TAURUS
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED BY A PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement |_| Confidential For Use of the
Commission Only
(as Permitted by
Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11 (c) or Rule 14a-12
TAURUS PETROLEUM, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee: (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act
Rule 14a-6(I)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
____________________________________________________________
(2) Aggregate number of securities to which transaction applies:
____________________________________________________________
<PAGE>
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
_____________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_____________________________________________________________
(5) Total fee paid:
_____________________________________________________________
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of the filing.
(1) Amount Previously Paid:
_______________________________________________________________
(2) For, Schedule or Registration Statement No.:
_______________________________________________________________
(3) Filing Party:
_______________________________________________________________
(4) Date Filed:
_______________________________________________________________
<PAGE>
TAURUS PETROLEUM, INC.
2016 Main Street, Suite 109
Houston, Texas 77002
____________________________________________________________________________
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
November 19, 1997
The Annual Meeting of Stockholders of Taurus Petroleum, Inc. (the "Company")
will be held on November 19, 1997 at 10:00 A.M. (CST) at 410 North Sam Houston
Parkway East, Houston, Texas 77060, for the following purposes:
(1) To elect five directors of the Company for the ensuing year.
(2) Proposal to change the name of the Company to Taurus Entertainment
Companies, Inc.
(3) Proposal to effectuate a one share for 300 shares (1 : 300) reverse stock
split of the issued and outstanding shares of common stock of the Company.
(4) Proposal to reduce the number of the Company's authorized shares of common
stock par value $0.001 to 20,000,000 shares.
(5) Proposal to authorize 10,000,000 shares of Preferred Stock of the Company.
(6) To ratify the selection of Simonton, Kutac & Barnidge L.L.P., Certified
Public Accountants as the Company's independent auditor for the fiscal year
ending 1997.
(7) To act upon such other business as may properly come before the meeting.
Only holders of the Company's Common Stock of record at the close of business on
October 6, 1997 will be entitled to vote at the Annual meeting, or any
adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you plan to
come to the meeting, please sign, date, and return your proxy promptly. Your
cooperation in signing and returning your proxy will help avoid further
solicitation expense.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Stephen E. Fischer
Chairman of the Board and President
October 31, 1997
Houston, Texas
<PAGE>
TAURUS PETROLEUM, INC.
2016 Main Street, Suite 109
Houston, Texas 77002
__________________
PROXY STATEMENT
Annual Meeting of Stockholders
November 19, 1997
_________________
This Proxy Statement is being furnished to stockholders in connection with the
solicitation of proxies by and on behalf of the Board of Directors of Taurus
Petroleum, Inc., a Colorado corporation ("the "Company") for use at the Annual
meeting of Stockholders of the Company to be held on November 19, 1997 at 10:00
A.M. (CST) at 410 North Sam Houston Parkway East, Houston, Texas 77060, and at
any adjournments thereof, for the purpose of considering and voting upon matters
set forth in the accompanying Notice of Annual Meeting of Stockholders. This
Proxy Statement and the accompanying form of proxy are first being mailed
to stockholders on or about October 31, 1997. The cost of the solicitation of
proxies is being borne by the Company.
The close of business on October 6, 1997 has been fixed as the record date for
the determination of stockholders entitled to notice of and to vote at the
Annual meeting and any adjournment thereof. As of the record date, there were
60,307,749 shares of the Company's common stock, par value $0.001 per share
(the "Common Stock"), issued and outstanding. The presence, in person or by
proxy, of a majority of the outstanding shares of the Common Stock on the
record date is necessary to constitute a quorum at the meeting. Each nominee
for Director named in Item 1 must receive a majority of the votes cast in person
or by proxy in order to be elected. Stockholders may not cumulate their votes
for the election of Directors. The affirmative vote of a majority of the
shares of Common Stock present or represented by proxy and entitled to vote at
the Annual Meeting is required for the approval of Item 2 through Item 6 set
forth in the accompanying Notice.
All shares represented by properly executed proxies, unless such proxies
previously have been revoked, will be voted at the Annual Meeting in accordance
with the directions on the proxies. If no direction is indicated, the shares
will be voted (i) FOR THE ELECTION OF THE NOMINEES NAMED HEREIN; (ii) FOR THE
PROPOSAL TO CHANGE THE NAME OF THE COMPANY TO TAURUS ENTERTAINMENT COMPANIES,
INC.; (iii) FOR THE PROPOSAL TO EFFECTUATE A 1 FOR 300 SHARE REVERSE STOCK
SPLIT; (iv) FOR THE PROPOSAL TO REDUCE THE NUMBER OF THE COMPANY'S AUTHORIZED
<PAGE>
SHARES OF COMMON STOCK; (v) FOR THE PROPOSAL TO AUTHORIZE 10,000,000 SHARES
OF PREFERRED STOCK OF THE COMPANY; and (vi) FOR THE RATIFICATION OF SIMONTON,
KUTAC & BARNIDGE, L.L.P. AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING JUNE 30, 1997. The enclosed proxy, even though executed and
returned, may be revoked at any time prior to the voting of the proxy (a) by the
execution and submission of a revised proxy, (b) by written notice to the
Secretary of the Company or (c) by voting in person at the Annual Meeting.
____________________________________________________________________________
(1) TO ELECT FIVE DIRECTORS FOR THE ENSUING YEAR
____________________________________________________________________________
Nominees for Directors
The persons named in the enclosed Proxy have been selected by the Board of
Directors to serve as Proxies and will vote the shares represented by valid
proxies at the Annual Meeting of Stockholders and any adjournment thereof. The
Board has determined that the number of Directors shall be fixed at five
directors. They have indicated that, unless otherwise specified in the Proxy,
they intend to vote for Directors the nominees listed below. All the nominees
are presently members of the Board of Directors. Each duly elected Director
will hold office until his successor shall have been elected and qualified.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed proxy will be voted for the election of the nominees listed herein.
Although the Board of Directors of the Company does not contemplate that
any of the nominees will be unable to serve, if such a situation arises prior to
the Annual Meeting, the persons named in the enclosed proxy will vote for the
election of such other person(s)as may be nominated by the Board of
Directors.
The following table provides information with respect to all nominees
to the Board of Directors, as well as all existing directors of the Company and
all executive officers of the Company.
The current nominees for the Board of Directors are Stephen E.
Fischer, Eric Langan, Mitchell White, Christopher N. Curnow and Michael
Thurman. The Board of Directors unanimously recommends a vote FOR the
election of each of the nominees listed below:
<PAGE>
<TABLE>
<S> <C> <C>
Name Position Held Term as Director
Stephen E. Fischer Chairman of the Board of April 1996 until Present
Directors, Chief Executive
Officer, President and
Secretary and Nominee for Director
Eric Langan Nominee for Director N/A
Mitchell White Nominee for Director N/A
Michael Thurman Nominee for Director N/A
Christopher N. Curnow Director and Nominee for November 1987 to Present
Director
Brian E. Cornish Director August 1987 to Present
Thomas P. McDonnell Director July 1990 to Present
David S. Crockett, Jr. Director July 1988 to Present
William B. Weekley Director April 1996 to Present
</TABLE>
Business Experience
STEPHEN E. FISCHER, age 50, was elected to the Board of Directors
in April, 1996. He has been involved in the food and beverage business since
1975. He has owned and operated eleven clubs, and one motel project. Mr.
Fischer has owned and operated three adult entertainment clubs in the Houston,
Texas area. He has a B.S. B.A. degree from the University of North Dakota
(1975). His experience includes club design, construction, and management.
ERIC LANGAN, age 29, has been involved in the adult entertainment
business since 1989. From January 1997 through the present, he has held the
position of President with XTC Cabaret, Inc. From November 1992 until
January 1997, Mr. Langan was the President of Bathing Beauties, Inc. From
May 1991 until November 1992, he was a vice-president with Hang On, Inc.
Since 1989, Mr Langan has exercised managerial control over the opening and
operations of a total of eleven adult entertainment businesses. Through these
activities, Mr. Langan has acquired the knowledge and skills necessary to
successfully operate adult entertainment businesses. Langan also is an officer
of Citation Land Company which owns commercial income real estate in Houston,
Texas.
<PAGE>
MITCHELL WHITE, age 36, has worked in the adult entertainment industry
in Houston, Texas since 1983. From 1983 until 1985, Mr White was employed by
La Bare as an entertainer, disc jockey and emcee. From 1985 until 1987 he was
employed by Executive Suite Cabaret as a manager. From 1987 until 1989, Mr.
White was employed by Chez Paris Cabaret in several management positions
culminating in his appointment as its general manager. In this capacity he
exercised managerial control over the opening of the business and all
operations. From 1989 until 1993 Mr. White was employed by the Colorado Bar
& Grill in several management positions culminating in his appointment as its
general manager. From 1993 until the present, Mr. White has been the general
manager of XTC Cabaret and he exercises managerial control over its three
locations in Houston.
MICHAEL THURMAN, age 38, has been employed in the bar and restaurant
industry since 1982 for several operators of bars and restaurants.. He served
in various management positions culminating in his being appointed comptroller
of a multi-location restaurant chain with annual sales in excess of $6,000,000.
Beginning in 1989, Mr. Thurman worked in managerial capacities for adult
entertainment businesses located in Houston, Texas including the Colorado Bar
& Grill, the Gold Club, Rick's, and Caligula XXI. Since 1994, Mr. Thurman has
been employed by the XTC Group and the XTC Cabaret as its chief financial
officer.
CHRISTOPHER N. CURNOW, age 50, was elected to the Board of Directors in
November, 1987. Mr. Curnow has over 20 years' experience in the petroleum
industry since graduating from the University of Adelaide with a Bachelor of
Science (Honors) degree in 1968. Mr. Curnow spent 13 years with Exxon
Corporation both in Australia and Canada, the USA and Malaysia. During these
years, he gained a wide range of experience in technical, operational and
management aspects of the oil industry. Since 1981 Mr. Curnow has been a
consultant specializing in the management and technical supervision of oil and
gas activities of several Australian companies. Mr. Curnow has been associated
with Cornwall Resource Corporation N.L. since January 1986 and has been
responsible for the management of the petroleum interests of the Cornwall
Group of Companies. Since 1982 Mr. Curnow has been Chief Executive Officer of
Centaur Petroleum Pty. Ltd., a company engaged in oil exploration in Australia.
Mr. Curnow is a Director of Cornwall Resource Corporation N.L. of Sydney,
Australia.
BRIAN E. CORNISH, age 56, was elected to the Board of Directors in
August, 1987. Mr. Cornish is a practicing petroleum geologist who graduated
from the University of Adelaide in Economic Geology in 1960. He subsequently
has gained wide experience in resource exploration both in the Australian and
international oil exploration industry which included a number of years with
The Superior Oil Co. Group. He has been a consulting geologist to a number of
resource oriented corporations. Mr. Cornish is an active member of a number of
professional petroleum and mineral organizations both in Australia and the
United States. Since 1967 he has been the Geologist and Managing Director of
B.E. Cornish & Associates Pty. Ltd., geological and technical consultants, of
Sydney, Australia. Mr. Cornish is Chairman and Managing Director of both
Cornwall Resource Corporation N.L. and its wholly owned subsidiary CPC Petroleum
Corporation N.L. of Sydney.
<PAGE>
THOMAS P. MCDONNELL, age 44, was elected to the Board of Directors in July,
1990. Mr. McDonnell is a graduate of the University of Florida, where he
received his BS degree in Electrical Engineering in 1975. Mr. McDonnell
received an MBA from Corpus Christi State University in 1978. Mr. McDonnell
was employed by Schlumberger Offshore Services as an Openhole Logging Engineer
from 1975 to 1978. Mr. McDonnell was a District Manager of an Openhole logging
District for Birdwell Division of SSC from 1978 to 1980. In 1980 Mr. McDonnell
was employed by WENCO Engineering as a Petroleum Engineer. WENCO is an
engineering firm specializing in production exploration and reservoir
engineering. Mr. McDonnell was involved in reservoir engineering for private
companies; however, his main position involved supervising exploration and
development. From 1981 to 1987, Mr. McDonnell was employed as President of
McDonnell Oil and Gas Consultants, Inc. In this position, Mr. McDonnell
consulted in the drilling and completion of numerous wells in Oklahoma, Texas
and Tennessee. He also operated over 50 wells in the Midcontinent Region. In
1984 Mr. McDonnell formed Validus Operating, Inc. of which he is the President
and Chairman of the Board. Validus Operating, Inc. is an oil and gas production
company with production in Texas, Oklahoma and New Mexico. Along with operating
its own properties, Validus Operating, Inc. operates properties as a third
party. Mr. McDonnell is also Chairman of the Board of Epoch Resources, Inc. an
oil and gas production company with operations in Texas and Oklahoma.
DAVID S. CROCKETT, JR., age 51, was elected to the Board of Directors in
July, 1988. Mr. Crockett has been President of David S. Crockett & Co.,
certified public accountants, since July 1972. Since April 1983, Mr. Crockett
has been Assistant Treasurer, and since May 1984 Vice President of Stonetex
Oil Corp.
WILLIAM B. WEEKLEY, age 44, was elected to the Board of Directors in April,
1996. He holds an MBA from the University of Texas. For more than five years
prior hereto, Mr. Weekley has been an independent consultant providing financial
advisory services, and a private investor in the oil & gas and entertainment
industries. He has been the President of HarCor Capital Markets Inc. which
was an investment banking firm, and he served as the Chairman of Cambridge
Trading and Transportation, Inc. and Pen Roy Oil Company.
Information Concerning the Board of Directors and Its Committees
The Company has no standing audit, nominating, or compensation
committees. Decisions concerning executive officer compensation for 1996
were made by the full Board of Directors. Stephen E. Fischer is the only
director of the Company who is also an officer of the Company. Decisions
concerning audit, nominating and compensation matters for 1996 were made by
the full Board of Directors.
The Company held four meetings of its Board of Directors during the
period covered by the fiscal year ended September 30, 1996. All directors were
present for at least 75% of the meetings.
<PAGE>
Certain Securities Filings
The Company believes that the following persons are each late in filing
Form 5: Thomas P. McDonnell, David S. Crockett, Jr., Brian E. Cornish,
William B. Weekley, Christopher N. Curnow, and Stephen E. Fischer.
EXECUTIVE COMPENSATION
The following table reflects all forms of compensation for
services to the Company for the fiscal years ended December 31, 1994, 1995
and 1996 of the chief executive officer of the Company. Mr. Stephen Fisher,
became President and Chief Executive Officer of the Company in April, 1996.
Prior thereto Mr. McDonnell was Chairman of the Board and President. During
the fiscal year ended June 30, 1996, neither Mr. Fischer, Mr. McDonnell nor
any other officer or director of the Company received any compensation for the
services rendered to the Company which exceeded $100,000.
<TABLE>
SUMMARY COMPENSATION TABLE
<S> <C> <S> <C> <S> <C> <C> <C>
Name and Annual Compensation Long Term Compensation All
Principal Stock Options Other
Position Year Salary Bonus Other All Restricted Awards (Shares) Compensation
Stephen E. Fischer 1996 -0- -0- -0- -0- -0- -0-
Chairman of the Board 1995 -0- -0- -0- -0- -0- -0-
1994 -0- -0- -0- -0- -0- -0-
Thomas P. McDonnell 1996 -0- -0- -0- -0- -0- -0-
Chairman of the Board 1995 -0- -0- -0- -0- -0- -0-
through April 1996 1994 -0- -0- -0- -0- -0- -0-
</TABLE>
Director Compensation
The Company does not currently pay any cash director's fees, but it pays
the expenses, if any, of its directors in attending board meetings.
Employee Stock Option Plan
While the Company has been successful in attracting and retaining qualified
personnel, the Company believes that its future success will depend in part on
its continued ability to attract and retain highly qualified personnel. The
Company also believes that equity ownership is an important factor in its
ability to attract and retain skilled personnel, and the Board of Directors
of the Company
<PAGE>
is presently evaluating the adoption of an employee stock option program. While
no decision has been made as to the type of stock option program which may be
adopted, it is the intention of the Board of Directors that a stock option
program will be established.
The purpose of the stock option program will be to further the interest
of the Company, its subsidiaries and its stockholders by providing incentives in
the form of stock options to key employees and directors who contribute
materially to the success and profitability of the Company. The grants will
recognize and reward outstanding individual performances and contributions
and will give such persons a proprietary interest in the Company, thus
enhancing their personal interest in the Company's continued success and
progress. This program will also assist the Company and its subsidiaries in
attracting and retaining key employees and directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of October 6, 1997
with respect to the beneficial ownership of shares of Common Stock by (i) each
person who owns beneficially more than 5% of the outstanding shares of
Common Stock, (ii) each director and nominee of the Company, (iii) each
executive officer of the Company and (iv) all executive officers and directors
of the Company as a group, and nominees for Director. Each stockholder has
sole voting and investment power with respect to the shares shown.
Shares of
Name of Beneficial Owner Common Stock % of Total
Stephen E. Fischer 28,262,602(1) 46.87%
Christopher N. Curnow 15,425,611(2) 25.73%
Brian E. Cornish 6,250,000 10.42%
Eric Langan -0- -0-
Mitchell White -0- -0-
Michael Thurman -0- -0-
David S. Crockett -0- -0-
William B. Weekley -0- -0-
Thomas P. McDonnell -0- -0-
All directors, nominees and
officersas a group (9 persons) 49,938,213 83.29%
_____________________________
(1) Includes holdings of SBCA Holdings, Inc. which is controlled by Stephen E.
Fischer.
<PAGE>
(2) Includes shares of Centaur Petroleum Pty. Ltd. which is controlled by
Christopher N. Curnow.
Certain Relationships and Related Transactions
The Company was operated by Validus Operating, Inc. ("Validus")
under a Management Agreement, which was originally effective April 1, 1990
and had been extended through January 31, 1996. Under the terms of this
agreement, Validus was entitled to receive $10,000 per month for its services.
Validus is an oil and gas operating company of which Thomas P. McDonnell is
the sole stockholder. Mr. McDonnell currently serves as a member of the
Board of Directors. On December 7, 1992, the Company issued 20,000,000
shares of the Company's Common Stock to Validus at $.005 per share as
consideration for $100,000 of the management fees payable to Validus. In
addition, the Company converted the remaining management fee payable of
$99,000 to a long-term note payable. Also on September 30, 1993, the
Company converted an additional $50,000 of management fee payable to a
long-term note payable. The principal of both notes would have been amortized
over a 10 year period at the prevailing monthly prime rate of interest. In an
effort to eliminate the liabilities of the Company, the Board of Directors
decided to divest all the oil and gas assets of the Company in exchange for the
extinguishment of the debt owed to Validus. These assets were divested to Mr.
Thomas P. McDonnell and Validus Operating, Inc., as they were the single
largest creditors of the Company. Mr. McDonnell currently is the sole
shareholder of Validus Operating, Inc. The liabilities exceeded the asset value
of the Company. This transaction was effective July 1, 1996.
Effective July 1, 1996, SBCA Holdings, Inc.("SBCA") acquired all of
the common stock previously controlled individually and/or beneficially by Mr.
McDonnell and Validus (28,262,602). SBCA is controlled by Mr. Fischer, a
member of the Board of Directors of the Company and currently the President
and Chairman of the Company. In exchange for the shares of common stock of
the Company, SBCA conveyed shares of common stock a private corporation
which Mr. Fischer also controlled.
_____________________________________________________________________________
(2) PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION OF THE
COMPANY TO CHANGE THE NAME OF THE COMPANY TO
TAURUS ENTERTAINMENT COMPANIES, INC.
_____________________________________________________________________________
Description and Effect of the Amendment
The Board of Directors of the Company recommends the approval of the
proposed amendment (the "Amendment") to change the name of the
Company to Taurus Entertainment Companies, Inc. The proposed Amendment
would amend Article I of the Articles of Incorporation, as amended, of Taurus
Petroleum, Inc. to change the name of the Company to Taurus Entertainment
Companies, Inc. Such an Amendment requires the affirmative vote of a
majority of the shares of Common Stock present or represented by proxy and
entitled to vote at the Annual Meeting.
<PAGE>
Principal Reasons for the Amendment
The Board of Directors believes it is desirable to change the name of the
Company because of the Company's divestiture of assets related to the petroleum
industry and believes that the name Taurus Entertainment Companies, Inc. is more
appropriate for the business activities in which the Company plans to be
engaged. Further, the Board of Directors believes that the name Taurus
Entertainment Companies, Inc. is more likely to have a greater intangible value,
and a greater recognition value to the Company in the future, than the current
name of the Company.
Amendment to Articles of Incorporation
The proposed Amendment to Article I will be as follows:
ARTICLE I
"The name of the Corporation is Taurus Entertainment Companies, Inc."
The Board of Directors unanimously recommends a vote FOR amending the Company's
Articles of Incorporation to change the name of the Company to Taurus
Entertainment Companies, Inc.
_____________________________________________________________________________
(3) PROPOSAL TO EFFECTUATE A ONE SHARE FOR 300 SHARES REVERSE
STOCK SPLIT OF THE ISSUED AND OUTSTANDING SHARES
OF COMMON STOCK OF THE COMPANY
_____________________________________________________________________________
The Board of Directors unanimously adopted a resolution declaring the
advisability of, and the Board submits to the shareholders for approval, a
proposal to reverse split the issued and outstanding shares of common stock of
the Company one share for 300 shares ("Reverse Split"). The Reverse Split will
result in one share of common stock being outstanding for each 300 shares
issued and outstanding immediately prior to the Reverse Split. The proposal
would reduce the number of outstanding shares of the Company's Common
Stock from 60,307,749 shares to 201,025 shares. Upon the affirmative vote of
shareholders to effect this Reverse Split, the conversion of shares of the
Company's common stock in connection with the Reverse Split will occur
immediately and without any action on the part of shareholders of the Company
and without regard to the date or dates certificates representing shares of the
Company's common stock are physically surrendered for transfer or exchange
("Effective Date").
The proposal for the Reverse Split requires the affirmative vote of a
majority of the shares of Common Stock present or represented by proxy and
entitled to vote at the Annual Meeting.
<PAGE>
The Board of Directors of the Company recommends the approval of the proposal
to effect a one share for 300 share reverse stock split of the Company's issued
and outstanding Common Stock.
Effect of Reverse Stock Split
The effect of the proposed stock split on the holders of common stock
will be as follows:
(i) Holders of record of fewer than 300 shares of common stock on the
Effective Date of the Reverse Split will have their shares
automatically converted in the Reverse Split into the right to receive
cash in lieu of less than one whole share in the amount set forth
below. (See "Cash Payment in Lieu of Shares").
(ii) Holders of record of 300 shares or more on the Effective Date will have
their shares automatically converted in the Reverse Split into the
number of shares equal to the number of their shares divided by 300.
Any fractional shares resulting from the Reverse Split will
automatically be rounded to the nearest whole share.
The common stock is currently registered under section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as a
result, the Company is subject to the periodic reporting and other requirements
of the Exchange Act. The proposed stock splits will not affect the registration
of the common stock under the Exchange Act, and the Company has no present
intention of terminating the registration under the Exchange Act in order to
become a "private" company.
Reasons for the Reverse Stock Split
The Board believes that the Reverse Split of the issued and outstanding
shares of common stock of the Company is in the best interests of the Company
and its shareholders for several reasons. The Reverse Split should enhance the
acceptability of the common stock by the financial community and the investing
public. The reduction in the number of issued and outstanding shares of
common stock caused by the Reverse Split is expected to increase the market
price of the common stock. The Board also believes that the proposed Reverse
Split will result in a broader market for the common stock than that which
currently exists. The Board believes that many securities brokerage houses tend
to have policies that discourage individual brokers within the firms from making
transactions in low priced stocks.
Some of those policies and practices pertain to the payment of broker's
commissions and to time-consuming procedures that function to make the
handling of lower priced stocks economically unattractive to brokers. In
addition, the structure of trading commissions also tends to have an adverse
impact upon holders of lower priced stock because the brokerage commission
on a sale of lower priced stock generally represents a higher percentage of the
sales price than the commission on a relatively higher priced issue. The
proposed Reverse Split should result in a price level for the Common Stock that
will reduce, to some extent, the effect of the above-referenced policies and
practices of brokerage firms and diminish the adverse impact of trading
commissions on the market for the common stock, although there can be no
assurance that such will be the case.
<PAGE>
There can be no assurance that any or all of these effects will occur;
including, without limitation, that the market price per share of common stock
after the Reverse Split will be greater than the market price pre-split, or that
such price will either exceed or remain in excess of the current market price.
Further, there is no assurance that the market for the common stock will be
improved. Stockholders should note that the Board cannot predict what effect
the reverse split will have on the market price of the Common Stock.
Reduction of Shareholder Base. As of October 6, 1997, the Company
estimates that approximately 3,500 record holders, or approximately 70% of the
record holders of common stock, owned fewer than 300 shares of common
stock. The small holdings of such shareholders represent, in the aggregate,
less than 2% of the Company's outstanding common stock.
The cost of administering each shareholder's account is the same
regardless of the number of shares held in the account. Accordingly, the cost
to the Company of maintaining many small accounts is disproportionately high
when compared with the total number of shares involved. In view of the
disproportionate cost to the Company of retaining small shareholder accounts,
management believes it would be beneficial to the Company and its shareholders
as a whole to eliminate the administrative burden and cost associated with the
many accounts containing fewer than 300 shares of the Company's common
stock. The Reverse Split will enable shareholders holding of record fewer than
300 shares to dispose of their investment at market value and, in effect, avoid
brokerage fees on the transaction. Shareholders owning a small number of
shares would, if they chose to sell their shares, probably incur brokerage fees
greater than the market value of their shares. In some cases, it might be
difficult to find a broker to handle such small transactions.
Cash Payment in Lieu of Shares
In lieu of issuing less than one whole share resulting from the Reverse
Split to holders of record of fewer than 300 shares, the Company will value
each outstanding share of common stock held on the Effective Date of the
Reverse Split at the average daily closing bid price per share of the common
stock as reported on the Over The Counter Bulletin Board for the 20 trading
days preceding the Effective Date. Such per share price is hereinafter referred
to as the "Purchase Price."
Shareholders who hold fewer than 300 shares of record on the Effective
Date will be entitled to receive in lieu of the less than one whole share
arising as a result of the Reverse Split, cash in the amount of the Purchase
Price times the number of shares of common stock held prior to the Reverse
Split.
Any shareholder owning of record fewer than 300 shares of common
stock who desires to retain any equity interest in the Company after the
Effective Date may do so by purchasing, prior to the Effective Date, sufficient
additional shares of the Company's outstanding common stock in the open
market to increase the number of shares held to 300 shares or more.
<PAGE>
Exchange of Stock Certificates
As soon as practicable after the Effective Date, the Company will send
Letters of Transmittal to all shareholders of record on the Effective Date for
use in transmitting stock certificates ("old certificates") to the Transfer
Agent. Upon proper completion and execution of the Letter of Transmittal and
return thereof to the Transfer Agent, together with old certificates, each
shareholder who holds of record fewer than 300 shares on the Effective Date will
receive cash in the amount to which the holder is entitled. No interest will be
paid on cash sums due as of the Effective Date. After the Effective Date and
until surrendered, each outstanding old certificate held by a shareholder who
holds of record fewer than 300 shares shall be deemed for all purposes to
represent only the right to receive the amount of cash to which the holder is
entitled as a result of the Reverse Split.
Upon proper completion and execution of the Letter of Transmittal and
return thereof to the Transfer Agent, together with old certificates, holders of
record of 300 or more shares on the Effective Date will receive certificates
("new certificates") representing the number of whole shares of common stock
into which their shares of common stock have been converted as a result of the
proposed stock splits. Until surrendered or exchanged, each outstanding old
certificate held by a shareholder who holds of record 300 or more shares shall
be deemed for all purposes to represent the number of whole shares to which
the holder is entitled as a result of the proposed Reverse Split and if
transferred or sold, will automatically be reissued in the transferee's name in
the new post-split number of shares. Further, any rights to acquire the
Company's common stock will be subject to automatic adjustment to reflect the
one share for 300 share Reverse Split.
Federal Income Tax Consequences on the Proposed Reverse Split
The following discussion describes certain federal income tax
consequences of the proposed Reverse Split to shareholders of the Company
who are citizens or residents of the United States. In general, the federal
income tax consequences of the proposed Reverse Split will vary among
shareholders depending upon whether they receive solely cash for their shares
or solely new certificates in exchange for old certificates. In addition, the
actual consequences for each shareholder will be governed by the specific facts
and circumstances pertaining to his acquisition and ownership of the common
stock. Thus, the Company recommends that each shareholder consult with his tax
advisor concerning his own personal tax situation. The Company has not
sought and will not seek an opinion of counsel or a ruling from the Internal
Revenue Service regarding the federal income tax consequences of the
proposed Reverse Split. However, the Company believes that because the
proposed Reverse Split is not part of a plan to periodically increase a
shareholder's proportionate interest in the assets or earnings and profits of
the Company, the proposed Reverse Split probably will have the following federal
income tax effects:
1. A shareholder who owns fewer than 300 shares of the common
stock before the Reverse Split, and who therefore receives only cash as a result
of the Reverse Split will generally be treated as having sold his shares of
common stock represented by old certificates and will recognize gain to the
extent that the cash received exceeds his basis in such common stock. If the
shares are a capital asset in the hands of the shareholder, the gain will be
recognized as a capital gain. Whether gains or losses from the sale or exchange
of capital assets are short-term or long-term capital gains or losses depends on
the period the capital asset was held. If the shareholder's basis in the shares
is greater than the cash received, and if the shares are a capital asset in the
hands of the shareholder, the shareholder will recognize a long-term or a short
- -term capital loss.
2. A shareholder who holds 300 or more shares before the Reverse
Split, i.e., a shareholder who is entitled to receive solely new certificates,
will not recognize gain or loss on the exchange. In the aggregate, the
shareholder's basis in the shares of common stock represented by new
certificates will equal the holder's basis in the shares of common stock
represented by old certificates.
3. The proposed stock splits will constitute a reorganization within
the meaning of Section 368(a)(1)(E) of the Internal Revenue Code of 1986 and
the Company will not recognize any gain or loss as a result of the proposed
Reverse Split.
_____________________________________________________________________________
(4) PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION OF THE COMPANY
TO REDUCE THE AUTHORIZED NUMBER OF POST-REVERSE-SPLIT SHARES
OF THE COMPANY'S COMMON STOCK TO 20,000,000 AUTHORIZED SHARES
_______________________________________________________________
Description and Effect of the Amendment
The Board of Directors of the Company recommends the approval of the
proposed amendment (the "Amendment") to reduce the number of authorized post
- -reverse-split shares of the Company's common stock par value $0.001 to
20,000,000 authorized shares. The proposed Amendment would amend Article V of
the Articles of Incorporation as amended of Taurus Petroleum, Inc. to authorize
20,000,000 shares of common stock par value $0.001. Such an Amendment
requires the affirmative vote of a majority of the shares of Common Stock
present or represented by proxy and entitled to vote at the Annual Meeting.
This amendment is subject to the passage of Proxy item (3) which is the proposal
related to the one share for 300 share reverse stock split of the issued and
outstanding shares of common stock of the Company.
Principal Reasons for the Amendment
The Board of Directors believes it is desirable to reduce the number of
authorized post-reverse-split shares of the Company's common stock par value
$0.001 to 20,000,000 shares. Currently, the Company has 200,000,000 shares
of common stock authorized. The Board of Directors believes that business
expansion of the Company and investor confidence will be furthered by the
reduction in the number of shares authorized by this proposal because the
potential market overhang of the current number of authorized shares will be
greatly reduced. Further, the Company's Board seeks to reduce the number of
authorized shares of common stock because the Board does not currently
foresee a need to issue shares of common stock in excess of the proposed
amount.
<PAGE>
Amendment to Articles of Incorporation
The proposed Amendment to Article V will be as follows:
ARTICLE V
"(a) The aggregate number of shares of common stock which
the corporation shall have authority to issue is twenty million (20,000,000)
shares with $0.001 par value which shall be designated as common stock. No
share of common stock shall be issued until it has been paid for and it shall
thereafter be non- assessable."
The Board of Directors unanimously recommends a vote FOR amending
the Company's Articles of Incorporation to reduce the number of authorized
post-reverse-split shares of the Company's common stock par value $0.001 to
20,000,000 authorized shares.
_____________________________________________________________________________
(5) PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION OF THE COMPANY
TO AUTHORIZE 10,000,000 SHARES OF PREFERRED STOCK
_____________________________________________________________________________
Description and Effect of the Amendment
The Board of Directors of the Company recommends the approval of
the proposed amendment (the "Amendment") to authorize 10,000,000 shares of
preferred stock.
The proposed Amendment would amend Article V of the Articles of
Incorporation as amended of Taurus Petroleum, Inc. to authorize 10,000,000
shares of preferred stock. Such an Amendment requires the affirmative vote of a
majority of the shares of Common Stock present or represented by proxy and
entitled to vote at the Annual Meeting.
Principal Reasons for the Amendment
The Board of Directors believes it is desirable to authorize 10,000,000
shares of preferred stock. Currently, the Company has no shares of preferred
shares authorized. The purpose of the proposed amendment is to make available
for issuance shares of preferred stock which will be available in the event the
Board of Directors determines that it is necessary and appropriate to raise
additional capital through the sale of preferred stock in the public or private
market, or otherwise issue shares of preferred stock for acquisitions or other
appropriate corporate purposes. The Board of Directors has no present
agreement, arrangement or plan to issue any shares of preferred stock.
<PAGE>
Amendment to Articles of Incorporation
The proposed Amendment to Article V will be as follows:
ARTICLE V
"(b) The aggregate number of shares of preferred stock which the
corporation shall have authority to issue is ten million (10,000,000) shares of
preferred stock with a par value of $0.01. No share of preferred stock shall
be issued until it has been paid for and it shall thereafter be non-assessable
(c) The Preferred Stock may be divided into and issued in one or
more series. The preferences, limitations, and relative rights of the Preferred
Stock may vary between series in any and all respects, but shall not vary within
a series. The Board of Directors may establish one or more series of unissued
shares of the Preferred Stock and fix and determine the preferences,
limitations, and relative rights of any series to the fullest extent set forth
herein and permitted by Colorado law, as now or hereafter in force. The Board
of Directors may increase or decrease the number of shares within each such
series; provided, however, that the Board of Directors may not decrease the
number of shares within a series below the number of shares within such series
that is then issued. The preferences, limitations, and relative rights of any
Preferred Stock to be issued shall be fixed by the Board of Directors adopting a
resolution or resolutions to such effect and filing a statement with respect
thereto as required by the Colorado law."
The Board of Directors unanimously recommends a vote FOR amending
the Company's Articles of Incorporation to authorize 10,000,000 of preferred
stock.
_____________________________________________________________________________
(6) PROPOSAL TO RATIFY THE SELECTION OF SIMONTON, KUTAC & BARNIDGE L.L.P.
AS THE COMPANY'S INDEPENDENT AUDITOR
FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1997
_____________________________________________________________________________
The Board of Directors has selected Simonton, Kutac & Barnidge
L.L.P. Certified Public Accountants as the Company's independent auditor for
the current fiscal year. Although not required by law or otherwise, the
selection is being submitted to the Stockholders of the Company as a matter of
corporate policy for their approval.
The Board of Directors wishes to obtain from the Stockholders a
ratification of their action in appointing Simonton, Kutac & Barnidge L.L.P.
Certified Public Accountants as the Company's independent auditor for the
fiscal year ending September 30, 1997. Such ratification requires the
affirmative vote of a majority of the shares of Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting.
<PAGE>
In the event the appointment of Simonton, Kutac & Barnidge Certified
Public Accountants as independent auditor is not ratified by the Stockholders,
the adverse vote will be considered as a direction to the Board of Directors to
select other independent auditors for the fiscal year ending September 30,
1997.
A representative of Simonton, Kutac & Barnidge L.L.P. Certified Public
Accountants is expected to be present at the Annual Meeting with the
opportunity to make a statement if he so desires and to respond to appropriate
questions.
The Board of Directors unanimously recommends a vote FOR the
ratification of Simonton, Kutac & Barnidge L.L.P. Certified Public Accountants
as independent auditor for fiscal year ending September 30, 1997.
Changes in Company's Certifying Accountant
Ernst & Young L.L.P. ("Ernst & Young"), Certified Public
Accountants, of San Antonio, Texas, audited the financial statements of the
Company for the year ended December 31, 1995. Ernst and Young was
mutually terminated as of January 6, 1997.
Simonton, Kutac & Barnidge, L.L.P. (SK&B), Certified Public
Accountants, of Houston, Texas was engaged as the Company's accountant on
June 3, 1997. The decision to change the Company's independent accountants
was recommended by Stephen E. Fischer and was approved by the Company's
Board of Directors.
There were no disagreements between the Company and Ernst &
Young, whether resolved or not resolved, on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved, would have caused them to make reference to
the subject matter of the disagreement in connection with their report.
The report of Ernst & Young for the past two fiscal years did not
contain any adverse opinion or disclaimer of opinion, excepting a "going
concern" qualification, and was not qualified or modified as to uncertainty,
audit scope or accounting principles.
Also, during the Company's two most recent fiscal years, and since then,
Ernst & Young has not advised the Company that any of the following exist or
are applicable:
(1) That the internal controls necessary for the Company to develop
reliable financial statements do not exist, that information has
come to their attention that has lead them to no longer be able to
rely on management's representations, or that has made them
unwilling to be associated with the financial statements prepared
by management;
(2) That the Company needs to expand significantly the scope of its
audit, or that information has come to their attention that if
further investigated may materially impact the fairness or
reliability of a previously issued audit report or the underlying
financial statements or any other financial presentation, or cause
him to be unwilling to rely on management's representations or
be associated with the Company's financial statements for the
foregoing reasons or any other reason; or
<PAGE>
(3) That they have advised the Company that information has come
to their attention that they have concluded materially impacts the
fairness or reliability of either a previously issued audit report
or the underlying financial statements for the foregoing reasons or
any other reason.
Further, during the Company's two most recent fiscal years and since
then, the Company has not consulted Ernst & Young regarding the application
of accounting principles to a specified transaction, either completed or
proposed; or the type of audit opinion that might be rendered on the Company's
financial statements or any other financial presentation whatsoever.
The Company provided Ernst & Young with a copy of the disclosure
provided under this caption, and has been provided with a letter addressed to
the Securities and Exchange Commission stating that it agrees with the above
statements.
___________________________________________________________________________
(7) OTHER MATTERS
___________________________________________________________________________
The Board of Directors is not aware of any other matters to be presented for
action at the meeting. However, if any other matter is properly presented, it
is the intention of the persons named in the enclosed proxy to vote in
accordance with their best judgment on such matters.
1998 STOCKHOLDERS PROPOSALS
The deadline for stockholders to submit proposals to be considered for inclusion
in the Proxy Statement for the 1998 Annual meeting of Stockholders is March
31, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Stephen E. Fischer
Chairman of the Board and CEO
Houston, Texas
<PAGE>
Proxy
TAURUS PETROLEUM, INC
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 19, 1997
The undersigned hereby appoints Stephen E. Fischer and Eric Langan,
and each of them as the true and lawful attorneys, agents and proxies of the
undersigned, with full power of substitution, to represent and to vote all
shares of Common Stock of Taurus Petroleum, Inc. held of record by the
undersigned on October 6, 1997, at the Annual Meeting of Stockholders to be held
on November 19, 1997 at 10:00 AM(CST) at 410 North Sam Houston Parkway East,
Houston, Texas 77060, and at any adjournments thereof. Any and all proxies
heretofore given are hereby revoked.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS
DESIGNATED BY THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE
PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN NUMBER 1 AND
FOR THE PROPOSALS IN NUMBERS 2, 3, 4 AND 5, AND FOR THE
RATIFICATION IN NUMBER 6.
1. ELECTION OF DIRECTORS OF THE COMPANY. (Instruction: To withhold
authority to vote for any individual nominee, strike a line through, or
otherwise strike, that nominee's name in the list below.)
o FOR all nominees listed o WITHHOLD authority to
below except as marked vote for all nominees
to the contrary below
Stephen E. Fischer Christopher N. Curnow
Eric Langan Mitchell White
Michael Thurman
<PAGE>
2. PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO
CHANGE THE NAME OF THE COMPANY TO TAURUS ENTERTAINMENT
COMPANIES, INC.
o FOR o AGAINST o ABSTAIN
3. PROPOSAL TO EFFECTUATE A ONE SHARE FOR 300 SHARES ( 1 : 300)
REVERSE STOCK SPLIT OF THE ISSUED AND OUTSTANDING SHARES OF
COMMON STOCK OF THE COMPANY.
o FOR o AGAINST o ABSTAIN
4. PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO
REDUCE THE NUMBER OF THE COMPANY'S AUTHORIZED SHARES OF POST-
REVERSE-SPLIT COMMON STOCK PAR VALUE $0.001 TO 20,000,000 SHARES.
o FOR o AGAINST o ABSTAIN
5. PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO
AUTHORIZE 10,000,000 SHARES OF PREFERRED STOCK OF THE COMPANY.
o FOR o AGAINST o ABSTAIN
6. PROPOSAL TO RATIFY THE SELECTION OF SIMONTON, KUTAC &
BARNIDGE L.L.P. AS THE COMPANY'S INDEPENDENT AUDITOR FOR THE
FISCAL YEAR ENDING SEPTEMBER 30, 1997.
o FOR o AGAINST o ABSTAIN
7. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE
ANNUAL MEETING.
o FOR o AGAINST o ABSTAIN
<PAGE>
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorizedofficer. If a
partnership, please sign in partnership name by authorized person.
_______________________ ________________________________
Number of Signature
Shares Owned
________________________________
(Typed or Printed Name)
________________________________
Signature if held jointly
________________________________
(Typed or Printed Name)
DATED: __________________________
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED
AT THE MEETING. PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY.