah, described as Sec. 18: lots 2 through 4,
E/2NW, NESW.
5. United States Department of the Interior Lease Number
UTU 68647 effective October 1, 1991 covering TOWNSHIP 8 SOUTH,
RANGE 22 EAST, SLM being 585.25 acres, more or less, situated in
Uintah County, Utah, described as Sec. 5: lots 1 through 3, 6
through 8, ten through 14, S/2NE, SENW, NESW, N/2SE.
6. United States Department of the Interior Lease Number
UTU 45465 effective October 1, 1991 covering TOWNSHIP 3 SOUTH,
RANGE 1 WEST, USB&M being 40 acres, more of less, situated in
Uintah County, Utah, described as Sec. 26: SW/4NE/4.
Drilling Activity (Guide 2/Item 6):
None.
Present Activities (Guide 2/Item 7):
Smith County, Mississippi
Non-operator working interest in four producing units
Frio County, Texas
As of the date of July 1, 1997, the company was
preparing to commence operations in its Big Foot Field holdings
in Frio County, Texas. The Company plans to initially re-enter
55 existing wells and place them back into production. Once the
initial phase of operations is completed, the Company plans to
initiate a drilling program to fully develop the 3,100 foot Olmos
"B" sand underlying its Frio County, acreage.
Rio Blanco County, Colorado
The Company is planning a re-entry on a wellbore
situated on its Rio Blanco acreage prior to October 31, 1998.
Delivery Commitments (Guide 2/Item 8):
None.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security
Holders
None.
PART II.
Item 5. Market for Common Equity and Related
Stockholder Matters
The Company's common stock is listed on the OTC Bulletin
Board of the NASD under the symbol "OLEX". No assurance can be
given that the present market for the Company's common stock will
continue.
The high and low bid quotations per share published by the
National Quotation Bureau Inc. for the quarterly periods
indicated are set forth below:
Fiscal Year High Low
1994
First Quarter .25 .125
Second Quarter .125 .03125
Third Quarter .03125 .03125
Fourth Quarter 2.875 .03125
1995
First Quarter 1.75 .375
Second Quarter .5625 .125
Third Quarter .8125 .09375
Fourth Quarter .75 .20
1996
First Quarter 1.06 0.44
Second Quarter 0.44 1.34
Third Quarter 0.91 0.47
Fourth Quarter 0.75 0.28
The over-the-counter market quotations set forth in the
foregoing table reflect inter-dealer prices, without retail
markup, markdown or commission, and may not necessarily represent
actual transactions.
As of December 31, 1996, the Company had 121 holders of
record of its shares of Common Stock, although many more holders
may exist under "street names."
The Company has not paid any cash dividends and does not
anticipate that it will pay any cash dividends on its Common
Stock in the foreseeable future. Payment of dividends is within
the discretion of the Company's Board of Directors and will
depend, among other factors, upon the Company's earnings,
financial condition and capital requirements.
Item 6: Management's Discussion and Analysis or
Plan of Operation
The Company's general business plan is to acquire additional
petroleum leases on older, low-production, low-profit fields, and
improve the operation of the fields by altering the extraction
methods, primarily by utilizing a much more efficient swabbing
and recovery process. By reduction of the costs of operation,
existing flow rates will be more profitable for the Company than
for the previous owners, who were not able to improve their cost
structure, because they did not have access to newer
technologies, such as swabbing extraction via motorized
collection equipment, at an economy of scale that allows for
application of the technology across hundreds of wells rather
than on a well-by-well basis.
The Company is a licensed operator in all of the states in
which it owns leases, and will become licensed in any states in
which it acquires leases in the future.
The Company complies with all requirements for operating
fields in the various states and local jurisdictions, and in all
cases has indemnity bonds, plugging and abandonment bonds and
similar assurances from state or private insurance facilities.
For example, the Texas leases are governed by the Texas Railroad
Commission, which regulates environmental aspects of extraction
throughout the State of Texas. On a yearly basis, the Company
pays a portion of its proceeds derived from Texas-based wells to
the Railroad Commission for participation in a State-mandated and
managed environmental program. The Company is not aware of any
non-compliance as to existing properties with any environmental
regulations governing any of its leased properties.
During the fourth quarter of 1994, the current management of
Oilex took control of the Company, modifying and altering the
Company's approach to business. Generally, the then-existing
lines of business of the Company were sold, and the new
management embarked on a plan of oil and gas lease acquisitions,
exchanging equity in the company for the lease rights acquired.
Several executive positions were eliminated and overhead was cut
substantially, from $241,498 to $42,817. During 1995, the
Company's revenues were derived from its interests in the
Mississippi leases, in which the Company has a very minor
interest. In 1995, the Company acquired significant additional
lease properties, but none in a production mode. These
properties were acquired with the intent of reactivating them,
utilizing the Company's ability to improve operating profits by
lowering costs of operations.
During 1996, the Company, in addition to receiving small
amounts of income from the Mississippi leases, has also been
selling off surplus, used oilfield equipment, in anticipation of
operating with the portable swabbing units. As of December 31,
1996, 2 swabbing units have been acquired and placed in operation
on the company's leases. Revenues from these low-production,
low-overhead, low yield fields were just starting to occur in the
fourth quarter of 1996.
The increased oil production from the fields that have been
treated has improved. The effects of those wells being serviced
by the swabbing units can be seen in the fourth quarter increase
in produced oil revenues from $3,585 (3rd quarter) to $25,921
(fourth quarter).
As of July 1, 1997, the company was preparing to commence
drilling operations in its Big Foot Field holdings in Frio
County, Texas. The Company plans to initially re-enter 55
existing wells and place them back into production. Once the
initial phase of operations is completed, the Company plans to
initiate a drilling program to fully develop the 3,100 foot Olmos
"B" sand underlying its Frio County, acreage.
Shown below is certain selected consolidated financial data
of the Company for the years ended December 31, 1995 and 1996.
This data should be read in conjunction with the Company's
financial statements and notes included elsewhere herein. The
Company's auditors, Simonton, Kutac & Barnidge, have issued a
"going concern" qualification of their opinion, which notes that
the significant operating losses and working capital deficit
raise substantial doubt about the company's ability to continue
as a going concern. The financial statements do not include any
adjustments that might result from the outcome of that particular
uncertainty.
STATEMENT OF OPERATIONS
(December 31, 1996)
For the Years Ended
December 31,
1996 1995
Revenue:
Oil and gas sales $ 34,236 $ 41,349
Other income 22,289 --
56,525 41,349
Expenses:
Lease operating 181,906 4,349
General and administrative 1,143,276 42,817
Depreciation, depletion and amortization 72,135 80,375
Interest 22,382 26,198
1,419,699 153,739
Loss before income taxes (1,363,174) (112,390)
Provision for income taxes -- --
Net loss (1,363,174) (112,390)
Weighted average common shares outstanding:
Primary and fully diluted 19,004,250 13,898,750
Loss per common share:
Primary and fully diluted $ (0.07) $ (0.01)
BALANCE SHEET
(December 31, 1996)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
1996 1995
Current Liabilities
Amounts due for oil and gas
properties $925,000 $ --
Bonds payable 233,161 244,577
Advances from related parties 11,610 --
Accounts payable 250 --
Note payable to related parties 35,484 33,475
Total Current Liabilities 1,205,505 278,052
Deferred income tax liability 3,032,000 --
Commitments and contingencies -- --
Stockholders' Equity
Preferred stock, Series A, $.001 par
value 10% cumulative convertible;
2,500,000 shares authorized, issued
and outstanding<fn1> -- 2,500
Common stock, $.001 par value; 50,000,000
and 25,000,000 shares authorized at
December 31, 1996 and 1995,
respectively, 24,726,775, and
14,327,570 shares issued and out-
standing at December 31, 1996 and 1995,
respectively 24,727 14,328
Paid-in capital 12,768,434 11,229,414
Accumulated deficit (7,904,236)( 6,541,062)
Total Stockholders' Equity 4,888,925 4,705,180
Total Liabilities and
Stockholders' Equity $9,126,430 $4,983,232
<FN1> Effective June 1, 1996, the Company and World Interactive
Networks, Inc. entered into an agreement to terminate the Stock
Exchange Agreement dated January 5, 1995 and to return the
149,970 shares of Series 'C' Preferred stock issued pursuant
thereto. WIN will return the 2,500,000 shares of Series 'A'
Preferred stock issued by Oilex. Both parties will release and
hold harmless the other from all future claims and causes of
action. See Note 4 - Stockholders Equity of the 1996 Audited
Financial Statement.
Description of Oil and Gas Property
(Guide 2, Item 4)
The only productive properties owned or leased by the Company as
of December 31, 1996 were a series of very minor working
interests in Mississippi, generally described as:
1) "Burns Baptist Church": A 2.6166% Working Interest insofar
and only insofar as to the portion of the leases listed below
which fall within the boundary of the unit for the Norcen
Explorer, Inc. Burns Baptist Church et al No. 1 as evidenced by
Declaration of Pooled Oil Unit dated September 7, 1990 and
recorded in Book No. 325, Page 676 of the records of Smith
County, Mississippi and further limited to the depths between the
surface and 9,986 feet subsurface.
2) "Henderson": A 2.6166% Working Interest insofar and only
insofar as to the portion of the leases listed below which fall
within the boundary of the unit for the Norcen Explorer, Inc.
John C. Henderson et al No. I as evidenced by Declaration of
Pooled Oil Unit dated July 22, 1991 and recorded in Book No. 338,
Page 126 of the records of Smith County, Mississippi and further
limited to the depths between the surface and 10,644 feet
subsurface.
3) "Kearney": A 3.4016% Working Interest insofar and only
insofar as to the portion of the leases listed below which fall
within the boundary of the Unit for the Norcen Explorer, Inc.
Allan P. Kearney et al No. 1 as evidenced by Declaration of
Pooled Oil Unit dated April 27, 1992 and recorded in the records
of Smith County, Mississippi and further limited to the depths
between the surface and 10,644 feet subsurface).
4) "Gladstone-Winstead": A 2.6166% Working Interest (insofar
and only insofar as to the portion of the leases listed below
which fall within the boundary of the unit for the Norcen
Explorer, Inc.-Gladstone-Winstead et al No. 1 as evidenced by
Declaration of Pooled Oil Unit dated of the records of Smith
County, June 2, 1992 and recorded in the records of Smith County,
Mississippi and further limited to the depths between the surface
and 10,644 feet subsurface).
and a much larger working interest position in a series of leases
in Frio County, Texas, identified as:
A One Hundred Percent (100%) Gross Working Interest and a
Seventy Percent (70%) Net Revenue Interest in and to the oil
rights down to 3,330 feet and all rights below 3,300 feet in and
under the acreage covered by the following Oil, Gas and Mineral
Leases 1 through 5 and all rights in and under the acreage
covered by the following Oil, Gas and Mineral Leases 6 through
10:
1. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 150 acres of
land, a Memorandum of which is recorded in Volume 886, Page 245,
Deed Records of Frio County, Texas.
2. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 310.68 acres
of land, a Memorandum of which is recorded in Volume 886, Page
249, Deed Records of Frio County, Texas.
3. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 80 acres of
land, a Memorandum of which is recorded in Volume 886, Page 247,
Deed Record of Frio County, Texas.
4. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 160 acres of
land, a Memorandum of which is recorded in Volume 886, Page 243,
Deed Records of Frio County, Texas.
5. Oil, Gas and Mineral Lease dated December 1, 1995, executed
by Carol Thompson Crouch, as Lessor, in favor of Oilex
International Investments, Inc., as Lessee, covering 77.65 acres
of land, a Memorandum of which is recorded in Volume 886, Page
241, Deed Records of Frio County, Texas.
6. Oil, Gas and Mineral Lease dated February 14, 1996, executed
by Jim Biediger, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 268, Deed
Records of Frio County, Texas.
7. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Fay Brown, as Lessors, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 285, Deed
Records of Frio County, Texas.
8. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Theresa Biediger, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 276, Deed
Records of Frio County, Texas.
9. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Helen Branham, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 259, Deed
Records of Frio County, Texas.
10. Oil, Gas and Mineral Lease dated June 8, 1996, executed by
Connie Bradley, as Lessor, in favor of Oilex International
Investments, Inc., as Lessee, covering 965.3 acres of land, a
Memorandum of which is recorded in Volume 886, Page 251, Deed
Records of Frio County, Texas.
Total production from the Frio County leases amounted to 54
barrels of oil as of September 30, 1996. This was based upon a
price per barrel of $19.90 and an average lifting cost of $12.00
per barrel.
Total production attributable to Oilex's minority interest from
the Mississippi leases was 693 barrels of oil through September
30, 1996, and was based upon a price per barrel of $18.00 and a
lifting cost per barrel of $11.00.
<PAGE>
FINANCIAL STATEMENTS
Financial Statements
Sequential
Page No.
Index to Audited Financial Statements
Financial Statements December 31,
1996, 1995 (Audited)
Independent Auditor's Report 27
Balance Sheets, December 31, 1996,
1995, 28
Statement of Operations, December 31,
1996, 1995 30
Statement of Changes in Stockholder's
Equity, December 31, 1994 through
December 31, 1996 31
Statement of Cash Flows, December 31,
1996, 1995 32
Notes to Annual Financial Statements 34
Independent Auditors' Report
SIMONTON, KUTAC
& BARNIDGE, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
909 Fannin, Suite 2050
Houston, Texas 77010-1007
Telephone:(713) 658-9755 Facsimile: (713) 658-0298
May 1, 1997
Board of Directors and Stockholders
Oilex, Inc.
Houston, Texas
We have audited the accompanying balance sheets of Oilex, Inc. as
of December 31, 1996 and 1995, 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 audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits 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 Oilex, Inc. at December 31, 1996 and 1995, and the results of
its operations and its cash flows for the years then ended, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note 8 to the financial statements, the Company's significant
operating losses and working capital deficit raises substantial
doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Simon, Kutac & Barnidge
<PAGE>
OILEX, INC.
BALANCE SHEET
(December 31, 1996)
ASSETS
December 31,
1996 1995
Current Assets:
Cash 14,630 15,272
Oil and gas receivables 9,929 --
Prepaid Expenses 11,503 --
Total Current Assets 36,062 15,272
Property and Equipment:
Oil and gas properties -
full cost method
Subject to amortization 7,519,000 7,969,529
Undeveloped properties 1,217,000 --
Production equipment 300,584 --
Furniture and equipment 61,081 --
Accumulated depreciation, depletion
and amortization (66,549) (5,567,407)
Net Property and Equipment 9,031,116 2,402,122
Investment in marketable securities -- 2,500,000
Organization costs, net of amortization 59,252 65,838
Total Assets $9,126,430 $4,983,232
<PAGE>
OILEX, INC.
BALANCE SHEET
(December 31, 1996)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
1996 1995
Current Liabilities
Amounts due for oil and gas
properties $925,000 $ --
Bonds payable 233,161 244,577
Advances from related parties 11,610 --
Accounts payable 250 --
Note payable to related parties 35,484 33,475
Total Current Liabilities 1,205,505 278,052
Deferred income tax liability 3,032,000 --
Commitments and contingencies -- --
Stockholders' Equity
Preferred stock, Series A, $.001 par
value 10% cumulative convertible;
2,500,000 shares authorized, issued
and outstanding -- 2,500
Common stock, $.001 par value; 50,000,000
and 25,000,000 shares authorized at
December 31, 1996 and 1995,
respectively, 24,726,775, and
14,327,570 shares issued and out-
standing at December 31, 1996 and 1995,
respectively 24,727 14,328
Paid-in capital 12,768,434 11,229,414
Accumulated deficit (7,904,236)( 6,541,062)
Total Stockholders' Equity 4,888,925 4,705,180
Total Liabilities and
Stockholders' Equity $9,126,430 $4,983,232
STATEMENT OF OPERATIONS
(December 31, 1996)
For the Years Ended
December 31,
1996 1995
Revenue:
Oil and gas sales $ 34,236 $ 41,349
Other income 22,289 --
56,525 41,349
Expenses:
Lease operating 181,906 4,349
General and administrative 1,143,276 42,817
Depreciation, depletion and amortization 72,135 80,375
Interest 22,382 26,198
1,419,699 153,739
Loss before income taxes (1,363,174) (112,390)
Provision for income taxes -- --
Net loss (1,363,174) (112,390)
Weighted average common shares outstanding:
Primary and fully diluted 19,004,250 13,898,750
Loss per common share:
Primary and fully diluted $ (0.07) $ (0.01)
<TABLE>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (December 31, 1996)
Preferred Stock Common Stock Paid-In Accumulated
Shares Amount Shares Amount Capital Deficit
<C> <C> <C> <C> <C> <C> <C>
<C>
Balance,
December 31, 1994 -- -- 13,812,570 $13,813 $7,396,445
$(6,428,672) $ 981,586
Issuance of Series
A Preferred Stock 2,500,000 2,500 -- -- 2,497,500
-- 2,500,000
Issuance of common
stock in exchange
for oil and gas
properties -- -- 515,000 515 1,335,469
-- 1,335,984
Net loss -- -- -- -- --
(112,390) (112,390)
Balance,
December 31, 1995 2,500,000 2,500 14,327,570 14,328 11,229,414
(6,541,062) 4,705,180
Retirement of Series
A Preferred Stock (2,500,00) (2,500) -- -- (2,497,500)
-- (2,500,000)
Common stock issued
in exchange for oil
and gas properties -- -- 6,898,265 6,898 2,239,411
-- 2,246,309
Common stock issued
for personal
services -- -- 3,500,940 3,501 1,797,109
-- 1,800,610
Net loss -- -- -- -- --
(1,363,174)(1,363,174)
Balance,
December 31, 1996 -- $ -- 24,726,775 $24,727 12,768,434
(7,904,236) 4,888,925
</TABLE>
STATEMENT OF CASH FLOWS
(December 31, 1996)
For the Years Ended
December 31,
1996 1995
Cash Flows from Operating Activities:
Net loss (1,363,174) $(112,390)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation, depletion and amortization 72,135 80,375
Increase in oil and gas receivables (9,929) --
Increase in prepaid expenses (11,503) --
Increase in advances from related party 11,610 --
Increase in amounts due for oil and gas
properties acquired 925,000 --
Increase in accounts payable 250 --
(Decrease) increase in bonds payable (11,416) 18,563
Increase in notes payable to
related parties 2,009 6,583
Net cash used by operating activities (385,018) (6,869)
Cash Flows Used in Investing Activities:
Increase in oil and gas properties, net (766,471)(1,281,265)
Purchase of production equipment (300,584) --
Purchase of furniture and equipment (61,081) --
Disposal (investment) in marketable
securities 2,500,000 (2,500,000)
Decrease in accumulated depreciation,
depletion and amortization (5,500,858) --
Increase in deferred tax liability 3,032,000 --
Other (65,549) (56,416)
Net cash used by investing activities (1,162,543)(3,837,681)
Cash Flows from Financing Activities:
Issuance of common stock for services
rendered 1,800,610 1,358,058
Issuance of common stock for oil and
gas properties 2,246,309 --
(Cancellation) issuance of
preferred stock (2,500,000) 2,500,000
Net Cash Provided by Financing Activities 1,546,919 3,858,058
Net Change in Cash (642) 13,508
Cash, beginning of year 15,272 1,764
Cash, end of year 14,630 15,272
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Organization --- Oilex, Inc. ("Company") was incorporated under
the laws of the State of Nevada on June 10, 1986 under the name
of "Akteck, Inc." The Company later changed its name to "Oilex
International Investments, Inc.," and in July, 1996 changed its
name to "Oilex, Inc."
Description of the Business --- The primary business activities
of Oilex, Inc. is oil and gas exploration, development and
acquisitions. The Company currently owns oil and gas leaseholds
and fee property interests in Texas, Mississippi, Colorado, West
Virginia and Utah.
Oil and Gas Properties --- The Company follows the full cost
method of accounting whereby all costs, including direct,
general and administrative expenses, associated with property
acquisition, exploration and development activities are
capitalized. Cost associated with proved reserves are amortized
by the unit-of-production method using independent engineers'
estimates of unrecovered proved oil and gas reserves. The costs
of unproved properties are excluded from amortization until the
properties are evaluated. Interest is capitalized on oil and gas
properties not subject to amortization and in the process of
development. Proceeds from the sale of properties are accounted
for as reductions to capitalized costs unless such sales involve
a significant change in the relationship between costs and the
estimated value of proved reserves or the underlying value of
unproved properties, in which case, a gain or loss is recognized.
Unamortized costs of proved properties are subject to a ceiling
which limits such costs to the estimated present value of oil and
gas reserves reduced by future operating expenses, development
expenditures and income taxes.
Income Taxes --- The Company accounts for income taxes in
accordance with Statement of Financial Accounting Standards No.
106, "Accounting for Income Taxes," which requires the use of the
"liability method" of accounting for income taxes. Deferred
taxes are provided using the liability method whereby deferred
tax assets are recognized for deductible temporary differences
and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of
enactment.
The Company has incurred operating losses in each of the last
seven years. As the utilization of such losses can not be
anticipated, a corresponding benefit has not been recorded.
The Company has Net Operating Loss Carryforwards which will be applied
to income
and which lapse according to the following schedule:
Year Generated Earnings NOL Amount Year Expires
1991 ( 7,478) ( 6,730) 2006
1992 (112,082) (100,874) 2007
1993 (137,229) (123,506) 2008
1994 (129,045) (116,141) 2009
1995 (112,390) (101,151) 2010
Sub Total (498,224) (448,402)
Accounting Estimates --- The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and the
accompanying notes. The actual results could differ from those
estimates.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued)
The Company's financial statements are based on a number of
significant estimates including selection of the useful lives for
property and equipment and oil and gas reserve quantities which
are the basis for the calculation of depreciation, depletion and
impairment of oil and gas properties. Management emphasizes that
reserve estimates are inherently imprecise and that estimates of
more recent discoveries and reserves associated with
non-producing properties are more imprecise than those for
producing properties with long production histories.
Accordingly, the Company's estimates are expected to change as
future information becomes available.
Other Property and Equipment --- Depreciation of property and
equipment, other than oil and gas properties, is provided
generally on the straight-line basis over the estimated useful
lives of the assets as follows:
Office equipment 3-7 years
Oilfield service equipment 3-7 years
Ordinary maintenance and repairs are charged to income and
expenditures which extend the physical or economic life of the
assets are capitalized. Gains or losses on disposition of assets
other than oil and gas properties and equipment are recognized in
income, and the related assets and accumulated depreciation
accounts are adjusted accordingly.
Other Non-Current Assets --- Other non-current assets include
organization costs, which are being amortized over five years.
Reclassification --- Certain reclassifications have been made to
the 1995 financial statements to conform to the 1996
presentation.
Loss Per Common Share --- Primary earnings per common share are
based upon the weighted average number of common and common
equivalent shares outstanding. Fully diluted earnings per common
share are based on the assumption that all convertible debentures
and stock options were converted at the beginning of the year.
Common stock equivalents were excluded from the calculation of
loss per common share as such inclusion would have had an
anti-dilutive effect; therefore, fully diluted earnings per share
is considered to be the same as primary earnings per share.
NOTE 2 - AMOUNTS DUE FOR OIL AND GAS PROPERTIES
Effective November 1, 1996, Oilex entered into an agreement to
acquire an approximate 75% gross working interest in the Walker
(Queen) Field) in Pecos County, Texas. This prospect consist of
3,040 acres of oil and gas leases, for which Oilex will pay
$925,000.
At December 31, 1996, $800,000 of the total $925,000 of amounts
due for oil and gas properties is payable solely from the 25%
gross working interest of net oil and gas revenues derived from
the Walker (Queen) Field. The remainder is to be paid by the
issuance of 125,000 shares of Oilex common stock, valued by
management at $1 per share.
NOTE 3 - BONDS PAYABLE
Bonds payable consists of the following:
December 31,
1996 1995
10.0% bonds payable, secured by certain of the
Company's oil and gas properties; due on
demand and convertible into common
stock at $2.00 per share. $ 166,098 $ 154,848
9.75% bonds payable to an insurance
company; secured by certain of the
Company's oil and gas properties;
due on demand and convertible into
common stock at $2.00 per share. -- 89,729
15.0% convertible subordinated bonds
payable, due April, 1997, and
convertible into common stock
at $0.28 per share. 67,063 --
$ 233,161 $ 244,577
In February, 1997, the 15.0% convertible bonds were converted
into 238,000 shares of Oilex common stock.
NOTE 4 - STOCKHOLDERS' EQUITY
Effective in January, 1996, Oilex exchanged 1,256,265 shares of
its common stock in exchange for 100% mineral rights in 83,751
acres located in Pocahontas and Greenbriar Counties, West
Virginia. These shares are included in stockholders' equity at
December 31, 1996. Oilex has retained the voting rights to these
common shares. The purchase price was valued at approximately
$1,256,265.
Effective in January, 1996, Oilex issued 500,000 shares of common
stock in exchange for oil and gas leaseholds and equipment
located in the Big Foot Field areas of Frio County, Texas. Oilex
has retained the voting rights to these common shares. The
purchase price was approximately $500,000.
In December, 1994, the Company agreed to issue 2,500,000 shares
of its Series A, 10% Cumulative Convertible Preferred Stock to
World Interactive Networks, Inc. ("WIN") in exchange for 149,200
shares of WIN's Series A Cumulative Convertible Preferred Stock
valued at $16.67 per share, which was the quoted market value of
these securities at the transaction date. The Oilex preferred
stock had a liquidation preference of $2.00 per share. This
transaction was subsequently rescinded on June 1, 1996, as Oilex
management decided to terminate all non-oil and gas related
activities.
On March 24, 1996, the Company issued 100,000 shares of its
common stock in exchange for 1,939 acres of lease rights in the
Carbon County, Utah field. The value of the acreage was
approximately $50 per acre.
On March 24, 1996, the Company acquired 3,945 acres of oil and
gas leases in the Unitah Basin area of Utah. The Company issued
42,000 shares of its common stock for these lease rights, which
were valued at approximately $11 per acre.
On April 17, 1996, Oilex entered into an agreement to acquired
100% of the working interest in the White River Dome Prospect
located in Rio Blanco County, Colorado. This prospect consists
of 11,535 acres. Oilex exchanged 1,500,00 shares of its common
stock along with $25,000 cash for these leaseholds.
Additionally, the Seller signed an agreement whereby these shares
will be voted in accordance with current management.
On November 12, 1996, the Company entered into an agreement with
a financial consulting firm whereby, as consideration for
services rendered, the Company has granted an option to purchase
300,000 shares at $0.50 per share. The agreement expired on May
15, 1997. No options were exercised.
At various times during 1996, the Company issued shares of its
common stock in the amounts and for the types of services as
follows: 46,240 common shares for leasing, geological and
engineering; 100,000 common shares for investor relations;
702,000 common shares for financial consulting and public
relations; and 10,000 common shares for other services rendered.
See Note 6 - Related Parties for additional disclosure regarding
stockholders' equity.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company is currently in dispute with a corporation owned
by certain stockholders of the Company. These stockholders were
formerly part of the management team of Oilex. They contend
that Oilex owes the company approximately $141,000 on a demand
note. The Company has recorded a $35,484 note payable to the
company at December 31, 1996. The amount in dispute is related
to certain general and administrative expense reimbursements.
Although no lawsuit has been filed, the management of Oilex
intends to vigorously defend its position in this matter should a
lawsuit be instituted. It believes that the amounts recorded in
its financial statements at December 31, 1996, for this note
payable is correct and accurate. Accordingly, no provision has
been made for the disputed difference herein.
NOTE 6 - LEASES
The Company, as lessee, has entered into and/or assumed various
operating leases for office equipment, vehicles, and office
facilities.
Future minimum lease payments under operating leases at December
31, 1996 are as follows:
Year Ending December 31,
1997 $ 45,666
1998 20,371
1999 10,864
2000 10,475
2001 6,354
Thereafter --
Total minimum lease payments $93,730
Rent expense during the years ended December 31, 1996 and 1995
for operating leases was $29,025 and $13,420, respectively, and
is included in general and administrative expenses.
NOTE 7 - RELATED PARTIES
In 1996, a corporate stockholder, Phoenix Reserves, Inc.
("Phoenix"), who owns 36.5% of Oilex's outstanding common stock
advanced $790,210 to Oilex. As payment, Oilex issued 1,200,000
shares of its common stock to Phoenix and are included in total
stockholders' equity at December 31, 1996. The funds were used
for working capital purposes. Phoenix has common management with
Oilex and it was a majority shareholder of Oilex in prior years.
During 1996, the Company received advances from its President
totaling $186,386 for which Oilex issued 500,000 shares of its
common stock as payment. The funds were used for working capital
purposes. Additionally, another 640,000 shares of common stock
were issued to the President of Oilex as compensation for
personal services.
A stockholder of the Company is a principal in a firm that
provides oil and gas reserve evaluation services to the Company.
A total of 152,700 shares of Oilex common stock was issued during
1996 in exchange for oil and gas reserve evaluation services.
As discussed in Note 4, the Company had a note payable of $35,484
and $33,475 as of December 31, 1996 and 1995, respectively, due
to a company owned by certain stockholders of Oilex who were
formerly part of the management of Oilex.
During 1996, the Company purchased oil and gas properties and
tangible equipment from Phoenix in exchange for 3,500,000 shares
of Oilex common stock.
During 1996 Oilex paid $52,949 for legal services to its
President and Director who is an attorney.
In 1996, the Company issued 150,000 shares of common stock for
directors' fees to three of its directors.
See Note 9 - Significant Subsequent Events, for additional
related parties transactions.
NOTE 8 - GOING CONCERN
The Company has incurred net losses since its inception creating
an accumulated deficit balance of $7,904,236 and $6,541,062 at
December 31, 1996 and 1995, respectively. Additionally, there is
a working capital deficit of $1,169,443 and $262,780 at December
31, 1996 and 1995, respectively.
These factors raise substantial doubt about the Company's ability
to continue as a going concern. Management intends to make an
equity financing which will infuse additional working capital
into the Company so that it can exploit and develop its newly
acquired oil and gas properties, thereby generating a positive
cash flow.
The accompanying financial statements have been prepared on a
going concern basis, which contemplates continuity of operations,
realization of assets and liquidation of liabilities in the
ordinary course of business, and therefore do not include any
adjustments that result from the outcome of this uncertainty.
NOTE 9 - SIGNIFICANT SUBSEQUENT EVENTS
On February 20, 1997, the holders of the 15.0% Convertible
Subordinated Bonds elected to convert their bonds into 238,000
shares of Oilex common stock, par value $0.001 per share, at
$0.28 per share.
Additionally, on February 20, 1997, the Company issued 198,000
shares of Oilex common stock, par value $0.001 per share, to
three individual investors.
In January, 1997, the Board of Directors approved the acquisition
from Phoenix of a 20% interest it owned in Oil Retrieval Systems,
Inc. ("ORS") an Arizona corporation. ORS designs, engineers,
produces and sells portable swabbing units to the oil and gas
industry. ORS is a development stage company.
Oilex issued 3,000,000 shares of common stock to Phoenix in
exchange for its ownership of 1,205,420 common shares of ORS.
In May, 1997, Funscape Corp. (formerly Imperial Energy Corp.), a
Colorado corporation, acquired ORS. Funscape Corp. issued 2.5
million shares of its common stock in exchange for all of the
outstanding shares of ORS.
Funscape Corp. has stockholders and management who are also
stockholders and have management responsibilities in Oilex,
Phoenix and ORS.
Reference is made here to Note 7 - Related Parties of these
financial statements.
NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION
There were no cash payments for interest nor income taxes during
the years ended December 31, 1996 and 1995.
NOTE 11 - OIL AND GAS PROPERTIES
Capitalized Costs --- The following table presents the aggregate
capitalized cost subject to amortization relating to the
Company's oil and gas acquisition, exploration and development
activities, and the aggregate related accumulated depreciation,
depletion and amortization ("DD&A").
December 31,
1996 1995
Proved properties $ 7,519,000 $ 7,969,529
Unproved properties 1,217,000 --
Accumulated DD&A -- (5,567,407)
Net capitalized costs $ 8,736,000 $ 2,402,122
Cost Incurred --- The Company's oil and gas acquisition,
exploration and development activities are conducted in Texas,
Mississippi, Colorado, West Virginia and Utah. The following
table summarizes the costs incurred in connection therewith.
December 31,
1996 1995
Property acquisition costs:
Unproved properties $ 1,217,000 $ --
Proved properties 6,506,801 1,281,265
Exploration costs -- --
Development costs -- --
$ 7,723,801 $ 1,281,265
Cost Not Subject to Amortization --- The Company had $1,217,000
of acquisition cost not subject to amortization at December 31,
1996. Unproved properties not subject to amortization consists
mainly of lease costs and seismic data related to unproved areas.
The Company will continue to evaluate these properties over the
lease term; however, the timing of the ultimate evaluation and
disposition of a significant portion of properties has not been
determined. Costs associated with seismic data and all other
costs will become subject to amortization as the prospects to
which they relate are evaluated.
NOTE 12 - SUPPLEMENTAL RESERVE INFORMATION (Unaudited)
The following information summarize the Company's net proved
reserves of oil (including condensate and natural gas liquids)
and gas and the present values thereof for the years ended
December 31, 1996 and 1995. The reserve estimates are based upon
reports of Ultra Engineering, Inc., an oil and gas reserve
engineering firm whose principal is a stockholder and director of
Oilex. The estimates are in accordance with regulations
prescribed by the Securities and Exchange Commission. Future net
revenue is estimated by the petroleum engineers using oil and gas
prices in effect as of the end of each respective year. Price
escalations are permitted only for those properties which have
contracts allowing for specific increases. Future operating
costs are based upon the average level of expenses during each
year.
The reliability of any reserve estimate is function of the
quality of available information and of engineering
interpretation and judgment. In management's opinion, the
reserve estimates presented herein, in accordance with generally
accepted engineering and evaluation principles consistently
applied, are believed to be reasonable. These reserves should be
accepted with the understanding that drilling activities or
additional information subsequent to the date of this report
might require their revision. Moreover, certain quantities of
the reserves included in this study were estimated using the
volumetric method, and such estimates are particularly
susceptible to revision as a result of subsequent drilling
activities or production information.
Estimated Quantities of Oil and Gas Reserves (Unaudited) --- The
following table sets forth certain data pertaining to the
Company's proved and proved developed reserves for the years
ended December 31, 1996 and 1995.
December 31,
1996 1995
Gas Oil Gas Oil
(Mcf) (Bbl) (Mcf) (Bbl)
Proved Reserves:
Beginning balance 36,075,492 3,981,731 27,930,994 1,208,804
Purchase of reserves
in place -- 1,725,594 8,144,498 2,775,433
Production -- (2,054) -- (2,506)
Revisions (36,066,040)(3,259,506) -- --
Ending balance 9,452 2,445,765 36,075,492 3,981,731
December 31,
1996 1995
Gas Oil Gas Oil
(Mcf) (Bbl) (Mcf) (Bbl)
Proved Developed
Reserves:
Beginning balance 7,610,696 1,359,952 5,565,696 595,582
Purchase of reserves
in place -- 1,725,594 2,045,000 766,876
Production -- (2,054) -- (2,506)
Revisions (7,601,244) (637,727) -- --
Ending balance 9,452 2,445,765 7,610,696 1,359,952
Standard Measure of Discounted Future Net Cash Flows (Unaudited)
- --- The standardized measure of discounted future net cash flows
and changes therein relating to proved oil and gas reserves is
presented below:
December 31,
1996 1995
Future cash inflows $ 48,933,726 $ 134,803,769
Future development costs (760,000) (15,279,040)
Future production costs (25,291,508) (25,902,840)
Future income tax expense (8,580,832) (32,000,000)
Future net cash flows 14,301,386 61,621,889
Discounted at 10% per year (8,951,208) (23,786,049)
Standardized measure of discounted future
net cash flows $ 5,350,178 $ 37,835,840
The "standardized measure" does not purport to represent and is
generally unrelated to the fair market value of the Company's oil
and gas reserves.
The principle sources of changes in the standardized measure of
future net cash flows are as follows:
December 31,
1996 1995
Balance, beginning of year $ 12,359,619 $ 2,178,648
Sales, net of production costs (26,019) (37,000)
Purchase of reserves in-place 8,560,285 26,616,225
Revisions of previous estimates (12,333,600) --
Accretion of discount -- (4,398,245)
Net change in income taxes ( 3,210,107) (12,000,000)
Balance, end of year $ 5,350,178 $ 12,359,628
Item 8. Changes in and Disagreements With
Accountants on Accounting and
Financial Disclosure
None.
Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance With Section 16(a) of
The Exchange Act
The company has a 5-person board of directors (with one vacancy),
each member of which is described below, serving for terms of one
year, or until the annual shareholder's meeting, at which time they
could be replaced. The officers and directors of the Company are:
Name Age Position with the Company
Oliver H. Timmins III 43 President and Director
Richard G. Clark 69 Director
Deborah K. Sacrey 43 Director
Cynthia C. Timmins 36 Secretary/Treasurer and Director
Oliver H. Timmins III, President & Director, is a graduate of Saint
Mary s School of Law (Juris Doctor). Mr. Timmins has been an attorney
practicing in oil and gas related areas for over 16 years, during
which period of time he has worked on the negotiation of mergers and
acquisitions, preparation of securities filings, SEC filings for
reporting and non-reporting companies, title examination, preparation
of gas purchase contracts and preparation of joint operating
agreements. In addition, Mr. Timmins has specific experience in both
exploration and production, as well as supervising of day to day
operations of oil and gas related service companies. During the past
5 years, Mr. Timmins worked directly in the oil and gas industry,
serving as counsel at Chase Energy, Navarro Gas, Wellington Funding
Group, and Carancahua Resources, Inc. His primary responsibility was
title examination, preparation of and negotiation for purchase
contracts, preparation of Joint Operating Agreements, and litigation
support for clients who had oil and gas related disputes. Commencing
in 1994, he has been working for Oilex, initially as general counsel
and then as President from 1995 to the present.
Richard G. Clark, Director - For the past 30 years, Mr. Clark has been
involved in dealer finance Banking, investment banking, management
related to institutional sales, branch management and national
marketing. A graduate of New York University s School of Business and
Finance, Mr. Clark has consulted for numerous companies. His
expertise and experience include corporate under writings, financing,
merger activities relating to retail facilities, as well as numerous
activities related to the oil and gas, mining, and rail transportation
industries, computer products, and environmental issues and in
negotiating the acquisition of a New York Stock Exchange brokerage
house.
Deborah K. Sacrey, Director - Ms. Sacrey is President of a full
service geological, drafting, geotechnical support facility with in-
house Diazo (printing and mylars), autocad with Terra Sciences
capabilities. Geological consulting areas include southern Louisiana,
Texas Gulf Coast, Mississippi, Arkansas and West Virginia. Ms. Sacrey
has a Bachelor of Science degree in Geology and Geophysics.
Cynthia C. Timmins, Secretary/Treasurer & Director - Mrs. Timmins, the
wife of Oliver Timmins (see above), is an elementary school assistant
teacher and has assisted Oliver Timmins in numerous corporate
businesses over the past 14 years. Mrs. Timmins attended the
University of Texas at Austin.
Item 10. Executive Compensation
None of the executive officers or directors of the Company
receives a salary or other compensation from the Company. Mr.
Timmins, the President of the Company, does not intend to request any
compensation unless and until the Company is profitable. In the
future, the Company intends to pay fees and grant stock options to its
non-employee directors. There are no outstanding options nor claims
of deferred salary as of July 31, 1997.
The Company does not currently have any stock option plans or
long term incentive compensation plans. In addition, the Company does
not award stock appreciation rights, restricted stock awards or long
term incentive plan pay-outs.
The following officers or directors received the compensation
noted:
Oliver Timmins $23,949
Richard Clark 25,000 shares of common
Deborah Sacrey 25,000 shares of common
No other officers or directors received any additional compensation in
1996.
Item 11. Security Ownership of Certain
Beneficial Owners and Management
The following table sets forth information as of October 23,
1996, relating to the beneficial ownership of the Company's Common
Stock by (i) each person known by the Company to be the beneficial
owner of more than five percent of the Company's outstanding Common
Stock, (ii) each of the Company's directors, (iii) the Company's Chief
Executive Officer, and (iv) all officers and directors of the Company
as a group.
Name and Address of Amount of Percent
Beneficial Owner Beneficial Ownership of Class
Oliver H. Timmins III 1,823,845 9.34%
Cynthia C. Timmins
3050 Post Oak Blvd., Suite 1760
Houston, Texas 77056
Richard G. Clark 50,000 .26%
2 Saddle River Road
Saddle River, New Jersey 07458
Deborah K. Sacrey 50,000 .26%
7035 W. Tidwell, Ste J103
Houston, Texas 77092
All directors and officers 1,923,845 9.86%
as a group (5 people)
Phoenix Reserves, Inc. 8,685,378 44.47%
P. O. Box 460767
Houston, Texas 77056
Brush Prairie Minerals, Inc. 1,256,265 6.43%
905 Pines Road, Suite A
Spokane, Washington 99214
Pioneer Oil and Gas 1,125,000 5.76%
1225 Ft. Union Blvd., #100
Midvale, Utah 84047
Phoenix Reserves, Inc., a Nevada corporation, obtained its
holdings in 1994, by virtue of a private placement pursuant to Rule
506 under Regulation D, wherein Phoenix exchanged the entirety of its
interest in the Wilson leases, in consideration of the issuance to it
of 8,685,378 shares of restricted common stock of the Company. Willie
C. Davis and John Craig, who are officers and directors of the
Company, did not and do not own any shares of Phoenix. Allen Burditt
II, owns 100% of Phoenix.
Brush Prairie Minerals, Inc., a Washington corporation having 20
shareholders, obtained its holdings in December of 1995, under a
private placement transaction pursuant to Rule 505 of Regulation D, by
which Brush Prairie obtained 1,256,265 shares of the Company's
restricted common stock in exchange for 100% of Brush Prairie's
holdings in Greenbriar and Pocahontas Counties, West Virginia. In
December of 1996, Western Continental, Inc., a public company,
acquired all of the assets of Brush Prairie, to include the 1,256,265
shares of Oilex common stock.
Don J. Colton, is the President, and Gregg B. Colton is the Vice
President and Secretary of Pioneer, and together control over 51% of
Pioneer's equity interests. John Anderson, Gregg Colton, and Don
Colton are the only directors of the company. None of the other
officers or directors of Pioneer owns more than 10% of Pioneer.
There are no contracts, option agreements, warrants or other
agreements outstanding by which any individual or entity can increase
its interest in the Company in reliance on pre-existing terms and
conditions.
Item 12. Certain Relationships and
Related Transactions
None.
Item 13. Exhibits and Reports on Form 8-K
Exhibit 3.5, Amendment to Articles changing name to Oilex,
Inc.
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
OILEX, INC.
By:/s/ Oliver Timmins III
President
Date: July 30, 1997
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: /s/ Oliver Timmins III
President
By: /s/ Cynthia Timmins
Secretary/Treasurer
By: /s/ Richard C. Clark
Director
By: /s/ Deborah Sacrey
Director
EXHIBIT 3.5
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION OF
OILEX INTERNATIONAL INVESTMENTS, INC.
We the undersigned, Oliver H. Timmins, III, President and
Cynthia C. Timmins, Secretary of Oilex International Investments,
Inc. do hereby certify:
That the board of directors of said corporation at a meeting
duly convened, held on the 5th day of June, 1996, adopted a
resolution to amend the original articles as follows:
Article I is hereby amended to read as follows:
The name of this corporation is OILEX, INC.
Article IV is hereby amended to read as follows:
The aggregate number of shares which this corporation shall
have the authority to issue is 50,000,000 shares of a par value
of $0.001 per share. Fully paid stock of the corporation shall
not be liable to any further call or assessment. The Board of
Directors of the corporation is expressly authorized to determine
by resolution classes, series and numbers of each class or series
of the stock of the corporation.
The number of shares of the corporation outstanding and
entitled to vote on an amendment to the Articles of Incorporation
is 19,531,835; that said change and amendment have been consented
to and approved by a majority vote of the stockholders holding a
majority of each class of stock outstanding and entitled to vote
thereon.
/s/ Oliver Timmins III, President
/s/ Cynthia Timmins, Secretary
STATE OF TEXAS
COUNTY OF BEXAR
This instrument was acknowledged before me on this 3rd day
of July, 1996, by Oliver H. Timmins III, President of Oilex
International Investments, Inc.
/Dolores C. Railsback
Notary Public, State of Texas
This instrument was acknowledged before me on this 3rd day
of July, 1996, by Cynthia C. Timmins, Secretary of Oilex
International Investments, Inc.
/Dolores C. Railsback
Notary Public, State of Texas
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