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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-2
AMENDING
CURRENT REPORT ON FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 19, 1995
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FOUNTAIN OIL INCORPORATED
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(Exact name of registrant as specified in its charter)
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Delaware 0-9147 91-0881481
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
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1400 Broadfield Blvd., Suite 200, Houston, Texas 77084-5163
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 713-492-6992
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective October 19, 1995, Registrant acquired from Ribalta Holdings, Inc.,
("Ribalta") the entire issued share capital of Gastron International Limited, a
British Virgin Islands corporation ("Gastron").
The principal assets of Gastron, which has not yet actively engaged in business,
are (i) a 31% ownership interest in Intergas, a closed private joint stock
company incorporated in Russia ("Intergas"), which has rights to develop the
12,500 acre Maykop gas condensate field (the "Maykop Field") in the Republic of
Adygea, Russian Federation, (ii) an interest in two drilling rigs and related
equipment, which Gastron acquired with a view towards providing such interest to
Intergas as Gastron's capital contribution to Intergas, and (iii) an account
receivable from Mostransgas Gas Transmission and Supply Enterprise, a Russian
joint stock company ("Mostransgas") and a shareholder of Intergas and an
affiliate of Gasprom which is the largest gas distribution group in Russia,
which represents amounts due from Mostransgas to reimburse Gastron for costs
incurred in connection with the acquisition of two drilling rigs and related
equipment which are expected to represent a joint capital contribution by
Gastron and Mostransgas to Intergas.
In August 1995, the Registrant loaned $2,450,000 to Gastron to finance a portion
of the acquisition costs of such rigs and equipment. The Registrant has
otherwise paid only a nominal consideration of $1 thus far for the issued share
capital of Gastron.
Subject to the satisfaction of various conditions prior to August 11, 1997,
Registrant may pay to Ribalta up to $1,000,000 in cash and issue to Ribalta up
to 1,000,000 shares of Registrant's common stock as additional consideration for
the issued share capital of Gastron. Among the conditions precedent to the
payment of some or all of the deferred consideration are (i) satisfactory
production tests of the initial wells drilled by Intergas in the Maykop Field,
(ii) confirmation that Intergas in receiving payment for its production in
freely convertible currency at open market international rates, (iii)
satisfactory reports and legal opinions from Registrant's professional advisors,
(iv) Gastron's receipt of funds to be paid by another shareholder of Intergas,
and (v) various approvals and confirmations. The amount and terms relating to
the consideration were determined through negotiations between Ribalta and
Registrant.
The funds utilized by Registrant in the transactions relating to Gastron have
come from Registrant's working capital.
Registrant will be the operator of the Maykop Field on behalf of Intergas and
will be responsible for arranging the financing of all drilling, development,
and other activities. The initial phase of the Maykop Field development program
envisions the drilling of two new wells to assess the flow of primary gas
production, together with the recompletion and stimulation using modern
production techniques of five existing but non-producing wells. The information
developed during the initial phase of the development program will be utilized
in determining the program for the total field development.
Mostransgas has advised Registrant that Mostransgas is unable at the present
time to affirm its previously announced agreement in principle regarding its
purchase of all gas produced from the Maykop Field at international market
prices. Registrant is continuing discussions with Mostransgas and other
potential purchasers regarding marketing arrangements for the output of the
Maykop Field.
Registrant anticipates shipping the drilling rigs and related equipment to
Russia, where delivery of such rigs and equipment to Intergas will take place.
Intergas, in turn, is expected to utilize them in connection
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with its development of the Maykop Field. Mostransgas has undertaken to pay the
account receivable owed to Gastron with respect to the acquisition of the
drilling rigs and related equipment within seven days of the delivery of the
drilling rigs and related equipment in Russia. Gastron will be required to pay
all remaining amounts owing with respect to the drilling rigs and related
equipment before shipment thereof. Registrant expects the shipment of such rigs
and equipment and the commencement of the initial phase of the development
program for the Maykop Field to follow clarification to Registrant's
satisfaction of marketing arrangements for the production from the Maykop Field.
No assurances can be given regarding the timing or substance of any such
marketing arrangements, whether arrangements satisfactory to Registrant can be
established, or the shipment of the drilling rigs and related equipment.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
The acquisition of the entire issued share capital of Gastron did not
constitute the acquisition of a business as provided for under Article 11 of
Regulation S-X. Therefore, the requirement of Rule 3-05 of Regulation S-X to
provide audited historical financial statements is not applicable.
Although Gastron has a 31% ownership interest in Intergas and an interest
in two drilling rigs and related equipment undergoing testing and certification,
it has not had any revenues, customers, operating rights, production techniques,
or other operations. Equipment owned by Gastron have been idle since acquired by
Gastron. As a result, management of the Registrant believes the historical
financial information of Gastron would not be relevant to investors.
The acquisition of Gastron and the related future development of the
Maykop Field will require significant future cash outlays by the Registrant
during fiscal 1996. In that regard, the Registrant expects to expend
approximately $2.5 million with respect to equipment and mobilization in
anticipation of the commencement of the initial phase of the field development
program of the Maykop Field. Significant additional resources will be required
to fully develop this field. No assurances can be given that such resources will
become available to the Registrant to fund the acquisition of equipment,
mobilization or full development of this field.
Fountain anticipates financing such cash outlays through a combination of
equity and debt financings. The ultimate effect of this acquisition on the
Registrant's financial condition, capital resources, and operating results
cannot reasonably be determined at this time.
(b) Pro Forma Financial Information
Pro forma financial information as of August 31, 1995, as amended, is
attached hereto as Exhibit 99(1) and is incorporated herein by
reference.
(c) Exhibits
*2(1) Agreement Relating to the Sale and Purchase of All the Issued
Share Capital of Gastron International Limited dated August 10,
1995, by and among Ribalta Holdings, Inc. as Vendor, and Fountain
Oil Incorporated as Purchaser, and John Richard Tate as
Warrantor.
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*2(2) Supplemental Agreement Relating to the Sale and Purchase of All
the Issued Share Capital of Gastron International Limited dated
November 3, 1995, by and among Ribalta Holdings, Inc. as Vendor,
and Fountain Oil Incorporated as Purchaser, and John Richard Tate
as Warrantor.
99(1) Fountain Oil Incorporated and Subsidiaries Amended Unaudited Pro
Forma Consolidated Balance Sheet as of August 31, 1995.
* Previously filed in Form 8-K
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SIGNATURES
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Pursuant to the requirement of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FOUNTAIN OIL INCORPORATED
Date: January 12, 1996 By: /s/Gary Plisga
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Gary Plisga
Executive Vice President
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EXHIBIT 99(1)
Fountain Oil Incorporated and Subsidiaries Unaudited Pro Forma Consolidated
Balance Sheet, as Amended
The following Amended Unaudited Pro Forma Consolidated Balance Sheet is based
upon (i) the Audited Consolidated Balance Sheet of Fountain Oil Incorporated and
Subsidiaries (collectively "Fountain") as of August 31, 1995, and (ii) the
Unaudited Balance Sheet of Gastron International Limited ("Gastron") as of
August 31, 1995. The Unaudited Pro Forma Consolidated Balance Sheet was
prepared assuming that the acquisition of Gastron by Fountain had been
consummated as of August 31, 1995. The Unaudited Pro Forma Balance Sheet has
been prepared based upon assumptions deemed appropriate by Fountain. No Pro
Forma Statement of Operations has been prepared as the acquisition of Gastron is
viewed as an acquisition of assets and did not constitute the acquisition of a
business as provided for under Article 11 of Regulation S-X.
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FOUNTAIN OIL INCORPORATED AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF AUGUST 31, 1995, AS AMENDED
(UNAUDITED)
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Acquisition of
Fountain Oil Gastron Pro Forma Total
Incorporated Int'l. Ltd. (A) Adjustments Pro Forma
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ASSETS
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Cash and cash equivalents $ 4,791,645 $ 2,846 $ --- $ 4,794,490
Accounts receivable, net 44,020 --- --- 44,020
Accounts receivable - affiliated entity --- 1,800,000 --- 1,800,000
Inventories 17,946 --- --- 17,946
Prepaid expenses 436,990 --- --- 436,990
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Total current assets 5,290,601 7,093,447
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Property and equipment, net 529,831 2,731,818 --- 3,261,649
Oil and gas properties, net, full cost method 551,685 --- --- 551,685
Notes receivable 2,980,000 --- (2,450,000)(B) 530,000
Investment in oil and gas ventures 1,358,205 --- --- 1,358,205
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Total assets $ 10,710,322 $ 12,794,986
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Accounts payable $ 666,903 $ 1,844,195 $ --- $ 2,511,098
Accrued liabilities 414,279 25,000 --- 439,279
Notes payable 21,250 215,469 --- 236,719
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Total current liabilities 1,102,432 3,187,096
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Note Payable - Fountain Oil Inc. --- 2,450,000 (2,450,000)(B) ---
Stockholders' equity:
Common stock 1,083,406 --- --- 1,083,406
Capital in excess of par value 29,249,175 --- --- 29,249,175
Accumulated deficit (20,724,691) --- --- (20,724,691)
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Total stockholders' equity 9,607,890 9,607,890
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Total liabilities and stockholders' equity $ 10,710,322 $ 12,794,986
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See the accompanying notes to the Pro Forma Balance Sheet.
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FOUNTAIN OIL INCORPORATED
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET, AS AMENDED
(UNAUDITED)
THE PRO FORMA ADJUSTMENTS TO THE ACCOMPANYING AMENDED PRO FORMA CONSOLIDATED
BALANCE SHEET AS OF AUGUST 31, 1995, ARE SUMMARIZED BELOW:
(A) To allocate the purchase price paid by Fountain for Gastron to the fair
value of Gastron's assets acquired and liabilities assumed. All additional
consideration is contingent upon the satisfaction of various conditions. The
acquisition was effective as of October 19, 1995.
(B) To record the elimination of a note payable by Gastron to Fountain
arising out of a $2,450,000 loan by Fountain to Gastron to facilitate Gastron's
purchase of drilling rigs and related equipment.
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