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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
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
FOUNTAIN OIL INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 0-9147 91-0881481
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1400 Broadfield Blvd., Suite 200, Houston, Texas 77084-5163
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 713-492-6992
_____________________________________________________________
(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, and (ii) two drilling rigs and related equipment,
which Gastron acquired with a view towards providing such rigs and equipment to
Intergas. Other shareholders of Intergas include the local government
and Mostransgas ("Mostransgas"), an affiliate of Gasprom which is the largest
gas distribution group in Russia.
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. 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 acquired
through the acquisition of the issued share capital of Gastron to the Republic
of Adygea, where Registrant expects to deliver such rigs and equipment to
Intergas which, in turn, is expected to utilize them in connection with its
development of the Maykop Field. 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 or whether arrangements satisfactory to Registrant can be
established.
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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 two idle
drilling rigs and related equipment, it has not had any revenues,
customers, operating rights, production techniques, or other operations.
Gastron's investment in Intergas does not entitle Gastron to current
production from the Maykop Field, and the drilling rigs and related
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.
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, 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.
*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 Unaudited Pro Forma
Consolidated Balance Sheet as of August 31, 1995.
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* Previously filed on Form 8-K.
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SIGNATURES
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: December 29, 1995 By: /s/GARY PLISGA
Gary Plisga
Executive Vice President
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EXHIBIT 99(1)
Fountain Oil Incorporated and Subsidiaries Unaudited Pro Forma Consolidated
Balance Sheet
The following 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
(UNAUDITED)
<TABLE>
<CAPTION> ACQUISITION OF
FOUNTAIN OIL GASTRON PRO FORMA TOTAL
ASSETS INCORPORATED INT'L. LTD.(A) ADJUSTMENTS PRO FORMA
- ------ ------------ -------------- ----------- ---------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 4,791,645 $ 2,846 $ _ $ 4,794,490
Accounts receivable, net 44,020 _ _ 44,020
Inventories 17,946 _ _ 17,946
Prepaid expenses 436,990 _ _ 436,990
------------ ------------
Total current assets 5,290,601 5,293,447
------------ ------------
Property and equipment, net 529,831 4,531,818 _ 5,061,649
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
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
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
------------ ------------
Total liabilities and stocholders' equity $ 10,710,322 $ 12,794,986
============ ============
</TABLE>
See the accompanying notes to the Pro Forma Balance Sheet.
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FOUNTAIN OIL INCORPORATED
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
The pro forma adjustments to the accompanying 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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