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SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D. C. 20549
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FORM 10-SB/A-2
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
OIL AND GAS SEEKERS, INC.
(Exact name of registrant as specific in its charter)
Nevada 88-0420501
(State of Incorporation) (I.R.S. Employer
Identification No.)
2810 South Madison
Spokane, Washington 99203-1361
(Address of executive offices, including postal code)
Registrant's telephone number: (509) 455-5681
Copies to: Conrad C. Lysiak, Esq.
601 West First Avenue
Suite 503
Spokane, Washington 99201
(509) 624-1475
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
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(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
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(Title of Class)
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ITEM 1. DESCRIPTION OF BUSINESS.
Background
OIL AND GAS SEEKERS, INC. (the "Company") is a development stage
enterprise formed under the laws of the State of Nevada, on March 19,
1999, for the purpose of purchasing, developing and operating oil and
gas leases. The Company is currently not earning any revenues and
is not conducting any business operations, except for the acquisition
of one undeveloped oil and gas lease.
The Company does not intend to acquire additional oil and gas
leases until it has initiate drilling operations on its existing lease.
Selection of Target Areas for Acquisition
The Company's proposed plans call for it to consider several
factors in choosing a region for acquisition of oil and gas leases.
First, the Company intends to acquire additional prospects in Texas
or Oklahoma. At the present time the Company has not targeted any
additional oil and gas leases for acquisition. The Company intends to
acquire additional oil and gas leases from other oil and gas companies.
The Company intends to engage third parties such as a drilling
contractor, geologist and engineer to direct the drilling of one well
on the lease. As of the date hereof, the Company has not entered into
any negotiations with any drilling contractors, geologists or engineers
and there is no assurance that the Company will ever enter into any
contracts with any drilling contractors, geologists or engineers.
The Company will determine which leases it is interested in
acquiring based upon the analysis of technical and production data, on
site verification of any well equipment and production capability, and
verification of ownership of lease hold rights. The Company
anticipates that it will take from four to six months to acquire
additional leasehold interests. Further, the Company intends upon
diversifying its production portfolio with respect to both reservoir
production characteristics and to market access. Production
portfolio is comprised of all producing oil and gas leases owned by the
Company. Reservoir production characteristics is the information which
defines the nature of the porous, permeable sedimentary rocks which
contain commercial quantities of oil or gas. Market access is the
demand for the particular grade of oil which is located in a particular
reservoir. The Company believes that the overall effect of these
two unrelated characteristics is to significantly lower the overall
risk of the Company strategy.
The Company does not anticipate acquiring additional leasehold
interests during the next six months.
Geological and Geophysical Techniques
The Company may engage detailed geological interpretation combined
with advanced seismic exploration techniques to identify the most
promising leases. Geological interpretation is based upon data
recovered from existing oil and gas wells in an area and other sources.
Such information is either purchased from the company that drilled the
wells or becomes public knowledge through state agencies after a period
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of years. Through analysis of rock types, fossils and the electrical
and chemical characteristics of rocks from existing wells, the Company
can construct a picture of rock layers in the area. The Company
will have access to the well logs and decline curves from existing
operating wells. Well logs allow the Company to calculate an original
oil or gas volume in place while decline curves from production history
allow the Company to calculate remaining proved producing reserves.
The Company has not purchased, leased, or entered into any
agreements to purchase or lease any of the equipment necessary to
conduct the geological or geophysical testing referred to herein and
will only be able to do so upon raising additional capital through
loans or the sale of equity securities.
Market for Oil and Gas Production
The market for oil and gas production is regulated by both the
state and federal governments. The overall market is mature and with
the exception of gas, all producers in a producing region will receive
the same price. The major oil companies will purchase all crude oil
offered for sale at posted field prices. There are price adjustments
for quality difference from the Benchmark. Benchmark is Saudi
Arabian light crude oil employed as the standard on which OPEC price
changes have been based. Quality variances from Benchmark crude
results in lower prices being paid for the variant oil. Oil sales are
normally contracted with a purchaser or gatherer as it is known in the
industry who will pick-up the oil at the well site. In some
instances there may be deductions for transportation from the well head
to the sales point. At this time the majority of crude oil purchasers
do not charge transportation fees, unless the well is outside their
service area. The service area is a geographical area in which the
purchaser of crude oil will not charge a fee for picking upon the oil.
The purchaser or oil gatherer as it is called within the oil industry,
will usually handle all check disbursements to both the working
interest and royalty owners. The Company will be a working
interest owner. By being a working interest owner, the Company is
responsible for the payment of its proportionate share of the operating
expenses of the well. Royalty owners and over-riding royalty owners
receive a percentage of gross oil production for the particular lease
and are not obligated in any manner whatsoever to pay for the costs of
operating the lease. Therefore, the Company, in most instances, will
be paying the expenses for the oil and gas revenues paid to the royalty
and over-riding royalty interests.
Gas sales are by contract. The gas purchaser will pay the well
operator 100% of the sales proceeds on or about the 25th of each and
every month for the previous months sales. The operator is responsible
for all checks and distributions to the working interest and royalty
owners. There is no standard price for gas. Prices will fluctuate
with the seasons and the general market conditions. It is the
Company's intention to utilize this market when ever possible in order
to maximize revenues. The Company does not anticipate any significant
change in the manner production is purchased, however, no assurance can
be given at this time that such changes will not occur.
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Acquisition of Future Leases
The principal activity for the Company in the future will be the
acquisition of producing oil and gas leases. The acquisition process
may be lengthy because of the amount of investigation which will be
required prior to submitting a bid to a major oil company.
Currently, the Company is not engaged in any bidding process.
Verification of each property and the overall acquisition process can
be divided into three phases, as follows:
Phase 1. Field identification. In some instances the seller will
have a formal divestiture department that will provide a sales catalog
of leases which will be available for sale. Review of the technical
filings made to the states along with a review of the regional
geological relationships, released well data and the production history
for each lease will be utilized. In addition a review of the
proprietary technical data in the sellers office will be made and
calculation of a bid price for the field. The Company believes that
the estimated cost of Phase 1 for one property will be approximately
$5,000.
Phase 2. Submission of the Bid. Each bid will be made subject to
further verification of production capacity, equipment condition and
status, and title. The Company believes that the estimated cost of
Phase 2 for one property will be approximately $50,000.
Phase 3. Closing. Final price negotiation will take place. Cash
transfer and issuance of title opinions. Tank gauging and execution of
transfer orders. The cost of Phase 3 cannot be estimated at this
time and is entirely dependent upon negotiations with the seller and
the seller's offering price for the property.
After closing has occurred, the newly acquired property will be
turned over to the Company for possible work-overs or operational
changes which will in the Company's estimation increase each well's
production.
In connection with the acquisition of an oil and gas lease for
work-over operations, the Company is able to assume 100% ownership of
the working-interest and surface production equipment facilities with
only minor expenses. In exchange for an assignment of the lease, the
Company agrees to assume the obligation to plug and abandon the well in
the event the Company determines that reworking operations are either
too expensive or will not result in production in paying quantities.
The cost of plugging a well can run from $500 to $15,000, depending on
the condition of the well. Accordingly, the Company believes that
it will be able to acquire oil and gas leases from large and small oil
and gas firms with little costs. The Company also believes that
it may be able to plug the wells in question, at no cost to the
Company, in exchange for the production tubing and casing which will be
removed during the plugging process.
Several major oil companies have recently placed numerous oil and
gas properties out for competitive bidding. The Company currently does
not have sufficient revenues or funds available to it to make a bid for
such properties. The Company has not initiated a search for
additional leases and does not intend to do so until it raises
additional capital. The Company believes that it is not an efficient
use of time to search for additional prospects when it does not have
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sufficient capital to acquire and develop additional leases. The
Company intends to raise additional capital through loans or the sale
of equity securities in order to have sufficient funds to make a bid
for such properties. There is no assurance that the Company will ever
raise such additional capital and if the Company is unable to raise
such capital, it may have to cease operations. At the present time,
the Company has not identified any specific oil and gas leases which it
intends to acquire and will only be able to make such determination
upon raising said capital.
The Company's Ownership Interest
As of the date hereof, the Company has acquired a 100% working
interest, in one non-producing oil and gas lease. The Company acquired
its oil and gas lease by assignment from McClymond, Inc., a Texas
corporation, on March 30, 2000. The Company paid $15,000 for a 100%
working interest, 78% net revenue interest in the lease. The foregoing
means that the Company is responsible for 100% of the expenses of
developing and operating the lease, but will only receive 78% of the
revenues derived from the sale of the oil and/or gas from the lease.
The lease is for a period of two years and may be extended beyond the
termination date by producing oil and/or gas in paying quantities.
Production in paying quantities requires that the revenues from the
lease exceed the expense of operating the lease. The Company intends
to begin drilling operations upon this registration statement becoming
effective by operation of law, there being no outstanding SEC comments
with respect thereto, and the Company's securities being listed for
trading on the Bulletin Board operated by the National Association of
Securities Dealers. Thereafter, the Company intends to engage a
drilling contractor, geologist and engineer to initiate its proposed
drilling operations. There is no assurance that any of the foregoing
will be accomplished by the Company. See "Item 2. Description of
Properties."
Competition
The oil and gas industry is highly competitive. The Company's
competitors and potential competitors include major oil companies and
independent producers of varying sizes of which are engaged in the
acquisition of producing properties and the exploration and development
of prospects. Most of the Company's competitors have greater
financial, personnel and other resources than does the Company and
therefore have a greater leverage to use in acquiring prospects, hiring
personnel and marketing oil and gas. Accordingly, a high degree of
competition in these areas is expected to continue.
Governmental Regulation
The production and sale of oil and gas is subject to regulation by
state, federal and local authorities. In most areas there are
statutory provisions regulating the production of oil and natural gas
under which administrative agencies may set allowable rates of
production and promulgate rules in connection with the operation and
production of such wells, ascertain and determine the reasonable market
demand of oil and gas, and adjust allowable rates with respect thereto.
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The sale of liquid hydrocarbons was subject to federal regulation
under the Energy Policy and Conservation Act of 1975 which amended
various acts, including the Emergency Petroleum Allocation Act of 1973.
These regulations and controls included mandatory restrictions upon the
prices at which most domestic crude oil and various petroleum products
could be sold. All price controls and restrictions on the sale of
crude oil at the wellhead have been withdrawn. It is possible,
however, that such controls may be reimposed in the future but when, if
ever, such reimposition might occur and the effect thereof on the
Company cannot be predicted.
The sale of certain categories of natural gas in interstate
commerce is subject to regulation under the Natural Gas Act and the
Natural Gas Policy Act of 1978 ("NGPA"). Under the NGPA, a
comprehensive set of statutory ceiling prices applies to all first
sales of natural gas unless the gas is specifically exempt from
regulation (i.e., unless the gas is "deregulated"). Administration and
enforcement of the NGPA ceiling prices are delegated to the FERC. In
June 1986, the FERC issued Order No. 451, which, in general, is
designed to provide a higher NGPA ceiling price for certain vintages of
old gas. It is possible, though unlikely, that the Company may in the
future acquire significant amounts of natural gas subject to NGPA price
regulations and/or FERC Order No. 451.
The Company's operations are subject to extensive and
continually changing regulation because legislation affecting the oil
and natural gas industry is under constant review for amendment and
expansion. Many departments and agencies, both federal and state, are
authorized by statute to issue and have issued rules and regulations
binding on the oil and natural gas industry and its individual
participants. The failure to comply with such rules and regulations can
result in large penalties. The regulatory burden on this industry
increases the Company's cost of doing business and, therefore, affects
our profitability. However, we do not believe that we are affected in
a significantly different way by these regulations than our competitors
are. Because of the many complex federal and state statutes and
regulations that may affect us, you should not rely upon the following
discussion of these statutes and regulations as a complete review of
all matters affecting the Company's proposed operations.
Transportation and Production
Transportation and Sale of Oil and Natural Gas. The Company can
make sales of oil, natural gas and condensate at market prices which
are not subject to price controls at this time. The price that we
receive from the sale of these products is affected by the Company's
ability to transport and the cost of transporting these products to
market. Under applicable laws, the Federal Energy Regulatory Commission
("FERC") regulates:
- the construction of natural gas pipeline facilities, and
- the rates for transportation of these products in interstate
commerce.
The Company's possible future sales of natural gas are affected
by the availability, terms and cost of pipeline transportation. The
price and terms for access to pipeline transportation remain subject to
extensive federal and state regulation. Several major regulatory
changes have been implemented by Congress and the FERC from 1985 to the
present. These changes affect the economics of natural gas production,
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transportation and sales. In addition, the FERC is continually
proposing and implementing new rules and regulations affecting these
segments of the natural gas industry that remain subject to the FERC's
jurisdiction. The most notable of these are natural gas transmission
companies.
The FERC's more recent proposals may affect the availability of
interruptible transportation service on interstate pipelines. These
initiatives may also affect the intrastate transportation of gas in
some cases. The stated purpose of many of these regulatory changes is
to promote competition among the various sectors of the natural gas
industry. These initiatives generally reflect more light-handed
regulation of the natural gas industry. The ultimate impact of the
complex rules and regulations issued by the FERC since 1985 cannot be
predicted. In addition, some aspects of these regulatory developments
have not become final but are still pending judicial and FERC final
decisions. The Company cannot predict what further action the FERC
will take on these matters. However, the Company does not believe that
any action taken will affect it much differently than it will affect
other natural gas producers, gatherers and marketers with which the
Company might compete against.
Effective as of January 1, 1995, the FERC implemented regulations
establishing an indexing system for transportation rates for oil. These
regulations could increase the cost of transporting oil to the
purchaser. The Company does not believe that these regulations will
affect it any differently than other oil producers and marketers with
which it competes with.
Regulation of Drilling and Production. The Company's proposed
drilling and production operations are subject to regulation under a
wide range of state and federal statutes, rules, orders and
regulations. Among other matters, these statutes and regulations
govern:
- the amounts and types of substances and materials that may be
released into the environment,
- the discharge and disposition of waste materials,
- the reclamation and abandonment of wells and facility sites,
and
- the remediation of contaminated sites,
and require:
- permits for drilling operations,
- drilling bonds, and
- reports concerning operations.
Texas law contains:
- provisions for the unitization or pooling of oil and natural
gas properties,
- the establishment of maximum rates of production from oil and
natural gas wells, and
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- the regulation of the spacing, plugging and abandonment of
wells.
Environmental Regulations
General. The Company's operations are affected by the various
state, local and federal environmental laws and regulations, including
the:
- Clean Air Act,
- Oil Pollution Act of 1990,
- Federal Water Pollution Control Act,
- Resource Conservation and Recovery Act ("RCRA"),
- Toxic Substances Control Act, and
- Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA").
These laws and regulations govern the discharge of materials into the
environment or the disposal of waste materials, or otherwise relate to
the protection of the environment. In particular, the following
activities are subject to stringent environmental regulations:
- drilling,
- development and production operations,
- activities in connection with storage and transportation of
oil and other liquid hydrocarbons, and
- use of facilities for treating, processing or otherwise
handling hydrocarbons and wastes.
Violations are subject to reporting requirements, civil penalties and
criminal sanctions. As with the industry generally, compliance with
existing regulations increases our overall cost of business. The
increased costs cannot be easily determined. Such areas affected
include:
- unit production expenses primarily related to the control and
limitation of air emissions and the disposal of produced
water,
- capital costs to drill exploration and development wells
resulting from expenses primarily related to the management
and disposal of drilling fluids and other oil and natural gas
exploration wastes, and
- capital costs to construct, maintain and upgrade equipment
and facilities and remediate, plug and abandon inactive well
sites and pits.
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Environmental regulations historically have been subject to
frequent change by regulatory authorities. Therefore, the Company is
unable to predict the ongoing cost of compliance with these laws and
regulations or the future impact of such regulations on its operations.
However, the Company does not believe that changes to these regulations
will have a significant negative affect on its operations.
A discharge of hydrocarbons or hazardous substances into the
environment could subject us to substantial expense, including both the
cost to comply with applicable regulations pertaining to the clean up
of releases of hazardous substances into the environment and claims by
neighboring landowners and other third parties for personal injury and
property damage. The Company does not maintain insurance for
protection against certain types of environmental liabilities.
The Clean Air Act requires or will require most industrial
operations in the United States to incur capital expenditures in order
to meet air emission control standards developed by the EPA and state
environmental agencies. Although no assurances can be given, the
Company believes the Clean Air Act requirements will not have a
material adverse effect on our financial condition or results of
operations.
RCRA is the principal federal statute governing the treatment,
storage and disposal of hazardous wastes. RCRA imposes stringent
operating requirements, and liability for failure to meet such
requirements, on a person who is either:
- a "generator" or "transporter" of hazardous waste, or
- an "owner" or "operator" of a hazardous waste treatment,
storage or disposal facility.
At present, RCRA includes a statutory exemption that allows oil and
natural gas exploration and production wastes to be classified as
non-hazardous waste. As a result, the Company will not be subject to
many of RCRA's requirements because its operations will probably
generate minimal quantities of hazardous wastes.
CERCLA, also known as "Superfund", imposes liability, without
regard to fault or the legality of the original act, on certain classes
of persons that contributed to the release of a "hazardous substance"
into the environment. These persons include:
- the "owner" or "operator" of the site where hazardous
substances have been released, and
- companies that disposed or arranged for the disposal of the
hazardous substances found at the site.
CERCLA also authorizes the EPA and, in some instances, third parties to
act in response to threats to the public health or the environment and
to seek to recover from the responsible classes of persons the costs
they incur. In the course of our ordinary operations, the Company could
generate waste that may fall within CERCLA's definition of a "hazardous
substance". As a result, the Company may be liable under CERCLA or
under analogous state laws for all or part of the costs required to
clean up sites at which such wastes have been disposed.
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Under such law the Company could be required to:
- remove or remediate previously disposed wastes, including
wastes disposed of or released by prior owners or operators,
- clean up contaminated property, including contaminated
groundwater, or
- perform remedial plugging operations to prevent future
contamination.
The Company could also be subject to other damage claims by
governmental authorities or third parties related to such
contamination.
While the foregoing regulations appear extensive, the Company
believes that because it will initially be drilling and operating one
oil or gas well, compliance with the foregoing regulations will not
have any material adverse affect upon the Company. Further, the
Company believes it spend minimal amounts of money to comply therewith
in connection with its one proposed well.
Company's Office
The Company's offices are located at 2810 South Madison, Spokane,
Washington 99203-1361. The Company leases the space from Harold
Kaufman, Jr., the Company's Secretary/Treasurer, as well as, equipment
including computers, office computer programs, fax machines, small copy
machines, a scanner, telephones, desks, files and fixtures. The lease
payment is at the rate of $1,000.00 per year, plus out-of-pocket
expenses. The transaction with Mr. Kaufman is no less favorable to the
Company than can be obtained from independent third parties.
Employees
The Company is a development stage company and currently has no
employees other than its Officers and Directors.
RISK FACTORS
1. The Company is an exploration stage company and has no
known oil and gas reserves. The Company is an exploration stage
company and has no known oil and gas reserves. The Company is
currently incurring losses in its operations and may continue to
sustain losses and accumulate deficits in the future.
2. The Company may not discover any oil on its property. The
search for oil and gas is risky. The Company will not know what is
underground until it drills a well. As such, there may be no oil and
gas under the Company's lease. Accordingly, the Company may not
discover any oil or gas.
3. Volatility of Oil and Gas Markets. In the past few years, the
price of oil and gas has been volatile. At the present time the
price of oil is near an all-time high. The price of natural gas is also
high ($5.29 per 1,000 cubic feet). There is no assurance that in
the future prices for oil and gas production will stabilize at current
rates.
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4. Availability of Suitable Prospects or Producing Properties.
Competition for prospects and producing properties is intense. The
Company will be competing with a number of other potential purchasers
of prospects and producing properties, most of which will have greater
financial resources than the Company. The state of the oil and gas
industry, the bidding for prospects has become particularly intense
with different bidders evaluating potential acquisitions with
different product pricing parameters and other criteria that
result in widely divergent bid prices. See "Business - Competition."
The presence in the market of bidders willing to pay prices higher than
are supported by the Company's evaluation criteria could further limit
the ability of the Company to acquire prospects and low or uncertain
prices for properties can cause potential sellers to withhold or
withdraw properties from the market. In this environment, there can be
no assurance that there will be a sufficient number of suitable
prospects available for acquisition by the Company or that the Company
can sell prospects or obtain financing for or participants to
join in the development of prospects.
5. Title to Properties. It is customary in the oil and gas
industry that upon acquiring an interest in a property, that only a
preliminary title investigation be done at that time. The Company
intends to follow this custom. If the title to the prospects
should prove to be defective, the Company could lose the costs of
acquisition, or incur substantial costs for curative title work.
6. Shut-in Wells and Curtailed Production. Production from gas
wells in many geographic areas of the United States has been curtailed
or shut-in for considerable periods of time due to a lack of market
demand, and such curtailments may continue for a considerable period of
time in the future. There may be an excess supply of gas in areas
where the Company's operations will be conducted. In such event, it is
possible that there will be no market or a very limited market for the
Company's prospects. It is customary in many portions of Oklahoma
and Texas to shut-in gas wells in the spring and summer when there is
not sufficient demand for gas.
7. Operating and Environmental Hazards. Hazards incident to the
operation of oil and gas properties, such as accidental leakage of
petroleum liquids and other unforeseen conditions, may be encountered
by the Company if it participates in developing a well and, on
occasion, substantial liabilities to third parties or governmental
entities may be incurred. It is anticipated that insurance coverage
will be obtained in the future, but the Company could be subject to
liability for pollution and other damages or may lose substantial
portions of prospects or producing properties due to hazards which
cannot be insured against or which have not been insured against due to
prohibitive premium costs or for other reasons. The Company currently
does not maintain any insurance for environmental damages.
Governmental regulations relating to environmental matters could also
increase the cost of doing business or require alteration or cessation
of operations in certain areas. See "Business - Government
Regulations."
8. Lack of Insurance. The Company does not maintain any
insurance against losses or liabilities which may arise from
operations.
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9. Federal and State Taxation. Federal and state income tax laws
are of particular significance to the oil and gas industry. Recent
legislation has eroded previous benefits to oil and gas producers, and
any subsequent legislation may continue this trend. The states in
which the Company may conduct oil and gas activities also impose taxes
upon the production of oil and gas located within such states. There
can be no assurance that the tax laws will not be changed or
interpreted in the future in a manner which adversely affects the
Company.
10. Government Regulation. The oil and gas business is subject
to substantial governmental regulation, including the power to limit
the rates at which oil and gas are produced and to fix the prices at
which oil and gas are sold. It cannot be accurately predicted whether
additional legislation or regulation will be enacted or become
effective. See "Business - Governmental Regulations."
11. Because the Company's common stock is a "penny stock,"
investors may not be able to resell their shares and will have access
to limited information about the Company. The Company's common stock
is defined as a "penny stock," under the Securities Exchange Act of
1934, and its rules. Because the Company's common stgock is a "penny
stock," investors may be unable to resell their shares. This is
because the Securities Exchange Act of 1934 and the penny stock rules
impose additional sales practice and disclosure requirements on broker-
dealers who sell the Company's securities to persons other than
accredited investors. As a result, fewer broker-dealers are willing to
make a market in the Company's common stock and investors may not be
able to resell their shares. Further, news coverage regarding penny
stock is extremely limited, if non-existent. As a result, investors
only information will be from reports filed the with the Securities and
Exchange Commission.
12. Writedowns and Limits on Accuracy of Reserve Estimates. Oil
and gas reserve estimates are necessarily inexact and involve matters
of subjective engineering judgment. In addition, any estimates of
future net revenues and the present value of such revenues are based on
the price and costs at the effective date of the estimate. These
estimates may not prove to have been correct over time. A further
decline in oil and gas prices may require the Company to write down the
value of its oil and gas reserves.
13. Need for Additional Key Personnel. At the present, the
Company employs no full time employees. Should the Company's
operations prove successful, the Company believes that it will need the
services of a full-time petroleum geologist and possibly an engineer
who would be available to evaluate its proposed acquisitions. At the
present time the Company has insufficient revenues to retain such
personnel and there is no assurance that it will be able to retain such
personnel in the future. If the Company is unable to engage and retain
the necessary personnel, its business would be materially and adversely
affected. See "Business."
14. Reliance Upon Directors and Officers. The Company is
wholly dependent, at the present time, upon the personal efforts and
abilities of its President and Director, Gary Ruff; its Vice President
and Director, Albert J. Schauble, Jr.; and, its Secretary/Treasurer and
Director, Harold Kaufman, Jr. The loss of any one of the foregoing
could adversely effect the Company's operations. While the foregoing
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will exercise control over the day to day affairs of the Company, they
will also be devoting limited time to the Company's activities.
Upon completion of this offering, the President will devote 5% of his
time to the operation of the day to day affairs of the Company, the
Vice President will devote 2% his time to the operation of the day to
day affairs to the Company and the Secretary/Treasurer will devote 2%
of his time to the operation of the day to day affairs to the Company.
The Company does not have employment agreements with any of its
officers and directors, nor does the Company maintain key-person
insurance for any officer or director. Accordingly, while the
Company may solicit business through its Officers, there can be no
assurance as to the volume of business, if any, which the Company may
succeed in obtaining, nor that its proposed operations will prove to be
profitable. As of the date hereof, the Company does not have any
commitments regarding its proposed operations and there can be no
assurance that any commitments will be forthcoming. See "Item 1 -
Business" and "Item 5 - Directors, Executive Officers, Promoters and
Control Persons - Officer and Director Biographies."
15. Messrs. Ruff and Kaufman own over 90% of the oustanding
common stock of the Company which may inhibit a change of control.
Messrs. Ruff and Kaufman own over 90% of the outstanding shares of the
Company's common stock. As a result, Messrs. Ruff and Kaufman are
able to elect all of the Company's directors and control the Company's
operations. The Company's articles of incorporation do not provide for
cumulative voting. Cumulative voting is a process that allows a
shareholder to multiply the number of shares he owns times the number
of directors to be elected. That number is the total votes a person
can cast for all of the directors. Those votes can be allocated in any
manner to the directors being elected. Cumulative voting, in some
cases, will allow a minority group to elect at least one director to
the board.
16. Messrs. Ruff and Kaufman's control can have a depressive
effect on the market price of stock. Because Messrs. Ruff and Kaufman
control the Company, the value attributable to the right to vote is
gone. This could result in a reduction in the market value to the
shares owned by investor because of the ineffective voting power.
17. Need for Subsequent Funding. The Company may have future
needs for additional funds in order to finance its proposed business
operations. The Company believes that does not have adequate
funds available to drill and complete one well on its lease. The
Company's continued operations therefore depend upon its ability to
raise additional funds through bank borrowings or equity or debt
financing. There is no assurance that the Company will be able to
obtain additional funding when needed, or that such funding, if
available, can be obtained on terms acceptable to the Company. If the
Company cannot obtain needed funds, it may be forced to curtail or
cease its activities.
18. Non-Arms's Length Transaction. The amount of stock issued
to the current shareholders was arbitrarily determined by the Board of
Directors in order to raise adequate funds to acquire one oil and gas
lease and complete one well on the lease. While no risk will result to
the Company as a result of the foregoing transaction, a future risk
could result to persons who acquire shares in the aftermarket from
current shareholders who will sell their shares as soon as the market
price for the shares is above $0.05 per share. See "Principal
Shareholders."
<PAGE> 14
19. Indemnification of Officers and Directors for Securities
Liabilities. The Bylaws of the Company provide that the Company may
indemnify any Director, Officer, agent and/or employee as to those
liabilities and on those terms and conditions as are specified in the
Nevada Business Corporation Act. Further, the Company may purchase and
maintain insurance on behalf of any such persons whether or not the
corporation would have the power to indemnify such person against the
liability insured against. The foregoing could result in substantial
expenditures by the Company and prevent any recovery from such
Officers, Directors, agents and employees for losses incurred by the
Company as a result of their actions. Further, the Company has been
advised that in the opinion of the Securities and Exchange Commission,
indemnification is against public policy as expressed in the Securities
Act of 1933, as amended, and is, therefore, unenforceable.
20. Public Market for Securities. There is no public market
for the Company's common stock. The Company's common stock is owned by
19 persons. The Company's common stock is not traded on any medium
and there is no assurance that the Company's common stock will ever be
traded.
21. Cumulative Voting, Preemptive Rights and Control. There are
no preemptive rights in connection with the Company's Common Stock.
Cumulative voting in the election of Directors is not provided for.
Accordingly, the holders of a majority of the shares of Common Stock,
present in person or by proxy, will be able to elect all of the
Company's Board of Directors. See "Description of the Securities."
22. No Dividends Anticipated. At the present time the Company
does not anticipate paying dividends, cash or otherwise, on its Common
Stock in the foreseeable future. Future dividends will depend on
earnings, if any, of the Company, its financial requirements and other
factors. Investors who anticipate the need of an immediate income from
their investment in the Company's Common Stock should refrain from the
purchase of the securities. See "Dividend Policy."
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The Company intends to spend its existing cash on drilling
operations on its existing oil and gas lease. The Company does not
intend to acquire any additional oil and gas leases until it completes
drilling operations on its existing lease. The Company intends to
initiate its drilling operations within the next twelve months and
believes that it will complete its drilling operations within the next
eighteen months. The Company does not believe it will need additional
capital to commence its drilling operations, but will need additional
capital to complete its well.
The Company's positive cash flow last year came solely from new
financings rather than income. The Company intends to reduce its
dependence on new financings by completing its initial drilling
operation. Income from the sale of oil or gas will then be applied to
the Company's plan to acquire additional leases. There is no
assurance, however, the the Company's initial drilling operation will
prove successful. It does not prove successful, the Company will have
to rely upon future new finances in order to continue its operations.
<PAGE> 15
The Company has inadequate cash to maintain operations during the
next twelve months. In order to meet its cash requirements the Company
will have to raise additional capital through the sale of securities or
loans. As of the date hereof, the Company has not made sales of
additional securities and there is no assurance that it will be able to
raise additional capital through the sale of securities in the future.
Further, the Company has not initiated any negotiations for loans to
the Company and there is no assurance that the Company will be able to
raise additional capital in the future through loans. In the event
that the Company is unable to raise additional capital, it may have to
suspend or cease operations.
The Company does not intend to conduct any research or development
during the next twelve months other than as described herein. See
"Business."
The Company does not intend to purchase a plant or significant
equipment. The Company will hire employees on an as needed basis,
however, the Company does not expect any significant changes in the
number of employees.
The Company does not expect to earn revenues until it begins
recovering oil and/or gas.
ITEM 3. DESCRIPTION OF PROPERTIES.
The Company owns one undeveloped oil and gas lease, more
particularly described as a 100% leasehold interest and a 78% net
revenue interest, in and to that certain oil and gas lease dated
January 9, 1954, from Ed Ford, et ux, as Lessors, to Vanroe M. Howard,
as Lessee, recorded in Volume 266, page 216, Deed Records of Stephens
County, Texas, only insofar as said lease covers all of Texan
Emigration and Land Company, Survey No. 1083, Stephens County, Texas,
save and except 20 acres in the form of a square surrounding the Ed
Ford A-3 well located in the southwest corner of said survey,
containing 300 acres of land, more or less.
The land is flat and arid.
A leasehold interest is the interest of one holding as a grantee
or lessee under an oil and gas lease.
A net revenue interest is a share of the working interest not
required to contribute to, nor liable for, any portion of the expense
of drilling and completing the initial well on the premises.
The Company has no proved reserves on its current property.
<PAGE> 16
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth the Common Stock ownership of each
person known by the Company to be the beneficial owner of five percent
or more of the Company's Common Stock each director individually and
all officers and directors of the Company as a group as of October
26, 2000. Each person has sole voting and investment power with
respect to the shares of Common Stock shown, unless otherwise noted,
and all ownership is of record and beneficial.
Name Number of Number of
of owner Shares Position Shares
Gary Ruff 16,900,000 President, Chief 44.05%
2120 Crosswood Lane Executive Officer and
Irving, TX 75063 a member of the
Board of Directors
Albert J.
Schauble, Jr. 0 Vice President and 0.00%
903 S. Jefferson St. a member of the
Kennewick, WA 99336 Board of Directors
Harold Kaufman Jr. 18,000,000 Secretary/Treasurer, 46.92%
2810 South Madison Chief Financial Officer
Spokane, WA 99203 and a member of the
Board of Directors
All officers and 34,900,000 90.97%
directors as a
group (3 persons)
Doris Ruff 3,300,000 8.60%
2001 Yacht Vindex
Newport Beach, CA 92660
Doris Ruff is the mother of Gary Ruff, the Company's President
and a member of the Board of Directors. Gary Ruff does not exercise
any control over Doris Ruff's stock in the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The officers and directors of the Company are as follows:
Name Age Position
Gary Ruff 40 President, Chief Executive Officer
and a member of the Board of
Directors
Albert J. Schauble, Jr. 44 Vice President and a member of the
Board of Directors
Harold Kaufman, Jr. 39 Secretary/Treasurer, Chief
Financial Officer and member of the
Board of Directors
<PAGE> 17
All directors hold office until the next annual meeting of
shareholders which is tentatively scheduled for third week in March,
2001, or until their successors have been elected and qualified. The
Company's officers are elected by the Board of Directors at the annual
meeting and hold office until their death, or until they resign, or
have been removed from office.
Officer and Director Biographies:
Gary Ruff - President, Chief Executive Officer and a member of the
Board of Directors.
Mr. Ruff is a founder, President, Chief Executive Officer and a
member of the Board of Directors of the Company. From September 1996 to
June 1998, Mr. Ruff was Vice President and a member of the Board of
Directors of Equipment Leasing & Sales Corporation, a Washington
corporation. Equipment Leasing & Sales purpose is to lend and sell
equipment and supplies to third parties. Since August 1992, Mr. Ruff
has been Senior Counsel for Tenet Healthcare Corporation, Dallas Texas.
During the month of July 1992, Mr. Ruff was on vacation. From July
1985 to June 1992 Mr. Ruff was Tax Manager at Deloitte & Touche,
Certified Public Accountants. Mr. Ruff holds a L.L.M. degree in
taxation from Georgetown University Law Center; a Juris Doctor degree
from Pepperdine University School of Law; a Masters of Management from
the J.L. Kellogg School of Management from Northwestern University,
Evanston, Illinois; and, a B.B.A. degree in accounting from Gonzaga
University, Spokane, Washington. Mr. Ruff is licensed to practice law
in the states of California and Texas.
Albert J. Schauble, Jr. - Vice President and a member of the Board of
Directors.
Since May 2000, Mr. Schauble has been the Vice President and a
member of the Board of Directors. Since 1979, Mr. Schauble has been
employed as a high school teacher and coach by the Kennewick School
District, Kennewick, Washington.
Harold Kaufman, Jr. - Secretary/Treasurer, Chief Financial Officer and
a member of the Board of Directors
Mr. Kaufman is a founder, Secretary/Treasurer, Chief Financial
Officer and a the Board of Directors of the Company. From December
1997 to March 1999, Mr. Kaufman was the President, Treasurer and a
member of the Board of Directors of Professional Perceptions, Inc., a
Nevada corporation. Professional Perceptions purpose is to assist
retail businesses with the development of marketing programs. Since
1994, Mr. Kaufman has been the Vice President and a member of the Board
of Directors of Probity Corporation, a Washington blank check
corporation. Since 1996, Mr. Kaufman has been employed as President of
Tarared, Inc., business consultants providing consulting and
administrative services on a project-by-project basis. From 1991 to
1996, Mr. Kaufman was employed as a mortgage broker in Spokane,
Washington. Mr. Kaufman's duties included managing all office
administration for Farwest Mortgage and loan organization. From 1988
to 1993, Mr. Kaufman was also employed on a part-time basis as Director
of the Music Department of Millman Jewelers - EZ Loans located in
Spokane, Washington. In 1991, Mr. Kaufman was employed as Special
Projects Facilitator, Seafirst Bank - Investment Division, Seattle,
Washington. Mr. Kaufman graduated from Spokane Community College in
1988 with an Associates of Arts degree.
<PAGE> 18
ITEM 6. EXECUTIVE COMPENSATION.
Summary Compensation.
The following table sets forth the compensation paid by the
Company from inception on March 19, 1999 through December 31, 1999, for
each officer and director of the Company. This information includes
the dollar value of base salaries, bonus awards and number of stock
options granted, and certain other compensation, if any.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation Awards Payouts
Securities
Names Other Under Restricted Other
Executive Annual Options/ Shares or Annual
Officer and Compen- SARs Restricted LTIP Compen-
Principal Year Salary Bonus sation Granted Share Payouts sation
Position Ended (US$) (US$) (US$) (#) Units (US$) (US$) (US$)
Gary 1999 0 0 0 0 0 0 0
Ruff 1998 0 0 0 0 0 0 0
President 1997 0 0 0 0 0 0 0
Albert J. 1999 0 0 0 0 0 0 0
Schauble 1998 0 0 0 0 0 0 0
VP 1997 0 0 0 0 0 0 0
Harold 1999 0 0 0 0 0 0 0
Kaufman 1998 0 0 0 0 0 0 0
Secretary 1997 0 0 0 0 0 0 0
Treasurer
Murray 1999 0 0 0 0 0 0 0
Sternfeld 1998 0 0 0 0 0 0 0
(Resigned) 1997 0 0 0 0 0 0 0
The Company does not anticipate paying any salaries until it
begins profitable operations and generating sufficient revenues to pay
the same:
Gary Ruff President $ -0-
Albert J. Schauble, Jr. Vice President $ -0-
Harold Kaufman Jr. Secretary/Treasurer $ -0-
There are no other stock option plans, retirement, pension, or
profit sharing plans for the benefit of the Company's officers and
directors.
Long-Term Incentive Plan Awards.
The Company does not have any long-term incentive plans that
provide compensation intended to serve as incentive for performance.
Compensation of Directors.
The Directors do not receive any compensation for serving as
members of the Board of Directors. The Board has not implemented a
plan to award options to any Directors. There are no contractual
arrangements with any member of the Board of Directors to pay any
compensation thereto. See "Certain Relationships and Related
Transaction."
<PAGE> 19
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In April 1999, the Company issued 16,900,000 shares of common
stock to Gary Ruff, the Company's President and Chief Executive Officer
in consideration of $16,900.
In April 1999, the Company issued 18,000,000 shares of common
stock to Harold Kaufman, Jr., the Company's Secretary/Treasurer and
Chief Financial Officer in consideration of $18,000.
In March 2000, the Company entered into an agreement with Harold
Kaufman, Jr., the Company's Secretary/Treasurer, wherein it was agreed
that Mr. Kaufman would lease space at his home to the Company in
consideration of an annual payment of $1,000.
ITEM 8. LEGAL PROCEEDINGS.
The Company is not a party to any pending or threatened litigation
and to its knowledge, no action, suit or proceedings has been
threatened against its officers and its directors.
ITEM 9. MARKET PRICE FOR COMMON EQUITY AND OTHER SHAREHOLDER MATTERS.
No market exists for the Company's securities and there is no
assurance that a regular trading market will develop, or if developed,
that it will be sustained. A shareholder in all likelihood, therefore,
will be unable to resell the securities referred to herein should he or
she desire to do so. Furthermore, it is unlikely that a lending
institution will accept the Company's securities as pledged collateral
for loans unless a regular trading market develops. There are no
plans, proposals, arrangements or understandings with any person with
regard to the development of a trading market in any of the Company's
securities. On January 4, 1999, the NASD amended its rules regarding
listing of securities for trading on the Bulletin Board. Effective on
January 4, 1999, securities of corporations will not be listed for
trading on the Bulletin Board unless the corporation files reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Accordingly, the Company's common stock will not be listed for trading
on the Bulletin Board until such time as this registration statement is
declared effective by the Securities and Exchange Commission (the
"Commission") and the Company has satisfied all comments made by the
Commission.
SEC Rule 15g
The Company's shares are covered by Section 15g of the Securities
Act of 1933, as amended that imposes additional sales practice
requirements on broker/dealers who sell such securities to persons
other than established customers and accredited investors (generally
institutions with assets in excess of $5,000,000 or individuals with
net worth in excess of $1,000,000 or annual income exceeding $200,000
or $300,000 jointly with their spouses). For transactions covered by
the Rule, the broker/dealer must make a special suitability
determination for the purchase and have received the purchaser's
written agreement to the transaction prior to the sale. Consequently,
the Rule may affect the ability of broker/dealers to sell the Company's
securities and also may affect the ability of purchasers to sell their
shares in the secondary market.
<PAGE> 20
Section 15g also imposes additional sales practice requirements on
broker/dealers who sell penny securities. These rules require a one
page summary of certain essential items. The items include the risk of
investing in penny stocks in both public offerings and secondary
marketing; terms important to understanding of the function of the
penny stock market, such as "bid" and "offer" quotes, a dealers
"spread" and broker/dealer compensation; the broker/dealer
compensation, the broker/dealers duties to its customers, including the
disclosures required by any other penny stock disclosure rules; the
customers rights and remedies in causes of fraud in penny stock
transactions; and, the NASD's toll free telephone number and the
central number of the North American Administrators Association, for
information on the disciplinary history of broker/dealers and their
associated persons.
As of June 12, 2000, the Company has 19 holders of record of its
Common Stock.
The Company has not paid any dividends since its inception and
does not anticipate paying any dividends on its Common Stock in the
foreseeable future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
The Company has 38,362,000 shares of Common Stock issued and
outstanding as of June 12, 2000. Of the 38,362,000 shares of the
Company's Common Stock outstanding, 3,462,000 shares are freely
tradeable and 34,900,000 shares can only be resold in compliance with
Reg. 144 adopted under the Securities Act of 1933 (the "Act"), with the
exception of the one year holding period thereunder.
In April 1999, the Company sold 38,362,000 shares of its common
stock to two officers/directors and seventeen other individuals in
consideration of $108,400. All sales were made pursuant to Reg. 504 of
the Securities Act of 1933 (the "Act") and all funds were received and
deposited to its bank account prior to April 7, 1999.
ITEM 11. DESCRIPTION OF SECURITIES.
Common Stock
The authorized Common Stock of the Company consists of 100,000,000
shares of $0.00001 par value Common Stock. As of May 1, 2000,
38,362,000 shares are issued and outstanding.
All shares have equal voting rights and are not assessable.
Voting rights are not cumulative and, therefore, the holders of more
than 50% of the Common Stock could, if they chose to do so, elect all
of the directors of the Company.
Upon liquidation, dissolution, or winding up of the Company, the
assets of the Company, after the payment of liabilities, will be
distributed pro rata to the holders of the Common Stock. The holders
of the Common Stock do not have preemptive rights to subscribe for any
securities of the Company and have no right to require the Company to
redeem or purchase their shares. The shares of Common Stock presently
outstanding are fully paid and non-assessable.
<PAGE> 21
Dividends
Holders of the Common Stock are entitled to share equally in
dividends when, as and if declared by the Board of Directors of the
Company, out of funds legally available therefore. No dividend has
been paid on the Common Stock since inception, and none is contemplated
in the foreseeable future.
Shareholders Meetings
The annual meeting of the shareholders of this Corporation, for
the purpose of election of Directors and for such other business as may
come before it, shall be held at the registered office of the
Corporation, or such other places, either within or without the State
of Nevada, as may be designated by the notice of the meeting.
Special meetings of the shareholders of this Corporation may be
called at any time by the holders of ten percent (10%) of the voting
shares of the Corporation, or by the President, or by the Board of
Directors or a majority thereof. No business shall be transacted at
any special meeting of shareholders except as is specified in the
notice calling for said meeting. The Board of Directors may designate
any place, either within or without the State of Nevada, as the place
of any special meeting called by the president or the Board of
Directors, and special meetings called at the request of shareholders
shall be held at such place in the State of Nevada, as may be
determined by the Board of Directors and placed in the notice of such
meeting.
Written notice of annual or special meetings of shareholders
stating the place, day, and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is
called shall be given by the secretary or persons authorized to call
the meeting to each shareholder of record entitled to vote at the
meeting. Such notice shall be given not less than ten (10) nor more
than fifty (50) days prior to the date of the meeting, and such notice
shall be deemed to be delivered when deposited in the United States
mail addressed to the shareholder at his/her address as it appears on
the stock transfer books of the Corporation.
Notice of the time, place, and purpose of any meeting may be
waived in writing and will be waived by any shareholder by his/her
attendance thereat in person or by proxy. Any shareholder so waiving
shall be bound by the proceedings of any such meeting in all respects
as if due notice thereof had been given.
A majority of the outstanding shares of the Corporation entitled
to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. A majority of the shares represented at
a meeting, even if less than a quorum, may adjourn the meeting from
time to time without further notice. At such adjourned meeting at
which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as
originally notified. The shareholders present at a duly organized
meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less
than a quorum.
<PAGE> 22
At all meetings of shareholders, a shareholder may vote by proxy
executed in writing by the shareholder or by his/her duly authorized
attorney in fact. Such proxy shall be filed with the secretary of the
Corporation before or at the time of the meeting. No proxy shall be
valid after eleven (11) months from the date of its execution, unless
otherwise provided in the proxy.
Except as otherwise provided in the Articles of Incorporation or
in these Bylaws, every shareholder of record shall have the right at
every shareholder's meeting to one (1) vote for every share standing in
his/her name on the books of the Corporation, and the affirmative vote
of a majority of the shares represented at a meeting and entitled to
vote thereat shall be necessary for the adoption of a motion or for the
determination of all questions and business which shall come before the
meeting.
Transfer Agent
The transfer agent for the Company's Common Stock is Pacific Stock
Transfer Co., 5844 South Pecos Road, Suite D, Las Vegas, Nevada 89120
and its telephone number is (702) 361-3033.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.037, 78.751 and 78.752 of the Nevada Revised
Statutes provide for indemnification of the Company's Officers,
Directors and controlling persons against liabilities which they may
incur in such capacities.
In general, any Officer, Director, employee or agent may be
indemnified against expenses, fines, settlements or judgments arising
in connection with a legal proceeding to which such person is a party,
if that person's actions were in good faith, were believed to be in the
Company's best interest, and were not unlawful. Unless such person is
successful upon the merits in such an action, indemnification may be
awarded only after a determination by independent decision of the Board
of Directors, by legal counsel, or by a vote of the shareholders, that
the applicable standard of conduct was met by the person to be
indemnified.
The circumstances under which indemnification is granted in
connection with an action brought on behalf of the Company is generally
the same as those set forth above; however, with respect to such
actions, indemnification is granted only with respect to expenses
actually incurred in connection with the defense or settlement of the
action. In such actions, the person to be indemnified must have acted
in good faith and in a manner believed to have been in the Company's
best interest, and have not been adjudged liable for negligence or
misconduct.
The Company's Articles of Incorporation and Bylaws contain similar
provisions for indemnification as described above.
ITEM 13. FINANCIAL STATEMENTS.
Financial Statements begin on following page.
<PAGE> 23
OIL AND GAS SEEKERS, INC.
December 31, 1999
CONTENTS
Independent Auditor's Review Report F-1
Balance Sheet F-2
Statement of Operations F-3
Statement of Stockholders' Equity F-4
Statement of Cash Flows F-5
Notes to the Financial Statements F-6
<PAGE> 24
The Board of Directors
Oil and Gas Seekers, Inc.
Spokane, WA
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Oil and Gas Seekers,
Inc. (an exploration stage company) as of December 31, 1999, and the
related statements of operations, stockholders' equity, and cash flows
for the period from inception (March 19, 1999) through December 31,
1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Oil and Gas
Seekers, Inc. as of December 31, 1999, and the results of its
operations and cash flows for the period from inception (March 19,
1999) through December 31, 1999 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2,
the Company has been in the exploration stage since its inception on
March 19, 1999. Realization of a major portion of the assets is
dependent upon the company's ability to meet its future financing
requirements, and the success of future operations. These factors
raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans regarding those matters also are
described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/Williams & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
March 30, 2000 (except for Note 2 as to which the date is September 5,
2000)
F-1
<PAGE> 25
OIL AND GAS SEEKERS, INC.
(An Exploration Stage Company)
BALANCE SHEETS
December 31,
1999
ASSETS
CURRENT ASSETS
Cash $ 105,619
-----------
Total Current Assets 105,619
-----------
TOTAL ASSETS $ 105,619
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Rent payable to related party $ 1,000
-----------
Total Current Liabilities 1,000
-----------
COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' EQUITY
Common stock, $0.00001 par value; 100,000,000 shares
authorized, 38,362,000 shares issued and outstanding, 384
Additional paid-in capital 108,016
Deficit accumulated during exploration stage
(3,781)
-----------
Total Stockholders' Equity 104,619
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 105,619
===========
The accompanying notes are an integral part of these financial
statements.
F-2
<PAGE> 26
OIL AND GAS SEEKERS, INC.
(A Exploration Stage Company)
STATEMENT OF OPERATION
Inception
(03/19/99)
to 12/31/99
REVENUES $ -
GENERAL AND ADMINISTRATIVE
EXPENSES
Rent 1,000
Taxes and licenses 85
Legal fees 1,916
Transfer agent fees 745
Miscellaneous 35
----------
Total Expenses 3,781
----------
NET LOSS $ (3,781)
==========
BASIC AND DILUTED LOSS PER
COMMON SHARE $ nil
==========
WEIGHTED AVERAGE NUMBER
OF BASIC AND DILUTED COMMON
SHARES OUTSTANDING 37,992,000
==========
The accompanying notes are an integral part of these financial
statements.
F-3
<PAGE> 27
OIL AND GAS SEEKERS, INC.
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Common Stock Additional During
Number Paid-in Exploration
of Shares Amount Capital Stage Total
Stock issued in
March 1999 for
an average of
$0.003 per share 38,362,000 $ 384 $ 108,016 $ - $ 108,400
Net loss for the
year ending
December 31, 1999 - - - (3,781) (3,781)
---------- ----- --------- -------- ---------
Balance,
December 31, 1999 38,362,000 $ 384 $ 108,016 $ (3,781) $ 104,619
========== ===== ========= ======== =========
The accompanying notes are an integral part of these financial
statements.
F-4
<PAGE> 28
OIL AND GAS SEEKERS, INC.
(A Exploration Stage Company)
STATEMENT OF CASH FLOWS
Inception
(March 19,1999)
to
December 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,781)
Adjustments to reconcile net loss to net
cash used by operating activities:
Increase in rent payable 1,000
----------
Net cash used by operating activities (2,781)
----------
CASH FLOWS FROM INVESTING ACTIVITIES: -
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of common stock 108,400
----------
Net cash provided by financing activities 108,400
----------
Net increase in cash 105,619
Cash beginning of period -
----------
Cash at end of period $ 105,619
==========
Supplemental cash flow disclosures:
Income taxes paid $ -
==========
Interest paid $ -
==========
The accompany notes are an integral part of these financial statements.
F-5
<PAGE> 29
OIL AND GAS SEEKERS, INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Oil and Gas Seekers, Inc. (hereinafter "the Company") was incorporated
on March 19, 1999 under the laws of the State of Nevada for the purpose
of acquiring, exploring and developing natural resource properties.
The Company maintains an office in Spokane, Washington. The Company's
fiscal year end is December 31.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Oil and Gas Seekers,
Inc. is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of
the Company's management which is responsible for their integrity and
objectivity. These accounting policies conform to generally accepted
accounting principles and have been consistently applied in the
preparation of the financial statements.
Exploration Stage Activities
The Company has been in the exploration stage since its formation in
March 1999 and has not yet realized any revenues from its planned
operations. It is primarily engaged in the acquisition, exploration
and development of natural resource properties. Upon location of a
commercial reserve, the Company expects to actively prepare the site
for extraction and enter a development stage.
Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting.
Loss Per Share
Loss per share was computed by dividing the net loss by the weighted
average number of shares outstanding during the period. The weighted
average number of shares was calculated by taking the number of shares
outstanding and weighting them by the amount of time that they were
outstanding. Basic and diluted loss per share is the same, as there
were no common stock equivalents outstanding.
Revenues
As noted in its statement of operations, Oil and Gas Seekers, Inc. has
not produced any revenue in the period ended December 31, 1999. When
the Company does produce revenue, sales will be recognized at the point
of passage of title specified in the contract.
Oil and Gas Rights
Leases to acquire oil and gas rights will be amortized over the life of
the leases, as they are acquired.
F-6
<PAGE> 30
OIL AND GAS SEEKERS, INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Inventories
At the point the Company obtains inventories, they will be valued at
the lower of cost or market. The cost of inventories of crude oil and
petroleum products will be determined on the last-in, first-out (LIFO)
method.
Cash and Cash Equivalents
For purposes of its statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or
less to be cash equivalents.
Provision for Taxes
At December 31, 1999, the Company had net operating loss of
approximately $3,700. No provision for taxes or tax benefit has been
reported in the financial statements, as there is not a measurable
means of assessing future profits or losses.
Use of Estimates
The process of preparing financial statements in conformity with
generally accepted accounting principles requires the use of estimates
and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Accordingly, upon settlement, actual results
may differ from estimated amounts.
Impaired Asset Policy
In March 1995, the Financial Accounting Standards Board issued a
statement titled "Accounting for Impairment of Long-lived Assets." In
complying with this standard, the Company will review its long-lived
assets quarterly to determine if any events or changes in circumstances
have transpired which indicate that the carrying value of its assets
may not be recoverable. The Company will determine impairment by
comparing the undiscounted future cash flows estimated to be generated
by its assets to their respective carrying amounts.
Exploration Costs
In accordance with generally accepted accounting principles, the
Company will expense exploration costs as incurred.
Environmental Expenditures
The Company will accrue for environmental remediation liabilities when
it is probable that such liability exists, based on past events or
known conditions, and the amount of such loss can be reasonably
estimated. If the Company can only estimate a range of probable
liabilities, the minimum, undiscounted expenditure necessary to satisfy
the Company's future obligation is accrued. Due to the fact that the
Company has not started any production activities, there are no known
liabilities at December 31, 1999.
F-7
<PAGE> 31
OIL AND GAS SEEKERS, INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Going Concern
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern.
As shown in the accompanying financial statements, the Company incurred
a net loss of $3,781 for the period ended December 31, 1999. The
Company has generated no revenues since inception. The Company has
been in exploration stage since inception. The future of the Company
is dependent upon its ability to obtain financing and sale of
securities. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets,
or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
Derivative Instruments
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This standard
establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the
consolidated balance sheet and measure those instruments at fair value.
At December 31, 1999, the Company has not engaged in any transactions
that would be considered derivative instruments or hedging activities.
Compensated Absences
Currently, the Company has no employees; therefore, no policy regarding
compensated absences has been established. The Company will establish
a policy to recognize the costs of compensated absences at the point in
time that it has employees.
Fair Value of Financial Instruments
The carrying amounts for cash, marketable securities, accounts
receivable, accounts payable, notes payable and accrued liabilities
approximate their fair value.
NOTE 3 - COMMON STOCK
In March 1999, 38,362,000 shares of common stock were issued for cash at
an average price of $0.003 per share.
F-8
<PAGE> 32
OIL AND GAS SEEKERS, INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999
NOTE 4 - RELATED PARTIES AND RENT PAYABLE
The Company occupies office space provided by Mr. Harold Kaufman Jr.,
the Secretary of the Company, at a rate of $1,000 per year. At
December 31, 1999 this rent amount had not been paid and was accrued as
a related party payable.
NOTE 5 - YEAR 2000 ISSUES
Like other companies, Oil and Gas Seekers, Inc. could be adversely
affected if the computer systems the Company, its suppliers or
customers use do not properly process and calculate date-related
information and data from the period surrounding and including January
1, 2000. This is commonly known as the "Year 2000" issue.
Additionally, this issue could impact non-computer
systems and devices such as production equipment and elevators, etc.
Any costs associated with Year 2000 compliance are expensed when
incurred. At this time, there have been no known adverse conditions
caused by the year 2000 issue.
NOTE 6 - CONCENTRATION OF CREDIT RISK FOR CASH HELD AT BANKS
The Company maintains cash balances at one bank. Accounts are insured
by the Federal Deposit Insurance Corporation up to $100,000. At
December 31, 1999 the cash balance exceeded this insured amount by
$5,619.
NOTE 7 - SUBSEQUENT EVENTS
On March 31, 2000, the Company acquired for $15,000 in cash a 100%
leasehold interest and a 78% net revenue interest in a lease containing
oil and gas rights in Stephens County, Texas. The lease is limited to
two years and can be extended under certain circumstances in the event
of actual drilling or production.
F-9
<PAGE> 33
OIL & GAS SEEKERS, INC.
(An Exploration Stage Enterprise)
TABLE OF CONTENTS
June 30, 2000
ACCOUNTANT'S REVIEW REPORT
FINANCIAL STATEMENTS F-10
Balance Sheets F-11
Statements of Operations F-12
Statement of Stockholders' Equity (Deficit) F-13
Statements of Cash Flows F-14
NOTES TO FINANCIAL STATEMENTS F-15
<PAGE> 34
Board of Directors
Oil and Gas Seekers, Inc.
Spokane, Washington
ACCOUNTANT'S REVIEW REPORT
We have reviewed the accompanying balance sheet of Oil and Gas Seekers,
Inc. (an exploration stage enterprise) as of June 30, 2000 and the
related statements of operations, stockholders' equity and cash flows
for the six months ended June 30, 2000, and for the period from March
19, 1999 (inception) to June 30, 2000. These financial statements are
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons
responsible for financial and accounting matters. It is substantially
less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements in order
for them to be in conformity with generally accepted accounting
principles.
The financial statements for the period ended December 31, 1999 were
audited by us and we expressed an unqualified opinion on them in our
report dated March 30, 2000 (except for Note 2 as to which the date is
September 5, 2000), but we have not performed any auditing procedures
since that date.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2,
the Company has been in the exploration stage since its inception on
March 19, 1999. Realization of a major portion of the assets is
dependent upon the Company's ability to meet its future financing
requirements, and the success of future operations. These factors raise
substantial doubt about the Company's ability to continue as a going
concern. Management's plans regarding those matters also are described
in Note 2. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Williams & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
September 14, 2000
F-10
<PAGE> 35
OIL & GAS SEEKERS, INC.
(AN EXPLORATION STAGE ENTERPRISE)
BALANCE SHEETS
June 30, December 31,
2000 1999
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 70,034 $ 105,619
--------- ---------
Total Current Assets 70,034 105,619
--------- ---------
PROPERTY, PLANT AND EQUIPMENT
Oil and gas properties using successful
efforts accounting:
Unproved properties, oil and gas lease 15,000 -
--------- ---------
Total Property Plant and Equipment 15,000 -
--------- ---------
TOTAL ASSETS $ 85,034 $ 105,619
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,462 $ -
Rent payable to related party 250 1,000
--------- ---------
Total Current Liabilities 1,712 1,000
--------- ---------
COMMITMENTS AND CONTINGENCIES - -
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $0.00001 par value;
100,000,000 shares authorized,
38,362,000 shares issued and
outstanding 384 384
Additional paid-in capital 108,016 108,016
Deficit accumulated during
exploration stage (25,078) (3,781)
--------- ---------
Total Stockholders' Equity 83,322 104,619
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 85,034 $ 105,619
========= =========
See accompanying notes and accountant's review report.
F-11
<PAGE> 36
OIL & GAS SEEKERS, INC.
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
For the
Period
For the For the 03/19/99
Three Months Ended Six Months Ended (Inception)
06/30/00 06/30/99 06/30/00 06/30/99 to 06/30/00
(Unaudited) (Unaudited) (Unaudited)
REVENUES $ - $ - $ - $ - $ -
---------- ---------- ---------- ---------- ----------
GENERAL AND ADMINISTRATIVE
EXPENSES
Rent 250 250 500 500 1,500
Taxes and licenses 200 - 200 85 385
Accounting expense 3,242 - 5,242 - 5,242
Legal fees 5,000 1,916 15,000 1,916 16,916
Transfer agent fees - - 295 - 930
Miscellaneous 35 17 70 17 105
---------- ---------- ---------- ---------- ----------
Total Expenses 8,727 2,183 21,297 2,518 25,078
---------- ---------- ---------- ---------- ----------
LOSS BEFORE
INCOME TAXES (8,727) (2,183) (21,297) (2,518) (25,078)
INCOME TAXES - - - - -
---------- ---------- ---------- ---------- ----------
NET LOSS $ (8,727) $ (2,183) $ (21,297) $ (2,518) $ (25,078)
========== ========== ========== ========== ==========
BASIC AND DILUTED
NET LOSS PER
COMMON SHARE $ nil $ nil nil $ nil $ nil
========== ========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER
OF BASIC AND DILUTED
COMMON SHARES
OUTSTANDING 38,362,000 38,325,297 38,362,000 38,218,553 38,332,102
========== ========== ========== ========== ==========
See accompanying notes and accountant's review report.
F-12
<PAGE> 37
OIL & GAS SEEKERS, INC.
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Common Stock Additional During
Number Paid-in Exploration
of Shares Amount Capital Stage Total
Stock issued in March
1999 for an average of
$0.003 per share 38,367,000 $ 384 $ 108,016 $ - $ 108,400
Net loss for the period
from inception
to December 31, 1999 - - - (3,781) (3,781)
---------- ----- --------- --------- ---------
Balances at
December 31, 1999 38,362,000 384 108,016 (3,781) 104,619
Net loss for the six
months ended
June 30, 2000 - - - (21,197) (21,197)
---------- ----- --------- --------- ---------
Balances at
June 30, 2000
(Unaudited) 38,362,000 $ 384 $ 108,016 $ (25,078) $ 83,322
========== ===== ========= ========= =========
See accompanying, notes and accountant's review report.
F-13
<PAGE> 38
OIL & GAS SEEKERS, INC.
(AN EXPLORATION STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
For the
For the For the period
Six Months Six Months 03/19/99
Ended Ended (Inception)
06/30/00 06/30/99 to 06/30/00
(Unaudited) (Unaudited)
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (21,297) $ (2,518) $ (25,078)
Adjustments to reconcile net
loss to net cash used
by operating activities:
Increase in accounts payable 1,462 - 1,462
Increase (decrease) in
related parties payable (750) 500 250
--------- --------- ---------
Net cash used by
operating activities (20,585) (2,018) (23,366)
--------- --------- ---------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of
oil and gas lease (15,000) - (15,000)
--------- --------- ---------
Net cash used by
investing activities (15,000) - (15,000)
--------- --------- ---------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from sales
of common stock - 108,400 108,400
--------- --------- ---------
Net cash provided by
financing activities - 108,400 108,400
--------- --------- ---------
Net increase (decrease)
in cash (35,585) 106,382 70,034
Cash beginning of period 105,619 - -
--------- --------- ---------
Cash at end of period $ 70,034 $ 106,382 $ 70,034
========= ========= =========
Supplemental cash
flow disclosures:
Income taxes paid $ - $ - $ -
========= ========= =========
Interest paid $ - $ - $ -
========= ========= =========
See accompanying notes and accountant's review report.
F-14
<PAGE> 39
OIL AND GAS SEEKERS, INC.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2000
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Oil and Gas Seekers, Inc. (hereinafter "the Company") was incorporated on
March 19, 1999 under the laws of the State of Nevada for the purpose of
acquiring, exploring and developing natural resource properties. The
Company had no activity, other than common stock sales, prior to April 1,
1999 (See Note 3). The Company maintains an office in Spokane,
Washington. The Company's fiscal year-end is December 31.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in
understanding the Company's financial statements. The financial
statements and notes are representations of the Company's management
which is responsible for their integrity and objectivity. These
accounting policies conform to generally accepted accounting principles
and have been consistently applied in the preparation of the financial
statements.
Interim Financial Statements
The interim financial statements as of June 30, 2000 and for the six
months ended June 30, 2000, included herein, have been prepared for the
Company without audit. They reflect all adjustments, which are, in the
opinion of management, necessary to present fairly the results of
operations for these periods. All such adjustments are normal recurring
adjustments. The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full fiscal
year.
Use of Estimates
The process of preparing financial statements in conformity with
generally accepted accounting principles requires the use of estimates
and assumptions regarding certain types of assets, liabilities, revenues,
and expenses. Accordingly, upon settlement, actual results may differ
from estimated amounts.
Accounting Method
The Company's financial statements are prepared using the accrual method
of accounting.
Exploration Stage Activities
The Company has been in the exploration stage since its formation in
March 1999 and has not yet realized any revenues from its planned
operations. It is primarily engaged in the acquisition, exploration and
development of natural resource properties. Upon location of a commercial
reserve, the Company expects to actively prepare the site for extraction
and enter a development stage.
F-15
<PAGE> 40
OIL AND GAS SEEKERS, INC.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
June 30,2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash and Cash Equivalents
For purposes of its statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or
less to be cash equivalents.
Fair Value of Financial Instruments
The carrying amounts for cash, marketable securities, accounts
receivable, accounts payable, notes payable and accrued liabilities
approximate their fair value.
Derivative Instruments
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This standard establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives
as either assets or liabilities in the balance sheets and measure those
instruments at fair value.
At June 30, 2000, the Company has not engaged in any transactions that
would be considered derivative instruments or hedging activities.
Inventories
At the point the Company obtains inventories, they will be valued at the
lower of cost or market. The cost of inventories of crude oil and
petroleum products will be determined on the last-in, first-out (LIFO)
method.
Oil and Gas Properties
The Company uses the successful efforts method of accounting for oil and
gas producing activities. Costs to acquire mineral interests in oil and
gas properties, to drill and equip exploratory wells that find proved
reserves, and to drill and equip development wells are capitalized. Costs
to drill exploratory wells that do not find proved reserves, geological
and geophysical costs, and costs of carrying and retaining unproved
properties are expensed.
Unproved oil and gas properties that are individually significant are
periodically assessed for impairment of value, and a loss is recognized
at the time of impairment by providing an impairment allowance. Other
unproved properties are amortized based on the Company's experience of
successful drilling and average holding period. Capitalized costs of
producing oil and gas properties, after considering estimated
dismantlement and abandonment costs and estimated salvage values, are
depreciated and depleted by the unit-of-production method. Support
equipment and other property and equipment are depreciated over their
estimated useful lives.
<PAGE> 41
OIL AND GAS SEEKERS, INC.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Oil and Gas Properties (continued)
On the sale or retirement of a complete unit of a proved property, the
cost and related accumulated depreciation, depletion, and amortization
are eliminated from the property accounts, and the resultant gain or loss
is recognized. On the retirement or sale of a partial unit of proved
property, the cost is charged to accumulated depreciation, depletion, and
amortization with a resulting gain or loss recognized in income.
On the sale of an entire interest in an unproved property for cash or
cash equivalent, gain or loss on the sale is recognized, taking into
consideration the amount of any recorded impairment if the property had
been assessed individually. If a partial interest in an unproved property
is sold, the amount received is treated as a reduction of the cost of the
interest retained.
Impaired Asset Policy
In March 1995, the Financial Accounting Standards Board issued a
statement titled "Accounting for Impairment of Long-lived Assets." In
complying with this standard, the Company will review its long-lived
assets quarterly to determine if any events or changes in circumstances
have transpired which indicate that the carrying value of its assets may
not be recoverable. The Company will determine impairment by comparing
the undiscounted future cash flows estimated to be generated by its
assets to their respective carrying amounts.
Revenues
As noted in its statement of operations, Oil and Gas Seekers, Inc. has
not produced any revenue in the period ended December 31,1999 or in the
six months ended June 30, 2000. When the Company does produce revenue,
sales will be recognized at the point of passage of title specified in
the contract.
Exploration Costs
In accordance with generally accepted accounting principles, the Company
will expense exploration costs as incurred.
Compensated Absences
Currently, the Company has no employees; therefore, no policy regarding
compensated absences has been established. The Company will establish a
policy to recognize the costs of compensated absences at the point in
time that it has employees.
Provision for Taxes
At June 30, 2000, the Company had accumulated net operating loss of
approximately $25,000. No provision for taxes or tax benefit has been
reported in the financial statements, as there is not a measurable means
of assessing future profits or losses.
F-17
<PAGE> 42
OIL AND GAS SEEKERS, INC.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Loss Per Share
Loss per share was computed by dividing the net loss by the weighted
average number of shares outstanding during the period. The weighted
average number of shares was calculated by taking the number of shares
outstanding and weighting them by the amount of time that they were
outstanding. Basic and diluted loss per share is the same, as there were
no common stock equivalents outstanding
Environmental Expenditures
The Company will accrue for environmental remediation liabilities when it
is probable that such liability exists, based on past events or known
conditions, and the amount of such loss can be reasonably estimated. If
the Company can only estimate a range of probable liabilities, the
minimum, undiscounted expenditure necessary to satisfy the Company's
future obligation will be accrued. Due to the fact that the Company has
not started any production activities, there are no known liabilities at
June 30, 2000.
Going Concern
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern.
As shown in the accompanying financial statements, the Company incurred a
cumulative net loss of $25,078 for the period March 19, 1999 (inception)
through June 30, 2000. The Company has generated no revenues since
inception. The Company has been in exploration stage since inception. The
future of the Company is dependent upon its ability to obtain financing
and sell shares of its stock. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
NOTE 3 - COMMON STOCK
The Company has the authority to issue 100,000,000 shares of common
stock, having a par value of $0.0001 per share. In March 1999, 38,362,000
shares of common stock were issued for cash at an average price of $0.003
per share.
NOTE 4 - RELATED PARTIES AND RENT PAYABLE
The Company occupies office space provided by Mr. Harold Kaufman Jr., the
secretary of the Company, at a rate of $1,000 per year. At June 30, 2000,
rent expense of $250 for the second quarter was accrued as a related
party payable.
F-18
<PAGE> 43
OIL AND GAS SEEKERS, INC.
(AN EXPLORATION STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2000
NOTE 5 - YEAR 2000 ISSUES
Like other companies, Oil and Gas Seekers, Inc. could be adversely
affected if the computer systems the Company, its suppliers or customers
use do not properly process and calculate daterelated information and
data from the period surrounding and including January 1, 2000. This is
commonly known as the "Year 2000" issue. Additionally, this issue could
impact non-computer systems and devices such as production equipment and
elevators, etc. Any costs associated with Year 2000 compliance are
expensed when incurred. At this time, there have been no known adverse
conditions caused by the year 2000 issue.
NOTE 6 - OIL AND GAS LEASE
On March 31, 2000, the Company acquired for $15,000 a 100% leasehold
interest and a 78% net revenue interest in a lease containing oil and gas
rights in Stephens County, Texas. The lease is limited to two years and
can be extended under certain circumstances in. the event of actual
drilling or production.
F-19
<PAGE> 44
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no disagreements on accounting and financial
disclosures through the date of this Registration Statement.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(1) List of Financial Statements
Audited
Independent Auditors' Report
Balance Sheet
Statement of Income
Statement of Cash Flows
Statement of Shareholders' Equity
Notes to Financial Statements
Unaudited
Independent Auditors' Report
Balance Sheet
Statement of Income
Statement of Cash Flows
Statement of Shareholders' Equity
Notes to Financial Statements
(2) List of Exhibits.
Exhibit No. Description
3.1 * Articles of Incorporation.
3.2 * Bylaws.
4.1 * Specimen Stock Certificate.
10.1 * Oil and Gas Lease.
27.2 Financial Data Schedule.
* Previously filed.
<PAGE> 45
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
OIL AND GAS SEEKERS, INC.
BY: /s/ Gary Ruff
Gary Ruff, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Form 10-SB/A-1 Registration Statement has been signed by the following
persons in the capacities and on the dates indicated:
Signatures Title Date
/s/ Gary Ruff
Gary Ruff President, Chief Executive October 25, 2000
Officer and a member of the
Board of Directors
/s/ Harold Kaufman, Jr.
Harold Kaufman, Jr. Secretary/Treasurer, Chief October 25, 2000
Financial Officer and a
Member of the Board of
Directors
/s/ Albert J. Schauble, Jr.
Albert J. Schauble, Jr. Vice President and a member October 25, 2000
of the Board of Directors
