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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
Commission file number 000-24971
CONTANGO OIL & GAS COMPANY
(Exact name of small business issuer as specified in its charter)
NEVADA 95-4067606
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3700 BUFFALO SPEEDWAY, SUITE 960
HOUSTON, TEXAS 77098
(Address of principal executive offices)
(713) 960-1901
(Issuer's telephone number)
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
--- ---
The total number of shares of common stock, par value $0.04 per share,
outstanding as of May 1, 2000 was 17,496,661.
Transitional Small Business Disclosure Format (check one): Yes No X
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CONTANGO OIL & GAS COMPANY
QUARTERLY REPORT ON FORM 10-QSB
FOR THE NINE MONTHS ENDED MARCH 31, 2000
TABLE OF CONTENTS
<TABLE>
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PAGE
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PART I - FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Condensed Balance Sheets as of March 31, 2000 (unaudited)
and June 30, 1999................................................................ 3
Condensed Statements of Operations for the three and nine months ended March 31,
2000 and 1999 (unaudited)........................................................ 4
Condensed Statement of Shareholders' Equity for the nine months ended March 31,
2000 (unaudited)................................................................. 5
Condensed Statements of Cash Flows for the nine months ended
March 31, 2000 and 1999 (unaudited).............................................. 6
Notes to the Condensed Financial Statements.......................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.... 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings........................................................................ 14
Item 2. Changes in Securities and Use of Proceeds................................................ 14
Item 3. Default Upon Senior Securities........................................................... 14
Item 4. Submission of Matters to Vote of Security Holders........................................ 14
Item 5. Other Information........................................................................ 15
Item 6. Exhibits and Reports on Form 8-K......................................................... 15
SIGNATURES......................................................................................... 16
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
CONTANGO OIL & GAS COMPANY (A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
MARCH 31, JUNE 30,
2000 1999
----------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents .......................................................... $ 2,196,624 $ 466,189
Accounts receivable, net ........................................................... 179,308 15,697
Prepaid insurance .................................................................. 56,072 8,003
Advances to operators .............................................................. 3,019,053 --
----------- -----------
Total current assets ........................................................... 5,451,057 489,889
----------- -----------
PROPERTY, PLANT AND EQUIPMENT:
Oil and natural gas properties, successful efforts method of accounting:
Proved properties .............................................................. 221,781 --
Unproved properties, not being amortized ....................................... 627,677 --
Furniture and equipment ............................................................ 17,046 --
Accumulated depreciation, depletion and amortization ............................... (8,308) --
----------- -----------
Total property, plant and equipment ............................................ 858,196 --
----------- -----------
TOTAL ASSETS ................................................................... $ 6,309,253 $ 489,889
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ................................................................... $ 1,106,736 $ 800
Preferred stock dividends payable .................................................. -- 75,565
Accrued liabilities ................................................................ 121,866 --
----------- -----------
Total current liabilities ...................................................... 1,228,602 76,365
----------- -----------
SHAREHOLDERS' EQUITY:
Convertible preferred stock, Series B, $0.04 par value, $30 per share
liquidation preference and certain voting rights, 125,000 shares
authorized, no shares issued and outstanding at March 31, 2000 and
16,792 shares issued and outstanding at June 30, 1999 .......................... -- 672
Common stock, $0.04 par value, 50,000,000 shares authorized,
17,496,661 issued and outstanding at March 31, 2000 and
1,509,865 shares issued and outstanding at June 30, 1999 ....................... 699,866 60,395
Additional paid-in capital ......................................................... 6,883,686 2,168,399
Accumulated deficit ................................................................ (1,815,942) (1,815,942)
Deficit accumulated during development stage ....................................... (686,959) --
----------- -----------
Total shareholders' equity ..................................................... 5,080,651 413,524
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ..................................... $ 6,309,253 $ 489,889
=========== ===========
</TABLE>
See notes to financial statements.
3
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CONTANGO OIL & GAS COMPANY (A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
CUMULATIVE
TOTAL FROM
THREE MONTHS ENDED NINE MONTHS ENDED JULY 1, 1999
MARCH 31, MARCH 31, (INCEPTION OF
------------------------ ------------------------ DEVELOPMENT
2000 1999 2000 1999 STAGE)
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Oil and natural gas sales........... $ 23,223 $ -- $ 29,590 $ -- $ 29,590
----------- ----------- ----------- ----------- -------------
EXPENSES:
Lease operating expense............. 14,114 -- 15,791 -- 15,791
Exploration costs................... 126,006 -- 214,934 -- 214,934
Depreciation, depletion
and amortization................ 6,260 -- 8,308 -- 8,308
General and administrative expense.. 84,514 40,469 615,985 86,286 615,985
----------- ----------- ----------- ----------- -------------
Total expenses.................. 230,894 40,469 855,018 86,286 855,018
----------- ----------- ----------- ----------- -------------
LOSS FROM OPERATIONS..................... (207,671) (40,469) (825,428) (86,286) (825,428)
Interest expense......................... (7,627) -- (7,627) -- (7,627)
Interest income.......................... 57,107 5,315 78,909 18,508 78,909
Gain on sale of assets................... 67,187 -- 67,187 -- 67,187
----------- ----------- ----------- ----------- -------------
NET LOSS................................. (91,004) (35,154) (686,959) (67,778) (686,959)
Preferred stock dividends................ -- 7,557 -- 22,669 --
----------- ----------- ----------- ----------- -------------
NET LOSS ATTRIBUTABLE TO
COMMON STOCK........................ $ (91,004) $ (42,711) $ (686,959) $ (90,447) $ (686,959)
=========== =========== =========== =========== =============
DEFICIT ACCUMULATED
DURING DEVELOPMENT
STAGE, BEGINNING OF PERIOD.......... (595,955) -- -- -- --
------------ ----------- ----------- ----------- -------------
DEFICIT ACCUMULATED
DURING DEVELOPMENT
STAGE, END OF PERIOD................ $ (686,959) $ -- $ (686,959) $ -- $ (686,959)
=========== =========== =========== =========== =============
BASIC AND DILUTED
NET LOSS PER SHARE.................. $ (0.01) $ (0.03) $ (0.06) $ (0.06) $ (0.06)
=========== =========== =========== =========== =============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING.................. 17,467,519 1,509,865 12,019,380 1,509,865 12,019,380
=========== =========== =========== =========== =============
</TABLE>
See notes to financial statements.
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CONTANGO OIL & GAS COMPANY (A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK
-------------------------- ------------------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1999 ......... 16,792 $ 672 1,509,865 $ 60,395 $ 2,168,399 $(1,815,942)
Preferred stock conversion ....... (16,792) (672) 503,760 20,150 (19,478) --
Sale of shares (8/99) ............ -- -- 6,460,000 258,400 387,600 --
Sale of warrants (8/99) .......... -- -- -- -- 24,600 --
Sale of shares (9/99) ............ -- -- 3,780,000 151,200 982,800 --
Net loss ......................... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance at September 30, 1999 .... -- -- 12,253,625 490,145 3,543,921 (1,815,942)
Sale of shares (10/99) ........... -- -- 416,666 16,667 264,583 --
Sale of shares (11/99) ........... -- -- 533,333 21,333 362,167 --
Sale of shares (12/99) ........... -- -- 4,197,704 167,908 2,702,592 --
Net loss ......................... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1999 ..... -- -- 17,401,328 696,053 6,873,263 (1,815,942)
Sale of shares (01/00) ........... -- -- 43,333 1,733 30,766 --
Sale of shares (02/00) ........... -- -- 50,000 2,000 35,500 --
Sale of shares (03/00) ........... -- -- 2,000 80 1,420 --
Offering expenses ................ -- -- -- -- (57,263) --
Net loss ......................... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance at March 31, 2000 ........ -- $ -- 17,496,661 $ 699,866 $ 6,883,686 $(1,815,942)
=========== =========== =========== =========== =========== ===========
<CAPTION>
DEFICIT
ACCUMULATED
FROM
JULY 1, 1999
(INCEPTION OF TOTAL
DEVELOPMENT SHAREHOLDERS'
STAGE) EQUITY
------------- -------------
<S> <C> <C>
Balance at June 30, 1999 ......... $ -- $ 413,524
Preferred stock conversion ....... -- --
Sale of shares (8/99) ............ -- 646,000
Sale of warrants (8/99) .......... -- 24,600
Sale of shares (9/99) ............ -- 1,134,000
Net loss ......................... (298,380) (298,380)
------------- -------------
Balance at September 30, 1999 .... (298,380) 1,919,744
Sale of shares (10/99) ........... -- 281,250
Sale of shares (11/99) ........... -- 383,500
Sale of shares (12/99) ........... -- 2,870,500
Net loss ......................... (297,575) (297,575)
------------- -------------
Balance at December 31, 1999 ..... (595,955) 5,157,419
Sale of shares (01/00) ........... -- 32,499
Sale of shares (02/00) ........... -- 37,500
Sale of shares (03/00) ........... -- 1,500
Offering expenses ................ -- (57,263)
Net loss ......................... (91,004) (91,004)
------------- -------------
Balance at March 31, 2000 ........ $ (686,959) $ 5,080,651
============= =============
</TABLE>
See notes to financial statements.
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CONTANGO OIL & GAS COMPANY (A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
CUMULATIVE
TOTAL FROM
NINE MONTHS ENDED JULY 1, 1999
MARCH 31, (INCEPTION OF
-------------------------- DEVELOPMENT
2000 1999 STAGE)
------------- ----------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................... $ (686,959) $ (90,447) $ (686,959)
Depreciation, depletion and amortization ............... 8,308 -- 8,308
Exploration costs ...................................... 214,934 -- 214,934
Gain on sale of assets ................................. (67,187) -- (67,187)
Changes in operating assets and liabilities:
Increase in accounts receivable .................... (163,611) -- (163,611)
Increase in prepaid insurance ...................... (48,069) -- (48,069)
(Increase) decrease in advances and other .......... -- 5,335 --
Increase (decrease) in accounts payable ............ 53,192 (900) 53,192
Increase in preferred stock dividends payable ...... -- 22,669 --
Increase in accrued liabilities .................... 121,866 -- 121,866
----------- ----------- -------------
Net cash used in operating activities .............. (567,526) (63,343) (567,529)
----------- ----------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to proved properties ......................... (221,781) -- (221,781)
Additions to unproved properties ....................... (703,721) -- (703,721)
Exploration costs ...................................... (214,934) -- (214,934)
Additions to furniture and equipment ................... (17,046) -- (17,046)
Increase in advances to operators ...................... (3,019,053) -- (3,019,053)
Increase in payables for capital expenditures .......... 1,052,744 -- 1,052,744
Proceeds from sale of assets ........................... 143,231 -- 143,231
----------- ----------- -------------
Net cash used in investing activities .............. (2,980,560) -- (2,980,560)
----------- ----------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock and warrants .... 5,354,086 -- 5,354,086
Preferred stock dividends .............................. (75,565) -- (75,565)
----------- ----------- -------------
Net cash provided by financing activities .......... 5,278,521 -- 5,278,521
----------- ----------- -------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ................................... 1,730,435 (63,343) 1,730,435
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .............. 466,189 599,102 466,189
----------- ----------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD .................... $ 2,196,624 $ 495,759 $ 2,196,624
=========== =========== =============
</TABLE>
See notes to financial statements.
6
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CONTANGO OIL & GAS COMPANY (A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
Contango Oil & Gas Company is a development stage, independent energy
company engaged in the exploration for and production of oil and natural gas in
the United States. Contango is required to present its financial statements as a
development stage enterprise starting July 1, 1999 (the inception date of the
development stage).
Contango was incorporated as a Nevada corporation in August 1986 under
the name of Maple Enterprises, Inc. In 1988, Maple acquired and subsequently
merged into Warner Technologies, Inc., a private corporation. Warner provided
energy efficiency products and services including lighting retrofits, electrical
control systems for buildings and strategic energy planning services. At the
1998 annual stockholders' meeting, Warner stockholders approved an agreement to
sell the operating business and substantially all net operating assets,
effective as of December 31, 1997. Stockholders also voted to change the name of
the company from Warner Technologies, Inc. to MGPX Ventures, Inc.
As a result of the sale of assets, MGPX became a "shell" corporation
with no operations or business plan other than to seek to identify and complete
an acquisition, merger or other transaction that would enhance stockholder
value. To accomplish this, the board of directors appointed an interim president
and chief executive officer and instructed him (i) to register MGPX's common
stock under the Securities Exchange Act of 1934 in order to improve the
prospects for completing a transaction by being a reporting company and (ii) to
conduct a search for potential merger and acquisition candidates and other
business opportunities. On October 16, 1998, MGPX filed a registration statement
to register its common stock under the Exchange Act, and the registration
statement became effective on December 15, 1998.
After reviewing numerous potential merger and acquisition candidates
and business opportunities, the board unanimously approved a plan for MGPX to
hire new management and to enter the oil and natural gas resources business.
Accordingly, on July 26, 1999, the board accepted the resignation of the interim
president and appointed Kenneth R. Peak as president, chief executive officer,
secretary and director of the company. At the annual stockholders' meeting held
on September 28, 1999, stockholders voted to change the name of the company from
MGPX Ventures, Inc. to Contango Oil & Gas Company, elected a new board of
directors including Kenneth R. Peak, as president, chief executive officer and
chairman of the board, and increased the authorized number of shares of common
stock from 12,375,000 to 50,000,000. At the same time, our trading symbol on the
Nasdaq over-the-counter bulletin board changed from "MGPX" to "BTUX".
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND DEVELOPMENT STAGE ACCOUNTING
Basis of Presentation. The accompanying financial statements have been
prepared in conformity with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all normal,
recurring adjustments
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CONTANGO OIL & GAS COMPANY (A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
considered necessary for a fair presentation have been included. All such
adjustments are of a normal recurring nature. The financial statements should be
read in conjunction with the audited financial statements and notes thereto
included in MGPX's Form 10-KSB, as amended, for the year ended June 30, 1999.
The results of operations for the three and nine months ended March 31, 2000 are
not necessarily indicative of the results that may be expected for the year
ending June 30, 2000.
Development Stage Accounting. Contango is a development stage
enterprise engaged in the exploration for and production of oil and natural gas
in the United States. Since July 1, 1999, Contango has completed three small
producing property acquisitions and one small lease acquisition and has reported
only limited oil and natural gas revenues for the nine months ended March 31,
2000. For the period from July 1, 1999 through March 31, 2000, Contango incurred
cumulative losses of approximately $(687,000) and expects that these losses will
continue until it generates sufficient revenues from oil and natural gas
production, either through drilling activities or through acquisition of
producing properties, to cover operating and general and administrative costs.
As of March 31, 2000, Contango had cash and cash equivalents of
approximately $2.2 million. Additionally, Contango has approximately $2.6
million included in "Advances to Operators" to cover the costs to drill and
potentially complete four onshore exploratory wells in Jim Hogg and Brooks
Counties in south Texas. Based on current available capital resources,
management believes that it will be able to meet its commitments and fund its
operations over the next six to twelve months.
Contango is subject to several categories of risk associated with its
development stage activities. Oil and gas exploration and production is a
speculative business and involves a high degree of risk. Among the factors that
have a direct bearing on Contango's prospects are uncertainties inherent in
estimating oil and gas reserves and future hydrocarbon production and cash
flows, particularly with respect to wells that have not been fully tested and
with wells having limited production histories; access to additional capital;
changes in the price of oil and natural gas; availability and cost of services
and equipment; and the presence of competitors with greater financial resources
and capacity.
Net Loss per Share. Basic net loss per share is computed by dividing
the net loss attributable to common stock by the weighted-average number of
common shares outstanding. Diluted net loss per share is computed similar to
basic net loss per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if potential
common shares had been issued and if the additional common shares were dilutive.
Diluted net loss per share does not include potential common shares because such
shares are anti-dilutive for all periods presented.
Income Taxes. Contango accounts for income taxes under the asset and
liability method of accounting. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. A
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CONTANGO OIL & GAS COMPANY (A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
valuation allowance is required when it is more likely than not that the company
will not be able to realize all or a portion of its deferred tax assets.
Property, Plant and Equipment. In accounting for oil and gas property,
Contango follows the successful efforts method of accounting, capitalizing costs
of successful exploratory wells and expensing costs of unsuccessful exploratory
wells. Exploratory geological and geophysical costs are expensed as incurred.
All development costs are capitalized. The estimated undiscounted cost, net of
salvage value, of dismantling and removing major oil and gas production
facilities, including necessary site restoration, are accrued using the
unit-of-production method.
Other property and equipment is generally depreciated using the
straight-line method over estimated useful lives, which range from 5 to 7 years.
Repairs and maintenance are expensed, while renewals and betterments are
generally capitalized.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with the financial
statements and the accompanying notes and other information included elsewhere
in this Form 10-QSB and in our Form 10-KSB, previously filed with the Securities
and Exchange Commission.
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS AND INFORMATION
Statements made in this Form 10-QSB about our company may constitute
"forward-looking statements". The words and phrases "should be", "will be",
"believe", "expect", "anticipate" and similar expressions identify
forward-looking statements. We believe the expectations reflected in such
forward-looking statements are accurate. However, we cannot assure you that such
expectations will occur. These forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different from actual
future results expressed or implied by the forward-looking statements. You
should not unduly rely on these forward-looking statements in this report, as
they speak only as of the date of this report. Except as required by law, we are
not obligated to publicly release any revisions to these forward-looking
statements to reflect events or circumstances occurring after the date of this
report or to reflect the occurrence of unanticipated events.
GENERAL
We are a development stage, independent energy company engaged in the
exploration for and production of oil and natural gas in the United States. Our
development stage and our entry into the oil and natural gas business began on
July 1, 1999, when previous management approved a plan to hire new management
and enter the oil and natural gas exploration business. We did not produce any
oil or natural gas prior to November 1999. We currently have working interests
in 18 producing wells, as well as an approximate 2.4% limited partnership
interest in an oil and natural gas partnership and an ongoing exploration
program on approximately 65,000 acres in Jim Hogg and Brooks Counties in south
Texas.
Business Strategy. Our goal is to achieve profitability and create
value for our stockholders through oil and natural gas exploration and the
acquisition of proved properties. Our strategy to achieve our goal includes:
o Funding exploration prospects developed by highly qualified
geoscientists
o Negotiated acquisitions of proved properties
o Strict control of general and administrative and geological and
geophysical costs
o Using creative deal structures to access acreage, seismic,
prospects and capital
o Using equity ownership incentives to align the interests of our
management and our alliance partners with that of our stockholders
o Investing in a variety of energy industry entrepreneurial
opportunities
10
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Our principal focus is on the funding and drilling of exploratory
wells, primarily located in the onshore and offshore Gulf Coast area. Our
strategy is to keep overhead as low as possible by keeping employee levels low
and outsourcing geological, geophysical, engineering, land and operating
activities and as much of our administrative activities as possible. In
particular, we have outsourced all of our oil and natural gas prospect
generation and evaluation functions to our alliance partner, Juneau Exploration
Company, L.L.C. Through the structure of our arrangement, Juneau Exploration
bears the upfront overhead costs of performing these functions, allowing us to
concentrate our investment dollars on drilling. Additionally, Juneau Exploration
will participate in each transaction they recommend, and we have tied their cost
reimbursement and remuneration to their exploration successes and, to some
extent, to the impact those successes have on our common stock price. We believe
this shifting of risk and alignment of incentives are key to our profitability.
Oil and Natural Gas Exploration. Oil and natural gas exploration
requires significant outlays of capital. We believe we will be able to enhance
our chances for success by effectively using available technology, rigorously
evaluating sub-surface and regional data by effective risk analysis and capital
allocation and by managing dry hole, oil and natural gas price and financial
risks. In particular, Juneau Exploration maintains or has access to a large
database of 3-D seismic. They also have significant experience in processing,
interpreting and drilling wells based on 3-D seismic, which we believe will
allow them to generate high-quality exploratory prospects.
Acquisition of Oil and Natural Gas Reserves. We intend to target
negotiated acquisitions and to avoid more competitive bidding situations.
Nonetheless, we will likely always face some form of competition from companies
that in many instances are well established, successful and may frequently be
willing to pay more for properties than what we might consider prudent. Thus,
our success depends on the execution of our business model to quickly identify
promising opportunities, prioritize opportunities to focus on those situations
where we have the most potential for success, and negotiate creative deal
structures that, whenever possible, avoid the payment of more up-front cash than
competitors are willing to pay.
RESULTS OF OPERATIONS
The following is a discussion of the results of our operations for the
three and nine months ended March 31, 2000, compared to those for the three and
nine months ended March 31, 1999. The results of operations for the periods
ended March 31, 2000 are not directly comparable to results for the periods
ended March 31, 1999, as we had no operations from December 1997 until July
1999. In addition, we did not operate as an oil and natural gas exploration and
production company prior to July 1999. As a result, our financial statements
from the periods prior to June 30, 1999 are not correlative to our current
financial statements that reflect us operating as an oil and natural gas
exploration and production company. Furthermore, we incurred start-up costs in
the three and nine months ended March 31, 2000 as a result of our entry into the
oil and natural gas business.
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THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
Oil and Natural Gas Sales. We recorded oil and natural gas sales of
approximately $23,200 for the three months ended March 31, 2000. This was
attributable to production from our properties located in Wharton, Colorado and
Ft. Bend Counties in Texas.
Lease Operating Expense. For the three months ended March 31, 2000, we
recorded approximately $14,100 of lease operating expense. This was attributable
to operating expenses and workovers of producing properties located in Wharton,
Colorado and Ft. Bend Counties in Texas.
Exploration Costs. For the three months ended March 31, 2000, we
recorded approximately $126,000 of exploration costs. Of this amount, $125,000
was attributable to overhead reimbursement under an exploration agreement.
Depreciation, Depletion and Amortization. For the three months ended
March 31, 2000, we recorded approximately $6,300 of depreciation, depletion and
amortization. This primarily was attributable to depletion and amortization
related to our production in Wharton, Colorado and Ft. Bend Counties in Texas.
General and Administrative Expense. General and administrative expense
increased approximately $44,000, from approximately $40,500 for the three months
ended March 31, 1999 to approximately $84,500 for the three months ended March
31, 2000. This increase primarily was attributable to costs incurred in opening
our corporate office in Houston, Texas and commencing operations as an oil and
natural gas exploration and production company in July 1999.
Interest Expense. For the three months ended March 31, 2000, we
recorded approximately $7,600 of interest expense. This expense represents the
interest cost of financing the premiums on our various insurance policies.
Interest Income. Interest income increased approximately $51,800, from
approximately $5,300 for the three months ended March 31, 1999 to approximately
$57,100 for the three months ended March 31, 2000. Interest income was derived
from interest earned on our cash balances during the reporting periods. The
increase in interest income was due to the increase in cash balances resulting
from proceeds of equity offerings completed during the nine months ended March
31, 2000.
Gain on Sale of Assets. During the quarter ended March 31, 2000, we
recorded a gain of approximately $67,200 associated with the sale of
approximately 2,000 gross unproved leasehold acres in Shelby County in Texas.
NINE MONTHS ENDED MARCH 31, 2000 COMPARED TO NINE MONTHS ENDED MARCH 31, 1999
Oil and Natural Gas Sales. We recorded oil and natural gas sales of
approximately $29,600 for the nine months ended March 31, 2000. This was
attributable to production from our properties located in Wharton, Colorado and
Ft. Bend Counties in Texas.
12
<PAGE> 13
Lease Operating Expense. For the nine months ended March 31, 2000, we
recorded approximately $15,800 of lease operating expense. This was attributable
to operating expenses and workovers of producing properties located in Wharton,
Colorado and Ft. Bend Counties in Texas.
Exploration Costs. For the nine months ended March 31, 2000, we
recorded approximately $214,900 of exploration costs. This was primarily
attributable to overhead reimbursement under an exploration agreement.
Depreciation, Depletion and Amortization. For the nine months ended
March 31, 2000, we recorded approximately $8,300 of depreciation, depletion and
amortization. This was attributable to approximately $6,300 of depletion and
amortization related to our production in the Wharton, Colorado and Ft. Bend
Counties in Texas and to approximately $2,000 of depreciation of fixed assets,
primarily office equipment.
General and Administrative Expense. General and administrative expense
increased approximately $529,700, from approximately $86,300 for the nine months
ended March 31, 1999 to approximately $616,000 for the nine months ended March
31, 2000. This increase primarily was attributable to costs incurred in opening
our corporate office in Houston, Texas and commencing operations as an oil and
natural gas exploration and production company in July 1999. Major components of
general and administrative expense for the nine months ended March 31, 2000
include accounting and tax service, insurance, salaries and benefits, legal fees
and office administrative expense.
Interest Expense. For the nine months ended March 31, 2000, we recorded
approximately $7,600 of interest expense. This expense represents the interest
cost of financing the premiums on our various insurance policies.
Interest Income. Interest income increased approximately $60,400, from
approximately $18,500 for the nine months ended March 31, 1999 to approximately
$78,900 for the nine months ended March 31, 2000. Interest income was derived
from interest earned on our cash balances during the reporting periods. The
increase in interest income was due to the increase in cash balances resulting
from proceeds of equity offerings completed during the nine months ended March
31, 2000.
Gain on Sale of Assets. During the quarter ended March 31, 2000, we
recorded a gain of approximately $67,200 associated with the sale of
approximately 2,000 gross unproved leasehold acres in Shelby County in Texas.
LIQUIDITY
Since July 1999, we have funded our activities almost exclusively with
the proceeds from private placements of our common stock, raising approximately
$5.4 million.
We have drilled and recently completed an oil well on Eugene Island
Block 28, offshore in the Gulf of Mexico, with an approximate net cost to us of
$1.1 million. We have a 28.5% working interest in this well, and our initial net
production is approximately 100 barrels of oil and 300 thousand cubic feet of
natural gas per day. As part of our overall financial risk management, we have
purchased puts to hedge a portion of our anticipated oil production over the
next eight months. Additionally, over the next three to four months, we have
plans to spend approximately $235,000 on
13
<PAGE> 14
leasehold and 3-D seismic processing costs and approximately $1.3 million in dry
hole costs to drill four exploratory wells, representing phase one of our
ongoing exploration program on approximately 65,000 acres in south Texas. It
will cost an estimated additional $1.3 million to complete these wells if all
four are successful. We have escrowed approximately $2.6 million to cover the
costs to drill and potentially complete these wells, reducing our current level
of cash and cash equivalents as of early May 2000 to approximately $924,000.
In addition to the funds necessary to fulfill our obligations under our
exploration programs, we estimate that we will require approximately $1.0
million to fund general and administrative expenses over the next 12 months.
These estimates are subject to change depending on the success we have when we
drill our currently planned exploratory wells and on the number of new
transactions in which we become involved. If we are successful in our
65,000-acre south Texas onshore exploration activities, we believe we will have
a number of additional development wells and prospects available to drill, and
our need for additional capital to complete and develop wells will increase and
could increase substantially.
We believe that our cash on hand will be adequate to satisfy our
currently existing expenditure requirements to drill four exploratory wells
under phase one of our south Texas exploration program and our general corporate
needs over the next six to twelve months. We currently are seeking additional
equity to fund the expansion of our exploration program, general and
administrative costs and to take advantage of other opportunities that may
become available. The availability of such funds will depend upon prevailing
market conditions and other factors over which we have no control, as well as
our financial condition and results of operations. We cannot assure you that we
will have sufficient funds available to finance our intended exploration or
development programs or acquisitions or to successfully execute our business
plan.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The company is not a party to any legal proceedings.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the quarter as part of a recent private placement, Contango sold
95,333 shares of its common stock at a price of $0.75 per share for net proceeds
of $71,500. All of the purchasers were "accredited investors" as defined in Rule
501 of Regulation D of the Securities Act of 1933, and the issuance of the
securities was exempt from registration under Rule 506 of Regulation D.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
14
<PAGE> 15
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
The following is a list of exhibits filed as part of this Form 10-QSB.
Where so indicated by footnote, exhibits, which were previously filed, are
incorporated by reference.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -------------------------------------------------------------------
<S> <C>
3.1 Restated Articles of Incorporation of the company, as amended. (1)
3.2+ Amended and Restated By Laws of Contango.
3.3+ Amendment to Articles of Incorporation of Contango.
4.1 Facsimile of common stock certificate of the company. (1)
10.1 Alcorn/MGPX Oil & Gas Lease Acquisition Agreement. (2)
10.2 Agreement, dated effective as of September 1, 1999, between
Contango and Juneau Exploration, L.L.C. (2)
10.3 Securities Purchase Agreement between Contango and Trust Company of
the West, dated December 29, 1999. (3)
10.4 Warrant to Purchase Common Stock between Contango and Trust Company
of the West, dated December 29, 1999. (3)
10.5 Co-Sale Agreement among Kenneth R. Peak, Contango and Trust Company
of the West, dated December 29, 1999. (3)
27.1+ Financial Data Schedule.
</TABLE>
- -------------------------
+ Filed herewith.
(1) Included as an exhibit to the Company's Form 10-SB Registration
Statement, as filed with the Securities and Exchange Commission on
October 16, 1998.
(2) Filed as an exhibit to the Company's Form 10-QSB for the quarter
ended June 30, 1999, as filed with the Securities and Exchange
Commission on November 11, 1999.
(3) Filed as an exhibit to the Company's Form 10-QSB for the quarter
ended December 31, 1999, as filed with the Securities and Exchange
Commission on February 14, 2000.
(b) REPORTS ON FORM 8-K:
The Company did not file any reports on Form 8-K during the quarter
ended March 31, 2000.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
CONTANGO OIL & GAS COMPANY
Date: May 10, 2000 By: /s/ KENNETH R. PEAK
-------------------------------------------
Kenneth R. Peak
President and Chief Executive Officer
(Principal Executive and Financial Officer)
16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -------------------------------------------------------------------
<S> <C>
3.1 Restated Articles of Incorporation of the company, as amended. (1)
3.2+ Amended and Restated By Laws of Contango.
3.3+ Amendment to Articles of Incorporation of Contango.
4.1 Facsimile of common stock certificate of the company. (1)
10.1 Alcorn/MGPX Oil & Gas Lease Acquisition Agreement. (2)
10.2 Agreement, dated effective as of September 1, 1999, between
Contango and Juneau Exploration, L.L.C. (2)
10.3 Securities Purchase Agreement between Contango and Trust Company of
the West, dated December 29, 1999. (3)
10.4 Warrant to Purchase Common Stock between Contango and Trust Company
of the West, dated December 29, 1999. (3)
10.5 Co-Sale Agreement among Kenneth R. Peak, Contango and Trust Company
of the West, dated December 29, 1999. (3)
27.1+ Financial Data Schedule.
</TABLE>
- -------------------------
+ Filed herewith.
(1) Included as an exhibit to the Company's Form 10-SB Registration
Statement, as filed with the Securities and Exchange Commission on
October 16, 1998.
(2) Filed as an exhibit to the Company's Form 10-QSB for the quarter
ended June 30, 1999, as filed with the Securities and Exchange
Commission on November 11, 1999.
(3) Filed as an exhibit to the Company's Form 10-QSB for the quarter
ended December 31, 1999, as filed with the Securities and Exchange
Commission on February 14, 2000.
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
CONTANGO OIL & GAS COMPANY
ARTICLE I
Meetings of Shareholders
Section 1. Annual Meeting. The annual meeting of the shareholders of
this Company, for the purpose of fixing or changing the number of directors of
the Company, electing directors and transacting such other business as may come
before the meeting, shall be held within 180 days of the Company's fiscal year,
on such date, at such time and at such place as may be designated by the Board
of Directors.
Section 2. Special Meetings. Special meetings of the shareholders may
be called at any time by the president or a vice-president or a majority of the
Board of Directors acting with or without a meeting, or the holder or holders of
one-half of all the shares outstanding and entitled to vote thereat.
Section 3. Place of Meetings. Meetings of shareholders shall be held at
the principal office of the Company, unless the Board of Directors decides that
a meeting shall be held at some other place and causes the notice thereof to so
state.
Section 4. Notices o Meetings. Unless waived, a written, printed, or
typewritten notice of each annual or special meeting, stating the day, hour and
place and the purpose of purposes thereof shall be served upon or mailed to each
shareholder of record entitled to vote or entitled to notice, not more than
sixty (60) days nor less than ten (10) days before any such meeting. If mailed,
it shall be directed to a shareholder at his or her address as the same appears
on the records of the Company. If a meeting is adjourned to another time and
place, notice as to such adjourned meeting shall be reissued and shall meet the
requirements otherwise set forth in this Section 4. In the event of a transfer
of shares after notice has been given and prior to the holding of the meeting,
it shall not be necessary to serve notice on the transferee. Nothing herein
contained shall prevent the setting of a record date in the manner provided by
law for the determination of the shareholders who are entitled to receive notice
of or to vote at any meeting of shareholders or for any purpose permitted by
law.
Section 5. Waiver of Notice. Notice of the time, place and purpose of
any meeting of shareholders may be waived in writing, either before or after the
holding of such meeting, by any shareholder.
Section 6. Determination of Stockholders of Record.
(a) For the purpose of determining the stockholders entitled to notice
of and to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any distribution or the allotment of any rights, or entitled
to exercise any rights in respect of any change, conversion, or exchange of
stock or for the purpose of any other lawful action, the directors may fix, in
<PAGE> 2
advance, a record date, which shall not be more than sixty (60) days nor less
than ten (10) days before the date of such meeting, nor more than sixty (60)
days prior to any other action.
(b) If no record date is fixed, the record date for determining
stockholders: (i) entitled to notice of and to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the day on which
notice is given, or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held; (ii) entitled to express
consent to corporate action in writing without a meeting shall be the day on
which the first written consent is expressed; and (iii) for any other purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto. A determination of stockholders of
record entitled to notice of or to vote at any meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
Section 7. Quorum. At any meeting of shareholders, the holders of a
majority in amount of the shares of the Company then outstanding and entitled to
vote thereat, present in person or represented by proxy, shall constitute a
quorum for such meeting but no action required by law, the Articles of
Incorporation or these Bylaws to be authorized or taken by the holders of a
designated proportion of the shares of any particular class, or of each class,
may be authorized or taken by a lesser proportion. The holders of a majority of
the voting shares represented at a meeting in person or by proxy may adjourn
such meeting from time to time, and at such adjourned meeting any business may
be transacted as if the meeting had been held as originally called. When a
stockholders' meeting is adjourned to another time or place hereunder, notice
shall be given in accordance with Section 4 hereof. The stockholders present at
a duly convened meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum of the voting power.
Section 8. Organization. At each meeting of the shareholders, the
president, or, in the absence of the president, a chairman chosen by a majority
in interest of the shareholders present in person or by proxy and entitled to
vote, shall act as chairman, and the secretary of the Company, or, if the
secretary of the Company not be present, the assistant secretary, or if the
secretary and the assistant secretary not be present, any person whom the
chairman of the meeting shall appoint, shall act as secretary of the meeting.
Section 9. Shareholders Entitled to Vote. (a)Unless otherwise provided
in the Articles of Incorporation, every shareholder of record shall be entitled
at each meeting of shareholders to one vote for each share standing in his name
on the books of the Company.
(b) Except as otherwise provided herein, all votes with respect to
shares standing in the name of an individual on the record date (included
pledged shares) shall be cast only by that individual or such individual's duly
authorized proxy, attorney-in-fact, or voting trustee(s) pursuant to a voting
trust. With respect to shares held by a representative of the estate of a
deceased stockholder, guardian, conservator, custodian or trustee, votes may be
cast by such holder upon proof of capacity, even though the shares do not stand
in the name of such holder. In the case of shares under the control of a
receiver, the receiver may cast votes carried by such shares even though the
shares do not stand in the name of the receiver; provided, that the order of the
court of competent jurisdiction which appoints the receiver contains the
authority to cast
2
<PAGE> 3
votes carried by such shares. If shares stand in the name of a minor, votes may
be cast only by the duly appointed guardian of the estate of such minor if such
guardian has provided the corporation with written proof of such appointment.
(c) With respect to shares standing in the name of another corporation,
partnership, limited liability company or other legal entity on the record date,
votes may be cast: (i) in the case of a corporation, by such individual as the
bylaws of such other corporation prescribe, by such individual as may be
appointed by resolution of the board of directors of such other corporation or
by such individual (including the officer making the authorization) authorized
in writing to do so by the chairman of the board of directors, president or any
vice-president of such corporation and (ii) in the case of a partnership,
limited liability company or other legal entity, by an individual representing
such stockholder upon presentation to the corporation of satisfactory evidence
of his authority to do so.
(d) Notwithstanding anything to the contrary herein contained, no votes
may be cast for shares owned by this corporation or its subsidiaries, if any. If
shares are held by this corporation or its subsidiaries, if any, in a fiduciary
capacity, no votes shall be cast with respect thereto on any matter except to
the extent that the beneficial owner thereof possesses and exercises either a
right to vote or to give the corporation holding the same binding instructions
on how to vote.
(e) Any holder of shares entitled to vote on any matter may cast a
portion of the votes in favor of such matter and refrain from casting the
remaining votes or cast the same against the proposal, except in the case of
elections of directors. If such holder entitled to vote fails to specify the
number of affirmative votes, it will be conclusively presumed that the holder is
casting affirmative votes with respect to all shares held.
(f) With respect to shares standing in the name of two or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in common,
husband and wife as community property, tenants by the entirety, voting
trustees, persons entitled to vote under a stockholder voting agreement or
otherwise and shares held by two or more persons (including proxy holders)
having the same fiduciary relationship in respect to the same shares, votes may
be cast in the following manner:
(i) If only one person votes, the vote of such person binds
all.
(ii) If more than one person casts votes, the act of the
majority so voting binds all.
(iii) If more than one person casts votes, but the vote is
evenly split on a particular matter, the votes shall be deemed
cast proportionately, as split.
(g) If a quorum is present, unless the Articles of Incorporation
provide for a different proportion, the affirmative vote of holders of at least
a majority of the voting power represented at the meeting and entitled to vote
on any matter shall be the act of the stockholders, unless
3
<PAGE> 4
voting by classes is required for any action of the stockholders by the laws of
the State of Nevada, the Articles of Incorporation or these Bylaws, in which
case the affirmative vote of holders of a least a majority of the voting power
of each such class shall be required.
Section 10. Shareholder Voting. At each meeting of the shareholders for
the election of directors at which a quorum is present, the persons receiving
the greatest number of votes shall be the directors. Such election may be by
ballot or viva voce, as the shareholders may determine. All other questions
shall be determined by a majority vote of the shares entitled to vote and
represented at the meeting in person or by proxy, unless for any particular
purpose the vote of a greater proportion of the shares, or of any particular
class of shares, or of each class, is otherwise required by law, the Articles of
Incorporation or these Bylaws.
Section 11. Proxies. At meetings of the shareholders any shareholder of
record entitled to vote thereat may be represented and may vote by a proxy or
proxies appointed by an instrument in writing, but such instrument shall be
filed with the secretary of the meeting before the person holding such proxy
shall be allowed to vote thereunder. No proxy shall be valid after the
expiration of six (6) months after the date of its execution, unless coupled
with an interest of the shareholder executing it shall have specified therein
the length of time it is to continue in force, which in no case shall exceed
seven (7) years from the date of its execution. Every proxy shall continue in
full force and effect until its expiration or revocation in a manner permitted
by the laws of the State of Nevada.
Section 12. Order of Business and Procedure. The order of business at
all meetings of the shareholders and all matters relating to the manner of
conducting the meeting shall be determined by the chairman of the meeting, whose
decisions may be overruled only by majority vote of the shareholders present and
entitled to vote at the meeting in person or by proxy. Meetings shall be
conducted in a manner designed to accomplish the business of the meeting in a
prompt and orderly fashion and to be fair and equitable to all shareholders, but
it shall not be necessary to follow any manual of parliamentary procedure.
Section 13. Business to be Conducted at Meeting. At an annual or
special meeting of the stockholders, only such business shall be conducted as
shall have been properly brought before the meeting. To be properly brought
before a meeting, business must be (a) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the board of directors,
(b) brought before the meeting by or at the direction of the board of directors,
(c) properly brought before an annual meeting by a stockholder, or (d) if, and
only if, the notice of a special meeting provides for business to be brought
before the meeting by stockholders, properly brought before the meeting by a
stockholder who is a stockholder of record at the time of serving of the notice
pursuant to Section 4, who shall be entitled to vote at such meeting and who
complies with the notice procedures set forth in this Section 13. For business
to be properly brought before a meeting by a stockholder pursuant to the
preceding clauses (c) or (d), the stockholder must have given timely notice
thereof in writing to the secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive office of the corporation not less than thirty-five (35)
days prior to the meeting; provided, however, that in the event less than
forty-five (45) days, notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the fifth (5th) day following the day on
which
4
<PAGE> 5
such notice of the date of the meeting was mailed or such disclosure was made. A
stockholder's notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the meeting (a) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting, (b) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business, and the name
and address of the beneficial owner, if any, on whose behalf the proposal is
made, (c) the class and number of shares of the corporation which are owned
beneficially and of record by such stockholder of record and the beneficial
owner, if any, on whose behalf of the proposal is made, and (d) any material
interest of such stockholder of record and the beneficial owner, if any, on
whose behalf the proposal is made in such business. Notwithstanding anything in
the Bylaws to the contrary, no business shall be conducted at a meeting except
in accordance with the procedures set forth in this Section 13. Notwithstanding
the foregoing provisions of this Section 13, a stockholder shall also comply
with all applicable requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder with respect to the matters
set forth herein.
ARTICLE II
Board of Directors
Section 1. General Powers of Board. The powers of the Company shall be
exercised, its business and affairs conducted, and its property controlled by
the Board of Directors, except as otherwise provided by the law of Nevada or in
the Articles of Incorporat1on.
Section 2. Number and Qualification. The number of directors of the
Company, none of whom need be shareholders or residents of Nevada, shall be at
least three (3) and not more than seven (7). Subject to the foregoing
limitations, without amendment of these Bylaws, the number of directors may be
fixed or changed by resolution adopted by the vote of the majority of directors
in office or by the vote of holders of shares representing a majority of the
voting power at any annual meeting, or any special meeting called for that
purpose; but no reduction of the number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
Section 3. Nomination of Directors. Nominations for the election of
directors may be made by the board of directors, by a committee appointed by the
board of directors, or by any stockholder of record at the time of giving of
notice as provided for herein. However, any stockholder entitled to vote in the
election of directors as provided herein may nominate one or more persons for
election as directors at a meeting only if written notice of such stockholder's
intent to make such nomination or nominations has been timely delivered to or
mailed and received by the secretary of the corporation. Such notice shall
include (i) a representation that the stockholder is a holder of record of stock
of the corporation entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified in
the notice; (ii) the class and number of shares of the Company which are
beneficially owned by such stockholder and also which are owned of record by
such stockholder; (iii) as to the beneficial owner, if any, on whose behalf the
nomination is made, (y) the name and address of such person and (z) the class
and number of shares of the Company which are beneficially owned by such person;
(iv) a description of all arrangements or understandings between the
5
<PAGE> 6
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder; (v) such other information regarding each nominee proposed by
such stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission, had such
nominee been nominated, or intended to be nominated, by the Board of Directors;
and (vi) the written consent of each nominee to serve as a director of the
corporation if so elected. At the request of the Board of Directors, any person
nominated by the Board of Directors for election as a director shall furnish to
the secretary of the corporation, that information required to be set forth in a
stockholder's notice of nomination which pertains to the nominee. The presiding
officer of the meeting may refuse to acknowledge the nomination of any person
not made in compliance with the foregoing procedure.
Section 4. Term of Office. Unless he shall earlier resign, be removed
as hereinafter provided, die, or be adjudged mentally incompetent, each director
shall hold office until the sine die adjournment of the annual meeting of
shareholders for the election of directors next succeeding his election, or the
taking by the shareholders of an action in writing in lieu of such meeting, or,
if for any reason the election of directors shall not be held at such annual
meeting or any adjournment thereof, until the sine die election of directors
held thereafter as provided for in Section 1 of Article I of these Bylaws, or
the taking by the shareholders of an action in writing in lieu of such meeting,
and until his successor is elected and qualified.
Section 5. Removal. Any director may be removed without cause at any
special meeting of shareholders called for such purpose by the vote of the
holders of sixty-six and two-thirds (66 2/3%) of the voting power entitling them
to elect directors in place of those to be removed, voting as a single class. In
case of any such removal, a new director may be elected at the same meeting for
the unexpired term of each director removed. Failure to elect a director to
fulfill the unexpired term of any director removed shall be deemed to create a
vacancy in the Board. The terms of this Section 5 are subject to any contractual
provisions binding on the Company from time to time, and such contractual
provisions shall control to the extent they conflict with the terms hereof.
Section 6. Resignations. Any director of the company may resign at any
time by giving written notice to the president or the secretary of the Company.
Such resignation shall take effect at the time specified therein, and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 7. Vacancies. Vacancies in the Board of Directors may be filled
by a majority vote of the remaining directors, even though they be less than a
quorum of the entire number of directors constituting a full Board, until an
election to fill such vacancies is had. Within the meaning of this Section, a
vacancy exists if the board of directors increases the authorized number of
directors or if the shareholders increase the authorized number of directors but
fail at the meeting at which such increase is authorized, or an adjournment
thereof, to elect the additional directors provided for, or if the shareholders
fail at any time to elect the whole authorized number of directors. Any director
elected under the provisions of this Section 6 shall serve until the next annual
election of directors and until their successors are elected and qualified.
6
<PAGE> 7
Section 8. Meetings. (a) The directors shall hold such meetings from
time to time as they may deem necessary and such meetings as may from time to
time be called by the president or the chairman of the board. Meetings shall be
held at the principal office of the Company or at such other place within or
without the State of Nevada as the president or a majority of the directors may
determine. A regular meeting of the Board of Directors shall be held each year
at the same place as and immediately after the annual meeting of shareholders.
At its regular annual meeting, the Board of Directors shall organize itself and
elect the officers of the Company for the ensuing year, and may transact any
other business.
(b) Members of the Board of Directors or of any committee
designated by the Board of Directors may participate in a meeting of the Board
of Directors or committee by means of a telephone conference or similar method
of communication by which all persons participating in such meeting can hear
each other. Participating in a meeting pursuant to this Section 8(b) constitutes
presence in person at the meeting.
Section 9. Notice of Meetings. Notice of each special meeting or, where
required, each regular meeting, of the Board of Directors shall be given to each
director either by being mailed, telegraphed or given personally or by telephone
on at least the third day prior to the date of the meeting. Such notice shall
specify the date and time of the meeting, the purpose or purposes for which the
meeting is called. At any meeting of the Board of Directors at which every
director shall be present, even though without such notice, any business may be
transacted. Any acts or proceedings taken at a meeting of the Board of Directors
not validly called or constituted may be made valid and fully effective by
ratification at a subsequent meeting which shall be legally and validly called
or constituted. Notice of any regular meeting of the Board of Directors need not
state the purpose of the meeting and, at any regular meeting duly held, any
business may be transacted. If the notice of a special meeting shall state as a
purpose of the meeting the transaction of any business that may come before the
meeting, then at the meeting any business may be transacted, whether or not
referred to in the notice thereof. A written waiver of notice of a special or
regular meeting, signed by the person or person entitled to such notice, whether
before or after the time stated therein shall be deemed the equivalent of such
notice, and attendance of a director at a meeting shall constitute a waiver of
notice of such meeting except when the director attends the meeting and prior to
or at the commencement of such meeting protests the lack of proper notice.
Section 10. Quorum and Voting. At all meetings of the directors fifty
percent of all of the authorized directors of the company shall constitute a
quorum, but less than fifty percent of the authorized directors may adjourn a
meeting of the directors from time to time, and at adjourned meetings any
business may be transacted as if the meeting had been held as originally called.
The act of a majority of Directors present at any meeting at which there is a
quorum shall be the at of the Board of Directors, except as otherwise provided
by law, the Articles of Incorporation or these Bylaws.
Section 11. Action Without Meeting. Any action required or permitted to
be taken at a meeting of the Board of Directors or of a committee thereof may be
taken without a meeting if, before or after the action, a written consent
thereto is signed by all of the members of the Board of Directors or the
committee. The written consent may be signed in counterparts and must be filed
with the minutes of the proceedings of the Board of Directors or committee.
7
<PAGE> 8
Section 12. Compensation. Directors shall be entitled to receive for
services and expenses such reasonable compensation as the Board of Directors may
determine by affirmative vote of a majority of those directors in office. The
Board of Directors may also delegate its authority to establish reasonable
compensation for directors to one or more officers or directors by an
affirmative vote of a majority of those directors in office. Any vote taken by
the Board of Directors with respect to director compensation shall be effective
irrespective of the financial or personal interest of any of the directors
involved.
Powers and Duties. (a) Except as otherwise restricted in the laws of
the State of Nevada or the Articles of Incorporation, the Board of Directors has
full control over the affairs of the corporation. The Board of Directors may
delegate any of its authority to manage, control or conduct the business of the
corporation to any standing or special committee or to any officer or agent and
to appoint any persons to be agents of the corporation with such powers,
including the power to subdelegate, and upon such terms as may be deemed fit.
(b) The Board of Directors may present to the stockholders at annual
meetings of the stockholders, and when called for by a majority vote of the
stockholders at an annual meeting or a special meeting of the stockholders shall
so present, a full and clear report of the condition of the corporation.
(c) The Board of Directors, in its discretion, may submit any contract
or act for approval or ratification at any annual meeting of the stockholders or
any special meeting properly called for the purpose of considering any such
contract or act, provided a quorum is present.
(d) The Board of Directors may, by resolution passed by a majority of
the whole board, designate one or more committees, each committee to consist of
one or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence of
disqualification of a member of a committee, the member of members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Subject to applicable law and to the extent provided in the resolution
of the board of directors, any such committee shall have and may exercise all
the powers of the board of directors in the management of the business and
affairs of the corporation. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the board
of directors. The committees shall keep regular minutes of their proceedings and
report the same to the board when required.
8
<PAGE> 9
ARTICLE III
Officers
Section 1. General Provisions. The officers of the Company shall be a
president, such number of vice-presidents as the Board may from time to time
determine, a secretary, a treasurer and such other officers as the directors may
elect. The Company may also have, at the discretion of the Board of Directors, a
Chairman of the Board or Vice Chairman who shall have the duties prescribed by
the Board of Directors. Except as specifically provided in these Bylaws, the
directors shall determine the duties and term of each of the officers of the
Company and shall be responsible for the designation of the Company's chief
executive officer. Officers need not be shareholders of the Company and may be
paid such compensation as the Board of Directors may determine. Any person may
hold any two or more officers and perform the duties thereof. If one person is
chosen to hold the offices of secretary and treasurer, he shall be known as
secretary-treasurer if one person be elected to both of these offices.
Section 2. Election, Term of Office, and Qualification. The officers of
the Company named in Section 1 of this Article III shall be elected by a
majority of the Board of Directors present and constituting a quorum for an
indeterminate term and shall hold office during the pleasure of the Board of
Directors. The qualifications of all officers shall be such as the Board of
Directors may see fit to impose.
Section 3. Additional Officers, Agents, etc. In addition to the
officers mentioned in Section I of this Article III, the Company may have such
other officers, committees, agents, and factors as the Board of Directors may
deem necessary and may appoint, each of whom or each member of which shall hold
office for such period, have such authority, and perform such duties as may be
provided in these Bylaws, or as the Board of Directors may from time to time
determine. The Board of Directors may delegate to any officer or committee the
power to appoint any subordinate officers, committees, agents or factors. In the
absence of any officer of the Company, or for any other reason the Board of
Directors may deem sufficient, the Board of Directors may delegate, for the time
being, the powers and duties, or any of them, of such officer to any other
officer, or to any director.
Section 4. Removal. Any officer of the Company may be removed either
with or without cause, at any time, by resolution adopted by the Board of
Directors at any meeting of the Board, the notices (or waivers of notice) of
which shall have specified that such removal action was to be considered. Any
officer appointed not by the Board of Directors but by an officer of committee
to which the Board shall have delegated the power of appointment may be removed,
with or without cause, by the committee or superior officer (including
successors) who made the appointment, or by any committee or officer upon whom
such power of removal may be conferred by the Board of Directors.
Section 5. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors, or to the president, or to the
secretary of the Company. Any such resignation shall take effect at the time
specified therein, and unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
9
<PAGE> 10
Section 6. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, shall be filled in the
manner prescribed in these Bylaws for regular appointments or elections to such
office.
ARTICLE IV
Duties of the Officers
Section 1. The President. The president shall manage and have general
supervision over the business of the Company and over its several officers,
subject, however, to the control of the Board of Directors. He shall, if
present, preside at all meetings of shareholders and of the Board of Directors.
He shall see that all orders and resolutions of the Board of Directors are
carried into effect, and shall from time to time report to the Board of
Directors all matters within his knowledge which the interests of the
corporation may require to be brought to the notice of the Board. He may sign
with the secretary, the treasurer, or any other proper officer of the company
thereunto authorized by the Board of Directors, certificates for share in the
Company. He may sign, execute and deliver in the name of the Company all deeds,
mortgages, bonds, contracts, or other instruments either when specially
authorized by the Board of Directors or when required or deemed necessary or
advisable by him in the ordinary conduct of the Company's normal business,
except in cases where the signing and execution thereof shall be expressly
delegated by these Bylaws to some other officer or agent of the Company or shall
be required by law or otherwise to be signed or executed by some other officer
or affixed to any instrument requiring the same; and, in general, perform all
duties as from time to time may be assigned to him by the Board of Directors. In
case the president for any reason shall be unable to attend to any of his
duties, such duties may be performed by a vice-president of the Company.
Section 2. Vice-Presidents. The vice-presidents shall perform such
duties as are conferred upon them by these Bylaws or as may from time to time be
assigned to them by the Board of Directors or the president. At the request of
the president (or in his or her absence or disability, the vice-president
designated by the Board) shall perform all the powers of the president. The
authority of vice-presidents to sign in the name of the Company all certificates
for shares and authorized deeds, mortgages, bonds, contracts, notes and other
instruments, shall be coordinate with like authority of the president.
Section 3. The Treasurer. The treasurer shall:
(a) Have charge and custody of, and be responsible for, all funds,
securities, notes, contracts, deeds, documents, and all other indicia of title
in the Company and valuable effects of the Company; receive and give receipts
for moneys due and payable to the name of the Company in such banks, trust
companies, or other depositories as shall be selected by or pursuant to the
directions of the Board of Directors; cause such funds to be discharged by
checks or drafts on the authorized depositories of the Company, signed as the
Board of Directors may require; and be responsible for the accuracy of the
amounts of, and cause to be preserved proper vouchers for, all moneys to be
disbursed;
10
<PAGE> 11
(b) Have the right to require from time to time reports or statements
giving such information as he may desire with respect to any and all financial
transactions of the Company from the officers or agents transacting the same;
(c) Keep or cause to be kept at the principal office or such other
office or offices of the Company as the Board of Directors shall from time to
time designate correct records of the business and transactions of the Company
and exhibit such records to any of the directors of the Company upon application
at such office;
(d) Have charge of the audit and statistical departments of the
Company;
(e) Render to the president or the Board of Directors whenever they
shall require him so to do an account of the financial condition of the company
and of all his transactions as treasurer and as soon as practicable after the
close of each fiscal year, make and submit to the Board of Directors a like
report for such fiscal year; and
(f) Exhibit at all reasonable times his cash books and other records to
any of the directors of the Company upon application.
Section 4. The Secretary. The secretary shall:
(a) Keep the minutes of all meetings of the shareholders and of the
Board of Directors in one or more books provided for that purpose;
(b) See that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law;
(c) Be custodian of the corporate records and, if one is provided, of
the seal of the Company, and see that such seal is affixed to all certificates
for shares prior to the issue thereof and to all other documents to which the
seal is required to be affixed and the execution of which on behalf of the
Company under its seal is duly authorized in accordance with the provisions of
these Bylaws;
(d) Have charge, directly or through such transfer agent or transfer
agents and registrar or registrars as the Board of Directors shall appoint, of
the issue, transfer and registration of certificates for shares in the Company
and of the records thereof, such records to be kept in such manner as to show at
any time the number of shares in the Company issued and outstanding, the manner
in which and time when such stock was paid for, the names and addresses of the
holders of record thereof, the number of classes of shares held by each, and the
time when each became such holder of record;
(e) Exhibit at all reasonable times to any directors, upon application,
the aforesaid records of the issue, transfer, and registration of such
certificates;
(f) Sign (or see that the treasurer or other proper officer of the
Company thereunto authorized by the Board of Directors shall sign), with the
president or vice-president, certificates for shares in the Company;
11
<PAGE> 12
(g) See that the books, reports, statements, certificates, and all
other documents and records required by law are properly kept and filed; and
(h) In general, perform all duties incident to the office of secretary,
he shall perform such duties as are conferred upon him by the officers of the
Company, or the Board of Directors, and in the absence or the inability of the
secretary to act, shall perform all the duties of the secretary and when so
acting shall have all the powers of the secretary.
In the event the Board of Directors shall elect an assistant secretary,
he shall perform such duties as are conferred upon him by the officers of the
Company, or the Board of Directors, and in the absence or inability of the
secretary to act, shall perform all the duties of the secretary and when so
acting shall have all the powers of the secretary.
ARTICLE V
Indemnification of Directors and Officers
Section 1. Indemnification and Insurance
(a) Indemnification of Directors and Officers.
(i) For purposes of this Article, (A) "Indemnitee" shall mean
each director or officer who was or is a party to, or is threatened to be made a
party to, or is otherwise involved in, any Proceeding (as hereinafter defined),
by reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving in any capacity at the request of the
corporation as a director, officer, employee, agent, partner, or fiduciary of,
or in any other capacity for, another corporation or any partnership, joint
venture, trust, or other enterprise; and (B) "Proceeding" shall mean any
threatened, pending or completed action or suit (including without limitation an
action, suit or proceeding by or in the right of the corporation), whether
civil, criminal, administrative or investigative.
(ii) Each Indemnitee shall be indemnified and held harmless by the
corporation for all actions taken by him or her and for all omissions
(regardless of the date of any such action or omission), to the fullest extent
permitted by Nevada law, against all expense, liability and loss (including
without limitation attorneys' fees, judgments, fines, taxes, penalties, and
amounts paid or to be paid in settlement) reasonably incurred or suffered by the
Indemnitee in connection with any Proceeding.
(iii) Indemnification pursuant to this Section shall continue as to
an Indemnitee who has ceased to be a director or officer and shall inure to the
benefit of his or her heirs, executors and administrators.
(b) Indemnification of Employees and Other Persons.
The corporation may, by action of its Board of Directors and to the
extent provided in such action, indemnify employees and other persons as though
they were Indemnitees.
12
<PAGE> 13
(c) Non-Exclusivity of Rights.
The rights to indemnification provided in this Article shall not be
exclusive of any other rights that any person may have or hereafter acquire
under any statute, provision of the corporation's Articles of Incorporation or
Bylaws, agreement, vote of stockholders or directors, or otherwise.
(d) Insurance.
The corporation may purchase and maintain insurance or make other
financial arrangements on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise for any
liability asserted against him or her and liability and expenses incurred by him
or her in his or her capacity as a director, officer, employee or agent, or
arising out of his or her status as such, whether or not the corporation has the
authority to indemnify him or her against such liability and expenses.
(e) Other Financial Arrangements.
The other financial arrangements which may be made by the corporation
may include the following (i) the creation of a trust fund; (ii) the
establishment of a program of self-insurance; (iii) the securing of its
obligation of indemnification by granting a security interest or other lien on
any assets of the corporation; (iv) the establishment of a letter of credit,
guarantee or surety. No financial arrangement made pursuant to this subsection
may provide protection for a person adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable for
intentional misconduct fraud, or a knowing violation of law, except with respect
to advancement of expenses or indemnification ordered by a court.
(f) Other Matters Relating to Insurance or Financial Arrangements.
Any insurance or other financial arrangement made on behalf of a person
pursuant to this section may be provided by the corporation or any other person
approved by the Board of Directors, even if all or part of the other person's
stock or other securities is owned by the corporation. In the absence of fraud:
(i) the decision of the Board of Directors as to the propriety
of the terms and conditions of any insurance or other financial arrangement made
pursuant to this section and the choice of the person to provide the insurance
or other financial arrangement is conclusive; and
(ii) the insurance or other financial arrangement:
(A) is not void or voidable; and
(B) does not subject any director approving it to personal
liability for his action,
13
<PAGE> 14
even if a director approving the insurance or other financial arrangement is a
beneficiary of the insurance or other financial arrangement.
Section 2. Amendment. The provisions of this Article relating to
indemnification shall constitute a contract between the corporation and each of
its directors and officers which may be modified as to any director or officer
only with that person's consent or as specifically provided in this Section.
Notwithstanding any other provision of these Bylaws relating to their amendment
generally, any repeal or amendment of this Article which is adverse to any
director or officer shall apply to such director or officer only on a
prospective basis and shall not limit the rights of an Indemnitee to
indemnification with respect to any action or failure to act occurring prior to
the time of such repeal or amendment. Notwithstanding any other provision of
these Bylaws, no repeal or amendment of these Bylaws shall affect any or all of
this Article so as to limit or reduce the indemnification in any manner unless
adopted by (a) the unanimous vote of the directors of the corporation then
serving, or (b) by the stockholders as set forth in Article VI hereof; provided
that no such amendment shall have retroactive effect inconsistent with the
preceding sentence.
Section 3. Changes in Nevada Law. References in this Article to Nevada
law or to any provision thereof shall be to such law as it existed on the date
this Article was adopted or as such law thereafter may be changed; provided that
(a) in the case of any change which expands the liability of directors or
officers or limits the indemnification rights or the rights to advancement of
expenses which the corporation may provide, the rights to limited liability, to
indemnification and to the advancement of expenses provided in the corporation's
Articles of Incorporation and/or these Bylaws shall continue as theretofore to
the extent permitted by law; and (b) if such change permits the corporation,
without the requirement of any further action by stockholders or directors, to
limit further the liability of directors (or limit the liability of officers) or
to provide broader indemnification rights or rights to the advancement of
expenses than the corporation was permitted to provide prior to such change,
then liability thereupon shall be so limited and the rights to indemnification
and the advancement of expenses shall be so broadened to the extent permitted by
law.
ARTICLE VI
Amendment of Bylaws
Section 1. Amendment or Repeal. These Bylaws may be amended or added
to, or repealed and superseded by new Bylaws, at any annual or special meeting
of shareholders in the notice (or waivers of notice) of which the intention to
consider such amendment, addition, or repeal is stated, by the affirmative vote
of at least sixty-six and two-thirds percent (66 2/3%) of the combined voting
power of all the then outstanding shares of capital stock entitled to vote
including those provisions relating to the number of directors, the filling of
vacancies on the Board of Directors, the prohibition of shareholder action
without a meeting, the indemnification of directors, officers and others, the
limitation of liability of the directors and the super majority voting
requirements of the Bylaws. These Bylaws may also be amended by the affirmative
vote of at least two-thirds of the members of the Board of Directors.
14
<PAGE> 15
Section 2. Additional Bylaws. Additional bylaws not inconsistent
herewith may be adopted by a majority of the board of directors. Any bylaws so
adopted shall be subject to alteration, amendment or repeal in accordance with
Section 8.01 of these Bylaws.
ARTICLE VII
Shares and Their Transfer
Section 1. Certificate for Shares. Every owner of one or more shares in
the Company shall be entitled to a certificate, which shall be in such form as
the Board of Directors shall prescribe, certifying the number and class of
paid-up shares in the Company owned by him. The certificates for the respective
classes of such shares shall be numbered in the order in which they shall be
issued and shall be signed in the name of the Company by the president or
vice-president and by the secretary, or any other proper officer of the Company
thereunto authorized by the Board of Directors, or the treasurer, and the seal
of the Company, if any, may be affixed thereto. A record shall be kept of the
name of the person, firm, or corporation owning the shares represented by each
such certificate and the number of shares represented by each such certificate
and the number of shares represented thereby, the date thereof, and in case of
cancellation, the date of cancellation. Every certificate surrendered to the
Company for exchange or transfer shall be cancelled and no new certificate or
certificates until such existing certificates shall have been so cancelled,
except in cases provided for in Section 2 of this Article.
Section 2. Lost, Destroyed and Mutilated Certificates. If any
certificates for shares in this Company become worn, defaced, or mutilated but
are still substantially intact and recognizable, the directors, upon production
and surrender thereof, shall order the same cancelled and shall issue a new
certificate in lieu of same. The holder of any shares in the Company shall
immediately notify the Company if a certificate therefor shall be lost,
destroyed, or mutilated beyond recognition, and the Board of Directors may, in
its discretion, require the owner of the certificate which has been lost,
destroyed, or mutilated beyond recognition, or his legal surety or sureties as
it may direct, not exceeding double the value of the stock, to indemnify the
Company against any claim that may be made against it on account of the alleged
loss, destruction, or mutilation of any such certificate. The Board of Directors
may, however, in its discretion, refuse to issue any such new certificate except
pursuant to legal proceedings, under the laws of the State of Nevada in such
case made and proved.
Section 3. Transfers of Shares. Transfers of shares in the Company
shall be made only on the books of the Company by the registered holder thereof,
his legal guardian, executor, or administrator, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the secretary of
the Company or with a transfer agent appointed by the Board of Directors, and on
surrender of the certificate or certificates for such shares. The person in
whose name shares stand on the books of the Company shall, to the full extent
permitted by law, be deemed the owner thereof for all purposes as regards the
Company.
Section 4. Regulations. The Board of Directors may make such rules and
regulations as it may deem expedient, not inconsistent with these Bylaws,
concerning the issue, transfer, and registration of certificates for shares in
the Company. It may appoint one or more transfer agents
15
<PAGE> 16
or one or more registrars or both, and may require all certificates for shares
to bear the signature of either or both.
ARTICLE VIII
Distributions
Distributions may be declared, subject to the provisions of the laws of
the State of Nevada and the Articles of Incorporation, by the Board of Directors
at any regular or special meeting and may be paid in cash, property, shares of
corporate stock, or any other medium. The Board of Directors may fix in advance
a record date, as provided herein, prior to the distribution for the purpose of
determining stockholders entitled to receive any distribution. The Board of
Directors may close the stock transfer books for such purpose for a period of
not more than five (5) days prior to the date of such distribution.
ARTICLE IX
Records; Reports; Seal, And Financial Matters
Section 1. Records. All original records of the corporation shall be
kept by or under the direction of the secretary or at such places as may
be prescribed by the Board of Directors.
Section 2. Directors' and Officers' Right of Inspection. Every director
and officer shall have the absolute right at any reasonable time for a purpose
reasonably related to the exercise of such individual's duties to inspect and
copy all of the corporation's books, records, and documents of every kind and to
inspect the physical properties of the corporation and/or its subsidiary
corporations. Such inspection may be made in person or by agent or attorney.
Section 3. Corporate Seal. The Board of Directors may, by resolution,
authorize a seal, and the seal may be used by causing it, or a facsimile, to be
impressed or affixed or reproduced or otherwise. Except when otherwise
specifically provided herein, any officer of the corporation shall have the
authority to affix the seal to any document requiring it.
Section 4. Fiscal Year-End. The fiscal year-end of the corporation
shall be such date as may be fixed from time to time by resolution of the Board
of Directors.
Section 5. Reserves. The Board of Directors may create, by resolution,
such reserves as the directors may, from time to time, in their discretion,
think proper to provide for contingencies, or to equalize distributions or to
repair or maintain any property of the corporation, or for such other purpose as
the Board of Directors may deem beneficial to the corporation, and the directors
may modify or abolish any such reserves in the manner in which they were
created.
16
<PAGE> 17
ARTICLE X
Depositories, Contracts and Other Instruments
Section 1. Depositories. The president and any vice-president of the
Company are each authorized to designate depositories for the funds of the
Company deposited in its name and the signatories and conditions with respect
thereto in each case, and from time to time, to change such depositories,
signatories and conditions, with the same force and effect as if each such
depository, the signatories and conditions with respect thereto and changes
therein had been specifically designated or authorized by the Board of Directors
or by the president, or any vice-president of the Company, shall be entitled to
rely upon the certificate of the secretary or any assistant secretary of the
Company setting forth the fact of such designation and of the appointment of the
officers of the Company or of both or of other persons who are to be signatories
with respect to the withdrawal of funds deposited with such depository, or from
time to time the fact of any change in any depository or in the signatories with
respect thereto.
Section 2. Execution of Instruments Generally. Except as provided in
Section l of this Article IX, all contracts and other instruments requiring
execution by the Company may be executed and delivered by the president or any
vice-president and authority to sign any such contracts or instruments, which
may be general or confined to specific instances, may be conferred by the Board
of Directors upon any other person or persons. Any person having authority to
sign on behalf of the Company may delegate, from time to time, by instrument in
writing, all or any part of such authority to any person or persons if
authorized so to do by the Board of Directors.
17
<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
MGPX VENTURES, INC.
MGPX VENTURES, INC., a Nevada corporation (the "Corporation"), does hereby
certify that:
I. The Articles of Incorporation of the Corporation shall be amended by
revising Articles First and Fourth to read in full as follows:
"FIRST: The name of said corporation shall be CONTANGO OIL & GAS
COMPANY.
FOURTH: The maximum number of shares of all classes which the
corporation is authorized to have outstanding is fifty million one hundred
twenty five thousand (50,125,000) shares, consisting of fifty million
(50,000,000) shares of Common Stock, all par value $0.04, and one hundred
twenty five thousand (125,000) shares of Preferred Stock, all par value
$0.04. The holders of Preferred Stock shall have such rights, preferences,
and privileges as may be determined, prior to the issuance of such shares,
by the Board of Directors."
I. The foregoing amendment has been duly authorized and approved by the Board
of Directors of the Corporation.
I. The foregoing amendment has been duly adopted and approved by a vote of the
stockholders holding a majority of the Corporation's outstanding stock entitled
to vote at an annual shareholder's meeting in accordance with NRS 78.320.
Date: September 28, 1999
MGPX VENTURES, INC.
By: /s/ Kenneth R. Peak
-------------------------------------
President
By: /s/ Kenneth R. Peak
-------------------------------------
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION DERIVED FROM COMPANY'S
FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED IN THE COMPANY'S FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,196,624
<SECURITIES> 0
<RECEIVABLES> 179,308
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,451,057
<PP&E> 866,504
<DEPRECIATION> 8,308
<TOTAL-ASSETS> 6,309,253
<CURRENT-LIABILITIES> 1,228,602
<BONDS> 0
0
0
<COMMON> 699,866
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,309,253
<SALES> 29,590
<TOTAL-REVENUES> 29,590
<CGS> 15,791
<TOTAL-COSTS> 855,018
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,627
<INCOME-PRETAX> (686,959)
<INCOME-TAX> 0
<INCOME-CONTINUING> (686,959)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (686,959)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
