U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR THE REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS Under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934
TIDELANDS OIL & GAS CORPORATION
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(Name of Small Business Issuer in its Charter)
Nevada 66-0549380
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(State of Incorporation) (IRS Employer Identification No.)
P.O. Box 270234, Corpus Christi, TX 78247
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number,( 361 ) 241 - 7748
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Securities to be registered under Section 12(b) of the Act: None
Title of each class Name of each exchange on which
to be so registered each class is to be registered
- -------------------------------- --------------------------------
- -------------------------------- --------------------------------
Securities to be registered under Section 12(g) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Common Stock, par value $0.001 OTC BB
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- -------------------------------- --------------------------------
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<PAGE>
PART I
Item 1. Description of Business.
(a) Forward-looking Statements. Certain statements in this Form 10SB
Registration Statement, particularly under Items 1 and 2, constitute "forward-
looking statements" with the meaning of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements, expressed or implied by the
forward-looking statements. All statements other than statements of historical
fact, including, among other things, statements regarding our future financial
position, business strategy, reserve information, projected levels of
production, projected costs and plans and objectives of management for future
operations, are forward-looking statements.
We typically use words such as "expect", "anticipate", "estimate",
"strategy", "intend", "plan", and "believe" or the negative of those terms or
other variations of them or by comparable terminology to identify our forward-
looking statements. In particular, statements, express or implied, concerning
future operations, operating results or the ability to generate income or cash
flows are forward-looking statements.
Although we believe our expectations reflected in forward-looking
statements are based on reasonable assumptions, no assurance can be given that
these expectations will be achieved. Important factors that could cause actual
results to differ materially from the expectations reflected in the forward-
looking statements include, among others:
-timing and extent of changes in commodity prices for crude oil,
natural and related products and interest rates;
-extent of our success in discovering, developing, marketing and
producing reserves and in acquiring oil and gas products;
-political developments around the world;
-financial market conditions.
In light of the risks, uncertainties and assumptions, the events
anticipated by our forward-looking statements might not occur. We undertake no
obligation to update or revise our forward-looking statements, whether as a
result of new information, future events or otherwise.
(b) Business. Tidelands Oil & Gas Corporation (the "Company"), formerly
known as C2 Technologies, Inc., was incorporated under the laws of the State of
Nevada on February 25, 1997. C2 Technologies, Inc. changed its name to Tidelands
Oil & Gas Corporation on November 19, 1998. The Company has two operating
subsidiaries named Tidelands Oil Corporation (TOC) and Tidelands Gas Corporation
(TGC), both Texas corporations.
Tidelands Oil Corporation was formed in May 1985. Since inception and until
recently, Tidelands Oil Corporation has devoted virtually all of its efforts to
acquiring control of leases which comprise the remaining portion of the Sacatosa
Field in Maverick County, Texas. This acreage is located on the Ewing Halsell
Foundation Ranch also known as the Farias Ranch. These oil and gas leases
directly offset Continental Oil Company (CONOCO) which has leases on the Chittam
Ranch. The CONOCO leases have produced in excess of 40,000,000 barrels of oil
and 20 BCF of gas. Tideland's leases have approximately 156 oil and gas wells
scattered across the leases with largest concentration being on the northern
portion of
<PAGE>
the acreage offsetting CONOCO. Tidelands has began a reworking program to place
all of the wells back into production.
Tidelands Gas Corporation was formed on August 29, 1996. Tidelands Gas
Corporation was formed primarily for the purpose of acquiring the Delhi Pipeline
System for use as a gas transportation outlet for the shallow gas reserves
underlying Tideland's leases. Engineering reports estimate that one zone, above
1500' in depth, which the leases contain in excess of 17 BCF of recoverable gas.
Tidelands has drilled numerous gas wells on the leased acreage.
Tidelands Gas Corporation organized two Texas Limited Liability companies, Rio
Bravo Energy, LLC and Sonora Pipeline, LLC. Tidelands owns fifty percent of each
LLC. The remaining fifty percent is owned by Hudson SVD, LLC. Sonora will
finance the testing and operational integrity of the Tidelands gas pipeline and
make is operational. Rio Bravo Energy, LLC. purchased the Chittim gas processing
plant from Conoco, Inc.
Sonora will operate the gas pipeline transporting gas to the gas plant. Sonora
will transport gas produced from Tideland's property as well as from other gas
suppliers. Rio Bravo will operate the gas plant. It will process the natural gas
into gas products such as natural gasoline, propane, butane. Rio Bravo will also
market the gas products.
Sonoro Pipeline and Rio Bravo will transport and process gas for suppliers such
as Tidelands, Merit Energy, Cononco, Cuantro Petroluem, Inc., Prime Operating,
Inc., The Exploration Company,. The maximum operating capacity of gas plant is
10 million cubic feet of gas per day. The Sonoro pipeline capacity is higher.
Rio Bravo intends to ship all propane and butane products to Mexico and to sell
natural gasolines to Enron Oil Trading and Transportation Company.
The Texas Railroad Commission regulates all aspects of the production,
transportation and processing of petroleum products.
COMPETITION
Tidelands will actively compete for reserve acquisitions and
exploration/exploitation leases, licenses, gas suppliers and petroleum product
purchasers. This competition will be against companies with greater financial
and other resources. Competitive factors will include price, contract terms and
quality of service, including pipeline connection times and distribution
efficiencies and financial resources. The Company will face competition from
other producers and suppliers, including competition from other local and world
wide energy suppliers.
EMPLOYEES
The Company has seven employees, including the Company officers, two plant
operators and three field personnel.
Item 2. Management's Discussion and Analysis or Plan of Operation.
The following discussion and analysis should be read in conjunction
with "Selected Consolidated Financial Data" and the Company's consolidated
Financial Statements and Notes thereto included elsewhere in this document.
<PAGE>
Overview
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain items from
the Company's Consolidated Statements of Operations, expressed as a percentage
of total expenses.
For Nine Months Ended September 30, 1999
Revenues of $24,417 resulted from gas and oil sales. Lease operating costs of
$86,119, depreciation and amortization of $151,832 and equity investment loss of
$12,593 were incurred. General and administrative costs were $392,691.
For the Nine Months Ended September 30, 1998
Revenues during this period were zero. There were no lease operating costs.
Depreciation and amortization were $133. General and administrative expenses
were $10,588.
Year 1998
Revenues of $14,381 resulted from gas and oil sales. Lease operating costs of
$15,691, depreciation and amortization of $51,776 and a loss in the equity of
joint ventures of $7,254 were incurred. General and administrative costs of
$164,062 consisted of professional fees of $29,600, reorganization costs of
$29,289, personnel costs of $79,590 and $25,583 for miscellaneous expenses.
Year 1997
The Company incorporated in February and incurred $15,465 of miscellaneous
expenses.
LIQUIDITY AND CAPITAL RESOURCES
Year 1998
The Company required $76,691 from operations, acquired oil and gas properties
and additional investments of $7,812 and incurred long-term debt of $37,000. On
February 1, 1999, the Company obtained a $1,000,000 credit line to be funded on
an as-needed basis.
Year 1997
The Company received $21,200 in cash and a note for $70,000 resulting from the
sale of common stock.
Item 3. Description of Property.
The Rio Bravo gas plant is located Maverick County, Texas. The oil and
gas leases are located in Maverick and Dimmit Counties, Texas.
The following table sets forth our net proved and proved developed
reserves at December 31, 1998, as set forth in the financial statements on the
Consolidated Supplemental Information (unaudited).
Table 1. Net Proved and Proved Developed Reserve Summary
Natural Gas (Mcf)
Proved developed and Undeveloped reserves 19,995,825
Proved Developed reserves 2,934,851
<PAGE>
Production -0-
Oil (BBLS)
Proved developed and undeveloped reserves 6,984,376
Proved developed reserves 3,919,223
Production 1,316
ACREAGE
The following table summarizes our developed and undeveloped acreage at
December 31, 1998 in Texas. We have excluded acreage in which the Company's
interest is limited to owned royalty, overriding royalty and other similar
interests.
Table 2. Acreage
Location Developed Undeveloped Total
Gross Net Gross Net
Oil 2429 1821 9419 7064 8885
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Gas 2280 1710 9908 7431 9711
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PRODUCING WELLS
The following table reflects the Company's ownership interests in gas
and oil wells located in Texas at December 31, 1998.
Table 3.
Gross Net
Oil 133 99.76
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Gas 23 4.31
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DRILLING AND ACQUISITION ACTIVITIES
During the year ended December 31, 1998, we conducted no drilling
activity.
PRESENT ACTIVITIES
No drilling operations are presently in process. Current activities
include reworking wells and placing wells back into production.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Table 1 lists the persons who are known to the Company to be the owners
of more than five percent of the Company's equity shares according to the
stockholder list provided by the Company's transfer agent as of February 2,
2000.
<PAGE>
<TABLE>
<CAPTION>
(a) Beneficial Ownership of more than 5% based on 15,245,489 shares issued
and outstanding.
Table 1.
(1) (2) (3) (4)
Title of Class Name and Address Amount and Nature Percent of
Class
<S> <C> <C> <C>
Common Michael Ward 3,513,125 20.16%
9309 North Star
Corpus Christi, TX
Common Royis Ward 3,513,125 20.16%
5902 Fenway
Corpus Christi, TX
Common Cede & Co 4,523,471 25.9%
P.O. Box 20
Bowling Green Station, NY
*Common Pan Pacific Investments, Ltd. 1,000,000 5.6%
Buckingham Square Penthouse
Seven Mile Beach
West Bay Road
Grand Cayman, Cayman Island
British West Indies
* Beneficial ownership based on outstanding common stock option to purchase
1,000,000 shares at $1.00 per share on, or before February 2, 2002. The option
has not been exercised as of the filing date of this registration statement.
(b) Security Ownership of Management.
Table 2.
(1) (2) (3) (4)
Title of Class Name and Address Amount and Nature Percent of
Class
*Common Michael Ward 3,513,125 20.16%
9309 North Star
Corpus Christi, TX
Common Royis Ward 3,513,125 20.16%
5902 Fenway
Corpus Christi, TX
**Common Allen Alderson 315,000 .95%
6857 N. Lakeshore Dr.
Shreveport, LA 71107
**Common Danny Vines 260,000 .95%
Rt. 4, Box 2620
Lufkin, TX 75904
Common Ahmmed Karim 27,500 .95%
1532 Woods Dr.
N. Vancouver, B.C.
Canada V7R 1A9
</TABLE>
** Includes common stock options granted to Vines totaling 50,000 shares each.
<PAGE>
(c) Changes in Control. Management is unaware of any facts that would
effect a change in the control of the Company as of the date of this
Form 10 SB filing.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
(a) Identify Directors and Executive Officers. Set forth below is the
information regarding the directors and executive officers of the
company.
Table 3.
Name Age Position
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Michael Ward 44 Director, President
Royis Ward 67 Director, Secretary/Treasurer
Ahmmed Karim 28 Director, Vice President
Allen Alderson 51 Director
Danny Vines 43 Director
The Company directors are Royis Ward, Michael Ward, Ahmmen Karim, Danny
Vines and Allen Alderson.
Michael Ward is the President and Chief Executive Officer. Michael Ward
has served in his present capacities since October 21, 1998. He is Vice
President and Chief Executive Officer of Tidelands Gas Corporation. He is a
Manager and Vice President of Development of Rio Bravo Energy, LLC. Mr. Ward has
more than 25 years of diversified experience as an oil and gas professional. He
was educated in business management and administration at Southwest Texas State
University and the University of Texas. He has wide experience in the capacity
in which he successfully served in operating oil and gas companies in the United
States. During the past 20 years, he has been associated with Century Energy
Corporation where his duties and responsibilities were production and drilling
superintendent and supervised 300 re-completions and new drills in Duval County,
Texas. In association with Omega Minerals, Inc., where he was vice president and
part owner, he operated 65 wells in 23 counties in South and West Texas: 17
wells in Seminole and Osage Counties, Oklahoma, 44 wells in Neosho and Wilson
Counties, Kansas and 125 wells in Brown, Pike, Schuyler and Scott Counties.
Illinois. He was president and owner of Major Petroleum Company. He drilled,
completed and produced 42 wells in South and West Texas counties. The company
was sold. With Tidelands Oil Corporation, his duties included supervising and
performing remedial well work, work-overs and economic evaluation of the
corporate properties. The primary area of interest was in Maverick County,
Texas. He has performed project financing analysis and consulting of refinery
acquisitions for the Yemen government. Currently, he is negotiating new gas
purchase and sale contracts, supervising and administering the sale of gas line
connections and hookups.
Royis Ward is the Secretary/Treasurer and director of the Company. He
is a Manager of Rio Bravo Energy, LLC and Sonora Pipeline, LLC. He is an oil and
gas professional. He has been engaged in the oil and gas industry since
graduation from Tyler Junior College, Tyler, Texas in 1952. Initially, he was
employed as a production superintendent and landman for Coffield & Guthrie,
Inc., a large independent oil and gas operator and thereafter placed in charge
of pipeline and drilling operations from 1952-1955. In 1955. he began to develop
oil and gas properties for his own account as an independent oil and gas
operator throughout the southwest until 1962. At that time, he became President
of Omega Petroleum Corporation, Shreveport, Louisiana. Thereafter, he continued
<PAGE>
as an independent oil and gas operator drilling individual in excess of 50 wells
in the South Texas Area. In 1968, he became the President and CEO of Omega
Minerals, Inc. and was instrumental in acquiring vast oil and gas properties by
drilling, development, and re-acquisitions. In 1985, Tidelands Oil Corporation,
a Texas Corporation, was formed for the purpose of drilling and developing oil
and gas properties in South Texas. He presently serves as President of Tidelands
Oil Corporation with emphasis primarily devoted to acquisitions of oil and gas
properties.
Ahmmed Karim Vice President and director of the Company. He is a
graduate of Simon Fraser University. He holds a degree in Business
Administration, specializing in marketing and international business. Since 1995
his business experience includes work with Quest Investments Group and
Interworld Trade and Finance where his responsibilities included marketing,
finance and investor relations.
Mr. Allen Alderson a member of the Company's board of directors. He is
currently President of Falco Energy Services, L.L.C. (FES), a natural gas
marketing and transportation company formed in 1995 with its headquarters
located in Shreveport, Louisiana. Falco Energy Services is engaged in the
marketing, transportation and processing of natural gas with emphasis on the
development and operation of natural gas pipeline systems. He is President of
Rio Bravo Energy L.L.C. and Sonora Pipeline L.L.C.
Mr. Alderson attended Louisiana Tech University and the University of
Texas at Austin, graduating with a Bachelor of Science Degree in Finance. He is
a member of the Independent Petroleum Association of America, the Texas
Independent Producers and Royalty Owners Association, the Houston Energy
Association and is a charter member of the Natural Energy Services Association.
Danny Vines is a member of the Company's board of directors. He is a
graduate of Stephen F. Austin State University. He holds a Bachelor of Science
in Forestry. He has been employed with CLECO Energy L.L.C., a Houston based
energy services company. CLECO markets natural gas, provides energy management
services for industrial and end-use customers, engages in acquisition and
development of energy assets. He is also Vice President of Operations and
Secretary for Rio Bravo Energy, LLC and Sonoro Pipeline, LLC. He is President
of Hudson SVD, LLC.
(b) Identify Significant Employees. The Company has no significant
employees, as that term is defined, other than its Michael, Royis Ward
and Ahmmed Karim.
(c) Family Relationships. Royis Ward is the father of Michael Ward.
(d) Involvement in Certain Legal Proceedings. None of the Company's
directors, officers, promoters or control persons, if any, during the
past five years was, to the best of the Company's knowledge:
1. A general partner or executive officer of a business that had a
bankruptcy petition filed by or against it either at the time of the
bankruptcy or within the two years before the bankruptcy;
2. Convicted in a criminal proceeding or been subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
3. Subject to any order, judgement, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his or her involvement in any type of business, securities or
banking activities; and
4. Found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or
commodities law, and the judgement has not been reversed, suspended or
vacated.
<PAGE>
Item 6. Executive Compensation.
The Company has three executive officers, Michael, Royis Ward and
Ahmmed Karim. Michael Ward's annual salary is $120,000. Royis Ward's annual
salary is $120,000. The company has not paid any of these salaries to date and
the amounts due are accruing. These salaries include work performed by the Wards
on the Company's subsidiaries in their respective executive officer capacities.
Item 7. Certain Relationships and Related Transactions.
(a) Transactions with Management and Others.
Except as otherwise set forth in this document, no member of
management, executive officer, director, nominee for a director or security
holder who is known to the Company to own of record or beneficially more than
five percent of any class of the Company's voting securities, nor any member of
the immediate family of any of the foregoing persons, has had any direct or
indirect material interest in any transaction to which the Company was or is to
be a party.
The Company granted common stock options on January 10, 1999 to its
officers and directors totaling 1650,000 common shares execiseable on, or before
January 10, 2000. None of the options were exercised.
The Company granted common stock options on November 11, 1999 to
directors Allen Alderson and Danny Vines. The options are execiseable in three
50,000 share blocks. The exercise price is 45 cents per share. Mr. Alderson
exercised all of his options. Mr. Vines exercised 100,000 share options and has
50,000 shares remaining unexercised.
The boards of directors of the Company's wholly owned subsidiaries had
previously approved the accrual of officer salaries totaling $370,000 for
services rendered during 1998 and previous years. These salaries remain unpaid.
As of December 31, 1998, the cumulative non-interest bearing advances
due from Michael and Royis Wards, as officers and directors of the Company's
wholly owned subsidiaries, totaled $90,220.
(b) Indebtedness of Management.
No member of the Company's management is or has been indebted to the
Company since the beginning of the Company's last fiscal year or January 1,
1999.
Item 8. Description of Securities.
(a) Common or Preferred Stock.
The Company is authorized to issue One Hundred Million (100,000,000)
shares of common stock, par value $0.001 per share. As of March 28, 2000, there
are 17,420,489 shares of common stock issued and outstanding. The holders of the
common stock are not entitled to pre-emptive or preferential rights to subscribe
to any unissued stock or other securities. The shareholders are not entitled to
cumulative voting rights. The common stock is not assessable and not subject to
the payment of any corporate debts.
(b) Debt Securities.
The company has no outstanding debt securities.
(c) Other Securities To Be Registered.
The Company is only registering its common stock securities.
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters.
(a) Market Information.
The Company's common stock trades Over-the-Counter (OTC) on the OTC
Bulletin Board under the symbol TIDE. Table 3 sets forth the high and low bid
information for each fiscal quarter beginning with September 30, 1998, the first
quoted quarter. These quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
These data provided by NASDAQ Trading and Market Services.
Table 3.
Bid Information
- --------------------------------------------------------------------------------
Fiscal Quarter Ended High Low
- --------------------------------------------------------------------------------
December 31, 1999 1.25
September 30, 1999 4.00 0.875
June 30, 1999 1.50 0.375
March 31, 1999 0.70 0.40
December 31, 1998 0.875 0.125
September 30, 1998 0.5625 0.375
- --------------------------------------------------------------------------------
(b) Holders.
The Company has 81 active shareholders of its common stock as of March
22, 2000 holding 17,420,489 common shares.
(c) Dividends.
A ten percent common stock dividend was declared on December 28 ,
1999. An additional 1,385,959 shares were issued to existing shareholders. There
are no restrictions imposed on the Company which limit its ability to declare or
pay dividends on its common stock. No cash dividends have been declared or paid
to date and none are expected to be paid in the forseeable future.
Item 2. Legal Proceedings.
The Company is not a party to any pending or threatened legal
proceedings.
Item 3. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
There have been no changes or disagreements with accountants on
accounting or financial disclosure during the Company's two most recent fiscal
years.
<PAGE>
Item 4. Recent Sales of Unregistered Securities.
On October 21, 1998, the Company issued 8,635,000 common shares to the
principal shareholders of Tidelands Oil Corporation and Tidelands Gas
Corporation in connection with the Company's acquisition of those two
corporations as wholly- owned subsidiaries based on the Section 4(2) securities
transaction exemption.
On January 13, 1999, the Company issued 90,000 common shares to a
creditor as payment for an outstanding debt. The debt was $64,414. In connection
with this transaction, the Company issued 40,000 common stock purchase warrants
exercisable at $2.50 per share. The warrants expire on January 13, 2001. The
securities transaction exemption was Section 4(2).
On February 15, 1999, the Company issued 88,570 common shares to a
creditor as payment for an outstanding debt. The debt was $61,390. In connection
with this transaction, the Company issued 40,000 common stock purchase warrants
exercisable at $2.50 per share. The warrants expire on February 5, 2001. The
securities transaction exemption was Section 4(2).
On April 6, 1999, the Company sold 2,000,000 shares of common stock for
50 cents per share. The securities transaction exemption was Regulations D and
S.
On August 18, 1999, the Company issued 175,000 shares of common stock
in connection with the settlement of a lawsuit. The consideration was par value.
The securities transaction exemption was Section 4(2).
On December 27, 1999, Alan Alderson exercised his option to purchase
150,000 common shares at the price of 45 cents per share. Danny Vines exercised
his option to purchase 100,000 common shares at the price of 45 cents per share.
The securities transaction exemption was Section 4(2).
Item 5. Indemnification of Directors and Officers.
Article Twelve of the Company's Articles of Incorporation provides that
the Company's directors and officers will not have any personal liability to the
Company or its stockholders for damages for breach of fiduciary duties as
directors or officers. This provision does not alleviate or limit any liability
of an officer or director for acts or omissions which involve intentional
misconduct, fraud or a knowing violation of the law or the payment of dividends
in violation of the Nevada Revised Statutes. This article does not provide for
the Company to indemnify the officers or directors, however, such
indemnification may be implied.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted for directors, officers and
controlling persons of the Company, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy and is
therefore, unenforceable.
PART F/S
Financial Statements.
Set forth below are the audited financial statements for the Company
for the period ending December 31, 1998 and interim unaudited financial
statements for the nine months ending September 30, 1999. The following
financial statements are attached to this report and filed as a part of it.
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTAL INFORMATION
YEAR ENDED DECEMBER 31, 1998
AND PERIOD FROM FEBRUARY 1997
(INCEPTION) TO DECEMBER 31, 1997
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTAL INFORMATION
YEAR ENDED DECEMBER 31, 1998
AND PERIOD FROM FEBRUARY 1997 (INCEPTION)
TO DECEMBER 31, 1997
<PAGE>
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT .............................................. 3
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheet ............................... 4
Statements of Consolidated Stockholders' Equity ......... 5
Statements of Consolidated Operations .................... 6
Statements of Consolidated Cash Flows ................... 7
Notes to Consolidated Financial Statements ............... 8-18
SUPPLEMENTAL INFORMATION (UNAUDITED) ......................................19-21
-2-
<PAGE>
BAUM & COMPANY, P.A.
4310 SHERIDAN STREET, SUITE 202
HOLLYWOOD, FLORIDA 33021
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Tidelands Oil & Gas Corporation
Corpus Christi, Texas
We have audited the accompanying consolidated balance sheet of Tidelands Oil &
Gas Corporation (formerly C2 Technologies, Inc.) as of December 31, 1998, and
the related statements of consolidated stockholders' equity, operations, and
cash flows for the year ended December 31, 1998 and period from February 1997
(inception) to December 31, 1997. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Tidelands Oil & Gas Corporation as of December 31, 1998 and the results of their
consolidated operations and their consolidated cash flows for the year ended
December 31, 1998 and period from February 1997 (inception) to December 31, 1997
in conformity with generally accepted accounting principles.
Baum & Company, P.A.
Hollywood, Florida
January 9, 2000
-3-
<PAGE>
<TABLE>
<CAPTION>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
ASSETS
<S> <C>
Current Assets:
Cash $ 47
Accounts Receivable 11,689
------------------
Total Current Assets 11,736
------------------
Oil and Gas Properties, Net (Notes 1,3) 593,898
------------------
Other Assets:
Deposits and Organizational Costs, Net 908
Investments (Notes 1,4) 27,778
Intangible Assets, Net (Notes 1,2,5) 3,690,494
------------------
Total Other Assets 3,719,180
------------------
Total Assets $ 4,324,814
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Expenses $ 279,536
Current Maturities of Long-Term Debt (Note 6) 601,175
Drilling Advances (Note 7) 25,967
------------------
Total Current Liabilities 906,678
Long-Term Debt (Note 6) 37,000
Due to Related Parties (Note 9) 282,084
------------------
Total Liabilities 1,225,762
------------------
Commitments and Contingencies (Note 11 )
Stockholders' Equity
Common Stock, $.001 Par Value Per Share,
100,000,000 Shares Authorized, 13,225,960 Shares
Issued and Outstanding 13,226
Paid-in Capital, in Excess of Par Value 3,325,762
Accumulated (Deficit) (239,936)
-------------------
Total Stockholders' Equity 3,099,052
------------------
Total Liabilities and Stockholders' Equity $ 4,324,814
==================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
-4-
<PAGE>
<TABLE>
<CAPTION>
TIDELANDS OIL AND GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1998 (NOTE 2) AND PERIOD FROM
FEBRUARY 1997 (INCEPTION) TO DECEMBER 31, 1997
Paid-In
Capital In
Common Stock Excess Of Accumulated
Shares Amount Par Value (Deficit)
-------------- ----------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Inception, February 1997 0 $ 0 $ 0 $ 0
Issuance of Common Stock 4,457,571 4,458 89,892
Subscriptions Receivable (3,150)
Net (Loss) (15,554)
-----------------------------------------------------------------------------
Balance December 31, 1997 4,457,571 1,308 89,892 (15,554)
Subscriptions Receivable 3,150
Issuance of Common Stock 133,389 133 58,512
Issuance of Stock for Acquisitions 8,635,000 8,635 3,655,584
(Deficit) Equity of Subsidiaries
Eliminated in Consolidation (478,226)
Net (Loss) (224,382)
-------------- ----------------- ------------------ -------------------
Balance December 31, 1998 13,225,960 $ 13,226 $ 3,325,762 $ (239,936)
============== ================= ================== ===================
</TABLE>
See Accompanying Notes To Consolidated Financial Statements
-5-
<PAGE>
<TABLE>
<CAPTION>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
STATEMENTS OF CONSOLIDATED OPERATIONS
YEAR ENDED AND PERIOD ENDED
From February 1997 (Inception) To
December 31, December 31,
1998 1997
-------------- --------------
(Note 2)
<S> <C> <C>
Revenues:
Oil and Gas Sales $ 14,381 $ 0
-------------- --------------
Expenses
Lease Operating 15,691 0
Depreciation and Amortization 51,776 89
(Loss) In Equity of Investments 7,254 0
General and Administrative 164,042 15,465
-------------- --------------
Total Expenses 238,763 15,554
-------------- --------------
(Loss) Before Provision
for Income Taxes (224,382) (15,554)
Provision for income taxes 0 0
-------------- --------------
Net (Loss) $ (224,382) $ (15,554)
============== ==============
Net (Loss) Per Common Share
Basic and Diluted $ (.025) $ (.006)
-------------- --------------
Weighted Average Number of Common
Shares Outstanding
Basic and Diluted 8,841,765 2,228,785
============== ==============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
-6-
<PAGE>
<TABLE>
<CAPTION>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
STATEMENTS OF CONSOLIDATED CASH FLOWS
YEAR ENDED AND PERIOD ENDED
From February 1997 Inception To
December 31, December 31,
1998 1997
---------------- --------------
(Note 2)
<S> <C> <C>
Cash Flows (Required)
By Operating Activities:
Net (Loss) $ (224,382) $ (15,554)
Adjustments to Reconcile Net (Loss)
to Operating Cash Flow:
Depreciation, Depletion and Amortization 51,776 88
Loss in J.V.'s 7,254 -
Decrease in Receivables 3,341 -
Increase in Accounts Payable
and Accrued Expenses 82,071 627
---------------- --------------
Net Cash (Required)
By Operating Activities (79,940) 19,644)
----------------- --------------
Cash Flows (Required) By Investing Activities:
Acquisitions of Oil and Gas Properties (1,200) -
Increase in Investments (998) (2)
---------------- --------------
Net Cash (Required) By Investing Activities (2,198) (2)
---------------- --------------
Cash Flows from Financing Activities:
Subscription Receivable 3,150 -
Increase in Debt 43,043 -
Increase in Due To Related Parties 34,438 -
---------------- --------------
Net Cash From Financing Activities 80,631 21,200
---------------- --------------
Net (Decrease) Increase in Cash (1,507) 1,554
Cash - Beginning of Year 1,554 0
---------------- --------------
Cash - End of Year $ 47 $ 1,554
================ ==============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
-7-
<PAGE>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to
assist in understanding these consolidated financial statements.
The consolidated financial statements and notes are representations
of management who is responsible for their integrity and
objectivity. The accounting policies used conform to generally
accepted accounting principles and have been consistently applied
in the preparation of these consolidated financial statements.
Organization
Tidelands Oil & Gas Corporation (formerly C2 Technologies, Inc.)
(the Company) was incorporated in the state of Nevada on February
25, 1997. On October 21, 1998 the Company acquired all of the
issued and outstanding capital stock of Tidelands Oil Corporation
and Tidelands Gas Corporation. On November 19, 1998, the legal name
of the Company was changed to Tidelands Oil and Gas Corporation,
and the aggregate number of shares in which the Company has
authority to issue was increased to 100,000,000 shares.
Nature of Operations
The Company is presently engaged, through its wholly-owned
subsidiaries and investments in joint ventures and limited
liability companies, in the acquisition, exploration and
development of oil and gas properties in southern Texas.
Principles of Consolidation
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All significant
inter-company accounts and transactions are eliminated.
Fair Value of Financial Investments
The Company has adopted Statement of Financial Accounting Standards
No. 107 "disclosure about fair value of financial instruments,"
which requires the disclosure of the fair value of off-and-on
balance sheet financial instruments. Unless otherwise indicated,
the fair values of all reported assets and liabilities, which
represent financial investments (none of which are held for trading
purposes), approximate the carrying values of such amounts.
-8-
<PAGE>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Use of Estimates
The preparation of consolidated financial statements in accordance
with generally accepted accounting principles requires management
to use estimates and make judgements. While management has
considered all available information, actual amounts could differ
from those reported as assets, liabilities, related revenues, costs
and expenses and the disclosed amounts of contingencies.
Investments
The equity method of accounting is used for investments, owned 50%
or less, including corporate joint ventures and limited liability
companies. Under this method, equity in the pre-tax income or
losses of limited liability companies, and in the net income or
losses of joint-ventures, is reflected in the Company's revenues or
expenses rather than when realized through dividends or
distributions.
Oil and Gas Properties
The Company uses the successful efforts method of accounting for
oil and gas producing activities. Costs, including interest, 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 the 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 depleted by the unit-of-production
method.
On the sale or retirement of a complete unit of a proven property,
the cost and related accumulated depreciation and depletion 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
and depletion with a resulting gain or loss recognized in income.
-9-
<PAGE>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 has 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.
Support equipment, facilities and other related equipment are
recorded at historical cost. Depreciation of property and equipment
is provided on the straight-line method over the estimated useful
economic lives of the related assets. Maintenance and repairs are
charged to operations. Additions and betterments, which extend the
useful lives of the assets are capitalized. Upon retirement or
disposal, the cost and accumulated depreciation are eliminated from
the account, and the resulting gain or loss is reflected in
operations.
Intangible Assets
Intangible assets, which primarily consist of the cost of acquired
business in excess of the fair value of tangible assets and
liabilities acquired (goodwill), are amortized, by the
straight-line method, over an estimated economic useful life, of
the underlying values of the companies required, of twenty years.
Long-Lived Assets
The Company adopted statement of Financial Accounting Standards 121
(SFAS 121) "Accounting for the Impairment of Long-Lived Assets to
be Disposed Of." SFAS 121 required that long-lived assets to be
held and used by the Company be reviewed for impairment whenever
events or changes in circumstances indicate that the related
carrying amount may not be recoverable. When required, impairment
losses on assets to be held and used are recognized based on the
fair value of the asset and long-lived assets to be disposed of are
reported at the lower of carrying amount or fair value less cost to
sell.
The adoption of SFAS 121 and the evaluation by the Company did not
have a significant effect on the consolidated financial position or
results of consolidated operations.
-10-
<PAGE>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards 109 (SFAS 109). "Accounting for
Income Taxes," which requires the establishment of a deferred tax
asset or liability for the recognition of future deductions or
taxable amounts and operating loss carryforwards, deferred tax
expense or benefit is recognized as a result of the change in the
deferred asset or liability during the year. If necessary, the
Company will establish a valuation allowance to reduce any deferred
tax asset to an amount which will, more likely than not, be
realized.
Net Earnings Per Common Share
The Company accounts for earnings per share in accordance with
statement of Financial Accounting Standard 128 ("SFAS 128")
"Earnings per Share". Basic earnings per share is based upon the
net earnings applicable to common shares after preferred dividend
requirements and upon the weighted average number of common shares
outstanding during the period. Diluted earnings per share reflects
the effect of the assumed conversions of convertible securities and
exercise of stock options only in the periods in which such affect
would have been dilutive.
NOTE 2 - ACQUISITION OF COMPANIES
On October 21, 1998, the Company, pursuant to an acquisition
agreement, acquired 100% of the issued and outstanding capital
stock of Tidelands Oil Corporation and Tidelands Gas Corporation in
exchange for 8,635,000 shares of its restricted common stock. The
value of this transaction was determined by the mean average of the
bid and asked stock price discounted by 50%. In addition, the
deficit in the equity of the companies acquired was offset against
paid-in capital in excess of par value. Tidelands Oil Corporation
and Tidelands Gas Corporation was owned by current officers of the
Company. The acquisition, accounted for as a purchase, was included
in consolidated operations of the Company from that date through
December 31, 1998.
-11-
<PAGE>
<TABLE>
<CAPTION>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 2 - ACQUISITION OF COMPANIES (CONTINUED)
In accordance with Accounting Principle Board Opinion #16, the
unaudited proforma condensed consolidated results of operations of
the Company are as follows:
Tidelands Oil & Gas Corporation
(Formerly C2 Technologies, Inc.)
Condensed Consolidated Statement Of Operations
Year Ended December 31, 1998
"Pro Forma"
(Unaudited)
<S> <C>
Revenues $ 54,775
--------------
Costs and Expenses $ 503,793
--------------
Net (Loss) $ (449,018)
==============
Net (Loss) Per Common Share $ (.051)
==============
Weighted Average Shares Outstanding 8,841,765
==============
NOTE 3 - OIL AND GAS PROPERTIES
A summary of oil and gas properties at December 31, 1998 is a
follows:
Pipeline $ 122,025
Proved Properties 355,086
Support Equipment 241,221
--------------
Total 718,332
Less Accumulated Depreciation and Depletion 124,434
--------------
Net Oil and Gas Properties $ 593,898
==============
</TABLE>
-12-
<PAGE>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 4 - INVESTMENTS
A summary of investments in Joint Ventures and Limited Liability
Companies at December 31, 1998 is as follows:
Ownership Percentage
GT-Pla J.V. 96 5.978% $12,750
G-Halsell J.V. 96 4.5% 14,028
Rio Bravo Energy LLC 50.0% 1,000
---------
$27,778
---------
The Company's potential exposure to loss, with respect to its
investments in Joint Ventures and Limited Liability Companies is
generally limited to its positive investments and advances.
However, in some cases the Company may be otherwise obligated to
make capital contributions or loans to the ventures to make up cash
flow deficits. The Company's maximum exposure to credit and market
risk is not determinable with any degree to accuracy as
determination of the ultimate amounts is dependent upon the manager
of the joint ventures to optimize cash flows from the operations of
the projects and increase the value of the projects. However,
management does not believe that the Company's exposure would
significantly exceed the aggregate of the exposure described above.
NOTE 5 - INTANGIBLE ASSETS
A summary of intangible assets at December 31, 1998 is as follows:
Goodwill $ 3,737,209
Less Accumulated Amortization 46,715
-----------
Net $ 3,690,494
===========
The company evaluates the amortization period of intangibles on an
ongoing basis, in light of any changes in business conditions,
events or circumstances, that may indicate the potential impairment
of intangible assets.
-13-
<PAGE>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 6 - LONG-TERM DEBT
A summary of notes payable at December 31, 1998 is as follows;
Notes Payable, Unsecured, Non Interest
bearing, Payable on Demand $ 441,642
Debentures Payable at 8% Interest 159,533
Note Payable, Unsecured, 6% Interest,
maturing January 2002 37,000
---------
638,175
Less: Current Maturities 601,175
---------
Total Long-Term Debt $ 37,000
=========
In 1999 stock was issued in exchange for notes payable of $422,090
and the debenture was repaid as part of a legal settlement (See
Note 12)
NOTE 7 - DRILLING ADVANCES
The Company received drilling advances from joint interest owners
of $25,967 at December 31, 1998. These advances will be applied
toward the payment of drilling costs to be incurred in subsequent
periods.
NOTE 8 - INCOME TAXES
At December 31, 1998 the Company had net operating loss
carryforwards of approximately $292,952, to offset against future
federal taxable income, that expire in the years through 2018.
The company files a consolidated income tax return and timing
differences between the recognition of certain income and expense
items for income tax purposes and financial reporting purposes are
as follows:
Tax benefit of net operating loss carryforwards $ 244,173
Book officers' salary deductions in excess of
tax deduction (125,800)
Tax depreciation in excess of book depreciation (20,802)
Total Deferred Tax Asset 97,501
Less Valuation Allowance 97,501
-------------
Net Deferred Tax Asset $ 0
=============
It is currently undeterminable as to when the Company will benefit
from the deferred tax asset.
-14-
<PAGE>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 9 - RELATED PARTY TRANSACTION
The Boards of Directors of the Company's wholly-owned subsidiaries
had previously approved the accrual of officer salaries of $370,000
for services rendered in current and prior years.
At December 31, 1998, cumulative non-interest bearing advances due
from officers and stockholders of the Company amount to $87,916.
The current officers and shareholders of the Company were formerly
officers and shareholders of Tidelands Oil Corporation and
Tidelands Gas Corporation.
NOTE 10 -SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for:
1998 1997
---- -----
Interest $ 19 $ 0
=========== ==========
Income Taxes $ 0 $ 0
=========== ==========
Supplemental schedule of non-cash investing and financing
activities.
<TABLE>
Year Ended Year Ended
December 31, 1998 December 31, 1997
----------------- -----------------
<S> <C> <C>
Increase in intangibles $3,737,209 -
Acquisitions of oil and gas
properties 597,561 -
Increase in investments 34,032 -
Increase in other assets 11,420
Issuance of shares
net of adjustments 3,244,638
Increase in liabilities 222,106 -
Increase in debt 595,132 -
Transactions with
related parties 311,346 (70,000)
</TABLE>
-15-
<PAGE>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 11 - COMMITMENTS AND CONTINGENCIES
The Company is subject to the laws and regulations relating to
the protection of the environment. The Company's policy is to
accrue environmental and cleanup related costs of a non-capital
nature when it is both probable that a liability has been
incurred and when the amount can be reasonably estimated.
Although it is not possible to quantify with any degree of
certainty the financial impact of the Company's continuing
compliance efforts, management believes any future remediation or
other compliance related costs will not have a material adverse
effect on the financial condition or reported results of
operations of the Company.
NOTE 12 - SUBSEQUENT EVENTS
(a) On June 24, 1998 Tidelands Oil Corporation and Tidelands Gas
Corporation (Subsidiaries), wholly-owned subsidiaries of the
Company entered into an acquisition agreement "Jersey Agreement"
with Jersey Petroleum, Inc. On October 16, 1998, the subsidiaries
formerly notified Jersey Petroleum, Inc. that the Jersey
Agreement was terminated due to non-performance of certain
provisions and other misrepresentations relating to pending
litigation.
Under the terms of the original Jersey agreement and a debenture
made a part thereof, the subsidiaries had drawn $155,000 of the
debenture. That amount would be repayable to Jersey Petroleum,
Inc. 10 days after the date of the termination letter or October
26, 1998. This amount had not been repaid pursuant to
management's belief that these costs were incurred as a result of
misrepresentations by Jersey Petroleum, Inc.
On October 22, 1998 Jersey Petroleum, Inc. filed suit against the
subsidiaries and in the Supreme Court of British Columbia
claiming unspecified damages for breach of contract.
On December 11, 1998 a default judgment against the subsidiaries
was issued for $157,229.04. In March 1999, Jersey Petroleum, Inc.
filed suit against the subsidiaries in a Texas State court
claiming unspecified damages for breach of contract. On May 20,
1998, the Supreme Court of British Columbia ruled to set aside
the December 11, 1998 default judgment. In June 1999, the Texas
State Court set aside the March 1999 Texas lawsuit pending the
timely refiling by Jersey Petroleum, Inc., of the Canadian
lawsuit. On August 18, 1999 the Company paid Jersey Petroleum,
Inc. $167,499 and issued 175,000 shares of restricted "Section
144" common stock as settlement of the lawsuit. In August and
September 1999 the Supreme Court of British Columbia and the
District Court of Nueces County, Texas dismissed all claims.
-16-
<PAGE>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED SUPPLEMENTAL INFORMATION (UNAUDITED)
DECEMBER 31, 1998
NOTE 12 - SUBSEQUENT EVENTS (CONTINUED)
(b) On January 15, 1999 the Company formed Sonora Pipeline, LLC
(Sonora) a Texas limited liability company, as a 50% member.
Falco Energy Services, LLC, the other 50% member, agreed to
advance Sonora funds to inter connect the pipeline system to the
various production facilities located throughout the system.
(b-1) On October 1, 1999 Rio Bravo Energy, LLC, a limited
liability Company investment in which the Company has 50%
ownership, acquired a natural gas processing plant "Chittim Gas
Plant from Conoco, Inc for $160,000.
(b-2) On November 29, 1999 the Company entered into a letter
agreement, for a joint venture development project with Genesis
Oil and Gas Company, for the drilling of 160 wells.
(c) On January 10, 1999 the Company approved stock options to its
Board of Directors as follows:
Shares Option Price Expiration Date
1,650,000 $ .45 January 10, 2000
100,000 .45 January 15, 2000
100,000 .45 January 15, 2001
100,000 .45 January 10, 2002
(d) On January 13, 1999 the Company issued 90,000 shares of
common stock and 40,000 warrants, to acquire shares at $2.50,
expiring January 13, 2001, in exchange for $64,414 of debt.
(e) On February 5, 1999 the Company issued 88,570 shares of
common stock, and 40,000 warrants, to acquire shares at $2.50,
expiring February 15, 2001, in exchange for $61,390 of debt.
-17-
<PAGE>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED SUPPLEMENTAL INFORMATION (UNAUDITED)
YEAR ENDED DECEMBER 31, 1998
NOTE 12 - SUBSEQUENT EVENTS (CONTINUED)
(f) On April 6, 1999 the Company offered 2,000,000 shares of its
common stock pursuant to the exemption under Regulation D and
Regulation S of the Securities Act of 1933, as amended. The Board
of Directors determined to establish the purchase price of all
shares purchased @ $.50 per share. This decision was made because
of the volatility of the market price of the common stock as
traded on the NASDAQ over-the-counter bulletin board. Proceeds
from the offering are as follows:
Conversion of debt $ 295,750
Conversion of trade payables 19,000
Working Capital - evidenced by a
promissory note maturing April 6, 2001
with Interest at 10% (See Note 12-h) 685,250
-----------
$ 1,000,000
(g) On December 28, 1999 the Board of Directors of the company
approved a stock dividend of 10% per share of common stock to
shareholders of record as of that date.
(h) On February 1, 1999 the company executed a $1,000,000, three
year, 6% promissory note, interest payable annually, payable to
Pan-Pacific Investments, Ltd., (Pan-Pacific) a Cayman Island
Corporation, as security for a credit line to be funded to the
Company on an as-needed basis. In consideration, the Company
issued to Pan-Pacific a stock-option agreement to acquire
1,000,000 shares of common stock for $1.00 per share, expiring
February 2, 2002.
At December 31, 1999 the Company was indebted to Pan-Pacific, for
advances against the credit line, in the amount of $628,175.
Pursuant to a December 31, 1999 assignment agreement, Pan-Pacific
agreed to accept, as full payment of the outstanding balance due
them, the assignment of a portion of a stock subscription
receivable. This stock subscription receivable arose from the
Company's April 6, 1999 Regulation S stock offering and is
secured by a two year, 10% promissory note. (See Note 12-f)
-18-
<PAGE>
<TABLE>
<CAPTION>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED SUPPLEMENTAL INFORMATION
YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
Capitalized Costs Relating to Oil and Gas Producing Activities at December 31,
1998
(Note 2)
<S> <C>
Pipeline $ 0
Proved Properties 0
Support Equipment 0
-----------------------
0
Less Accumulated Depreciation and Depletion 0
-----------------------
Net Capitalized Costs $ 0
=======================
Costs Incurred in Oil and Gas Producing Activities for the year ended December
31, 1998 (Note 2)
Property Acquisition Costs
Proved $ 0
=======================
Results of Operations for Oil and Gas Producing Activities for the year ended
December 31, 1998 (Note 2)
Oil and Gas Sales $ 14,381
Production Costs (15,691)
Depreciation and Depletion (4,863)
-----------------------
(6,173)
Income Tax Expense 0
-----------------------
Results of Operations for Oil and Gas Producing
Activities (Excluding Corporate Overhead,
Management Fees and Losses of Joint Ventures) $ (6,173)
========================
</TABLE>
-19-
<PAGE>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED SUPPLEMENTAL INFORMATION
YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
Reserve Information
The following estimate of proved reserve and proved developed reserve quantities
and related standardized measure of discounted net cash flow are estimates only,
and do not purport to reflect realizable values or fair market values of the
Company's reserves. The Company emphasizes that reserve estimates are inherently
imprecise and that estimates of new discoveries are more imprecise than those of
producing oil and gas properties. Accordingly, those estimates are expected to
change as future information becomes available. All of the Company's reserves
are located in the state of Texas.
Proved reserves are estimated reserves of crude oil (including condensate and
natural gas liquids) and natural gas that geological and engineering data
demonstrate with reasonable certainty to be recoverable in future years from
known reservoirs under existing economic and operating conditions. Proved
developed reserves are those expected to be recovered through existing wells,
equipment, and operating methods.
The standardized measure of discounted future net cash flows is computed by
applying year-end prices of oil and gas (with consideration of price changes
only to the extent provided by contractual arrangements) to the estimated future
production of proved oil and gas reserves, less estimated future expenditures
(based on year-end costs) to be included in developing and producing the proved
reserves, less estimated future income tax expenses (based on year-end statuary
tax rates) to be incurred on pretax net cash flows less tax basis of the
properties and available credits, and assuming continuation of existing economic
conditions. The estimated future net cash flows are then discounted, pursuant to
the requirements of Statement of Financial Accounting Standards 69 (SFAS 69),
"Disclosures About Oil and Gas Producing Activities," using a rate of 10 percent
a year to reflect the estimated timing of the future cash flows.
-20-
<PAGE>
<TABLE>
<CAPTION>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONSOLIDATED SUPPLEMENTAL INFORMATION
YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
Reserve Information (continued)
GAS (MCF) OIL (BBLS)
----------------- -----------------
<S> <C> <C>
Proved Developed and Undeveloped Reserves
Beginning of Year 19,995,825 6,984,376
Production - 1,316
-------------- -----------------
End of Year 19,995,825 6,983,060
============== =================
Proved Developed Reserves
Beginning of Year 2,934,851 3,919,223
End of Year 2,934,851 3,917,907
Standardized Measure of Discounted Future
Net Cash Flows at December 31, 1998
Future Cash Inflows $ 33,661,012 $ 117,050,004
Future Production Costs (2,784,050) (28,658,400)
Future Development Costs (2,775,000) (19,115,000)
Future Income Tax Expense (10,098,407) (33,814,942)
-------------- -----------------
Future Net Cash Flows 18,003,555 35,461,662
10% Annual Discount for Estimated
Timing of Cash Flows (9,013,514) (13,802,854)
--------------- ------------
Standardized Treasures of
Discounted Future Net
Cash Flows Relating to Proved
Oil and Gas Reserves $ 8,990,041 $ 21,658,808
============== =================
The following reconciles the change in the standardized measure of discounted future net cash flow during 1998
Beginning of Year $ 8,990,041 21,673,189
Oil and Gas Produced Including
Excess Production Costs 0 (14,381)
-------------- ------------------
End of Year $ 8,990,041 $ 21,658,808
============== =================
</TABLE>
-21-
<PAGE>
<TABLE>
<CAPTION>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(UNAUDITED)
September 30, 1999 December 31, 1998
------------------ ------------------
<S> <C> <C>
Current Assets:
Cash $ 24,417 $ 47
Loans and Accounts Receivable 5,370 9,385
----------------- ------------------
Total Current Assets 29,787 9,432
----------------- ------------------
Oil and Gas Properties (Net) 499,670 593,898
----------------- ------------------
Other Assets:
Deposits 1,225 908
Investments 131,801 27,778
Intangible Assets, Net 3,550,350 3,690,494
----------------- ------------------
Total Other Assets 3,683,376 3,719,180
----------------- ------------------
Total Assets $ 4,212,833 $ 4,322,510
================= ==================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(UNAUDITED)
September 30, 1999 December 31, 1998
------------------ -----------------
<S> <C> <C>
Current Liabilities:
Accounts Payable and
Accrued Expenses $ 282,550 $ 279,536
Current Maturities of Long-Term Debt 19,552 601,175
Drilling Advances 25,967 25,967
-------------- --------------
Total Current Liabilities 328,069 906,678
Long-Term Debt 575,965 37,000
Due to Related Parties 383,276 279,780
-------------- --------------
Total Liabilities 1,287,310 1,223,458
-------------- --------------
Commitments and Contingencies
Stockholders' Equity
Common stock $.001 par value
per share, 100,000,000 shares
authorized; 15,584,530 shares issued
and outstanding, September 30, 1999;
13,225,960 shares issued and
outstanding, December 31, 1998 15,585 13,226
Additional Paid-in Capital 4,451,381 3,325,762
Subscriptions Receivable (685,250) 0
Accumulated (Deficit) (856,193) (239,936)
-------------- --------------
Total Stockholders' Equity 2,925,523 3,099,052
-------------- --------------
Total Liabilities and
Stockholders' Equity $ 4,212,833 $ 4,322,510
============== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine Months Ended Nine Months Ended
September 30, September 30,
1999 1998
---- ----
<S> <C> <C>
Revenues:
Oil and Gas Sales $ 26,978 $ 0
----------------- -----------------
Expenses:
Lease Operating 86,119 0
Depreciation and Amortization 151,832 133
(Loss) In Equity of Investments 12,593 0
General and Administrative 392,691 10,588
----------------- -----------------
Total Expenses 643,235 10,721
----------------- -----------------
(Loss) Before Provision
for Income Taxes (616,257) (10,721)
Provision For Income Taxes 0 0
----------------- -----------------
Net (Loss) $ (616,257) $ (10,721)
================= =================
Net (Loss) Per Common Share
Basic $ (.043) $ (.002)
----------------- -----------------
Weighted Average Number of Common
Shares Outstanding - Basic 14,405,745 4,457,571
================= =================
Net (Loss) for Common Share Diluted $ (.039) $ (.002)
----------------- -----------------
Weighted Average Number of Common
Shares Outstanding - Diluted 15,920,745 4,457,571
================= =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Three Months Ended
September 30, September 30,
1999 1998
---- ----
<S> <C> <C>
Revenues:
Oil and Gas Sales $ 13,753 $ 0
----------------- ------------------
Expenses:
Lease Operating 53,603 0
Depreciation and Amortization 50,629 44
(Loss) In Equity of Investments 12,593 0
General and Administrative 179,236 2,276
----------------- ------------------
Total Expenses 296,061 2,320
----------------- ------------------
(Loss) Before Provision
for Income Taxes (282,308) (2,320)
Provision For Income Taxes 0 0
----------------- ------------------
Net (Loss) $ (282,308) $ (2,320)
================= ==================
Net (Loss) Per Common Share
Basic $ .018 $ .000
----------------- ------------------
Weighted Average Number of
Common Shares Outstanding - Basic 15,498,030 4,457,571
================= ==================
Net (Loss) Per Common Share
Diluted $ .015 $ .000
----------------- ------------------
Weighted Average Number of Common
Shares Outstanding - Diluted $ 18,528,030 $ 4,457,571
================= ==================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended Nine Months Ended
September 30, September 30,
1999 1998
---- ----
<S> <C> <C>
Cash Flows Provided (Required)
By Operating Activities:
Net (Loss) $ (616,257) $ (282,308)
Adjustments to Reconcile Net (Loss)
To Operating Cash Flow:
Depreciation, Depletion and Amortization 151,832 50,629
(Decrease) in Receivables 6,319 2,486
(Decrease) in Current Maturities (581,623) -
(Increase) in Deposits
and Organization Costs (450) (450)
Increase (Decrease) in Accounts Payable
And Accrued Expenses 3,014 (455)
----------------- ------------------
Net Cash (Required) by Operating
Activities (1,037,165) (230,098)
----------------- ------------------
Cash Flows From (Required) By
Investing Activities (Acquisitions),
Dispositions of Oil and Gas Properties 82,673 (31,256)
Increase in Investments (104,023) 12,308
----------------- ------------------
Net Cash (Required) by
Investing Activities (21,350) (18,948)
----------------- ------------------
Cash Flows Provided by Financing Activities:
Increase in Long-Term Debt 538,965 218,031
Increase in Due to Related Parties 101,192 35,571
Increase in Stockholders' Equity 442,728 175
----------------- ------------------
Net Cash Provided by Financing Activities 1,082,885 253,777
----------------- ------------------
Net Increase in Cash 24,370 4,731
Cash - Beginning of Period 47 19,686
----------------- ------------------
Cash - End of Period $ 24,417 $ 24,417
================= ==================
Supplemental Disclosure of Cash
Flow Information:
Interest Paid $ 23,943 $ 14,226
================= ==================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TIDELANDS OIL & GAS CORPORATION
(FORMERLY C2 TECHNOLOGIES, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(CONTINUED)
Nine Months Ended Nine Months Ended
September 30, September 30,
1999 1998
---- ----
<S> <C> <C>
Supplemental Disclosure of Non-Cash
Transactions:
Common Stock Issued in Payment of
Accrued Expenses and Accounts Payable $ 19,000 $ -
================= ==================
Common Stock Issued in Payment of
Notes and Loans Payable $ 423,553 $ -
================= ==================
Common Stock Issued in Settlement
of Litigation $ - $ -
================= ==================
</TABLE>
<PAGE>
PART III
Item 1. Index to Exhibits.
Exhibit Number Description
(3.1) Articles of Incorporation of C2 Technologies,
Inc.
(3.2) Certificate of Amendment of Articles of
Incorporation of C2 Technologies, Inc.
(3) By-Laws
(27) Financial Data Schedule
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, who are duly authorized.
Dated: March , 2000
---
TIDELANDS OIL & GAS CORPORATION
a Nevada corporation
/s/
------------------------------
Michael Ward
President, Director
Exhibit 3.0
Filed in the Office of the Secretary
of State of the State of Nevada
February 25, 1997
C 3888-97
/s/ Dean Heller,
Secretary of State
ARTICLES OF INCORPORATION
OF
C2 TECHNOLOGIES, INC.
The undersigned, acting as incorporator, pursuant to the provisions of
the laws of the State of Nevada relating to private corporations, hereby adopts
the following Articles of Incorporation:
ARTICLE ONE. [Name]. The name of the corporation is:
C2 TECHNOLOGIES, INC.
ARTICLE TWO. [RESIDENT AGENT]. The initial agent for service of
process is Nevada Agency and Trust Company, 50 West Liberty Street, Suite 880,
city of Reno, County of Washoe, State of Nevada 89501.
3
<PAGE>
ARTICLE THREE. [PURPOSES]. The purposes for which the corporation is
organized are to engage in any activity or business not in conflict with the
laws of the State of Nevada or of the United States of America, and without
limiting the generality of the foregoing, specifically:
I. (OMNIBUS]. To have to exercise all the powers now or hereafter
conferred by the laws of the State of Nevada upon corporations
organized pursuant to the laws under which the corporation is
organized and any and all acts amendatory thereof and
supplemental thereto.
II. (CARRYING ON BUSINESS OUTSIDE STATE]. To conduct and carry on
its business or any branch thereof in any state or territory
of the United States or in any foreign country in conformity
with the laws of such state, territory, or foreign country,
and to have and maintain in any state, territory, or foreign
country a business office, plant, store or other facility.
III. (PURPOSES TO BE CONSTRUED AS POWERS]. The purposes specified
herein shall be construed both as purposes and powers and
shall be in no wise limited or restricted by reference to, or
inference from, the terms of any other clause in this or any
other article, but the purposes and powers specified in each
of the clauses herein shall be regarded as independent
purposes and powers, and the enumeration of specific purposes
and powers shall not be construed to limit or restrict in any
manner the meaning of general terms or of the general powers
of the corporation; nor shall the expression of one thing be
deemed to exclude another, although it be of like nature not
expressed.
ARTICLE FOUR. [CAPITAL STOCK]. The corporation shall have authority to
issue an aggregate of TWENTY-FIVE MILLION (25,000,000) shares of Capital Stock,
PAR VALUE ONE MILL ($O.001) per share, for a total capitalization of TWENTY-FIVE
THOUSAND DOLLARS ($25,000).
The holders of shares of capital stock of the corporation shall not be
entitled to pre-emptive or preferential rights to subscribe to any unissued
stock or any other securities which the corporation may now or hereafter be
authorized to issue.
The corporations capital stock may be issued and sold from time to time
for such consideration as may be fixed by the Board of Directors, provided that
the consideration so fixed is not less than par value.
The stockholders shall not possess cumulative voting rights at all
shareholders meetings called for the purpose of electing a Board of Directors.
ARTICLE FIVE. [DIRECTORS]. The affairs of the corporation shall be
governed by a Board of Directors of no more than six (6) nor less than one (1)
person. The name and address of the first Board of Directors is:
NAME
Gordon McDougall 1820--1095 West Pender Street
Vancouver, British Columbia
Canada V6E 2M6
ARTICLE SIX. [ASSESSMENT OF STOCK]. The capital stock of the
corporation, after the amount of the subscription price or par value has been
paid in, shall not be subject to pay debts of the corporation, and no paid up
stock and no stock issued as fully paid up shall ever be assessable or assessed.
ARTICLE SEVEN. [INCORPORATOR]. The name and address of the incorporator
of the corporation is as follows:
NAME:
Amanda W. Cardinalli 50 West Liberty Street, Suite 880
Reno, Nevada 89501
<PAGE>
ARTICLE EIGHT. [PERIOD OF EXISTENCE]. The period of existence of the
corporation shall be perpetual.
ARTICLE NINE. [BY-LAWS]. The initial By-laws of the corporation shall
be adopted by its Board of Directors. The power to alter, amend, or repeal the
By-laws, or to adopt new By-laws, shall be vested in the Board of Directors,
except as otherwise may be specifically provided in the By-laws.
ARTICLE TEN. [STOCKHOLDERS' MEETINGS]. Meetings of stockholders shall
be held at such place within or without the State of Nevada as may be provided
by the By-laws of the corporation. Special meetings of the stockholders may be
called by the president or any other executive officer of the corporation, the
Board of Directors, or any member thereof, or by the record holder or holders of
at least ten percent (10%) of all shares entitled to vote at the meeting. Any
action otherwise required to be taken at a meeting of the stockholders, except
election of directors, may be taken without a meeting if a consent in writing,
setting forth the action So taken, shall be signed by stockholders having at
least a majority of the voting power.
ARTICLE ELEVEN. (CONTRACTS OF CORPORATION]. No contract or other
transaction between the corporation and any other corporation, whether or not a
majority of the shares of the capital stock of such other corporation is owned
by this corporation, and no act of this corporation shall in any way be affected
or invalidated by the fact that any of the directors of this corporation are
pecuniarily or otherwise interested in, or are directors or officers of such
other corporation. Any director of this corporation, individually, or any firm
of which such director may be a member, may be a party to, or may be pecuniarily
or otherwise interested in any contract or transaction of the corporation;
provided, however, that the fact that he or such firm is so interested shall be
disclosed or shall have been known to the Board of Directors of this
corporation, or a majority thereof; and any director of this corporation who is
also a director or officer of such other corporation, or who is so interested,
may be counted in determining the existence of a quorum at any meeting of the
Board of Directors of this corporation that shall authorize such contract or
transaction, and may vote thereat to authorize such contract or transaction,
with like force and effect as if he were not such director or officer of such
other corporation or not so interested.
ARTICLE TWELVE. (LIABILITY OF DIRECTORS AND OFFICERS]. No director or
officer shall have any personal liability to the corporation or its stockholders
for damages for breach of fiduciary duty as a director or officer, except that
this Article Twelve shall not eliminate or limit the liability of a director or
officer for (I) acts or omissions which involve intentional misconduct, fraud or
a knowing violation of law, or (ii) the payment of dividends in violation of the
Nevada Revised Statutes.
IN WITNESS WHEREOF, the undersigned incorporator has hereunto affixed
his signature at Reno, Nevada this 19th day of February, 1997.
/s/ Amanda W. Cardinalli
------------------------
AMANDA W. CARDINALLI
<PAGE>
STATE OF NEVADA )
: ss.
COUNTY OF WASHOE )
On the 19th day of February, 1997, before me, the undersigned, a Notary
Public in and for the State of Nevada, personally appeared AMANDA W. CARDINALLI,
known to me to be the person described in and who executed the foregoing
instrument, and who acknowledged to me that she executed the same freely and
voluntarily for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
/s/ Margaret A. Oliver
-----------------------------
Margaret A. Oliver
NOTARY PUBLIC
Residing in Reno, Nevada
My Commission Expires:
October 10, 1998
Filed in the Office of the Secretary
of State of State of Nevada
November 19, 1998
C3888-97
Dean Heller, Secretary of State
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
of
C2 TECHNOLOGIES, INC.
(After Issuance of Stock)
We the undersigned, Michael Ward, President and Royis Ward, Secretary
of C2 Technologies, Inc. do hereby certify:
That the Board of Directors of C2 Technologies, Inc. by unanimous board
action, and on November 9, 1998, adopted the following resolution to amend the
original articles of incorporation as follows:
Article One [Name] is hereby amended to read as follows:
The name of the corporation is TIDELANDS OIL & GAS CORPORATION.
Article Four [Capital Stock] is hereby amended to read as follows:
The aggregate number of shares which this corporation shall have
authority to issue is 100,000,000 shares of stock, all of one class, each with a
par value of $0.001 per share, which shall be known as common stock. All of the
voting power of the capital stock of this corporation will reside in the common
stock. No capital stock of this corporation will be subject to assessment and no
holder of any share or shares will have preemptive rights to subscribe to any or
all issues of shares of securities of this corporation.
Article Five [Directors] is hereby added as follows:
The affairs of the corporation will be governed by a Board of Directors
of no more than seven (7) nor less than one (1) person.
This change and amendment have been consented to and approved by a
majority vote of the stockholders holding at least a majority of each class of
stock outstanding and entitled to vote thereon.
/s/ Michael R. Ward /s/ Royis Ward
----------------------- ---------------------
Michael Ward, President Royis Ward, Secretary
STATE OF TEXAS )
) ss:
County of Nueces )
On this 17th day of November, 1998, personally appeared before me, a
Notary Public, Michael Ward, President of C2 Technologies, Inc., who
acknowledged that he signed the above instrument.
/s/ Priscilla Castillo
-----------------------
NOTARY PUBLIC in and for the
State of Texas, residing at:
Comm. Expires: 7/30/00
STATE OF TEXAS )
) ss:
County of )
On this 17th day of November, 1998, personally appeared before me, a
Notary Public, Royis Ward, Secretary of C2 Technologies, Inc., who acknowledged
that he signed the above instrument.
/s/ Barbie Lopez
-------------------
NOTARY PUBLIC in and for the
State of Texas, residing at:
Comm. Expires: April 26,1999
BY-LAWS FOR THE REGULATION
EXCEPT AS OTHERWISE PROVIDED BY STATUTE
OR ITS ARTICLES OF INCORPORATION OF
C2 TECHNOLOGIES, INC.
ARTICLE I.
Offices
Section 1. PRINCIPAL OFFICE. The principal office for the transaction
of the business of the corporation is hereby fixed and located at Suite 880,
Bank of America Plaza, 50 West Liberty Street, Reno, Nevada 89501, being the
offices of THE NEVADA AGENCY AND TRUST COMPANY. The board of directors is hereby
granted full power and authority to change said principal office from one
location to another in the State of Nevada.
Section 2. OTHER OFFICES. Branch or subordinate offices may at any time
be established by the board of directors at any place or places where the
corporation is qualified to do business.
ARTICLE II.
Meetings of Shareholders
Section 1. MEETING PLACE. All annual meetings of shareholders and all
other meetings of shareholders shall be held either at the principal office or
at any other place within or without the State of Nevada which may be designated
either by the board of directors, pursuant to authority hereinafter granted to
said board, or by the written consent of all shareholders entitled to vote
thereat, given either before or after the meeting and filed with the Secretary
of the corporation.
Section 2. ANNUAL MEETINGS. The annual meetings of shareholders shall
be held on the ___________ day of each year, at the hour of :00 o'clock _.m. of
said day commencing with the year 19 , provided, however, that should said day
fall upon a legal holiday then any such annual meeting of shareholders shall be
held at the same time and place on the next day thereafter ensuing which is not
a legal holiday.
Written notice of each annual meeting signed by the president or a vice
president, or the secretary, or an assistant secretary, or by such other person
or persons as the directors shall designate, shall be given to each shareholder
entitled to vote thereat, either personally or by mail or other means of written
communication, charges prepaid, addressed to such shareholder at his address
appearing on the books of the corporation or given by him to the corporation for
the purpose of notice. If a shareholder gives no address, notice shall be deemed
to have been given to him, if sent by mail or other means of written
communication addressed to the place where the principal office of the
corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which said office is located. All such
notices shall be sent to each shareholder entitled thereto not less than ten(10)
nor more than sixty (60) days before each annual meeting, and shall specify the
place, the day anti the hour of such meeting, and shall also state the purpose
or purposes for which the meeting is called.
<PAGE>
Section 3. SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes whatsoever, may be called at any time by the president
or by the board of directors, or by one or more shareholders holding not less
than 10% of the voting power of the corporation. Except in special cases where
other express provision is made by statute, notice of such special meetings
shall be given in the same manner as ,f or annual meetings of shareholders.
Notices of any special meeting shall specify in addition to the place, day and
hour of such meeting, the purpose or purposes for which the meeting is called.
Section 4. ADJOURNED MEETINGS AND NOTICE THEREOF. Any shareholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat, but in the absence
of a quorum, no other business may be transacted at any such meeting.
When any shareholders' meeting, either annual or special, is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall be given as in
the case of an original meeting. Save as aforesaid, it shall not be necessary to
give any notice of an adjournment or of the business to be transacted at an
adjourned meeting, other than by announcement at the meeting at which such
adjournment is taken.
Section 5. ENTRY OF NOTICE. Whenever any shareholder entitled to vote
has been absent from any meeting of shareholders, whether annual or special, an
entry in the minutes to the effect that notice has been duly given shall be
conclusive and incontrovertible evidence that due notice of such meeting was
given to such shareholders, as required by law and the By-Laws of the
corporation.
Section 6. VOTING. At all annual and special meetings of stockholders
entitled to vote thereat, every holder of stock issued to a bona fide purchaser
of the same, represented by the holders thereof, either in person or by proxy in
writing, shall have one vote for each share of stock so held and represented at
such meetings, unless the Articles of Incorporation of the company shall
otherwise provide, in which event the voting rights, powers and privileges
prescribed in the said Articles of Incorporation shall prevail. Voting for
directors and, upon demand of any stockholder, upon any question at any meeting
shall be by ballot. Any director may be removed from office by the vote of
stockholders representing not less than two-thirds of the voting power of the
issued and outstanding stock entitled to voting power.
Section 7. QUORUM. The presence in person or by proxy of the holders of
a majority of the shares entitled to vote at any meeting shall constitute a
quorum for the transaction of business. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum.
Section 8. CONSENT OF ABSENTEES. The transactions of any meeting of
shareholders, either annual or special, however called and noticed, shall be as
valid as though at a meeting duly held after regular call and notice, if a
quorum be present either in person or by proxy, and if either before or after
the meeting, each of the shareholders entitled to vote, not present in person or
by proxy, sign a written Waiver of Notice, or a consent to the holding of such
meeting, or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of this meeting.
Section 9. PROXIES. Every person entitled to vote or execute consents
shall have the right to do so either in person or by an agent or agents
authorized by a written proxy executed by such person or his duly authorized
agent and filed with the secretary of the corporation; provided that no such
proxy shall be valid after the expiration of eleven (11) months from the date of
its execution, unless the shareholder executing it specifies therein the length
of time for which such proxy is to continue in force, which in no case shall
exceed seven (7) years from the date of its execution.
<PAGE>
ARTICLE III
Section 1. POWERS. Subject to the limitations of the Articles of
Incorporation or the By-Laws, and the provisions of the Nevada Revised Statutes
as to action to be authorized or approved by the shareholders, and subject to
the duties of directors as prescribed by the By-Laws, all corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by the board of directors. Without prejudice to
such general powers, but subject to the same limitations, it is hereby expressly
declared that the directors shall have the following powers, to wit:
First - To select and remove all the other officers, agents and
employees of the corporation, prescribe such powers and duties for them as may
not be inconsistent with law, with the Articles of Incorporation or the By-Laws,
fix their compensation, and require from them security for faithful service.
Second - To conduct, manage and control the affairs and business of the
corporation, and to make such rules and regulations therefor not inconsistent
with law, with the Articles of incorporation or the By--Laws, as they may deem
best.
Third - To change the principal office for the transaction of the
business of the corporation from one location to another within the same county
as provided in Article I, Section 1, hereof; to fix and locate from time to time
one or more subsidiary offices of the corporation within or without the State of
Nevada, as provided in Article I, Section 2, hereof; to designate any place
within or without the State of Nevada for the holding of any shareholders'
meeting or meetings; and to adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock, and to alter the form of such seal
and of such certificates from time to time, as in their judgment they may deem
best, provided such seal and such certificates shall at all times comply with
the provisions of law.
Forth To authorize the issue of shares of stock of the corporation from time to
time, upon such terms as may be lawful, in consideration of money paid, labor
done or services actually rendered, debts or securities canceled, or tangible or
intangible property actually received, or in the case of shares issued as a
dividend, against amounts transferred from surplus to stated capital.
Fifth - To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and securities therefore.
Sixth - To appoint an executive committee and other committees and to
delegate to the executive committee any of the powers and authority of the board
in management of the business and affairs of the corporation, except the power
to declare dividends and to adopt, amend or repeal By-Laws. The executive
committee shall be composed of one or more directors.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number
of directors of the corporation shall be not less than one (1) and no more than
fifteen (15).
Section 3. ELECTION AND TERM OF OFFICE. The directors shall be elected
at each annual meeting of shareholders, but if any such annual meeting is not
held, or the directors are not elected thereat, the directors may be elected at
any special meeting of shareholders. All directors shall hold office until their
respective successors are elected.
<PAGE>
Section 4. VACANCIES. Vacancies in the board of directors may be filled
by a majority of the remaining directors, though less than a quorum, or by a
sole remaining director, and each director so elected shall hold off ice until
his successor is elected at an annual or a special meeting of the shareholders.
A vacancy or vacancies in the board of directors shall be deemed to exist in
case of the death, resignation or removal of any director, or if the authorized
number of directors be increased, or if the shareholders fail at any annual or
special meeting of shareholders at which any director or directors are elected
to elect the full authorized number of directors to be voted for at that
meeting.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors. If the board of directors
accept the resignation of a director tendered to take effect at a future time,
the board or the shareholders shall have the power to elect a successor to take
office when the resignation is to become effective.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
Section 5. PLACE OF MEETING. Regular meetings of the board of directors
shall be held at any place within or without the State which has been designated
from time to time by resolution of the board or by written consent of all
members of the board. In the absence of such designation, a regular meeting
shall be held at the principal office of the corporation. Special meetings of
the board may be held either at a place so designated, or at the principal
office.
Section 6. ORGANIZATION MEETING. Immediately following each annual
meeting of shareholders, the board of directors shall hold a regular meeting for
the purpose of organization, election of officers, and the transaction of other
business. Notice of such meeting is hereby dispensed with.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the board
of directors shall be held without call on the ___________day of each month at
the hour of __ :00 o'clock .m. of said day; provided, however, should said day
fall upon a legal holiday, then said meeting shall be held at the same time on
the next day thereafter ensuing which is not a legal holiday. Notice of all such
regular meetings of the board of directors is hereby dispensed with.
Section 8. SPECIAL MEETINGS. Special meetings of the board of directors
for any purpose or purposes shall be called at any time by the president, or, if
he is absent or unable or refuses to act, by any vice president or by any two
(2) directors.
Written notice of the time and place of special meetings shall be delivered
personally to the directors or sent to each director by mail or other form of
written communication, charges prepaid, addressed to him at his address as it is
shown upon the records of the corporation, or if it is not shown on such records
or is not readily ascertainable, at the place in which the meetings of the
directors are regularly held. In case such notice is mailed or telegraphed, it
shall be deposited in the United States mail or delivered to the telegraph
company in the place in which the principal office of the corporation is located
at least forty-eight (48) hours prior to the time of the holding of the meeting.
In case such notice is delivered as above provided, it shall be so delivered at
least twenty-four (24) hours prior to the time of the holding of the meeting.
Such mailing, telegraphing or delivery as above provided shall be due, legal and
personal notice to such director.
<PAGE>
Section 9. NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned meeting need not be given to absent directors, if the time
and place be fixed at the meeting adjourned.
Section 10. ENTRY OF NOTICE. Whenever any director has been absent from
any special meeting of the board of directors, an entry in the minutes to the
effect that notice has been duly given shall be conclusive and incontrovertible
evidence that due notice of such special meeting was give to such director, as
required by law and the By-Laws of the corporation.
Section 11. WAIVER OF NOTICE. The transactions of any meeting of the
board of directors, however called and noticed or wherever held, shall be as
valid as though had a meeting duly held after regular call and notice, if a
quorum be present, and if, either before or after the meeting, each of the
directors not present sign a written waiver of notice or a consent to the
holding of such meeting or an approval of the minutes thereof. All such waivers,
consents or approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
Section 12. QUORUM. A majority of the authorized number of directors
shall be necessary to constitute a quorum for the transaction of business,
except to adjourn as hereinafter provided. Every act or decision done or made by
a majority of the directors present at a meeting duly held at which a quorum is
present, shall be regarded as the act of the board of directors, unless a
greater number be required by law or by the Articles of Incorporation.
Section 13. ADJOURNMENT. A quorum of the directors may adjourn any
directors' meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum, a majority of the directors present at any
directors' meeting, either regular or special, may adjourn from time to time
until the time fixed for the next regular meeting of the board.
Section 14. FEES AND COMPENSATION. Directors shall not receive any
stated salary for their services as directors, but by resolution of the board, a
fixed fee, with or without expenses of attendance may be allowed for attendance
at each meeting. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise, and receiving compensation therefor.
ARTICLE IV.
Officers
Section 1. OFFICERS. The officers of the corporation shall be a
president, a vice president and a secretary/treasurer. The corporation may also
have, at the discretion of the board of directors, a chairman of the board, one
or more vice presidents, one or more assistant secretaries, one or more
assistant treasurers, and such other officers as may be appointed in accordance
with the provisions of Section 3 of this Article. Officers other than president
and chairman of the board need not be directors. Any person may hold two or more
offices.
<PAGE>
Section 2. ELECTION. The officers of the corporation, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article, shall be chosen annually by the board of directors,
and each shall hold his office until he shall resign or shall be removed or
otherwise disqualified to serve, or his successor shall be elected and
qualified.
Section 3. SUBORDINATE OFFICERS, ETC. The board of directors may
appoint such other officers as the business of the corporation may require, each
of whom shall hold office for such period, have such authority and perform such
duties as are .provided in the By-Laws or as the board of directors may from
time to time determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed, either
with or without cause, by a majority of the directors at the time in office, at
any regular or special meeting of the board.
Any officer may resign at any time by giving written notice to the board of
directors or to the president, or to the secretary of the corporation. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the By-Laws for regular appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board, if there
shall be such an officer, shall, if present, preside at all meetings of the
board of directors, and exercise and perform such other powers and duties as may
be from time to time assigned to him by the board of directors or prescribed by
the By- Laws.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as
may be given by the board of directors to the chairman of the board, if there be
such an officer, the president shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction and control of the business and officers of the
corporation. He shall preside at all meetings of the shareholders and in the
absence of the chairman of the board, or if there be none, at all meetings of
the board of directors. He shall be ex-officio a member of all the standing
committees, including the executive committee, if any, and shall have the
general powers and duties of management usually vested in the office of
president of a corporation, and shall have such other powers and duties as may
be prescribed by the board of directors or the By-Laws.
Section 8. VICE PRESIDENT. In the absence or disability of the
president, the vice presidents in order of their rank as fixed by the board of
directors, or if not ranked, the vice president designated by the board of
directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
board of directors or the By-Laws.
Section 9. SECRETARY. The secretary shall keep, or cause to be kept, a
book of minutes at the principal office or such other place as the board of
directors may order, of all meetings of directors and shareholders, with the
time and place of holding, whether regular or special, and if special, how
authorized, the notice thereof given, the names of those present at directors'
meetings, the number of shares present or represented at shareholders' meetings
and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal office, a share
register, or a duplicate share register, showing the names of the shareholders
and their addresses; the number and classes of shares held by each; the number
and date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.
<PAGE>
The secretary shall give, or cause to be given, notice of all the meetings of
the shareholders and of the board of directors required by the By-Laws or by law
to be given, and he shall keep the seal of the corporation in safe custody, and
shall have such other powers and perform such other duties as may be prescribed
by the board of directors or the By-Laws.
Section 10. TREASURER. The treasurer shall keep and maintain, or cause
to be kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursement, gains, losses, capital, surplus and shares.
Any surplus, including earned surplus, paid-in surplus and surplus arising from
a reduction of stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all times be open to
inspection by any director.
The treasurer shall deposit all moneys and other valuables in the name and to
the credit of the corporation with such depositories as may be designated by the
board of directors. He shall disburse the funds of the corporation as may be
ordered by the board of directors, shall render to the president and directors,
whenever they request it, an account of all of his transactions as treasurer and
of the financial condition of the corporation, and shall have such other powers
and perform such other duties as may be prescribed by the board of directors or
the By-Laws.
ARTICLE V.
Miscellaneous
Section 1. RECORD DATE AND CLOSING STOCK BOOKS. The board of directors
may fix a time, in the future, not exceeding fifteen (15) days preceding the
date of any meeting of shareholders, and not exceeding thirty (30) days
preceding the date fixed for the payment of any dividend or distribution, or for
the allotment of rights, or when any change or conversion or exchange of shares
shall go into effect, as a record date for the determination of the shareholders
entitled to notice of and to vote at any such meeting, or entitled to receive
any such dividend or distribution, or any such allotment of rights, or to
exercise the rights in respect to any such change, conversion or exchange of
shares, and in such case only shareholders of record on the date so fixed shall
be entitled to notice of and to vote at such meetings, or to receive such
dividend, distribution or allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after any record date fixed as aforesaid. The board of directors may
close the books of the corporation against transfers of shares during the whole,
or any part of any such period.
Section 2. INSPECTION OF CORPORATE RECORDS. The share register or
duplicate share register, the books of account, and minutes of proceedings of
the shareholders and directors shall be open to inspection upon the written
demand of any shareholder or the holder of a voting trust certificate, at any
reasonable time, and for a purpose reasonably related to his interests as a
shareholder, or as the holder of a voting trust certificate, and shall be
exhibited at any time when required by the demand of ten percent (10%) of the
shares represented at any shareholders' meeting. Such inspection may be made in
person or by an agent or attorney, and shall include the right to make extracts.
Demand of inspection other than at a shareholders' meeting shall be made in
writing upon the president, secretary or assistant secretary of the corporation.
Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the board of directors.
<PAGE>
Section 4. ANNUAL REPORT. The board of directors of the corporation
shall cause to be sent to the shareholders not later than one hundred twenty
(120) days after the close of the fiscal or calendar year an annual report.
Section 5. CONTRACT, ETC., HOW EXECUTED. The board of directors, except
as in the By-Laws otherwise provided, may authorize any officer or officers,
agent or agents, to enter into any contract, deed or lease or execute any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances; and unless so authorized by
the board of directors, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit to render it liable for any purpose or to any amount.
Section 6. CERTIFICATES OF STOCK. A certificate or certificates for
shares of the capital stock of the corporation shall be issued to each
shareholder when any such shares are fully paid up. All such certificates shall
be signed by the president or a vice president and the secretary or an assistant
secretary, or be authenticated by facsimiles of the signature of the president
and secretary or by a facsimile of the signature of the president and the
written signature of the secretary or an assistant secretary. Every certificate
authenticated by a facsimile of a signature must be countersigned by a transfer
agent or transfer clerk.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the board of directors or the By-Laws may
provide; provided, however, that any such certificate so issued prior to full
payment shall state the amount remaining unpaid and the terms of payment
thereof.
Section 7. REPRESENTATIONS OF SHARES OF OTHER CORPORATIONS. The
president or any vice president and the secretary or assistant secretary of this
corporation are authorized to vote, represent and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority herein
granted to said officers to vote or represent on behalf of this corporation or
corporations may be exercised either by such officers in person or by any person
authorized so to do by proxy or power of attorney duly executed by said
officers.
Section 8. INSPECTION OF BY-LAWS. The corporation shall keep in its
principal office for the transaction of business the original or a copy of the
By-Laws as amended, or otherwise altered to date, certified by the secretary,
which shall be open to inspection by the shareholders at all reasonable times
during office hours.
ARTICLE VI.
Amendments
Section 1. POWER OF SHAREHOLDERS. New By-Laws may be adopted or these
By- Laws may be amended or repealed by the vote of shareholders entitled to
exercise a majority of the voting power of the corporation or by the written
assent of such shareholders.
Section 2. POWER OF DIRECTORS. Subject to the right of shareholders as
provided in Section 1 of this Article VI to adopt, amend or repeal By-Laws, By-
Laws other than a By-Law or amendment thereof changing the authorized number of
directors may be adopted, amended or repealed by the board of directors.
Section 3. ACTION BY DIRECTORS THROUGH CONSENT IN LIEU OF MEETING. Any
action required or permitted to be taken at any meeting of the board of
directors or of any committee thereof, may be taken without a meeting, if a
written consent thereto is signed by all the members of the board or of such
committee. Such written consent shall be filed with the minutes of proceedings
of the board or committee.
/s/ G. McDougall
----------------------------
G. McDougall
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<NAME> Tidelands Oil & Gas Corporation
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