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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-3
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.
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Geological interpretation is based upon data recovered from existing
oil and gas wells in an area and other sources. Such information is
either purchased from the company that drilled the wells or becomes
public knowledge through state agencies after a period of years.
Through analysis of rock types, fossils and the electrical and
chemical characteristics of rocks from existing wells, the Company
can construct a picture of rock layers in the area. 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.
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 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.
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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 the Company's
securities being listed for trading on the Bulletin Board operated by
the National Association of Securities Dealers. The Company
believes that if its securities are listed for trading on the
Bulletin Board, it will be easier for it to raise funds since there
will be a place for investors to liquidate their investment.
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
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.
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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 affected.
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, 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.
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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
- 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:
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- 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.
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.
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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.
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.
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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 will only 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. During the last five
years the price of oil has fluctuated from a low of approximately
$11.00 per barrel to a high of approximately $36.00 per barrel. The
price of gas has fluctuated from a low of approximately $1.80 per
1,000 cubic feet to a high of approximately $9.00 per 1,000 cubic
feet. At the present time the price of oil is near $29.00 per
barrel. The price of natural gas is near $7.50 per 1,000 cubic feet.
There is no assurance that in the future prices for oil and gas
production will stabilize at current rates.
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
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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. 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.
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."
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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 stock 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. See "Market Price for
Common Equity and Other Shareholder Matters."
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. In order to drill a well
on its property, the Company will have to hire a drilling contractor.
The Company believes that it has sufficient funds to commence its
drilling operations, but not enough money to complete its well,
should oil and/or gas be discovered. 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 hire a geologist or engineer and there is no
assurance that it will be able to hire and 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
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
<PAGE> 13
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 outstanding
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. Further, we do not permit cumulative voting
for directors.
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 it 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 purchase price of
stock issued to the Company's officers, directors and Doris Ruff was
not at arm's length, but was determined by the Company's board of
directors to be enough money to acquire one oil and gas lease. The
number of shares allocated to them was determined by the Company's
board of directors to invest Messrs Ruff and Kaufman and Doris Ruff
with control of the Company during its exploration stage. Subsequent
sales of shares were arm's length and were intended to raise enough
capital to complete one well. While no risk will result to the
Company as a result of the foregoing transactions, 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 in that the selling
shareholders will have a depressive effect on the market price of the
Company's stock. See "Principal Shareholders."
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.
<PAGE> 14
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. No Cumulative Voting or Preemptive Rights. There are no
preemptive rights in connection with the Company's Common Stock and
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. Cumulative voting, in some cases, will
allow a minority group to elect at least one director to the board.
Because there is no provision for cumulative voting, a minority group
will not be able to elect any 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
estimates that it will need approximately $50,000 to complete its
well.
The Company's positive cash flow last year came solely from new
finances rather than income. The Company intends to reduce its
dependence on new finances 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 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.
The Company's auditors have issued a going concern opinion.
This means that the Company's auditors believe there is doubt that it
can continue as an on-going business for the next twelve months
unless it obtains additional capital. This is because the Company
has not generated any revenues and no revenues are anticipated until
it successfully completes one producing oil or gas well.
<PAGE> 15
Accordingly, the Company must raise cash from sources other than the
sale of oil or gas found on its property. That cash must be raised
from other sources. The Company's only other source for cash at this
time are investments or loans by others in the Company. The Company
must raise cash to complete its well and stay in business.
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 lease is located approximately 130-150 miles west of
Dallas, Texas near Breckenridge, Texas and contains three hundred
acres or approximately one-half square mile. The surface of the
lease 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.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
<PAGE> 16
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 41 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
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.
<PAGE> 17
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.
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.
<PAGE> 18
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, Jr. 1998 0 0 0 0 0 0 0
Vice President 1997 0 0 0 0 0 0 0
Harold 1999 0 0 0 0 0 0 0
Kaufman, Jr. 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."
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.
<PAGE> 19
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 December 19, 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 December 19, 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
December 19, 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 the Company may be
held as designated in the notice of annual meeting. The notice of the
annual meeting of shareholders will be mailed to each shareholder of
the Company.
Special meetings of the shareholders may be called at any time
by the holders of ten percent (10%) of the voting shares of the
Company, or by the President, or by the Board of Directors or a
majority thereof. The notice of a special meeting of shareholders
will be mailed to each shareholder.
The written notice of annual or special meetings of shareholders
will state 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. Such notice shall be given not less than ten (10)
nor more than fifty (50) days prior to the date of the meeting.
A majority of the outstanding shares of the Company entitled to
vote, represented in person or by proxy, shall constitute a quorum at
an annual or special meeting of shareholders.
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.
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.
<PAGE> 22
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 - 108,40 108,400
--------- --------- ----------
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.
The Company's continued operations depends upon its ability to raise
additional funds. Management's plans are to obtain such 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.
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 calculated 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 - 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 December 27, 2000
Officer and a member of the
Board of Directors
/s/ Harold Kaufman, Jr.
Harold Kaufman, Jr. Secretary/Treasurer, Chief December 27, 2000
Financial Officer and a
Member of the Board of
Directors
________________________
Albert J. Schauble, Jr. Vice President and a member December __, 2000
of the Board of Directors
