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FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended - December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission file number 0-24977
MIZAR ENERGY COMPANY
(Exact name of registrant as specified in its charter)
Colorado 33-0231238
State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
5459 South Iris Street
Littleton, Colorado 80123
(Address of principal executive offices, including zip code.)
(303) 932-9998
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days.
YES [ X ] NO [ ]
Check if no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is contained herein, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [ ]
State Issuer's revenues for its most recent fiscal year.
December 31, 1998 - $0.
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State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock
was sold, or the average bid and ask prices of such stock, as of a
specified date within the past 60 days. December 31, 1998 - $ -0-.
There are approximately 30,700 shares of common voting stock of the
Registrant held by non-affiliates. During the past five years, there
has been no "public market" for the shares of Common Stock of the
Registrant, so the Registrant has arbitrarily valued these shares.
Issuers involved in Bankruptcy Proceedings during the past Five Years.
Not Applicable.
State the number of shares outstanding of each of the Issuer's classes
of common equity, as of the latest practicable date:
December 31, 1998 - 1,430,700 shares of Common Stock
Documents Incorporated by Reference
Form 10-SB Registration Statement filed with the Securities and
Exchange Commission on October 20, 1998 and all exhibits thereto.
Transitional Small Business Issuer Format
YES [ ] NO [ x ]
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PART I
ITEM 1. 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 has filed a 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.
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. The new lease expired on January 15,
1999.
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
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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 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.
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 acquired 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.
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.
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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 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.
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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.
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.
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.
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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's
competitors and potential competitors include major oil companies and
independent producers of varying sizes of which are engaged in the
acquisition of producing properties and the exploration and development
of prospects. Most of the Company's competitors have greater
financial, personnel and other resources than does the Company and
therefore have a greater leverage to use in acquiring prospects, hiring
personnel and marketing oil and gas. Accordingly, a high degree of
competition in these areas is expected to continue.
Governmental Regulation
The production and sale of oil and gas is subject to regulation by
state, federal and local authorities. In most areas there are
statutory provisions regulating the production of oil and natural gas
under which administrative agencies may set allowable rates of
production and promulgate rules in connection with the operation and
production of such wells, ascertain and determine the reasonable market
demand of oil and gas, and adjust allowable rates with respect thereto.
The sale of liquid hydrocarbons was subject to federal regulation
under the Energy Policy and Conservation Act of 1975 which amended
various acts, including the Emergency Petroleum Allocation Act of 1973.
These regulations and controls included mandatory restrictions upon the
prices at which most domestic crude oil and various petroleum products
could be sold. All price controls and restrictions on the sale of
crude oil at the wellhead have been withdrawn. It is possible,
however, that such controls may be reimposed in the future but when, if
ever, such reimposition might occur and the effect thereof on the
Company cannot be predicted.
The sale of certain categories of natural gas in interstate
commerce is subject to regulation under the Natural Gas Act and the
Natural Gas Policy Act of 1978 ("NGPA"). Under the NGPA, a
comprehensive set of statutory ceiling prices applies to all first
sales of natural gas unless the gas is specifically exempt from
regulation (i.e., unless the gas is "deregulated"). Administration and
enforcement of the NGPA ceiling prices are delegated to the FERC. In
June 1986, the FERC issued Order No. 451, which, in general, is
designed to provide a higher NGPA ceiling price for certain vintages of
old gas. It is possible, though unlikely, that the Company may in the
future acquire significant amounts of natural gas subject to NGPA price
regulations and/or FERC Order No. 451. 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.
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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. 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 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.
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. 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.
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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.
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.
7. Uninsured Risks. The Company may not be insured against all
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.
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.
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.
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.
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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.
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.
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.
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. 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.
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ITEM 2. DESCRIPTION OF PROPERTIES.
The Company owned 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:
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.
The Company sold its interest in its 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.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not the subject of any pending legal proceedings;
and to the knowledge of management, no proceedings are presently
contemplated against the Company by any federal, state or local
governmental agency.
Further, to the knowledge of management, no director or executive
officer is party to any action in which any has an interest adverse to
the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted during the fourth quarter of the
calendar year covered by this report.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDERS MATTERS.
(a) Market Information.
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.
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.
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 10. 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.
The Company currently has outstanding 1,430,700 shares of common
stock of which 30,700 are freely tradeable and 1,400,000 of which are
subject to Reg. 144 of the Securities Act of 1933.
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.
<PAGE> 15
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.
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.
(b) Holders.
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.
(c) Dividends .
The Registrant has never paid a cash dividend on its Common Stock
and has no present intention to declare or pay cash dividends on the
Common Stock in the foreseeable future. The Registrant intends to
retain any earnings which it may realize in the foreseeable future to
finance its operations. Future dividends, if any, will depend on
earnings, financing requirements and other factors.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULT OF OPERATIONS.
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.
<PAGE> 16
December 31, December 31,
1998 1997
Sales $ - $ -
Lease Operating Costs 2,780 5,382
General and Administrative
Expenses 11,483 1,020
Impairment of Oil and Gas
Properties - 17,876
--------- ---------
Net Loss $ (14,263) $ (24,278)
========= =========
Net loss per common share $ (0.01) $ (0.02)
========= =========
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.
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.
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.
In 1999, the Company's underlying interest in oil and gas properties
expired. In connection with this interest, the Company could, if the
assignee of the underlying interest fails to pay reclamation costs of
the expired interest in the oil and gas properties, be obligated to pay
these costs. The Company has estimated and reserved $3,500 to pay the
reclamation costs if its assignee fails to pay these costs.
<PAGE> 17
The Company has suffered recurring losses from operations and may
not be able to meet its obligations as they become due which raise
substantial doubt about its ability to continue as a going concern.
The continuation of the Company as a going concern is dependent upon
the Company attaining and maintaining profitable operations and raising
additional capital. Management's plans in this regard is to raise
additional capital through debt financing or raise additional capital
through the sale of common stock. The financial statements do not
include any adjustment relating to the recovery and classification of
recorded asset amounts or the amount and classification of liabilities
that might be necessary should the Company discontinue operations.
The Company is a development stage company and currently has no
employees other than its Officers and Directors. 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 a 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. The Company has no operating history. The
Company has approximately $9,828 in cash as of December 31, 1998, which
the Company intends to use for working capital and to purchase
additional oil and gas leases.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
TABLE OF CONTENTS
Page
Independent Auditors' Report F-1
Balance Sheets F-2
Statements of Operations F-3
Statements of Changes in Shareholders' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 - F-8
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
To the Shareholders
Mizar Energy Company
(A Company in the Development Stage)
We have audited the accompanying balance sheets of Mizar Energy Company
(a Company in the Development Stage) as of December 31, 1998 and 1997,
and the related statements of operations, changes in shareholders'
equity, and cash flows for the year ended December 31, 1998 and 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 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 Mizar
Energy Company (a Company in the Development Stage) as of December 31,
1998 and 1997, and the results of its operations and its cash flows for
the year ended December 31, 1998 and the period from inception
(December 11, 1996) through December 31, 1997, 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 5
to the financial statements, the Company has suffered recurring losses
from operations and may not be able to meet its obligations as they
become due which raise substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these matters are
also described in Note 5. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
SPICER, JEFFRIES & CO.
Denver, Colorado
March 1, 1999
F-1<PAGE>
<PAGE> 19
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1998 1997
ASSETS
<S> <C> <C>
CURRENT ASSET - CASH $ 9,828 $ 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 in 1997 (Note 1) - 357
-------- --------
$ 9,828 $ 20,245
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Reserve for reclaimation costs
(Note 5 $ 3,500 $ -
Due to Shareholders (Note 2) - 10,423
-------- --------
Total current liabilities 3,500 10,423
-------- --------
COMMITMENTS AND CONTINGENCIES (Note 4)
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;
1,430,700 and 1,404,100 shares
issued and outstanding 44,869 34,100
Deficit accumulated during
the development stage (34,541) (24,278)
-------- --------
Total shareholders' equity 6,328 9,822
-------- --------
$ 9,828 $ 20,245
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE> 20
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
inception
(December
11, 1996)
Year ended through
December 31, December 31,
1998 1997
<S> <C> <C>
REVENUE $ - $ -
EXPENSES:
Lease operating costs 2,780 5,382
General and administrative 11,483 1,020
Impairment of oil and
gas properties - 17,876
----------- ----------
NET LOSS $ (14,263) $ (24,278)
=========== ==========
NET LOSS PER COMMON SHARE
(Note 1) $ (0.01) $ (0.02)
=========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING (Note 1) 1,421,592 1,400,470
=========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE> 21
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
PERIOD FROM INCEPTION (DECEMBER 11, 1996)
THROUGH DECEMBER 31, 1997 AND
YEAR ENDED DECEMBER 31, 1998
<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)
Issuance of common stock,
April 10, 1998 7,700 7,700 -
Issuance of common stock,
April 20, 1998 1,000 1,000 -
Issuance of common stock,
May 12, 1998 11,000 11,000 -
Issuance of common stock,
May 18, 1998 4,000 4,000 -
Issuance of common stock,
June 10, 1998 2,900 2,900 -
Less offering costs - (15,831) -
Net loss - - (14,263)
--------- -------- ---------
BALANCES
December 31, 1998 1,430,700 $ 44,869 $ (38,541)
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4<PAGE>
<PAGE> 22
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from
inception
(December 11, 1996)
Year ended through
December 31, December 31,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (14,263) $ (24,278)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Organization costs 357 89
Impairment of oil and gas
properties - 17,876
Increase in organization costs - (446)
--------- ---------
Net cash used in
operating activities (13,906) (6,313)
-------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of oil and gas
properties - (17,876)
Proceeds from sale of oil
and gas equipment 3,500 -
-------- ---------
3,500 (17,876)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of common stock 26,600 34,100
Deferred offering costs - (15,831)
Proceeds from shareholder loan - 10,423
Repayment of shareholder loan (10,423) -
-------- ---------
Net cash provided by
financing activities 16,177 28,246
-------- --------
NET INCREASE IN CASH 5,771 4,057
CASH, at beginning of period 4,057 -
-------- --------
CASH, at end of period $ 9,828 $ 4,057
======== ========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Deferred offering costs offset
to capital $ 15,831 $ -
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE> 23
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, 1998 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
private offering and were charged against the proceeds of the offering.
Organization Costs
Organization costs were amortized over a period of sixty months.
During 1998, these costs were charged to operations.
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.
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.
F-6
<PAGE> 24
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES . . . continued
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.
During 1998, the Company completed its private offering by selling an
additional 26,600 shares for $26,600.
For the year ended December 31, 1997, two of the Company's major
shareholders advanced $10,423 to the Company; in 1998 the Company
repaid these advances. In addition, the Company is provided office
space on a rent-free basis from one of these shareholders.
NOTE 3 - OIL AND GAS PROPERTIES
In 1997, The Company acquired oil and gas mineral leases. In April
1998, the Company sold its working interest in these leases for an
overriding royalty interest. The Company retained the rights to the
surface equipment in this transaction. On December 31, 1997, the
Company adjusted its investment in the royalty interest to its net
realizable value (see note 5).
NOTE 4 - INCOME TAXES
At December 31, 1998, the Company had a net operating loss carryforward
for income tax purposes of approximately $38,000 available to offset
future income taxes, expiring through 2018.
F-7
<PAGE> 25
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - COMMITMENTS AND CONTINGENCIES
In 1999, the Company's underlying interest in oil and gas propertiess
expired. In connection with this interest, the Company could, if the
assignee of the underlying interest fails to pay reclaimation costs of
the expired interest in the oil and gas properties, be obligated to pay
these costs. The Company has estimated and reserved $3,500 to pay the
reclaimation costs if its assignee fails to pay these costs.
The Company has suffered recurring losses from operations and may not
be able to meet its obligations as they become due which raise
substantial doubt about its ability to continue as a going concern.
The continuation of the Company as a going concern is dependent upon
the Company attaining and maintaining profitable operations and raising
additional capital. Management's plans in this regard is to raise
additional capital through debt financing or raise additional capital
through the sale of common stock. The financial statements do not
include any adjustment relating to the recovery and classification of
recorded asset amounts or the amount and classification of liabilities
that might be necessary should the Company discontinue operations.
F-8
<PAGE> 26
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.
Identification of Directors and Executive Officers.
The following table sets forth the names and nature of all
positions and offices held by all directors and executive officers of
the Company for the calendar year ending December 31, 1998, and to the
date hereof, and the period or periods during which each such director
or executive officer served in his or her respective positions.
Date of
Position Election of
Name Held Designation
Philip J. Davis President, Treasurer December 11, 1996
and a member of the
Board of Directors
John C. Lee Secretary and member December 11, 1996
of the Board of Directors
Term of Office
The terms of office of the current directors continue until the
annual meeting of stockholders, which the Bylaws provide shall be held
in October as determined by the Board of Directors; officers are
elected at the annual meeting of the board of directors, which
immediately follows the annual meeting of stockholders.
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 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
<PAGE> 27
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 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.
<PAGE> 28
Involvement in Certain Legal Proceedings
During the past five years, no present or former director,
executive officer or person nominated to become a director or an
executive officer of the Company has been the subject matter of any
legal proceedings, including bankruptcy, criminal proceedings, or civil
proceedings. Further, no legal proceedings are known to be
contemplated by governmental authorities against any director,
executive officer and person nominated to become a director.
Indemnification
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.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the Securities and Exchange Act of 1934 requires
officers, directors and persons who own more than ten percent of a
registered class of a company's equity securities to file initial
reports of beneficial ownership and to report changes in ownership of
those securities with the Securities and Exchange Commission and the
National Association of Securities Dealers. They are also required to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
Forms 3, 4 and 5 furnished to the Company or written representations
that no other transactions were required, the Company has determined
that the pertinent officers, directors and principal shareholders have
complied with all applicable Section 16(a) requirements during fiscal
1998.
<PAGE> 29
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth the aggregate compensation paid by
the Company for services rendered during the period indicated:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION> Long Term Compensation Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (I)
Name Other Restricted LTIP All
and Annual Stock Pay- Other
Principal $ $ Compen Awards Options/ Outs Compen
Position Year Salary Bonus sation($) $ SAR's(#) ($) sation$
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 31
Philip J.
Davis
President 1998 $ -0- $0 $0 $0 0 $0 $0
Treasurer 1997 $ -0- $0 $0 $0 0 $0 $0
Director 1996 $ -0- $0 $0 $0 0 $0 $0
John C. Lee
Secretary 1998 $ -0- $0 $0 $0 0 $0 $0
Director 1997 $ -0- $0 $0 $0 0 $0 $0
1996 $ -0- $0 $0 $0 0 $0 $0
</TABLE>
Cash 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. The Company did not paid any salaries in 1996, 1997
and 1998 and has not paid any salaries in 1999, and will not initiate
the payment of salaries until it becomes profitable to do so.
Compensation of Directors.
The Company's Board of Directors unanimously resolved that members
receive no compensation for their services and are not reimbursed for
travel expenses incurred in serving on the Board of Directors.
No additional amounts are payable to the members of the Company's
Board of Directors for committee participation or special assignments.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Security Ownership of Certain Beneficial Owners
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.
<PAGE> 30
Name and Number of Percent of
address of owner Shares Position Ownership
Philip J. Davis 700,000 President, 48.93%
5459 South Iris Street Treasurer and
Littleton, CO 80123 Director
John C. Lee 700,000 Secretary and 48.93%
5410 East Long Place Directors
Littleton, CO 80122
All officers and 1,400,000 97.86%
directors as a
group (2 persons)
Changes in Control
To the knowledge of management, there are no present arrangements
or pledges of securities of the Company which may result in a change in
control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Registrant has engaged in no transactions with management or
others in which the amount involved exceeds $60,000.
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.
Total Shares
Name Consideration 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 an offering and sold 30,700
shares of Common Stock to 48 persons in consideration of $30,700 in
cash pursuant to Reg. 504 of the Act.
For the year ended December 31, 1997, 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.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of
the period covered by this report.
<PAGE> 31
Exhibits
The following documents are incorporated herein by reference from
the Registrant's Form 10-SB Registration Statement which was filed with
the Securities and Exchange Commission on October 20, 1998, and all
exhibits thereto, as filed with the Commission:
Exhibit
No. Description
3.1 Articles of Incorporation.
3.2 Bylaws.
10.1 Oil and gas lease.
10.2 Contract for sale of lease.
The following documents are incorporated herein:
27 Financial Data Schedule.
<PAGE> 32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto
duly authorized, on this 15th day of April, 1999.
MIZAR ENERGY COMPANY
(Registrant)
BY: /s/ Philip J. Davis
Philip J. Davis, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following person on
behalf of the Registrant and in the capacities and on this 15th day of
April, 1999.
SIGNATURES TITLE DATE
/s/ Philip J. Davis President, Treasurer April 15, 1999
Philip J. Davis Chief Financial Officer
and a member of the
Board of Directors
/s/ John C. Lee Secretary and a member April 15th, 1999
John C. Lee Board of Directors
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Financial Condition at December 31, 1998 Audited
and the Consolidated Statement of Income for the twelve months ended December
31, 1998 Audited and is quualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 9,828
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,828
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,828
<CURRENT-LIABILITIES> 3,500
<BONDS> 0
0
0
<COMMON> 44,869
<OTHER-SE> (38,541)
<TOTAL-LIABILITY-AND-EQUITY> 9,828
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,263
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
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