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SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D. C. 20549
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FORM 10SB/A-1
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
MIZAR ENERGY COMPANY
(Exact name of registrant as specific in its charter)
Colorado 33-0231238
(State of Incorporation) (I.R.S. Employer
Identification No.)
5459 South Iris Street
Littleton, Colorado 80123
(Address of executive offices.) (Zip Code)
Registrant's telephone number: (303) 932-9998
Copies to: Conrad C. Lysiak, Esq.
West 601 First Avenue
Suite 503
Spokane, Washington 99201
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
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(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
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(Title of Class)
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ITEM 1. DESCRIPTION OF BUSINESS.
The Business
MIZAR ENERGY COMPANY (the "Company") is a development stage
enterprise formed under the laws of the State of Colorado on
December 11, 1996, for the purpose of buying, selling, leasing
and operating oil and gas properties.
The Company subsequently acquired one oil and gas lease
located in Barton County, Kansas covering 160 acres, more or
less. In April 1998, the Company sold its only oil and gas
lease, however, the Company retained an approximate 2% overriding
royalty interest in the lease along with all surface equipment.
The Company is filing this Form 10-SB on a voluntary basis.
The reason the Company filed said Form 10-SB was in anticipation
of being listed for trading on the Bulletin Board operated by the
National Association of Securities Dealers, Inc. (the "Bulletin
Board"). Effective January 4, 1999, in order to be listed for
trading on the Bulletin Board, the Company must be filing reports
with the Securities and Exchange Commission (the "Commission")
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act"). Section 15(d) of the Exchange Act is
unavailable to the Company. The filing of this Form 10-SB is in
furtherance of the foregoing.
The Company will voluntarily file periodic reports with the
Commission in the event its obligation to file such reports is
suspended under the Exchange Act.
The Company is currently obligated to file reports with the
Securities and Exchange Commission pursuant to Section 13 of the
Securities Exchange Act of 1934. In the event the Company
acquires an oil and gas lease which accounts for more than ten
percent (10%) of its assets, the Company will required to file
pro forma unaudited financial statements within 75 days of the
date of acquisition of the oil and gas lease pursuant to Item 2
of Form 8-K.
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Historic Operations
On January 29, 1997, the Company acquired one (1) oil and
gas lease located in Barton County, Kansas covering 160 acres,
more or less, at an auction in consideration of sixteen thousand
dollars ($16,000.00) in cash. The foregoing lease expired on
January 2, 1998.
On January 15, 1998, the Company successfully negotiated a
new lease covering the aforementioned property for one thousand
six hundred dollars ($1,600.00) in cash.
On April 2, 1998, the Company sold its interest in the
aforementioned oil and gas lease to an unaffiliated oil and gas
company in consideration of a two percent (2%) overriding royalty
interest in the property. The Company also maintained its right
to all surface equipment on the property. The Company believes
the surface equipment, which includes pumping units and other
miscellaneous equipment, is worth approximately five thousand
dollars ($5,000) in value. In July 1998, the Company sold one
pumping unit for three thousand five hundred dollars ($3,500) and
is currently attempting to sell the balance of the equipment.
The Company believes that the existing oil and gas equipment
which is located on the foregoing lease should be replaced with
newer equipment. The sale of the existing equipment will not
have any adverse effect upon the operation of the Company.
The Company has retained a 2% overriding royalty interest in
the lease. The lease is currently not producing any oil or gas.
The last production from the lease was in 1995. At that time the
lease was producing three barrels of oil per day.
None of the foregoing transactions were with related
parties.
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Selection of Additional Target Areas for Acquisition
The Company's future proposed plans call for it to consider
several factors in choosing additional properties for acquisition
and development. First, the Company considers those regions in
which one or more of its management or other technical personnel
have field of experience. The Company's initial acquisition was
located in Kansas. The Company anticipates acquiring additional
leases in Colorado. At the present time the Company has not
targeted any additional oil and gas leases for acquisition. The
Company intends to acquire the oil and gas leases from other
existing oil companies that are brought to the attention of
Company's management.
The Company will determine which leases it is interested in
acquiring based upon the analysis of technical and production
data, on site verification of well equipment and production
capability, and verification of ownership of leasehold rights.
The Company anticipates that it will take from four to six months
to acquire a leasehold interest. 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.
Currently, the Company may not have adequate funds to bid on
oil and gas leases. If the Company does not have adequate funds
to acquire leases which appear desirable, the Company will have
to seek alternative funding sources in order to acquire the
leases. The funding sources would either come from loans to the
Company or through the sale of common stock. The sale of common
stock may be through the sale of "restricted" common stock and/or
a public offering. In the event the Company is unable to raise
any funds to acquire the foregoing leases, the Company will have
to forego any acquisition thereof and seek alternative, possibly
less attractive leases. Currently, the Company does not have any
sources of alternative funding available to it and may not have
any alternative sources of funding available in the future. As
such, if the Company is unable to raise additional capital, it
may have to cease operations entirely.
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There are no preliminary agreements or understandings
between the Company and its officers and directors or affiliates
or lending institutions with respect to any loan agreements.
There are no plans, proposals, arrangements or
understandings with respect to the sale or issuance of additional
securities by the Company prior to the location of any oil and
gas leases.
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.
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
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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 cost 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 interest.
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 Leases
The principal activity for the Company 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.
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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.
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 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 too 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 anticipates
initially attempting to acquire properties located in the eastern
part of the state of Colorado. At the present time, the Company
has not identified any specific oil and gas leases which it
intends to acquire.
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The Company has not entered into any preliminary agreements
or understandings with respect to the acquisition of additional
oil and gas leases in Colorado.
The Company will not acquire oil and gas lease from related
parties.
There is no present potential that the Company may acquire a
lease or merge with a business or company in which the Company's
promoters, management or their affiliates or associates directly
or indirectly have an ownership interest. The Company does not
have any policies which permit or prohibit the acquisition of an
oil and gas lease or merger with a business or company in which
the Company's promoters, management or their affiliates or
associates directly or indirectly have an interest. The Company
is not aware of any circumstances which result in a change of the
foregoing.
The Company is unable to determine at this time if it will
acquire any oil and gas leases during the next twelve months.
Accordingly, it is unable to anticipate costs of the acquisitions
during the next twelve months. Further, the Company is unable to
determine at this time if it will sell any securities during the
next twelve months.
Other than as disclosed herein, the Company does not know
how it will proceed in seeking out additional target areas for
lease acquisition.
The Company may pay a finder's fee in connection with the
acquisition of an oil or gas lease. The amount of the finder's
fee will be predicated upon the oil and gas lease acquired. The
Company cannot determine the maximum or minimum amount of the
finder's fee. A finder's fee could be paid in securities of the
Company. A finder's fees or other oil and gas lease acquisition
related compensation will not be paid to officers, directors,
promoters or other affiliates or associates of the Company.
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The Company currently has no plans, arrangements, or
understandings to be acquired by or merge with an existing
operating business, however, there is no assurance that in the
future, the Company will not be the subject matter of an
acquisition or merger.
The Company may employ the services of independent
consultants, in connection with its operations. The Company has
not established any criteria that will be used to hire
independent consultants. The Company will review a consultant's
education and work experience and decide on a case by case basis
if the consultant should be retained by the Company.
Dissenting Shareholders Rights
The Company does not intend to provide the Company's
shareholders with disclosure documentation concerning leases
which it intends to acquire. The Company has no intention of
acquiring or merging with an existing corporation. In the event,
in the future, the Company determines that it will acquire or
merge with an existing corporation, it will provide the
disclosure required by then existing federal and state law.
None of the Company's officers, directors, promoters, their
affiliates or associates have had any preliminary contact or
discussions with and there are no present plans, proposals,
arrangements or understandings with any representatives of the
owners of any leases, business or company regarding the
possibility of an acquisition or merger transaction.
Competition
The oil and gas industry is highly competitive. The Company
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. See "Risk Factors - Competition."
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Operating and Environmental Hazards
The Company currently does not maintain any insurance
coverage. In the event that the Company acquires insurance
coverage in the future, of which there is no assurance, the
Company anticipates that the insurance will be that of customary
coverage. Such customary insurance includes coverage for blow-
outs, fire, personal injury, surface damage, spills and pollution
of streams and the aquifer, and other casualties. Other than the
foregoing, the Company does not plan to have any additional
insurance coverage.
Governmental Regulation
The production and sale of oil and gas is subject to
regulation by state, federal and local authorities. In most
areas there are statutory provisions regulating the production of
oil and natural gas under which administrative agencies may set
allowable rates of production and promulgate rules in connection
with the operation and production of such wells, ascertain and
determine the reasonable market demand of oil and gas, and adjust
allowable rates with respect thereto.
The sale of liquid hydrocarbons was subject to federal
regulation under the Energy Policy and Conservation Act of 1975
which amended various acts, including the Emergency Petroleum
Allocation Act of 1973. These regulations and controls included
mandatory restrictions upon the prices at which most domestic
crude oil and various petroleum products could be sold. All
price controls and restrictions on the sale of crude oil at the
wellhead have been withdrawn. It is possible, however, that such
controls may be reimposed in the future but when, if ever, such
reimposition might occur and the effect thereof on the Company
cannot be predicted.
The sale of certain categories of natural gas in interstate
commerce is subject to regulation under the Natural Gas Act and
the Natural Gas Policy Act of 1978 ("NGPA"). Under the NGPA, a
comprehensive set of statutory ceiling prices applies to all
first sales of natural gas unless the gas is specifically exempt
from regulation (i.e., unless the gas is "deregulated").
Administration and enforcement of the NGPA ceiling prices are
delegated to the FERC. In June 1986, the FERC issued Order No.
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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. The recently enacted
Natural Gas Wellhead Decontrol Act of 1989 provides for the
phasing out of all price regulations under the NGPA by January 1,
1993.
Company's Office
The Company's offices are located at 5459 South Iris Street,
Littleton, Colorado 80123. This is the home of the Company's
president, Philip J. Davis. The Company uses Mr. Davis's home on
a rent free basis.
Employees
The Company is a development stage company and currently has
no employees other than its Officers and Directors. See
"Management." Management of the Company expects to hire
additional employees as needed.
Year 2000
The Company has reviewed its internal computer systems and
products and their capability of recognizing the year 2000 and
years thereafter. The Company expects that any costs relating to
ensuring such systems to be year 2000 compliant will not be
material to the financial condition or results of operations of
the Company.
Risk Factors
1. No Operating History and Revenues. The Company being
formed is in the development stage, and is subject to all the
risks inherent in the creation of a new business. Since the
Company is a new venture, it has no record of operations and
there is nothing at this time upon which to base an assumption
that the Company's plans will prove successful.
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2. Volatility of Oil and Gas Markets. While in the past
few years, the price of oil and gas has stabilized, there is no
assurance that in the future prices for oil and gas production
may become volatile in the future.
3. Availability of Suitable Prospects or Producing
Properties. Competition for prospects and producing properties
is intense. The Company will be competing with a number of other
potential purchasers of prospects and producing properties, most
of which will have greater financial resources than the Company.
Due to the state of the oil and gas industry, the bidding for
prospects has become particularly intense with different bidders
evaluating potential acquisitions with difference product pricing
parameters and other criteria that result in widely divergent bid
prices. See "Business - Competition." The presence in the
market of bidders willing to pay prices higher than are supported
by the Company's evaluation criteria could further limit the
ability of the Company to acquire prospects and low or uncertain
prices for properties can cause potential sellers to withhold or
withdraw properties from the market. In this environment, there
can be no assurance that there will be a sufficient number of
suitable prospects available for acquisition by the Company or
that the Company can sell prospectus or obtain financing for or
participants to join in the development of prospects.
4. Title to Properties. It is customary in the oil and gas
industry that upon acquiring an interest in a property, that only
a preliminary title investigation be done at that time. If the
title to the prospects should prove to be defective, the Company
could lose the costs of acquisition, or incur substantial costs
for curative title work.
5. Shut-in Wells and Curtailed Production. Production from
gas wells in many geographic areas of the United States has been
curtailed or shut-in for considerable periods of time due to a
lack of market demand, and such curtailments may continue for a
considerable period of time in the future. There may be an
excess supply of gas in areas where the Company's operations will
be conducted. In such event, it is possible that there will be
no market or a very limited market for the Company's prospects.
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6. Operating and Environmental Hazards. Hazards incident
to the operation of oil and gas properties, such as accidental
leakage of petroleum liquids and other unforeseen conditions, may
be encountered by the Company if it participates in developing a
well and, on occasion, substantial liabilities to third parties
or governmental entities may be incurred. It is anticipated that
customary insurance coverage will be obtained, but the Company
could be subject to liability for pollution and other damages or
may lose substantial portions of prospects or producing
properties due to hazards which cannot be insured against or
which have not been insured against due to prohibitive premium
costs or for other reasons. Governmental regulations relating to
environmental matters could also increase the cost of doing
business or require alteration or cessation of operations in
certain areas. See "Business - Government Regulations."
7. Uninsured Risks. The Company is not insured against any
losses or liabilities which may arise from operations, either
because such insurance is unavailable or because the Company has
elected not to purchase such insurance due to high premium costs
or other reasons.
8. Federal and State Taxation. Federal and state income
tax laws are of particular significance to the oil and gas
industry. The "windfall profits tax" adopted in 1980 reduces the
profits which may be realized by the Company in the production of
crude oil. Recent legislation has eroded previous benefits to
oil and gas producers, and any subsequent legislation may
continue this trend. The states in which the Company may conduct
oil and gas activities also impose taxes upon the production of
oil and gas located within such states. There can be no
assurance that the tax laws will not be changed or interpreted in
the future in a manner which adversely affects the Company.
9. Government Regulation. The oil and gas business is
subject to substantial governmental regulation, including the
power to limit the rates at which oil and gas are produced and to
fix the prices at which oil and gas are sold. It cannot be
accurately predicted whether additional legislation or regulation
will be enacted or become effective.
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10. Writedowns and Limits on Accuracy of Reserve Estimates.
Oil and gas reserve estimates are necessarily inexact and involve
matters of subjective engineering judgment. In addition, any
estimates of future net revenues and the present value of such
revenues are based on price and cost assumptions provided by the
Company as its best estimate. These estimates may not prove to
have been correct over time. A further decline in oil and gas
prices may require the Company to write down the value of its oil
and gas reserves.
11. Need for Subsequent Funding. The Company believes it
will need to raise additional funds to acquire additional oil and
gas leases. The Company's continued operations therefore will
depend upon the availability of cash flow, if any, from its
operations or its ability to raise additional funds through bank
borrowings or equity or debt financing. There is no assurance
that the Company will be able to obtain additional funding when
needed, or that such funding, if available, can be obtained on
terms acceptable to the Company. If the Company cannot obtain
needed funds, it may be forced to curtail or cease its
activities. See "Business."
12. Need for Additional Key Personnel. At the present, the
Company employs no full time employees. The success of the
Company's proposed business will depend, in part, upon the
ability to attract and retain qualified employees. The Company
believes that it will be able to attract competent employees, but
no assurance can be given that the Company will be successful in
this regard. If the Company is unable to engage and retain the
necessary personnel, its business would be materially and
adversely affected. See "Business."
13. Reliance Upon Directors and Officers. The Company is
wholly dependent, at the present, upon the personal efforts and
abilities of its Officers who will exercise control over the day
to day affairs of the Company, and upon its Directors, all of
whom are engaged in other activities, and will devote limited
time to the Company's activities. The President and Secretary
will devote 20% of their time to the operation of the day to day
affairs of the Company. Accordingly, while the Company may
solicit business through its Officers, there can be no assurance
as to the volume of business, if any, which the Company may
succeed in obtaining, nor that its proposed operations will prove
to be profitable. See "Business" and "Management."
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14. Issuance of Additional Shares. Approximately
23,569,300 shares of Common Stock or 93.2% of the 25,000,000
authorized shares of Common Stock of the Company are unissued.
The Board of Directors has the power to issue such shares,
subject to shareholder approval, in some instances. The Company
may also issue additional shares of Common Stock pursuant to a
plan and agreement of merger with a private corporation.
Although the Company presently has no commitments, contracts or
intentions to issue any additional shares to other persons, the
Company may in the future attempt to issue shares to acquire
products, equipment or properties, or for other corporate
purposes. Any additional issuance by the Company, from its
authorized but unissued shares, would have the effect of diluting
the interest of shareholders. See "Description of Securities."
15. Non-Arms's Length Transaction. The number of shares of
Common Stock issued to present shareholders of the Company for
cash was arbitrarily determined and may not be considered the
product of arm's length transactions.
16. Indemnification of Officers and Directors for
Securities Liabilities. The Company's Articles of Incorporation
provide that the Company will indemnify any Director, Officer,
agent and/or employee as to those liabilities and on those terms
and conditions as are specified in the Colorado Business
Corporation Act. Further, the Company may purchase and maintain
insurance on behalf of any such persons whether or not the
corporation would have the power to indemnify such person against
the liability insured against. The foregoing could result in
substantial expenditures by the Company and prevent any recovery
from such Officers, Directors, agents and employees for losses
incurred by the Company as a result of their actions. Further,
the Company has been advised that in the opinion of the
Securities and Exchange Commission, indemnification is against
public policy as expressed in the Securities Act of 1933, as
amended, and is, therefore, unenforceable.
17. Competition. The Company believes that it will have
competitors and potential competitors, many of whom may have
considerably greater financial and other resources than the
Company. See "Business - Competition."
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18. Cumulative Voting, Preemptive Rights and Control.
There are no preemptive rights in connection with the Company's
Common Stock. Shareholders may be further diluted in their
percentage ownership of the Company in the event additional
shares are issued by the Company in the future. Cumulative
voting in the election of Directors is not provided for.
Accordingly, the holders of a majority of the shares of Common
Stock, present in person or by proxy, will be able to elect all
of the Company's Board of Directors. See "Description of the
Securities."
19. No Dividends Anticipated. At the present time the
Company does not anticipate paying dividends, cash or otherwise,
on its Common Stock in the foreseeable future. Future dividends
will depend on earnings, if any, of the Company, its financial
requirements and other factors. See "Dividend Policy."
20. Nature of Oil and Gas Exploration. The search for oil
and gas has historically been marked by unprofitable efforts
resulting not only from the drilling of dry holes, but also from
wells which, though productive, will not produce oil or gas in
sufficient quantities to return a profit. Liabilities in excess
of insurance coverage could possibly be incurred by the Company
as a result of a blow-out, fire, personal injury or other
casualty. Currently, the Company has no insurance coverage.
Pollution which might be caused by the Company's operations could
also result in liabilities and restrictions on the Company's
activities. If properties are proven productive, there is no
assurance such production can be sold at the most favorable rates
or in optimum quantities. The oil and gas industry is highly
competitive and includes a number of large well-established
companies which possess substantially greater resources than the
Company. To the extent the Company acts as the unit operator of
its oil and gas wells, it can be expected to make substantial
advancements on behalf of other joint owners of the property.
There is no assurance that such joint owner advancements will be
collectible. See "Business."
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
Selected Consolidated 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 "Plan of Operation" and the Financial
Statements and related notes included elsewhere in this
Registration Statement. The information shown below may not be
indicative of the Company's future results of operations.
12/31/98 13/31/97
Sales $ - $ -
Lease Operating Costs 2,780 5,382
General and Administrative
Expenses 11,483 1,020
Impairment of Oil and Gas
Properties - 17,876
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Net Loss $ (14,263) $ (24,278)
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Net loss per common share $ (0.01) $ (0.02)
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Plan of Operation
The following discussion should be read in conjunction with
the consolidated financial statements and notes thereto.
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.
The Company's future proposed plan calls for it to consider
and acquire oil and gas leases for acquisition or development.
See "Business."
The Company believes it can satisfy is cash requirements for
the next twelve months as it relates to its current
administrative and start-up costs. Although it is anticipated
that the Company may require additional funding over the next
twelve months to acquire and/or develop future oil and gas
properties.
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The Company's future proposed plans call for it to consider
several factors in choosing additional properties for acquisition
and development. First, the Company considers those regions in
which one or more of its management or other technical personal
have field of experience. The Company's initial acquisition is
located in Kansas. The Company anticipates acquiring additional
leases in Colorado. At the present time the Company has not
targeted any additional oil and gas leases for acquisition. The
Company intends to acquire the oil and gas leases from other
existing oil companies that are brought to the attention of
Company's management.
The Company owns the surface equipment from its initial oil
and gas acquisition in Kansas. To date the Company has sold one
pumping unit for $3,500 in cash. The remaining equipment is
currently for sale.
The Company is a development stage company and currently has
no employees other than its Officers and Directors. See
"Management." Management of the Company expects to hire
additional employees as needed.
Liquidity and Capital Resources.
The Company sold 1,400,000 shares of its Common Stock to
officers and directors for $30,000 in cash. The Company also
completed an offering of 30,700 shares in June 1998 for $30,700
in cash. A portion of the foregoing was used for
organizational matters and the purchase of one oil and gas lease.
See "Business." The Company has no operating history. The
Company has approximately $19,000 in cash as of September 30,
1998, which the Company intends to use for working capital and to
purchase additional oil and gas leases.
ITEM 3. DESCRIPTION OF PROPERTIES.
The Company owns an undivided 2.00% overriding royalty
interest in one oil and gas lease located in Barton County,
Kansas covering 160 acres, more or less. A brief description of
the lease is as follows:
<PAGE> 19
Lease Name: N. J. Weber
Field: Kraft - Prusia
County: Barton
State: Kansas
Legal Description: SE/4 Section 11, T16S, R12W
Spacing: 160 acres on 20 acre spacing
Overriding Royalty Interest: 2.00%
Operator: Scavenger Oil Company
Number of Wells: 4(5 others plugged and
abandoned)
Production Formation: Arbuckle
Date of First Production: 1944
Cost of Drilling and Completion: $95,000 - $110,000
Crude Oil Purchaser: NCRA
Gas Purchaser: Not Applicable-no gas
production
The foregoing lease currently does not produce any oil or
gas. The last production from the lease was in 1995. At that
time the lease was producing three barrels of oil per day.
Further the foregoing lease expired on January 15, 1999.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth 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.
Name and Number of Percentage
address of owner Shares Position of Ownership
Philip J. Davis 700,000 President, CFO 48.93%
5459 South Iris St. Treasurer and
Littleton, CO 80123 Director
John C. Lee 700,000 Secretary and 48.93%
5410 E. Long Pl. Directors
Littleton, CO 80122
<PAGE> 20
All officers and 1,400,000 97.86%
directors as a
group (2 persons)
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
The officers and directors of the Company are as follows:
Name Age Position
Philip J. Davis 42 President, Treasurer and a
member of the Board of
Directors
John C. Lee 42 Secretary and a member of the
Board of Directors
All directors hold office until the next annual meeting of
shareholders and 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.
Philip J. Davis - President, Treasurer and a member of the Board
of Directors
Mr. Davis is a founder, President, Treasurer and a member of
the Board of Directors of the Company. From December 1992 to the
present, Mr. Davis is a self-employed consultant. In October
1992, Mr. Davis filed for protection under Chapter XIII of the
United States Bankruptcy Act. In July 1994, the action was
voluntarily dismissed by the Bankruptcy Court. On December 2,
1994, Mr. Davis filed a petition for bankruptcy pursuant to
Chapter VII of the United States Bankruptcy Act. Mr. Davis was
granted a discharge in March 1995. From May 1991 to November
1995, Mr. Davis was Secretary/Treasurer and a member of the Board
of Directors of Kapalua Acquisitions, Inc., a Colorado
corporation, which was formed for the purpose of acquiring or
merging with an existing operating entity. Kapalua's Common
Stock began trading on the Bulletin Board, operated by the
<PAGE> 21
National Association of Securities Dealers, Inc., in November
1995. From November 1994 to November 1995, Mr. Davis was
President of Kapalua Acquisitions, Inc. Mr. Davis resigned his
positions as an officer and director of Kapalua Acquisitions,
Inc., on November 17, 1995, when it completed a reverse
acquisition with Startech Corporation, a Connecticut corporation
engaged in the business of waste disposal. From August 1996 to
the present, Mr. Davis has been the President and a member of the
Board of Directors of Medical Management Systems, Inc., a
Colorado corporation. Medical Management is a shell corporation.
From May 1991 to November 1995, Mr. Davis was Secretary/Treasurer
and a member of the Board of Directors of Paia Acquisitions,
Inc., a Colorado corporation. Paia's Common Stock began trading
on the Bulletin Board operated by the National Association of
Securities Dealers, Inc., in January 1996. In November 1995,
Paia acquired all of the issued and outstanding shares of common
stock of Consolidated Financial Management, Inc. d/b/a Banc-Pro,
an Arizona corporation in exchange for 3,900,000 post reverse-
split restricted shares of common of Paia and 845,000 preferred
shares of Paia. Mr. Davis resigned as an officer and director of
Paia in November 1995. From May 1991 to November 1995, Mr. Davis
was Secretary/Treasurer of Lahaina Acquisitions, Inc., a Colorado
corporation which was formed for the purpose of acquiring or
merging with an existing operating entity. Lahaina's Common
Stock began trading on the Bulletin Board, operated by the
National Association of Securities Dealers, Inc., in August 1996.
In November 1995, Mr. Davis resigned from the foregoing positions
to assume the Presidency of Lahaina Acquisitions, Inc. Mr. Davis
resigned the foregoing position on May 27, 1997, when he sold his
interest in Lahaina Acquisitions, Inc. to third parties. Mr.
Davis also resigned his position as a Director of Lahaina
Acquisitions, Inc. on the same date, a position he held since May
1991. Mr. Davis will devote approximately 20% of his time to the
Company.
John C. Lee - Secretary and a member of the Board of Directors
Mr. Lee is Secretary and a member of the Board of Directors
of the Company. Mr. Lee has held the foregoing positions since
inception of the Company. Since November 1992, Mr. Lee been
engaged in the practice of investing his personal funds in
securities. Since August 1996, Mr. Lee has been the Secretary
and a member of the Board of Directors of Medical Management
<PAGE> 22
Systems, Inc., a Colorado corporation. Medical Management is a
shell corporation. From November 1995 to May 1997, Mr. Lee was
Secretary and a member of the Board of Directors of Lahaina
Acquisitions, Inc., a Colorado corporation, which was formed for
the purpose of acquiring or merging with an existing operating
entity. Lahaina's Common Stock began trading on the Bulletin
Board, operated by the National Association of Securities
Dealers, Inc., in August 1996. On May 27, 1997, Mr. Lee resigned
the foregoing positions when he sold his interest in Lahaina
Acquisitions, Inc. to third parties. From November 1994 to
November 1995, Mr. Lee was Vice President and a member of the
Board of Directors of Kapalua Acquisitions, Inc., a Colorado
corporation. Kapalua's Common Stock began trading on the
Bulletin Board, operated by the National Association of
Securities Dealers, Inc., in November 1995. Mr. Lee resigned his
positions, on November 5, 1995, as an officer and director when
it completed a reverse acquisition with Startech Corporation, a
Connecticut corporation engaged in the business of waste
disposal. Mr. Lee will devote approximately 20% of his time to
the operation of the Company.
The Company's officers and directors activities will be
material to the operations of the Company. In addition, any
activities consulting engineers, geologists, and title attorneys
will be material to the operations of the Company
The only Company promoters are the Company's officers and
directors, Philip J. Davis and John C. Lee.
ITEM 6. 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 did not paid any salaries in 1996, has not paid any
salaries in 1997, and will not initiate the payment of salaries
until it becomes profitable to do so.
<PAGE> 23
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On December 20, 1996, the Company issued 1,400,000 shares of
Common Stock to the following individuals and corporations in
consideration of the payment of $0.02143 per share in cash.
Name Total Consideration Shares Acquired
Philip J. Davis $ 15,000.00 700,000
5459 South Iris Street
Littleton, Colorado 80123
John C. Lee $ 15,000.00 700,000
5410 East Long Place
Littleton, Colorado 80122
In June 1998, the Company completed a private placement and
sold 30,700 shares of Common Stock to 48 persons in consideration
of $14,869 in cash.
For the year ended December 31, 1998, two of the Company's
officers advanced $10,423 to the Company during the quarter ended
September 30, 1998, and the quarter ended December 31, 1998. The
Company repaid these advances.
ITEM 8. LEGAL PROCEEDINGS.
The Company is not a party to any litigation and to its
knowledge, no action, suit or proceedings against it has been
threatened by any person.
ITEM 9. MARKET PRICE FOR COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS.
No market exists for the Company's securities and there
is no assurance that a regular trading market will develop, or if
developed, that it will be sustained. A shareholder in all
likelihood, therefore, will be unable to resell the securities
referred to herein should he or she desire to do so.
Furthermore, it is unlikely that a lending institution will
accept the Company's securities as pledged collateral for loans
unless a regular trading market develops.
<PAGE> 24
There are no plans, proposals, arrangements or
understandings with any person with regard to the development of
a trading market in any of the Company's securities.
As of September 30, 1998, the Company has 50 holders of
record of its Common Stock and no shares of its Preferred Stock
have been issued.
The Company has not paid any dividends since it is inception
and does not anticipate paying any dividends on its Common Stock
in the foreseeable future.
At the request of the Company, Public Securities of Spokane,
Washington has submitted a Form 211 to the National Association
of Securities Dealers, Inc. (the "NASD") requesting that the
Company's securities be listed for trading on the Bulletin Board
operated by the NASD. Public Securities has advised the Company
that the NASD will not list the Company's securities on the
Bulletin Board until such time as the Securities and Exchange
Commission has reached a "no-comment" position regarding its Form
10SB. Other than the foregoing, the Company has no understanding
or discussions with any broker/dealer regarding market making
activities. Further, the Company has not and does not intend to
hire consultants regarding market making activities.
SEC Rule 15g
The Company's shares are covered by Section 15g of the
Securities Act of 1933, as amended that imposes additional sales
practice requirements on broker/dealers who sell such securities
to persons other than established customers and accredited
investors (generally institutions with assets in excess of
$5,000,000 or individuals with net worth in excess of $1,000,000
or annual income exceeding $200,000 or $300,000 jointly with
their spouses). For transactions covered by the Rule, the
broker/dealer must make a special suitability determination for
the purchase and have received the purchaser's written agreement
to the transaction prior to the sale. Consequently, the Rule may
affect the ability of broker/dealers to sell the Company's
securities and also may affect the ability of purchasers in this
offering to sell their shares in the secondary market.
<PAGE> 25
Section 15g also imposes additional sales practice
requirements on broker/dealers who sell penny securities. These
rules require a one page summary of certain essential items. The
items include the risk of investing in penny stocks in both
public offerings and secondary marketing; terms important to in
understanding of the function of the penny stock market, such as
"bid" and "offer" quotes, a dealers "spread" and broker/dealer
compensation; the broker/dealer compensation, the broker/dealers
duties to its customers, including the disclosures required by
any other penny stock disclosure rules; the customers rights and
remedies in causes of fraud in penny stock transactions; and, the
NASD's toll free telephone number and the central number of the
North American Administrators Association, for information on the
disciplinary history of broker/dealers and their associated
persons.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
The Company has 1,430,700 shares of Common Stock issued and
outstanding as of September 30, 1998. Of the 1,430,700 shares of
the Company's Common Stock 30,700 are freely tradeable and
1,400,000 thereof, can only be resold in compliance with Reg. 144
adopted under the Securities Act of 1933, as amended.
In December 1996, the Company sold 1,400,000 Shares to its
officers and directors in consideration of $30,000, in cash,
pursuant to Section 4(2) of the Securities Act of 1933 (the
"Act"), as amended. No commissions were paid to any persons in
connection with such sales, no advertising of any nature was made
in connection with the sale of said shares and all Company
information was made available to said purchasers. Accordingly,
the Company believes that the aforementioned transactions were
exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
On July 8, 1997, the Company filed a Form D with the
Securities and Exchange Commission and the States of Colorado and
New York. In June 1998, the Company completed this private
placement of its shares of Common Stock pursuant to Reg. 504,
selling 30,700 shares of Common Stock at an offering price of
$1.00 per share. The net proceeds of the offering to the Company
<PAGE> 26
was $14,867. Further, no commissions were paid to any persons in
connection with such sales, no advertising of any nature was made
in connection with the sale of said shares, all Company
information was made available to said purchasers, and said
purchasers were required to execute a subscription agreement
restating the aforementioned, among other things. Accordingly,
the Company believes that the aforementioned transactions were
exempt from registration pursuant to Section 504 of the
Securities Act of 1933, as amended.
In general, under Rule 144 as currently in effect a person
(or persons whose Shares are aggregated), who has beneficially
owned Shares privately acquired directly or indirectly from the
Company or from an affiliate, for at least one year, or who is an
affiliate, is entitled to sell within any three month period a
number of such Shares that does not exceed the greater of 1% of
the then outstanding shares of the Company's Common Stock or the
average weekly trading volume in the Company's Common Stock
during the four calendar weeks, immediately preceding such sale.
Sales under Rule 144 are also subject to certain manner of sale
provisions, notice requirements and the availability of current
public information about the Company. A person (or persons whose
Shares are aggregated) who is not deemed to have been an
affiliate at any time during the 90 day preceding a sale, and who
has beneficially owned Restricted Shares for at least two years,
is entitled to sell all such Shares under Rule 144 without regard
to the volume limitations, current public information
requirements, manner of sale provisions or notice requirements.
ITEM 11. DESCRIPTION OF SECURITIES.
Common Stock
The authorized Common Stock of the Company consists of
25,000,000 shares of no par value Common Stock. All shares have
equal voting rights and are not assessable. Voting rights are
not cumulative and, therefore, the holders of more than 50% of
the Common Stock could, if they chose to do so, elect all of the
directors of the Company.
<PAGE> 27
Upon liquidation, dissolution or winding up of the Company,
the assets of the Company, after the payment of liabilities, will
be distributed pro rata to the holders of the Common Stock. The
holders of the Common Stock do not have preemptive rights to
subscribe for any securities of the Company and have no right to
require the Company to redeem or purchase their shares. The
shares of Common Stock presently outstanding are fully paid and
nonassessable.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of
Preferred Stock, no par value, per share. The Preferred Stock
may be issued in series from time to time with such designation,
rights, preferences and limitations as the Board of Directors of
the Company may determined by resolution. The rights,
preferences and limitations of separate series of Preferred Stock
may differ with respect to such matters as may be determined by
the Board of Directors, including, without limitation, the rate
of dividends, method and nature of payment of dividends, terms of
redemption, amounts payable on liquidation, sinking fund
provisions (if any), conversion rights (if any), and voting
rights. No Preferred Stock has been issued by the Company.
Dividends
Holders of the Common Stock are entitled to share equally in
dividends when, as and if declared by the Board of Directors of
the Company, out of funds legally available therefore. No
dividend has been paid on the Common Stock since inception, and
none is contemplated in the foreseeable future.
Transfer Agent
The Company's transfer agent is Corporate Stock Transfer,
370 17th Street, Suite 2350, Denver, Colorado 80202 and the
telephone number is (303) 595-3300.
<PAGE> 28
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Colorado Revised Statutes and certain provisions of the
Company's Articles of Incorporation under certain circumstances
provide for indemnification of the Company's Officers, Directors
and controlling persons against liabilities which they may incur
in such capacities. A summary of the circumstances in which such
indemnification is provided for is contained herein, but this
description is qualified in its entirety by reference to the
Company's Articles of Incorporation and to the statutory
provisions.
In general, any Officer, Director, employee or agent may be
indemnified against expenses, fines, settlements or judgments
arising in connection with a legal proceeding to which such
person is a party, if that person's actions were in good faith,
were believed to 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.
<PAGE> 29
ITEM 13. FINANCIAL STATEMENTS.
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
TABLE OF CONTENTS
Page
Independent Auditors' Report F-2
Balance Sheet F-3
Statement of Operations F-4
Statement of Changes in Shareholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7 - F-9
<PAGE> 30
INDEPENDENT AUDITORS' REPORT
To the Shareholders
Mizar Energy Company
(A Company in the Development Stage)
We have audited the accompanying balance sheet of Mizar Energy
Company (a Company in the Development Stage) as of December 31,
1997, and the related statements of operations, changes in
shareholders' equity, and cash flows for the period from inception
(December 11, 1996) through December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based upon our audit.
We conducted our audit 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 audit
provides 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 Mizar
Energy Company (a Company in the Development Stage) as of December
31, 1997, and the results of its operations and its cash flows for
the period from inception (December 11, 1996) through December 31,
1997, in conformity with generally accepted accounting principles.
SPICER, JEFFRIES & CO.
Denver, Colorado
August 24, 1998, except with respect to Note 4, as
to which date is March 1, 1999.
F-1
<PAGE> 31
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSET - CASH $ 4,057
OIL AND GAS PROPERTIES (Note 1) -
OTHER ASSETS:
Deferred offering costs (Note 1) 15,831
Organization costs, net of
accumulated amortization of $89 357
--------
$ 20,245
========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITY - DUE TO
SHAREHOLDERS (Note 2) $ 10,423
--------
SHAREHOLDERS' EQUITY: (Note 2)
Preferred stock, no par value,
10,000,000 shares authorized;
no shares issued and outstanding -
Common stock, no par value,
25,000,000 shares authorized;
1,404,100 shares issued and outstanding 34,100
Deficit accumulated during
the development stage (24,278)
--------
Total shareholders' equity 9,822
--------
$ 20,245
========
</TABLE>
The accompanying notes are an integral part of this statement.
F-2
<PAGE> 32
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
STATEMENT OF OPERATIONS
PERIOD FROM INCEPTION (DECEMBER 11, 1996)
THROUGH DECEMBER 31, 1997
<TABLE>
<S> <C>
REVENUE $ -
EXPENSES:
Lease operating costs 5,382
General and administrative 1,020
Impairment of oil and
gas properties 17,876
----------
NET LOSS $ (24,278)
==========
NET LOSS PER COMMON SHARE (Note 1) $ (0.02)
==========
WEIGHTED AVERAGE SHARES OUTSTANDING (Note 1) 1,400,470
==========
</TABLE>
The accompanying notes are an integral part of this statement.
F-3
<PAGE> 33
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
PERIOD FROM INCEPTION (DECEMBER 11, 1996)
THROUGH DECEMBER 31, 1997
<TABLE>
<CAPTION>
Deficit
Accumulated
during the
Common Stock Development
Shares Amount Stage
<S> <C> <C> <C>
INCEPTION,
December 11, 1996 - $ - $ -
Issuance of common stock,
December 20, 1996 1,400,000 30,000 -
Issuance of common stock,
November 5, 1997 1,800 1,800 -
Issuance of common stock,
November 12, 1997 900 900 -
Issuance of common stock,
December 12, 1997 1,400 1,400 -
Net loss - - (24,278)
--------- -------- ---------
BALANCES,
December 31, 1997 1,404,100 $ 34,100 $ (24,278)
========= ======== =========
</TABLE>
The accompanying notes are an integral part of this statement.
F-4
<PAGE> 34
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
STATEMENT OF CASH FLOWS
PERIOD FROM INCEPTION (DECEMBER 11, 1996)
THROUGH DECEMBER 31, 1997
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (24,278)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Amortization 89
Impairment of oil and gas properties 17,876
---------
Net cash used in operating activities (6,313)
---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of oil and gas properties (17,876)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 34,100
Deferred offering costs (15,831)
Organization costs (446)
Proceeds from shareholder loan 10,423
---------
Net cash provided by financing activities 28,246
---------
NET INCREASE IN CASH 4,057
CASH, at beginning of period -
---------
CASH, at end of period $ 4,057
=========
</TABLE>
The accompanying notes are an integral part of this statement
F-5
<PAGE> 35
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and business
Mizar Energy Company (the "Company") was incorporated in the state of
Colorado on December 11, 1996, and had no previous operations.
Activities through December 31, 1997 include organization of the
Company and the raising of equity capital. The Company plans to be
engaged in the business of acquiring, developing, and operating oil and
gas properties.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
The carrying amount of cash, receivables, and payables approximates
fair value.
Deferred Offering Costs
Deferred offering costs represent costs incurred in connection with the
proposed private offering. In the event that such offering is
successful, costs incurred and additional costs incurred subsequent
will be charged against the proceeds of the offering. If the offering
is not successful, the costs will be charged to operations.
Organization Costs
Organization costs are amortized over a period of sixty months.
Cash Flows
For purposes of reporting cash flows, cash includes those investments
which are short-term in nature (three months or less to original
maturity), are readily convertible to cash, and represent insignificant
risk of changes in value.
F-6
<PAGE> 36
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES . . . continued
Long-Lived Assets
The Company adopted the provisions of SFAS 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of, in its financial statements for the year ended December
31, 1997. The adoption of SFAS 121 had no material effect on the
Company's financial statements. The Company reviews its long-lived
assets for impairment to determine if the carrying amount of the asset
is recoverable.
Net Loss Per Share of Common Stock
Net loss per share of common stock is based on the weighted average
number of shares of common stock outstanding.
NOTE 2 - SHAREHOLDERS' EQUITY AND RELATED PARTY TRANSACTIONS
The Company has the authority to issue 10,000,000 shares of preferred
stock no par value and 25,000,000 shares of common stock no par value.
The Company issued 1,400,000 shares of common stock to its founders for
$30,000 in December, 1996, and 4,100 shares of common stock in
connection with a private offering for $4,100 in November and December,
1997.
For the year ended December 31, 1997, two of the Company's major
shareholders advanced $10,423 to the Company. In addition, the Company
is provided office space on a rent-free basis from one of these
shareholders.
NOTE 3 - INCOME TAXES
At December 31, 1997, the Company has a net operating loss carryforward
for income tax purposes of approximately $6,400 available to offset
future income taxes, expiring in 2012.
F-7
<PAGE> 37
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - SUBSEQUENT EVENTS
In April 1998, the Company sold, subject to an overriding royalty
interest, its rights in the oil and gas properties reflected on the
balance sheet at December 31, 1997. The Company retained the surface
equipment rights to the oil and gas properties. In August 1998, the
Company received $3,500 from the sale of a portion of this equipment.
Accordingly, the property has been written down to this amount net of
estimated reclamation costs of the same amount.
In addition, the Company completed its private offering as mentioned in
Note 2 by selling an additional 26,600 shares.
F-9
<PAGE> 38
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
There have been no disagreements on accounting and financial
disclosures from the inception of the Company through the date of this
Registration Statement.
ITEM 15. INDEX TO EXHIBITS
a) List of Financial Statements
Independent Auditors' Report
Balance Sheet
Statement of Operations
Statement in Shareholders' Equity
Statement of Cash Flows
Notes to Financial Statements
b) Exhibit No. Description
3.1 * Articles of Incorporation.
3.2 * Bylaws.
4.1 Specimen Stock Certificate.
10.1 * Oil and gas lease.
10.2 * Contract for sale of lease.
27 Financial Data Schedule
* Previously Filed.
<PAGE> 39
SIGNATURES
In accordance with Section 12 of the Securities Act of 1934, the
registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
MIZAR ENERGY COMPANY
BY: /s/ Philip J. Davis
Philip J. Davis
Pursuant to the requirements to the requirements of the Securities
Act of 1934, this Form 10SB Registration Statement has been signed by
the following persons in the capacities and on the dates indicated:
Signatures Title Date
/s/ Philip J. Davis
Philip J. Davis President, Treasurer and April 19, 1999
Member of the Board of
Directors
/s/ John C. Lee
John C. Lee Secretary and member April 19, 1999
of the Board of Directors
<PAGE> 40
EXHIBIT 3.1
NUMBER SHARES
MIZAR ENERGY COMPANY
Incorporated under the laws of the State of Colorado
Authorized 25,000,000 Common Shares, no par value
CUSIP 60685C 10 9
This Certifies that
is the owner of
Fully Paid and non-assessable Shares of Common Stock, no par
value of
Mizar Energy Company
transferable only on the books of this Corporation in person or
by attorney upon surrender of this Certificate properly endorsed.
This Certificate is not valid unless countersigned by the
transfer agent and registrar.
IN WITNESS WHEREOF, the said Corporation has caused this
Certificate to be endorsed by the facsimile signatures of its
duly authorized officers and to be sealed with the facsimile seal
of the Corporation.
Dated
____________________ Seal _________________________
Secretary President
<PAGE> 41
MIZAR ENERGY COMPANY
Corporate Stock Transfer, Inc.
Transfer Fee: $15.00 per certificate
The following abbreviations, when used in the inscription on the
face of this certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - __________(Cust.) Custodian for
________(Minor)
Under Uniform Gifts to Minors
Act of ____________________ (State)
Additional abbreviations may also be used though not in the above
list.
For the value received _____________ hereby sell, assign and
transfer until
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
[ ]
Please print or type name and address of assignee
________________________________________
________________________________________
________________________________________ Shares
of the Common Stock represented by the within Certificate and do
hereby irrevocably constitute and appoint
_______________________________________
_______________________________________
Attorney to transfer the said stock on the books of the within
named Corporation, with full power of substitution in the
premises.
Dated _____________ 19____
SIGNATURE GUARANTEED: x__________________________________
x__________________________________
<PAGE> 42
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THIS CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATSOEVER. THE SIGNATURE(E) MUST BE BUARANTEE4D BY AN ELIGIBLE
GUARANTOR INSTITUTION (Banks, Stockbroker, Savings and Loan
Association and Credit Unions) WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO RULE 17Ad-15
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contians summary financial information extracted from the
Consolidated Statement of Financial Condition at December 31, 1997 and
the Consolidated Statement of Income for the twelve months ended December
31, 1997 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,057
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,245
<CURRENT-LIABILITIES> 10,423
<BONDS> 0
0
0
<COMMON> 34,100
<OTHER-SE> 24,278
<TOTAL-LIABILITY-AND-EQUITY> 20,245
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 24,278
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24,278)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
