U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended December 31, 1999.
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______ to ________ .
Commission File Number: 0-9435
FIELDPOINT PETROLEUM CORPORATION
--------------------------------
(Name of Small Business Issuer in Its Charter)
Colorado 84-0811034
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1703 Edelweiss Drive
Cedar Park, Texas 78613
----------------- ------
(Address of Principal Executive Offices) (Zip Code)
(512) 250-8692
--------------
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
(None)
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.01 Par Value
Title of Class
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
-------- --------
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ X ]
The issuer's revenues for its most recent fiscal year were $917,810.
As of December 31, 1999, 6,331,925 shares of the Registrant's common stock par
value $.01 per share, were outstanding. The aggregate market value of the voting
stock held by non-affiliates of the Registrant at March 15, 2000, was
$5,297,053.
Documents Incorporated by Reference: None.
<PAGE>
PART I
ITEM 1- BUSINESS
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General
FieldPoint Petroleum Corporation, (formerly Energy Production Company)a Colorado
corporation (the "Company"), was formed on March 11, 1980, for the purpose of
identifying, acquiring, and enhancing the production of mature oil and natural
gas fields located primarily in the mid-continent and the Rocky Mountain region.
From 1980 the Company was engaged in oil and gas operations, and beginning in
December 1986, the Company divested all of its oil and gas assets and
operations. Since December 1986, the Company was not engaged in any oil and gas
operations until the completion of the reverse acquisition described below on
December 31, 1997.
Reverse Acquisition - The Company entered into an Agreement dated as of December
22, 1997, with Bass Petroleum, Inc., a Texas corporation ("BPI"), pursuant to
which, on December 31, 1997, the Company acquired from the shareholders of BPI
an aggregate of 8,655,625 shares of capital stock of BPI, in exchange for the
issuance of 4,000,000 unregistered shares of the Company's common stock. The
transaction was treated, for accounting purposes, as an acquisition of
FieldPoint Petroleum Corporation by Bass Petroleum, Inc. On December 31,1997,
the Company changed its name from Energy Production Company to FieldPoint
Petroleum Corporation.
On January 11, 1999, the Company entered into an agreement with W.B.McKee
Securities to act as placement agent in the selling of up to a maximum of
1,466,667 Units each consisting of one share of the Company's Common Stock and
one common stock warrant, with its exercise price of $1.25, (the "Warrants"),on
a "best efforts all or none" basis with respect to the first 533,333 Units (the
"Minimum Offering"), and a "best efforts" basis with respect to the remaining
933,334 Units (the "Maximum Offering") at a purchase price of $.75 per Unit.
Proceeds from the offering were used to fund the acquisition of certain oil and
gas properties from Pontotoc Production, Inc. and for working capital.
Forward-Looking Statements
Certain statements contained in this document, including without limitation
statements containing the words "believes," "anticipates," "intends," "expects,"
and words of similar import, constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievements of the company to
materially differ from any future results, performance or achievements expressed
or implied by such forward-looking statements.
2
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Business Strategy
The Company's business strategy is to continue to expand its reserve base and
increase production and cash flow through the acquisition of producing oil and
gas properties. Such acquisitions will be based on an analysis of the
properties' current cash flow and the Company's ability to profit from the
acquisition. The Company's ideal acquisition will include not only oil and gas
production, but also leasehold and other working interest in exploration areas.
The Company will also seek to identify promising areas for the exploration of
oil and gas through the use of outside consultants and the expertise of the
Company. This identification will include collecting and analyzing geological
and geophysical data for exploration areas. Once promising properties are
identified, the Company will attempt to acquire the properties either for
drilling oil and natural gas wells, using independent contractors for drilling
operations, or for sale to third parties.
The Company recognizes that the ability to implement its business strategies is
largely dependent on the ability to raise additional debt or equity capital to
fund future acquisition, exploration, drilling and development activities. The
Company's capital resources are discussed more thoroughly in Part II, Item 6, in
Management's Discussion and Analysis.
Operations
As of December 31, 1999, the Company had varying ownership interest in 304 gross
productive wells (82.58 net) located in 3 states. The Company operates 59 of the
304 wells; the other wells are operated by independent operators under contracts
that are standard in the industry. It is a primary objective of the Company to
operate most of the oil and gas properties in which it has an economic interest.
The Company believes, with the responsibility and authority as operator, it is
in better position to control cost, safety, and timeliness of work as well as
other critical factors affecting the economics of a well.
Market for Oil and Gas
The demand for oil and gas is dependent upon a number of factors, including the
availability of other domestic production, crude oil imports, the proximity and
size of oil and gas pipelines in general, other transportation facilities, the
marketing of competitive fuels, and general fluctuations in the supply and
demand for oil and gas. The Company intends to sell all of its production to
traditional industry purchasers, such as pipeline and crude oil companies, who
have facilities to transport the oil and gas from the wellsite.
Competition
The oil and gas industry is highly competitive in all aspects. The Company will
be competing with major oil companies, numerous independent oil and gas
producers, individual proprietors, and investment programs. Many of these
competitors possess financial and personnel resources substantially in excess of
those which are available to the Company and may, therefore, be able to pay
greater amounts for desirable leases and define, evaluate, bid for and purchase
a greater number of potential producing prospects that the Company's own
resources permit. The Company's ability to generate resources will depend not
only on its ability to develop existing properties but also on its ability to
identify and acquire proven and unproven acreage and prospects for further
exploration.
3
<PAGE>
Environmental Matters and Government Regulations
The Company's operations are subject to numerous federal, state and local laws
and regulations controlling the discharge of materials into the environment or
otherwise relating to the protection of the environment. Such matters have not
had a material effect on operations of the Company to date, but the Company
cannot predict whether such matters will have any material effect on its capital
expenditures, earnings or competitive position in the future.
The production and sale of crude oil and natural gas are currently subject to
extensive regulations of both federal and state authorities. At the federal
level, there are price regulations, windfall profits tax, and income tax laws.
At the state level, there are severance taxes, proration of production, spacing
of wells, prevention and clean-up of pollution and permits to drill and produce
oil and gas. Although compliance with their laws and regulations has not had a
material adverse effect on the Company's operations, the Company cannot predict
whether its future operations will be adversely effected thereby.
Operational Hazards and Insurance
The Company's operations are subject to the usual hazards incident to the
drilling and production of oil and gas, such as blowouts, cratering, explosions,
uncontrollable flows of oil, gas or well fluids, fires, pollution, releases of
toxic gas and other environmental hazards and risks. These hazards can cause
personal injury and loss of life, severe damage to and destruction of property
and equipment, pollution or environmental damage and suspension of operations.
The Company maintains insurance of various types to cover its operations. The
Company's insurance does not cover every potential risk associated with the
drilling and production of oil and gas. In particular, coverage is not
obtainable for certain types of environmental hazards. The occurrence of a
significant adverse event, the risks of which are not fully covered by
insurance, could have a material adverse effect on the Company's financial
condition and results of operations. Moreover, no assurance can be given that
the Company will be able to maintain adequate insurance in the future at rates
it considers reasonable.
Administration
Office Facilities- The office space for the Company's executive offices at 1703
Edelweiss Drive, Cedar Park, Texas 78613, is currently provided by the majority
shareholder at a cost of $1000 per month as of December 31,1999.
Employees- As of March 15, 2000, the Company had 4 employees, the Company
considers its relationship with its employees satisfactory.
ITEM 2-PROPERTIES
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Principal Oil and Gas Interest
West Allen Field, Pontotoc County Oklahoma is a producing oil and gas field
located approximately 100 miles south of Oklahoma City, Oklahoma. The Company
has a working interest in 52 leases or a total of 225 wells, the leases have
multiple wellbores which the Company has plans to participate in the
recompletion of behind pipe zones.
4
<PAGE>
Giddings Field, Fayette County Texas is in the prolific Austin Chalk field
located in various counties surrounding the city of Giddings, Texas. In February
1998, the company acquired a 97% working interest in the Shade lease. The lease
currently has 3 producing oil and gas wells with a daily production rate of
approximately 120 Mcfe net to the Company. Oil and Gas are produced from the
Austin chalk formation; the Company will evaluate whether additional reserves
can be developed by use of horizontal well technology.
Big Muddy Field, Converse County Wyoming is a producing oilfield located
approximately thirty miles south of Casper, Wyoming. FieldPoint Petroleum owns a
100% working interest in the Elkhorn and J.C. Kinney lease which consists of 3
oil wells producing out of the Wallcreek and Dakota formations at depth ranging
in general from approximately 3,200 feet to approximately 4,000 feet.
Serbin Field, Lee and Bastrop Counties Texas is an oil and gas field located
approximately 50 miles east of Austin and 100 miles west of Houston. The Company
has a working interest in 73 producing oil and gas wells with a production rate
for 1999 of approximately 70 barrels of oil equivalent ("BOE") net to the
Company. Oil and gas are produced from the Taylor Sand at depths ranging from
approximately 5,300 feet to approximately 5,600 feet; it is a 46-gravity oil
sand.
Production
The table below sets forth oil and gas production from the Company's net
interest in producing properties for each of its last two fiscal years.
Oil and Gas Production
----------------------
Quantities 1999 1998
---- ----
Oil (Bbls) 33,120 28,788
Gas (Mcf) 114,278 89,127
Average Sales Price
Oil ($/Bbl) $17.75 $11.96
Gas ($/Mcf) $1.74 $1.50
Average Production Cost ($/BOE) $6.00 $6.31
The Company's oil and gas production is sold on the spot market and the Company
does not have any production that is subject to firm commitment contracts.
During the year ended December 31, 1999, purchases by each of four customers,
Dorado Oil Company, Conoco, GPM Gas Corporation, and Pontotoc Production, Inc.
represented more than 10% of the total Company revenues. Neither of these four
customers, or any other customers of the Company, has a firm sales agreement
with the Company. The Company believes that it would be able to locate alternate
customers in the event of the loss of one or all of these customers.
5
<PAGE>
Productive Wells
The table below sets forth certain information regarding the company's ownership
as of December 31, 1999 of productive wells in the areas indicated.
Productive Wells
----------------
Oil Gas
State Gross1 Net2 Gross1 Net2
- ----- -------- -------- -------- --------
Oklahoma 188 42.90 37 4.59
Texas 69 28.29 7 3.8
Wyoming 3 3 - -
-------- -------- -------- --------
Total 260 74.19 44 8.39
Drilling Activity
The Company participated in drilling one well in Oklahoma in 1999, and drilled
no wells in 1998.
Reserves
Please refer to Note 12 in the accompanying audited financial statements for a
summary of the Company's reserves at 12/31/99 and 12/31/98.
- --------------------
1 A gross well or acre is a well or acre in which a working interest is owned.
The number of gross wells is the total number of wells in which a working
interest is owned. The number of gross acres is the total number of acres in
which a working interest is owned.
2 A net well or acre is deemed to exist when the sum of fractional ownership
working interests in gross wells or acres equals one. The number of net wells or
acres is the sum of the fractional working interests owned in gross wells or
acres expressed as whole numbers and fractions thereof.
6
<PAGE>
Acreage
The following tables set forth the gross and net acres of developed and
undeveloped oil and gas leases in which the Company had working interest and
royalty interest as of December 31, 1999. The category of "Undeveloped Acreage"
in the table includes leasehold interest that already may have been classified
as containing proved undeveloped reserves.
Developed1 Undeveloped2
State Gross3 Net4 Gross3 Net4
- ------ ------ ------ ------ ------
Oklahoma 7237 831 200 19
Texas 1560 390 1360 1000
Wyoming 200 200 400 400
------ ------ ------ ------
Total 8997 1421 1960 1419
ITEM 3-LEGAL PROCEEDINGS
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The Company is a party to a lawsuit arising in the ordinary course of business.
In the opinion of management, final judgement or settlement, if any, that may be
awarded or entered into in connection with this suit would not have a material
adverse effect on the Company's financial position or results of operations.
ITEM 4-SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None.
PART II
ITEM 5-MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------
The Company's Common Stock is traded in the over-the-counter market and listed
on the Bulletin Board under the symbol "FPPC." Prior to January 1998 the
Company's symbol was "ENEU." Also prior to January 1998, the Company's Common
Stock experienced only limited trading and its prices were quoted irregularly in
the National Quotation Bureau's "Pink Sheets." Information regarding bid prices
and closing bids has been obtained from the National Quotation Bureau. The
following quotations, where quotes were available, reflect inter-dealer prices,
without retail mark-up, markdown or commission and may not necessarily represent
actual transactions.
- ------------------------
1 Developed acreage is acreage spaced for or assignable to productive wells.
2 Undeveloped acreage is oil and gas acreage on which wells have not been
drilled or to which no Proved Reserves other than Proved Undeveloped Reserves
have been attributed.
3 A gross well or acre is a well or acre in which a working interest is owned.
The number of gross wells is the total number of wells in which a working
interest is owned. The number of gross acres is the total number of acres in
which a working interest is owned.
4 A net well or acre is deemed to exist when the sum of fractional ownership
working interests in gross wells or acres equals one. The number of net wells or
acres is the sum of the fractional working interests owned in gross wells or
acres expressed as whole numbers and fractions thereof.
7
<PAGE>
FISCAL 1998 CLOSING BID
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HIGH LOW
First Quarter .8125 .3750
Second Quarter 1.5625 .8125
Third Quarter 1.7500 .8125
Fourth Quarter 1.3750 .8750
FISCAL 1999
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HIGH LOW
First Quarter 1.6250 1.0000
Second Quarter 1.6250 1.1250
Third Quarter 1.7500 1.0312
Fourth Quarter 1.8125 .7500
At March 15, 2000, the approximate number of shareholders of record was 1,020.
The Company has not paid any dividends on its Common Stock and does not expect
to do so in the foreseeable future.
Recent Sales of Unregistered Securities
During the fiscal year ended December 1999, the Company issued the following
securities without registration under the Securities Act of 1933, as amended.
On January 11, 1999, the Company entered into an agreement with W.B McKee
Securities to act as placement agent in selling up to a maximum of 1,466,667
Units at a price of $0.75 per Unit, each Unit consisting of one share of the
Company's Common Stock and one common stock warrant, with its exercise price of
$1.25 (the "Warrant") the offering was fully subscribed and closed on September
30, 1999.
As to the issuance of securities identified above, the Company relied upon
Section 4(2) of the Securities Act in claiming exemption from the registered
requirement of the Securities Act. All the persons to whom the securities were
issued had full information concerning the business and affairs of the Company
and acquired the shares for investment purposes. Certificates representing the
securities issued bear a restrictive legend prohibiting transfer of the
securities except in compliance with applicable securities laws.
ITEM 6-MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
The following discussion should be read in conjunction with the Company's
Financial Statements, and respective notes thereto, included elsewhere herein.
The information below should not be construed to imply that the results
discussed herein will necessarily continue into the future or that any
conclusion reached herein will necessarily be indicative of actual operating
results in the future. Such discussion represents only the best present
assessment of the management of FieldPoint Petroleum Corporation.
8
<PAGE>
Overview
FieldPoint Petroleum Corporation derives its revenues from its operating
activities including sales of oil and gas and operating oil and gas properties.
The Company's capital for investment in producing oil and gas properties has
been provided by cash flow from operating activities and from bank financing.
The Company categorizes its operating expenses into the categories of production
expenses and other expenses.
Comparison of Year Ended December 31, 1999 to Year Ended December 31, 1998
--------------------------------------------------------------------------
Results of Operation
Revenues increased 51% or $311,046 to $917,810 for the year ended December 31,
1999, from the comparable 1998 period. Oil production volumes increased by 15%
at the same time the average price per barrel increased 48% during 1999 to
$17.75 from the comparable 1998 period average price of $11.96 per barrel. Also
in 1999, the gas production volume increased by 28% while the average price per
Mcf was $1.74, a 16% increase from the 1998 comparable period. The increase in
production volumes were primarily due to the acquisition of interest in the
Pontotoc County properties in 1999.
Year Ended December 31,
1999 1998
--------- ------
Oil Production 33,120 28,788
Average Sales Price Per Bbl ($/Bbl) $17.75 $11.96
Gas Production 114,278 89,127
Average Sales Price Per Mcf ($/Mcf) $1.74 $1.50
Production expenses increased 14% or $37,916 to $313,435 for the year ended
December 31, 1999, from the comparable 1998 period. The increase was due to cost
associated with additional 1999 production offset by a decrease in workover
expense incurred in 1999 as compared to 1998. Depletion and depreciation expense
decreased 10% or $17,157 to $152,166 for the year ended December 31, 1999 from
the comparable 1998 period. The decrease in depletion and depreciation was due
to an increase in the value and life of the reserve base. General and
administrative overhead cost remained relatively stable and decreased 1% or
$2,554 to $309,712 for the 1999 period verses the comparable 1998 period.
Net other expenses for the year ended December 31, 1999, was $64,264 compared to
net other expenses of $50,374 for 1998. This increase was primarily due to
higher interest expense offset by miscellaneous income.
9
<PAGE>
The Company's net income increased by $225,228 to income of $65,465 for the year
ended December 31, 1999, from the comparable 1998 period. The increase in net
income was primarily due to higher prices received for oil and gas sales and
increases in production.
Liquidity and Capital Resources
Cash flow from operating activities was a $218,650 for the year ended December
31, 1999, compared to a negative $76,272 for the year ended December 31, 1998.
The increase in cash flow from operating activities was primarily due to the
increase in net income for the year ended December 31, 1999.
Cash flow used by investing activities was $1,282,264 in the period ended
December 31, 1999, compared to $401,944 for December 31, 1998. This is primarily
due to increased purchases of oil and gas properties in 1999. Cash flow from
financing activities was $1,179,498 for the period ended December 31, 1999,
compared to $431,134 for the same period in 1998. This was due to increases in
long-term debt and proceeds from sale of common stock, which were used to fund
purchases of oil and gas properties.
Capital Requirements
Management believes the Company will be able to meet its current operating needs
through internally generated cash from operations. Management believes that oil
and gas property investing activities in 2000 can be financed through cash on
hand, cash from operating activities, and bank borrowing. The Company
anticipates continued investments in proven oil and gas properties in 2000. If
bank credit is not available, the Company may not be able to continue to invest
in strategic oil and gas properties. The Company cannot predict how oil and gas
prices will fluctuate during 2000 and what effect they will ultimately have on
the Company, but Management believes that the Company will be able to generate
sufficient cash from operations to service its bank debt and provide for
maintaining current production of its oil and gas properties. The Company had no
significant commitments for capital expenditures at December 31, 1999. The
timing of most capital expenditures for new operations is relatively
discretionary. Therefore, the Company can plan expenditures to coincide with
available funds in order to minimize business risks.
Year 2000 Compliance
The Company has not encountered any negative impacts from the Year 2000 issue on
its operations. There can be no assurance, however, as to the ultimate effect of
the Year 2000 issue on the Company.
10
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ITEM 7-FINANCIAL STATEMENTS
--------------------
The information required is included in this report as set forth in the "Index
to Financial Statements."
Index to Financial Statements
-----------------------------
Independent Auditor's Report F-1
Consolidated Balance Sheets F-2
Consolidated Statements of Operations F-3
Consolidated Statements of Stockholders' Equity F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6 - F-13
Supplemental Oil and Gas Information (Unaudited) F-13 - F-15
ITEM 8-CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
-------------------------------------------------------------------------
DISCLOSURE
----------
None.
PART III
ITEM 9-DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
------------------------------------------------------------------------
WITH SECTION 16(a) OF THE EXCHANGE ACT
--------------------------------------
(a) Identification of Directors and Executive Officers. The following table
sets forth the names and ages of the Directors and Executive Officers of
the Company, all positions and offices with the Company held by such
person, and the time during which each such person has served:
Name Age Position with Company Period Served
- ----- --- --------------------- -------------
Ray D. Reaves 38 Director, President, Chairman, May 1997-present
Chief Executive Officer
Roger D. Bryant 57 Director July 1997-present
Robert A. Manogue 75 Director July 1997-present
Donald H. Stevens 46 Director September 1999-present
Mr. Reaves, age 38, has been Chairman, Director, President, Chief Executive
Officer and Chief Financial Officer of the Company since May 22, 1997. Mr.
Reaves has also served as Chairman, Chief Executive Officer, Chief Financial
Officer and Director of Bass Petroleum, Inc. from October 1989 to the present
and as President of Field Point Inc., a private investment firm from October
1995.
Mr. Reaves will serve until the next meeting of the shareholders or until his
successor(s) have been duly elected and qualified.
Roger D. Bryant, age 57, has been a Director of the Company since July 1997.
From November 1994 to present, Bryant has been President of Canmax Corporation.
From May 1993 to October 1994, Bryant was President of Network Data Corporation.
11
<PAGE>
From January 1993 to May 1993, he served as Senior Vice President, Corporate
Development, of Network Data Corporation. From January 1993 to May 1993, he
served as Senior Vice President, Corporate Development, of Network Data
Corporation. From May 1991 to July 1992, he served as President of Dresser
Industries, Inc., Wayne Division, a leading international manufacturer of fuel
dispensing equipment. Additionally, from August 1989 to May 1991, Bryant was
President of Schlumberger Limited, Retail Petroleum Systems Division, U.S.A., a
division of Schlumberger Corporation.
Robert A. Manogue, age 75, has been a Director of the Company since July 1997.
Since 1982, Manogue has been retired and has been involved in house construction
in Albuquerque, New Mexico under R.A. Manogue Construction. From 1976 to 1982,
Manogue was President of C.P. Clare International N.V. in Brussels, Belgium, a
$50 million subsidiary of General Instruments Corporation. He also served as
Vice President of Marketing for Emerson Electric Company, a manufacturer and
marketer of consumer and industrial products, from 1971 to 1976.
Donald H. Stevens, age 46, has been a Director of the Company since September
1999. Since August 1997 to present he has been Vice President and Treasurer of
Forest Oil Corp. He served as Vice President of Corporate Relations for Barrett
Resources Corp. from August 1992 until August 1997. He also served as Manager of
Corporate and Tax planning for Kennecott Corp. from July 1989 until August 1992.
(b) Identification of Significant Employees. The Company does not employ any
persons, other than its President, who make or are expected to make any
significant contributions to the business of the Company.
(c) Family Relationships. There is no family relationship between any present
director, executive officer or person nominated or chosen by the Company to
become a director or executive officer.
(d) Involvement in Certain Legal Proceedings. No present director or executive
officer of the Company has been the subject of any civil or criminal
proceeding during the past five years which is material to an evaluation of
his integrity or ability to serve as an officer or director, nor is any
such person the subject of any order, judgment or decree of any federal or
state authority which is material to an evaluation of his abilities or
integrity.
ITEM 10-EXECUTIVE COMPENSATION
The following table sets forth in summary form the compensation received during
each of the Company's last two completed fiscal years by each of the Company's
Chief Executive Officer and President. No employee of the Company received total
salary and bonus exceeding $100,000 during the last two fiscal years.
Long-Term
Name and Compensation
Principal Position Fiscal Year Salary Bonus Options (#)
- --------------------------------------------------------------------------------
Ray D. Reaves 1999 $90,000 -- --
Chief Executive Officer 1998 $90,000 -- --
and President
12
<PAGE>
Option Grants Table
The following table sets forth information concerning individual grants of stock
options made during the fiscal years ended December 31, 1999 and 1998, to the
Company's Officers and Directors.
Name Options Granted (#) Price ($/sh.) Expiration Date
- --------------------------------------------------------------------------------
Kelly Latz 5,000 $.88 12/31/1999
Corporate Secretary
Donald H. Stevens 100,000 $1.16 12/31/2001
Director
ITEM 11-SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The following table sets forth the persons known to the Company to own
beneficially more than five percent of the outstanding shares of Common Stock as
of December 31, 1999 and information as of December 31, 1999, with respect to
the ownership of Common Stock by each director and executive officer of the
Company. In all cases, the owners have sole voting and investment powers with
respect to the shares.
Name and Address of Amount and Nature
Beneficial Owner of Beneficial Owner Percent of Class
- ---------------- ------------------- ----------------
Bass Petroleum, Inc. 117,500 1.7%
1703 Edelweiss Drive
Cedar Park, Texas 78613
Mildred Babich 325,801 4.8%
4225 Clear Lake
Ft. Worth, Texas 76109
Peter Babich 323,490 4.7%
3310 Parkside Rd.
Flint, Michigan 48503
The Delray Trust 628,428 9.2%
3606 Belle Grove
Sugar Land, Texas 77479
Ray D. Reaves 2,679,125(1) 39.5%
1703 Edelweiss Drive
Cedar Park, Texas 78613
- ----------------------
1 Includes (i) shares beneficially owned based on position with BPI; (ii)
estimated shares received in Reverse Acquisition in exchange for common stock of
BPI owned by Mr. Reaves; and (iii) 200,000 shares of Common Stock underlying an
option granted to Mr. Reaves by BPI, which option has been assumed by the
Company.
13
<PAGE>
Robert A. Manogue 389,277(2) 5.7%
1703 Edelweiss Drive
Cedar Park, Texas 78613
Roger D. Bryant 94,000(3) 1.3%
1703 Edelweiss Drive
Cedar Park, Texas 78613
Donald H. Stevens 100,000 1.4%
1703 Edelweiss Drive
Cedar Park, Texas 78613
All Officers and Directors 3,262,90(2) 48.2%
as a Group (4 persons)
ITEM 12-CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
The Company leases office space from its majority shareholder. The lease
requires monthly payments of $1,000 on a month to month basis.
At December 31, 1998, the Company had a liability to its majority stockholder of
$15,000 for short-term, non-interest bearing operating advances. This liability
was repaid during 1999.
At December 31, 1999 and 1998, the Company had notes payable to stockholders in
the amount of $16,000 and $220,000 respectively.
ITEM 13-EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
Financial Statements of the Company as set forth under Item 7 of this
Report on Form 10-KSB
3.1 Articles of Incorporation (incorporated by reference to Amendment No. 1
to Form S-2 dated August 1, 1980.)
3.2(b) Articles of Amendment of Articles of Incorporation, dated December 31,
1997 (incorporated by reference to the Company's 10KSB for the year
ended December 31, 1997.)
3.3 Bylaws (incorporated by reference to Amendment No. 1 to Form S-2 dated
August 1, 1980.)
4.1 Plan of Exchange (incorporated by reference to the Company's definitive
proxy statement dated December 8, 1997).
4.2 Indenture (Term Loan) dated June 21, 1999 by and among the Company and
Union Planters
- --------------------
2 Includes (i) shares owned by a partnership of which Mr. Manogue is a partner;
and (ii) 100,000 shares of Common Stock underlying an option of BPI granted to
Mr. Manogue by BPI, which option has been assumed by the Company.
3 Includes 100,000 shares of Common Stock underlying an option granted to Mr.
Bryant.
14
<PAGE>
4.3 Indenture (Term Loan) dated August 18, 1999 by and among the Company
and Union Planters
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Company during the last
quarter of its fiscal year.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIELDPOINT PETROLEUM CORPORATION
--------------------------------
(Registrant)
By: /s/ Ray Reaves
----------------------
Ray Reaves, President
Date: 3/22/00
-------
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Ray Reaves
----------------------
Ray Reaves, President, Chief Executive Officer,
Director, Chairman, Chief Financial Officer
Date: 3/22/00
-------
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH
REPORTS FILED PURSUANT TO SECTION 15(d) OF THE
EXCHANGE ACT BY NON-REPORTING ISSUERS
No annual report or proxy material has been sent to security holders. Proxy
material, which is to be furnished to security holders subsequent to the filing
of the annual report on this form, shall be furnished to the Commission when it
is sent to security holders.
15
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
FieldPoint Petroleum Corporation
Austin, Texas
We have audited the accompanying consolidated balance sheets of FieldPoint
Petroleum Corporation as of December 31, 1999 and 1998, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the years then ended. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of FieldPoint Petroleum
Corporation as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
HEIN + ASSOCIATES LLP
Dallas, Texas
February 12, 2000
<PAGE>
<TABLE>
<CAPTION>
FIELDPOINT PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
------
DECEMBER 31,
--------------------------
1999 1998
------ -----
<S> <C> <C>
CURRENT ASSETS:
Cash $ 117,259 $ 1,375
Trading securities 2,880 2,880
Accounts receivable:
Due from investor -- 9,000
Oil and gas sales 135,067 50,026
Joint interest billings, less allowance for doubtful accounts
of $40,753 and $20,000, respectively 84,906 67,225
Income taxes recoverable -- 48,000
Prepaid expenses 2,535 2,535
----------- -----------
Total current assets 342,647 181,041
PROPERTY AND EQUIPMENT:
Oil and gas properties (successful efforts method):
Unproved leasehold costs -- 180,000
Proved leasehold costs 2,396,998 1,115,176
Lease and well equipment 351,425 172,860
Furniture and equipment 32,280 31,432
Transportation equipment 75,974 74,945
Less accumulated depletion and depreciation (675,424) (523,258)
----------- -----------
Net property and equipment 2,181,253 1,051,155
OTHER ASSETS 25,981 56,815
----------- -----------
Total assets $ 2,549,881 $ 1,289,011
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt $ 409,132 $ 449,500
Accounts payable and accrued expenses 112,339 128,347
Oil and gas revenues payable 49,799 62,538
Due to related party -- 15,000
----------- -----------
Total current liabilities 571,270 655,385
LONG -TERM DEBT, net of current portion 559,462 374,070
DEFERRED INCOME TAXES 15,954 --
COMMITMENT (Note 10)
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 75,000,000 shares authorized;
6,331,925 and 4,613,259 shares issued and outstanding, respectively 63,319 46,132
Additional paid-in capital 1,177,785 117,723
Treasury stock, 117,500 and 210,000 shares, at cost (1,175) (2,100)
Retained earnings 163,266 97,801
----------- -----------
Total stockholders' equity 1,403,195 259,556
----------- -----------
Total liabilities and stockholders' equity $ 2,549,881 $ 1,289,011
=========== ===========
</TABLE>
See accompanying notes to these financial statements.
F-2
<PAGE>
FIELDPOINT PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
------------------------
1999 1998
--------- ---------
REVENUE:
Oil and gas sales $ 786,361 $ 443,448
Well operational and pumping fees 131,449 163,316
--------- ---------
Total revenue 917,810 606,764
COSTS AND EXPENSES:
Production expense 313,435 275,519
Depletion and depreciation 152,166 169,323
General and administrative 309,712 312,266
--------- ---------
Total costs and expenses 775,313 757,108
OTHER INCOME (EXPENSE):
Interest expense, net (83,826) (56,351)
Miscellaneous 19,562 5,977
Total other income (expense) (64,264) (50,374)
--------- ---------
INCOME (LOSS) BEFORE INCOME TAXES 78,233 (200,718)
INCOME TAX BENEFIT (PROVISION):
Current -- 40,955
Deferred (12,768) --
--------- ---------
Total income tax benefit (expense) (12,768) 40,955
--------- ---------
NET INCOME (LOSS) $ 65,465 $(159,763)
========= =========
EARNINGS (LOSS) PER SHARE - Basic and diluted $ .01 $ (.04)
========= =========
See accompanying notes to these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
FIELDPOINT PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JANUARY 1, 1998 TO DECEMBER 31, 1999
Common Stock Treasury Stock Additional
------------------------- ------------------------- Paid-In Retained
Shares Amount Shares Amount Capital Earnings Total
----------- ----------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES, January 1, 1998 4,413,259 $ 44,132 -- $ -- $ 83,906 $ 257,564 $ 385,602
Record value of treasury shares -- -- 214,000 (2,140) 2,140 -- --
Issuance of options to consultant -- -- -- -- 9,732 -- 9,732
Exercise of options by former
director 200,000 2,000 -- -- 18,000 -- 20,000
Sale of treasury stock -- -- (4,000) 40 3,945 -- 3,985
Net loss for year -- -- -- -- -- (159,763) (159,763)
----------- ----------- ---------- ---------- ---------- ---------- -----------
BALANCES, December 31, 1998 4,613,259 46,132 210,000 (2,100) 117,723 97,801 259,556
Proceeds from private placement,
net of offering costs 1,466,666 14,667 -- -- 916,353 -- 931,020
Issuance of common stock and
treasury stock to private
placement consultants 80,000 800 (10,000) 100 (900) -- --
Issuance of common stock to
consultant 35,000 350 -- -- 41,150 -- 41,500
Issuance of common stock to
bridge lender 2,000 20 -- -- 2,180 -- 2,200
Exercise of options 135,000 1,350 -- -- 44,650 -- 46,000
Sales of treasury stock -- -- (82,500) 825 56,629 -- 57,454
Net income for year -- -- -- -- -- 65,465 65,465
----------- ----------- ---------- ---------- ---------- ---------- -----------
BALANCES, December 31, 1999 6,331,925 $ 63,319 117,500 $ (1,175) $1,177,785 $ 163,266 $ 1,403,195
=========== =========== ========== ========== ========== ========== ===========
</TABLE>
See accompanying notes to these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
FIELDPOINT PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 65,465 $ (159,763)
Adjustments to reconcile to net cash from operating activities:
Depletion and depreciation 152,166 169,323
Deferred income taxes 15,954 --
Common stock and options issued for services 43,700 9,732
Changes in assets and liabilities:
Accounts receivable (93,722) 2,033
Income taxes recoverable 48,000 (48,000)
Prepaid expenses and other assets 30,834 (46,815)
Accounts payable and accrued expenses (16,008) 17,092
Oil and gas revenues payable (12,739) (33,974)
Due to related party (15,000) 15,000
Other -- (900)
----------- -----------
Net cash provided (used) by operating activities 218,650 (76,272)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (1,280,387) (411,270)
Purchase of furniture and equipment (1,877) (674)
Decrease in restricted cash -- 10,000
----------- -----------
Net cash used by investing activities (1,282,264) (401,944)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 810,000 595,000
Repayments of long-term debt (664,976) (187,851)
Proceeds from sales of common stock, net of offering costs 977,020 20,000
Proceeds from sales of treasury stock 57,454 3,985
----------- -----------
Net cash provided by financing activities 1,179,498 431,134
----------- -----------
NET INCREASE (DECREASE) IN CASH 115,884 (47,082)
CASH, beginning of the year 1,375 48,457
----------- -----------
CASH, end of the year $ 117,259 $ 1,375
=========== ===========
SUPPLEMENTAL INFORMATION:
Cash paid during the year for interest $ 85,941 $ 58,462
=========== ===========
Cash paid during the year for income taxes $ -- $ 7,045
=========== ===========
Oil and gas properties acquired for forgiveness of receivables $ -- $ 6,267
=========== ===========
</TABLE>
See accompanying notes to these financial statements.
F-5
<PAGE>
FIELDPOINT PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Organization and Nature of Operations
-------------------------------------
FieldPoint Petroleum Corporation (the "Company") is incorporated under the
laws of the state of Colorado. The Company is engaged in the acquisition,
operation and development of oil and gas properties, which are located in
Oklahoma, South-Central Texas and Wyoming as of December 31, 1999.
Consolidation Policy
--------------------
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, Bass Petroleum, Inc. All material
intercompany accounts and transactions have been eliminated in
consolidation.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid debt instruments purchased with a
remaining maturity of three months or less to be cash equivalents.
Oil and Gas Producing Operations
--------------------------------
The Company uses the successful efforts method of accounting for its oil
and gas producing activities. Costs incurred by the Company related to the
acquisition of oil and gas properties and the cost of drilling successful
wells are capitalized. Costs incurred to maintain wells and related
equipment and lease and well operating costs are charged to expense as
incurred. Gains and losses arising from sales of properties are included in
income. Unproved properties are assessed periodically for possible
impairment. Any impaired amounts are charged to expense. The Company had no
impaired unproved properties as of December 31, 1999.
Capitalized amounts attributable to proved oil and gas properties are
depleted by the unit-of-production method based on proved reserves.
Depreciation and depletion expense for oil and gas producing property and
related equipment was $134,166 and $152,093 for the years ended December
31, 1999 and 1998, respectively.
Capitalized costs are evaluated for impairment based on an analysis of
undiscounted future net cash flows in accordance with Financial Accounting
Standards Board Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". If
impairment is indicated, the asset is written down to its estimated fair
value based on expected future discounted cash flows.
Joint Interest Billings Receivable and Oil and Gas Revenue Payable
------------------------------------------------------------------
Joint interest billings receivable represent amounts receivable for lease
operating expenses and other costs due from third party working interest
owners in the wells that the Company operates. The receivable is recognized
when the cost is incurred and the related payable and the Company's share
of the cost is recorded.
Oil and gas revenues payable represents amounts due to third party revenue
interest owners for their share of oil and gas revenue collected on their
behalf by the Company. The payable is recorded when the Company recognizes
oil and gas sales and records the related oil and gas sales receivable.
Other Property
--------------
Other assets classified as property and equipment are primarily office
furniture and equipment and vehicles, which are carried at cost.
Depreciation is provided using the straight-line method over estimated
useful lives ranging from five to seven years. Gain or loss on retirement
or sale or other disposition of assets is included in income in the period
of disposition. Depreciation expense for other property and equipment was
$18,000 and $17,230 for the years ended December 31, 1999 and 1998,
respectively.
F-6
<PAGE>
FIELDPOINT PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Income Taxes
------------
Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due, if any, plus
net deferred taxes related primarily to differences between the bases of
assets and liabilities for financial and income tax reporting. Deferred tax
assets and liabilities represent the future tax return consequences of
those differences, which will either be taxable or deductible when the
assets and liabilities are recovered or settled. Deferred tax assets
include recognition of operating losses that are available to offset future
taxable income and tax credits that are available to offset future income
taxes. Valuation allowances are recognized to limit recognition of deferred
tax assets where appropriate. Such allowances may be reversed when
circumstances provide evidence that the deferred tax assets will more
likely than not be realized.
Stock-Based Compensation
------------------------
The Company applies Statement of Financial Accounting Standards (SFAS) No.
123 "Accounting for Stock- Based Compensation", which requires recognition
of the value of stock options and warrants granted based on an option
pricing model. However, as permitted by SFAS 123, the Company continues to
account for stock options and warrants granted to directors and employees
pursuant to Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations. See Note 7.
Use of Estimates and Certain Significant Estimates
--------------------------------------------------
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's management
to make estimates and assumptions that affect the amounts reported in these
financial statements and accompanying notes. Actual results could differ
from those estimates. Significant assumptions are required in the valuation
of proved oil and gas reserves, which as described above may affect the
amount at which oil and gas properties are recorded. It is at least
reasonably possible those estimates could be revised in the near term and
those revisions could be material.
Reclassifications
-----------------
Certain reclassifications have been made to conform the December 31, 1998
financial statements to the presentation in 1999. The reclassifications had
no effect on net income.
2. ACQUISITION OF OIL AND GAS PROPERTIES
-------------------------------------
In February 1998, the Company acquired interests in certain producing
properties in Texas for consideration of $190,000. The acquisition was
financed with an extension of the Company's existing borrowing facility
with a bank. The following unaudited proforma information is presented as
if the interests in the property had been acquired on January 1, 1998.
YEAR ENDED
DECEMBER 31, 1998
Revenues $ 626,366
Net loss $ (145,443)
Net loss per share $ (.03)
F-7
<PAGE>
<TABLE>
<CAPTION>
FIELDPOINT PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In April, June and July 1999, the Company acquired working interests in
certain producing properties and leases in Oklahoma for $1,102,600. The
acquisition was funded with $625,000 in new bank borrowings and $477,600 in
cash. The following unaudited proforma information is presented as if the
interests in the properties had been acquired at the beginning of the
respective periods.
YEAR ENDED DECEMBER 31,
1999 1998
------ -----
Revenue $1,146,000 $931,000
Net income (loss) $ 141,000 $(23,000)
Net income (loss) per share $ .03 $ (.01)
3. RELATED PARTY TRANSACTIONS
--------------------------
At December 31, 1998, the Company had a liability to its majority
stockholder of $15,000 for short-term, non- interest bearing operating
expenses. This liability was repaid during 1999.
The Company leases office space from its majority stockholder. Rent expense
for this lease was $12,000 for each of the years ended December 31, 1999
and 1998.
At December 31, 1999 and 1998, the Company had notes payable to
stockholders in the amount of $16,000 and $220,000 as described in Note 4.
4. LONG-TERM DEBT
--------------
Long-term debt at December 31, 1999 and 1998 consisted of the following:
1999 1998
---------- ----------
<S> <C> <C>
Note payable to a bank, interest at the bank's floating rate (9.75% at December
31, 1999), monthly payments of principal and interest of $17,227, until
maturity in June 2001. This note is collateralized by certain oil and gas
properties and is guaranteed by the majority stockholder of the Company. $ 299,703 $ 470,601
Note payable to a bank, interest at the bank's floating rate (9.75% at December
31, 1999), monthly payments of principal of $3,788 plus accrued interest,
until maturity in March 2001. This note is collateralized by certain oil and
gas properties and is guaranteed by the majority stockholder of the Company. 56,818 102,273
Note payable to a bank, interest at the bank's floating rate (9.75% at December
31, 1999), monthly payments of principal of $10,417 plus accrued interest,
until maturity in August 2003. This note is collateralized by certain oil and
gas properties and is guaranteed by the majority stockholder of the Company. 458,333 -
Note payable to a bank, interest at the bank's floating rate (9.75% at December
31, 1999), monthly payments of principal of $1,786 plus accrued interest,
until maturity in June 2005. This note is collateralized by certain oil and
gas properties and is guaranteed by the majority stockholder of the Company. 117,857 -
F-8
<PAGE>
FIELDPOINT PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1999 1998
---------- ----------
Unsecured note payable to a stockholder, interest at the prime rate, principal
and accrued interest due at maturity in February 1999. - 180,000
Unsecured note payable to a stockholder, interest at the prime rate, principal
and accrued interest due at maturity in March 1999. - 40,000
Unsecured note payable to a stockholder, interest at the prime rate (9.75% at
December 31, 1999), principal and accrued interest due upon demand. 16,000 -
Other notes payable collateralized by vehicles. 19,883 30,696
---------- ----------
Total 968,594 823,570
Less current portion (409,132) (449,500)
---------- ----------
$ 559,462 $ 374,070
========== ==========
Maturities of long-term debt for the years ending December 31 are as
follows:
2000 $ 409,132
2001 275,049
2002 147,039
2003 104,753
2004 21,432
Thereafter 11,189
-----------
$ 968,594
===========
5. INCOME TAXES
------------
The difference between the Company's effective federal income tax rate and
the statutory federal income tax rate in the years ended December 31, 1999
and 1998 primarily results from the effect of graduated income tax
brackets.
The Company's deferred tax assets (liabilities) are composed of the following :
DECEMBER 31,
------------------------------
1999 1998
--------- ---------
Deferred tax assets:
Non-deductible acquisition cost $ 13,000 $ 15,000
Net operating loss carryforwards 13,000 -
Other items 1,000 9,000
--------- ---------
27,000 24,000
Deferred tax liabilities:
Difference in bases of oil and gas properties (42,954) (11,000)
--------- ---------
Net asset (liability) before valuation allowance (15,954) 13,000
Valuation allowance - (13,000)
--------- ---------
Net asset (liability) $ (15,954) $ -
========= =========
F-9
<PAGE>
FIELDPOINT PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. EARNINGS PER SHARE
Basic earnings (loss) per share is computed based on the weighted average
number of shares of common stock outstanding during the period. Diluted
earnings (loss) per share takes common stock equivalents (such as options
and warrants into consideration. The following table sets for the
computation of basic and diluted earnings per share:
YEAR ENDED DECEMBER 31,
-------------------------------
1999 1998
---------- ----------
Net income (loss) $ 65,465 $ (159,763)
---------- ----------
Numerator for basic and diluted earnings per share 65,465 (159,763)
Denominator:
Denominator for basic earnings per share - weighted
average shares 5,568,811 4,211,592
Effect of dilutive securities:
Director stock options 296,928 -
Warrants 75,359 -
---------- ----------
Dilutive potential common shares 372,287 -
---------- ----------
Denominator for diluted earnings per share -adjusted
weighted-average shares 5,941,098 4,211,592
========== ==========
Basic earnings per share $ 0.01 $ (0.04)
========== ==========
Diluted earnings per share $ 0.01 $ (0.04)
========== ==========
</TABLE>
For additional disclosures regarding the employee stock options and the
warrants, see Note 7. The net effect of converting stock options and
warrants to purchase 1,881,666 shares of common stock at exercise prices
less than the average market prices has been included in the computation of
diluted earnings per share for the year ended December 31, 1999. As of
December 31, 1998, the Company had outstanding options for 455,000 shares
of common stock, which are not included in the dilutive calculation of loss
per share as the effect would be antidilutive.
7. STOCK BASED COMPENSATION
------------------------
Stock Options
-------------
In January 1998, the Company granted 5,000 non-qualified stock options to
an officer, which were exercisable at $0.88 per share. These options
expired unexercised on December 31, 1999.
In January 1998, the Company granted 50,000 non-qualified stock options to
a consultant in exchange for services. The options are exercisable at $0.75
per share until expiration in December 1999. The fair market value of these
options, as determined by the Black-Scholes option pricing model, of $9,732
was recorded as an expense during the year ended December 31, 1998.
F-10
<PAGE>
<TABLE>
<CAPTION>
FIELDPOINT PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In August 1999, the Company granted 100,000 non-qualified stock options to
a director to purchase the Company's common stock at $1.16 per share, which
was greater than the quoted market price on the date of grant. The options
may be exercised from January 1, 2000 to December 31, 2002.
SFAS 123 Disclosures
The following is a summary of activity for the stock options granted for
the years ended December 31, 1999 and 1998:
DECEMBER 31, 1999 DECEMBER 31, 1998
-------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Weighted Weighted
Average Average
Number Exercise Number Exercise
of Shares Price of Shares Price
Outstanding, beginning of year 455,000 $ 0.18 600,000 $ 0.10
Canceled or expired (5,000) $ 0.88 - -
Granted 100,000 $ 1.16 55,000 $ 0.76
Exercised (135,000) $ 0.34 (200,000) $ 0.10
---------- ----------- --------- ----------
Outstanding, end of year 415,000 $ 0.36 455,000 $ 0.18
========== =========== ========= ==========
Exercisable, end of year 315,000 $ 0.10 455,000 $ 0.18
========== =========== ========= ==========
If not previously exercised, options outstanding at December 31, 1999 will
expire as follows:
Weighted
Average
Number Exercise
of Shares Price
--------- --------
December 31, 2001 315,000 $ 0.10
December 31, 2002 100,000 1.16
------- -------
Total 415,000 $ 0.36
======= =======
Presented below is a comparison of the weighted average exercise prices and
fair values of the Company's common stock options on the measurement date
for the options granted during fiscal years 1999 and 1998. The exercise
price exceeded the market price at the measurement date for each option.
1999 1998
----------------------------------- -----------------------------------
Number Exercise Fair Number Exercise Fair
of Shares Price Value of Shares Price Value
--------- ------- ------- --------- ------- ------
Exercise price greater than
market price 100,000 $ 1.16 $ 0.77 55,000 $ 0.76 $ 0.19
</TABLE>
Pro Forma Stock-Based Compensation Disclosures
----------------------------------------------
As discussed in Note 1, the Company applies APB Opinion No. 25 and related
interpretations in accounting for its stock options. Accordingly, no
compensation cost has been recognized for grants of options to employees
F-11
<PAGE>
FIELDPOINT PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
since the exercise prices were not lower than the market prices of the
Company's common stock on the measurement date. Had compensation been
determined based on the estimated fair value at the measurement dates for
awards under those plans consistent with the method prescribed by SFAS No.
123, the Company's December 31, 1999 and 1998 income and earnings per share
would have been changed to the pro forma amounts indicated below.
1999 1998
--------- ---------
Net income (loss):
As reported $ 65,465 $(159,763)
Pro forma 1,006 (160,676)
Net income (loss) per common share:
As reported $ 0.01 $ (0.04)
Pro forma $ * $ (0.04)
* Less than $0.01 per share
The estimated fair value of each officer and director option granted during
fiscal year 1999 and 1998 was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions:
1999 1998
--------- ---------
Expected volatility 104.7% 126.3%
Risk-free interest rate 5.88% 6.5%
Expected dividends - -
Expected terms (in years) 3 2
8. STOCKHOLDERS' EQUITY
--------------------
During 1999, the Company closed a private placement of its common stock and
redeemable common stock purchase warrants. The Company sold 1,466,666
equity units for $0.75 per unit. Each unit consisted of one share of common
stock and one redeemable Class A common stock purchase warrant with an
exercise price of $1.25. Proceeds from the offering totaled $931,020, net
of approximately $168,980 of associated commissions and offering expenses.
The warrants are exercisable during a three-year period commencing the
earlier of one year from the date of issuance or the effective date of a
registration statement registering the warrants. The warrants have not been
registered as of December 31, 1999. The warrants are redeemable by the
Company at $0.01 per warrant if the public trading price of the Company's
common stock equals or exceeds 150% of the exercise price of the warrants
for twenty consecutive days. The warrants were not redeemed as of December
31, 1999.
9. ENVIRONMENTAL ISSUES
--------------------
The Company is engaged in oil and gas exploration and production and may
become subject to certain liabilities as they relate to environmental clean
up of well sites or other environmental restoration procedures as they
relate to the drilling of oil and gas wells and the operation thereof. In
the Company's acquisition of existing or previously drilled well bores, the
Company may not be aware of what environmental safeguards were taken at the
time such wells were drilled or during such time the wells were operated.
F-12
<PAGE>
FIELDPOINT PETROLEUM CORPORATION
FIELDPOINT PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Should it be determined that a liability exists with respect to any
environmental clean up or restoration, the liability to cure such a
violation could fall upon the Company. No claim has been made, nor is the
Company aware of any liability which the Company may have, as it relates to
any environmental clean up, restoration or the violation of any rules or
regulations relating thereto.
10. COMMITMENT
----------
As of December 31, 1999 and 1998, the Company had a $10,000 open letter of
credit in favor of the State of Wyoming as a plugging bond. The letter of
credit is collateralized by a certificate of deposit in the same amount.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
--------------------------------------------------------------------
The Company's financial instruments are cash, amounts receivable and
payable and long-term debt. Management believes the fair values of these
instruments, with the exception of the long-term debt, approximate the
carrying values, due to the short-term nature of the instruments.
Management believes the fair value of long- term debt also reasonably
approximates its carrying value, based on expected cash flows and interest
rates.
Financial instruments that subject the Company to credit risk consist
principally of receivables. The receivables are primarily from companies in
the oil and gas business or from individual oil and gas investors. These
parties are primarily located in the Southwestern region of the United
States. The Company does not ordinarily require collateral, but in the case
of receivables for joint operations, the Company often has the ability to
offset amounts due against the participant's share of production from the
related property. The Company believes the allowance for doubtful accounts
at December 31, 1999 and 1998 is adequate.
The Company had the following concentrations in volume of oil and gas sales
revenue by customer as a percentage of total oil and gas revenue:
Customer 1999 1998
-------- ---- ----
A 45% 45%
B 14% 17%
C 17% 21%
D 14% -
Additionally, the four customers above accounted for a total of 85% and 88%
of accrued oil and gas sales as of December 31, 1999 and 1998,
respectively.
12. SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
------------------------------------------------------------------------
The following table sets forth certain information with respect to the oil
and gas producing activities of the Company:
F-13
<PAGE>
<TABLE>
<CAPTION>
FIELDPOINT PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31,
-----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Costs incurred in oil and gas producing activities:
Acquisition of unproved properties $ - $ 180,000
Acquisition of proved properties 1,137,062 237,537
Development costs 143,325 -
----------- -----------
Total costs incurred $ 1,280,387 $ 417,537
=========== ===========
Net capitalized costs related to oil and gas producing activities:
Unproved leasehold costs $ - $ 180,000
Proved leasehold costs 2,748,423 1,288,036
Less accumulated depletion and depreciation (594,434) (460,268)
----------- -----------
Net oil and gas property costs $ 2,153,989 $ 1,007,768
=========== ===========
The following table, based on information prepared by independent petroleum
engineers, summarizes changes in the estimates of the Company's net
interest in total proved reserves of crude oil and condensate and natural
gas, all of which are domestic reserves:
Oil Gas
(Barrels) (MCF)
----------- ------------
Balance, January 1, 1998 192,047 436,717
Purchase of minerals in place 40,559 238,020
Revisions of previous estimates (50,742) (96,663)
Production (28,788) (89,127)
----------- ------------
Balance, December 31, 1998 153,076 488,947
Purchase of minerals in place 436,330 1,580,342
Revisions of previous estimates 56,086 166,582
Production (33,120) (114,278)
----------- ------------
Balance, December 31, 1999 612,372 2,121,593
=========== ============
Proved developed reserves, December 31, 1999 549,203 2,076,403
=========== ============
Proved developed reserves, December 31, 1998 153,076 488,947
=========== ============
</TABLE>
Proved oil and gas reserves are the estimated quantities of crude oil,
condensate and natural gas which 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 oil and gas reserves are reserves that can be expected to
be recovered through existing wells with existing equipment and operating
methods. The above estimated net interests in proved reserves are based
upon subjective engineering judgments and may be affected by the
limitations inherent in such estimation. The process of estimating reserves
is subject to continual revision as additional information becomes
available as a result of drilling, testing, reservoir studies and
production history. There can be no assurance that such estimates will not
be materially revised in subsequent periods.
F-14
<PAGE>
<TABLE>
<CAPTION>
FIELDPOINT PETROLEUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS (UNAUDITED)
--------------------------------------------------------------------
The standardized measure of discounted future net cash flows at December
31, 1999 and 1998, relating to proved oil and gas reserves is set forth
below. The assumptions used to compute the standardized measure are those
prescribed by the Financial Accounting Standards Board and, as such, do not
necessarily reflect the Company's expectations of actual revenues to be
derived from those reserves nor their present worth. The limitations
inherent in the reserve quantity estimation process are equally applicable
to the standardized measure computations since these estimates are the
basis for the valuation process.
YEAR ENDED DECEMBER 31,
-----------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
Future cash inflows $ 17,316,000 $ 2,386,000
Future development and production costs (6,442,000) (1,660,000)
-------------- --------------
Future net cash flows, before income tax 10,874,000 726,000
Future income taxes (3,117,000) (8,000)
-------------- --------------
Future net cash flows 7,757,000 718,000
10% annual discount (3,056,000) (195,000)
-------------- --------------
Standardized measure of discounted future net cash flows $ 4,701,000 $ 523,000
============== =============
Future net cash flows were computed using year-end prices and costs, and
year-end statutory tax rates (adjusted for permanent differences) that
relate to existing proved oil and gas reserves at year end. The following
are the principal sources of change in the standardized measure of
discounted future net cash flows:
YEAR ENDED DECEMBER 31,
-----------------------------------
1999 1998
-------------- --------------
Sales of oil and gas produced, net of production costs $ (473,000) $ (168,000)
Purchase of minerals in place 5,101,000 192,000
Net changes in prices and production costs 1,288,000 (742,000)
Revisions and other (56,000) (153,000)
Accretion of discount 52,000 100,000
Net change in income taxes (1,734,000) 300,000
-------------- --------------
Net change 4,178,000 (471,000)
Balance, beginning of year 523,000 994,000
-------------- --------------
Balance, end of year $ 4,701,000 $ 523,000
============== ==============
</TABLE>
************
F-15
TERM LOAN NOTE
- --------------------------------------------------------------------------------
$500,000.00 June 21, 1999
Maker:
FIELDPOINT PETROLEUM CORPORATION
P.O. Box 200685
Austin, Texas 78720
Payee:
UNION PLANTERS BANK, N.A.
5005 Woodway
Houston, Texas 77056
FOR VALUE RECEIVED, the undersigned Maker named above promises to pay
to the order of Payee named above at its offices at the address set forth above
in lawful money of the United States of America, the principal sum of FIVE
HUNDRED THOUSAND and no/100 DOLLARS ($500,000.00) or so much thereof as may be
advanced and outstanding pursuant to the Credit Agreement of even date herewith
by and between Maker and Payee (the "Credit Agreement"), together with interest
on the principal balance from time to time remaining unpaid at the rate and upon
the terms provided in this Note. Unless otherwise defined herein or unless the
context hereof otherwise requires, each term used herein with its initial letter
capitalized has the meaning given to such term in the Credit Agreement.
1. Schedule of Payments. Commencing on July 21, 1999, and again on August 21,
1999, Maker shall pay all accrued and unpaid interest, without any reduction of
principal; thereafter, commencing September 21, 1999, and each successive
calendar month thereafter, Maker shall make forty-eight (48) equal monthly
payments of $10,416.67, together with all accrued and unpaid interest. The
unpaid balance of all principal and all accrued but unpaid interest shall be due
and payable on August 21, 2003, the Maturity Date.
2. Interest Rate. The unpaid principal balance from day to day outstanding
hereunder shall bear interest at a rate per annum which shall from day to day be
equal to the lesser of (a) the Floating Base Rate, as hereinafter defined (the
"Contract Rate;" calculated on the basis of actual days elapsed, but computed as
if each calendar year consisted of 360 days), or (b) the Highest Lawful Rate.
Notwithstanding the foregoing, if at any time the Contract Rate exceeds
the Highest Lawful Rate, the rate of interest hereon shall be limited to the
Highest Lawful Rate, but any subsequent reductions in the Contract Rate shall
not reduce the rate of interest hereon below the Highest Lawful Rate until the
total amount of interest accrued hereon approximately equals the amount of
interest which would have accrued hereon if a rate equal to the Contract Rate
had at all times been in effect. In the event that at maturity of this Note
(stated or by acceleration), or at final payment of this Note, the total amount
of interest paid or accrued hereon is less than the amount of interest which
would have accrued hereon if the Contract Rate had at all times been in effect,
then at such time and to the extent permitted by law, Maker shall pay to Payee
an amount equal to the difference between (x) the lesser of the amount of
interest which would have accrued hereon if the Contract Rate had at all times
been in effect and the amount of interest which would have accrued hereon if the
Highest Lawful Rate had at all times been in effect, and (y) the amount of
interest actually paid or accrued on this Note. Each change in the rate charged
hereunder shall, subject to the foregoing, become effective, without notice to
Maker, upon the effective date of each change in the Floating Base Rate or the
Highest Lawful Rate, as the case may be.
As used herein, the term (x) "Floating Base Rate" means the prime
interest rate as quoted by the Wall Street journal from time to time, plus one
percent, floating, (y) "Highest Lawful Rate" means the maximum rate (or, if the
context so requires, an amount calculated at such rate) of interest which the
holder hereof is allowed to contract for, charge, take, reserve, or receive
- 1 -
----------
Initials
<PAGE>
under applicable law after taking into account, to the extent required by
applicable law, any and all relevant payments or charges. To the extent the laws
of the State of Texas are applicable for the purposes of determining the Highest
Lawful Rate hereunder, such term shall mean the "indicated rate ceiling" from
time to time in effect under Article 1.04, Title 79, Revised Civil Statutes of
Texas, 1925, as amended, or to the extent permitted by law and effective upon
the giving of the notices required by such Article 1.04 (or effective upon any
other date specified by applicable law), the "quarterly ceiling" or the
"annualized ceiling" from time to time in effect under such Article 1.04,
whichever the holder hereof shall elect to substitute for the "indicated rate
ceiling," and vice versa, such substitution to have the effect provided in such
Article 1.04; the holder hereof shall be entitled to make such election from
time to time and one or more times and to leave any such substitute rate in
effect, without notice to Maker, for subsequent periods in accordance with
subsection (h)(1) of such Article 1.04.
3. Prepayment. Maker may prepay this Note in whole or in part at any time
without being required to pay any penalty or premium for such privilege. All
prepayments hereunder, whether designated as payments of principal or interest,
shall be applied to the principal or interest of this Note or to expenses
provided herein or in the Credit Agreement, or any combination of the foregoing,
as directed by Payee at its option.
4. Past Due Interest. All principal and interest which remain in arrears three
(3) days or more after their respective due dates shall bear interest, payable
on demand, for each day until paid, commencing on the fourth (4th) day after
their respective due dates until paid, at a rate equal to 3% per annum above the
Contract Rate (the "Default Rate"), but in no event to exceed the maximum
non-usurious rate permitted by applicable law.
5. Events of Default and Remedies. Without notice or demand (each of which is
hereby waived), the entire unpaid principal balance of this Note shall
immediately become due and payable at the option of the holder hereof upon the
occurrence of any one or more of the events of default described in Section 7.1
of the Credit Agreement (individually or collectively, herein called a
"Default").
6. Acceleration. In the event that Maker fails or refuses to pay any part of the
principal of or interest on this Note when due, or in the event of the
occurrence of a Default under the Credit Agreement or under any Security
Document, then in any such event, the holder hereof shall be entitled to declare
the entire unpaid principal of and accrued interest on this Note immediately due
and payable, without notice of intent to accelerate, notice of acceleration, any
other notice whatsoever, demand, or presentment, all of which are hereby waived,
foreclose any liens or security interests securing all or any part hereof,
offset against this Note any sum or sums owed by the holder hereof to Maker or
any guarantor, or may proceed to protect and enforce, and exercise any other
right or remedy to which the holder hereof may be entitled by agreement, at law,
or in equity. Each right and remedy available to the holder hereof shall be
cumulative of and in addition to each other such right and remedy. No delay on
the part of the holder hereof in the exercise of any right or remedy available
to the holder hereof shall operate as a waiver thereof, nor shall any single or
partial exercise thereof or exercise of any other such right or remedy.
7. Collection Costs. If this Note is placed in the hands of an attorney for
collection, or if it is collected through any legal proceedings, Maker agrees to
pay the court costs, reasonable attorneys' fees, and other costs of collection
of the holder hereof.
8. Waiver. Except as provided herein, Maker and any party which may be or become
liable for the payment of any sums of money payable on this Note (including any
surety, endorser, or guarantor)
- 2 - ----------
Initials
<PAGE>
jointly and severally waive (to the extent permitted by law) all applicable
exemption rights (whether arising by constitution, law, or otherwise), all
valuation and appraisement rights, presentment and demand for payment, protest,
notice of protest and nonpayment, and notice of the intention to accelerate, and
agree that their liability on this Note shall not be affected by any renewal or
extension in the time of payment hereof, by any indulgences, or by any release
or change in any security for the payment of this Note, and hereby consent to
any and all renewals, extensions, indulgences, releases, or changes, regardless
of the number of such renewals, extensions, indulgences, releases, or changes.
9. Legal Interest Limitation. Regardless of any provision contained herein or in
any agreement, document, or instrument securing or assuring payment hereof or
executed in connection herewith, the holder hereof shall never be entitled to
receive, collect, or apply, as interest on this Note, any amount in excess of
the Highest Lawful Rate, and, in the event the holder hereof ever receives,
collects, or applies as interest, any such excess, such amount which would be
excessive interest shall be deemed a partial prepayment of principal and treated
hereunder as such; and, if the principal hereof is paid in full, any remaining
excess shall forthwith be paid to Maker. In determining whether or not the
interest paid or payable, under any specific contingency, exceeds the Highest
Lawful Rate, Maker and the holder hereof shall, to the maximum extent permitted
under applicable law, (a) characterize any nonprincipal payment as an expense,
fee, or premium rather than as interest, (b) exclude voluntary prepayments and
the effects thereof, and (c) spread the total amount of interest throughout the
entire contemplated term of this Note; provided that, if this Note is paid and
performed in full prior to the end of the full contemplated term hereof, and if
the interest received by the holder hereof for the actual period of existence
hereof exceeds the Highest Lawful Rate, the holder hereof shall refund to Maker
the amount of such excess, and, in such event, the holder hereof shall not be
subject to any penalties provided by any laws for contracting for, charging,
taking, reserving, or receiving interest in excess of the Highest Lawful Rate.
Pursuant to Article 15.10(b) of Chapter 15, Subtitle 3, Title 79, Revised Civil
Statutes of Texas, 1925, as amended, the holder hereof and Maker agree that the
other provisions of such Chapter 15 shall not apply to this Note or to any
provision hereunder.
10. Conflicts. This Note has been executed and delivered pursuant to the terms
of the Credit Agreement, and Payee is entitled to the benefits of and security
provided for in the Credit Agreement. Advances hereunder by Payee to Maker shall
be governed by the terms and provisions of the Credit Agreement. Any Default
under the terms of the Credit Agreement by Maker or under any other Security
Document will automatically be a Default hereunder. The terms of the Credit
Agreement will govern in the event of any conflict with the terms of this Note.
11. Additional Security. This Note is secured by all security agreements,
collateral assignments, assignments, pledges, guaranties, deeds of trust and
lien instruments executed by Maker (or by any other liable party) in favor of
Payee or any other holder of this Note, including those executed simulta neously
herewith, those executed heretofore and those executed hereafter.
12. Set-off Rights. Maker agrees that Payee may apply any deposits of Maker with
Payee to the payment of Maker's obligations under this Note in the event of any
Default under the terms and provisions of this Note or the documents securing
same.
13. Deed of Trust. This Note is secured by the liens of Deeds of Trust,
Mortgage, Assignment of Production, Security Agreement and Financing Statement
(the "Deeds of Trust") of even date herewith given to Rebecca Dozier, Trustee
for the benefit of Payee, and any other holder of holders of this Note, covering
the lands and other property in Pontotoc County, Oklahoma, and other property
owned by Maker and described in the Deeds of Trust (the "Subject Property"), to
which reference is made for all purposes.
- 3 - ----------
Initials
<PAGE>
14. Cumulative Rights. No delay on the part of the holder of this Note in the
exercise of any power or right under this Note, or under any document or
instrument executed in connection herewith, shall operate as a waiver thereof,
nor shall a single or partial exercise of any other power or right. Enforcement
by the holder of this Note of any security for the payment hereof shall not
constitute any election by it of remedies so as to preclude the exercise of any
other remedy available to it.
15. Notices. Any notice or demand given hereunder by the holder shall be in
writing and be deemed to have been given and received (a) when actually received
by Maker, if delivered in person or by courier or messenger, or (b) two Business
Days (hereinafter defined) after a letter containing such notices, certified or
registered, with postage prepaid addressed to Maker, is deposited in the United
States Mail. The address of Maker is set forth at the top of this Note, or such
other address as Maker shall advise the holder hereof by certified or registered
letter.
16. Governing Law. THIS NOTE IS BEING EXECUTED AND DELIVERED, AND IS INTENDED TO
BE PERFORMED, IN THE STATE OF TEXAS, AND THE LAWS OF SUCH STATE SHALL GOVERN THE
CONSTRUCTION, VALIDITY, ENFORCEMENT, AND INTERPRETATION HEREOF, EXCEPT TO THE
EXTENT FEDERAL LAWS OTHERWISE GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT,
AND INTERPRETATION HEREOF.
17. Headings. The headings of the sections of this note are inserted for
convenience only and shall not be deemed to constitute a part hereof.
18. Successors and Assigns. All of the covenants, stipulations, promises, and
agreements in this Note by or on behalf of Maker shall bind its successors and
assigns, whether so expressed or not; provided, however, that Maker may not,
without the prior written consent of the holder hereof, assign any rights,
duties, or obligations under this Note. Any assignment in violation of the
foregoing shall be null and void.
19. Business Day; Payments. As used herein, the expression (a) "Business Day"
means every day on which Payee is open for business, and (b) "Nonbusiness Day"
means every day which is not a Business Day. Payment of the principal of this
note shall be due and payable in lawful money of the United States of America,
in Harris County, Texas at the office of Payee set forth at the top of this Note
at or before 3:00 p.m., Houston, Texas time on the day such payment is due. In
any case where a payment of principal is due on a Nonbusiness Day, Maker shall
be entitled to delay such payment until the next succeeding Business Day.
IN WITNESS WHEREOF, the undersigned has executed this note as of the
day and year first above written.
MAKER:
FIELDPOINT PETROLEUM CORPORATION
By:
------------------------------
Ray D. Reaves, Jr., President
- 4 -
TERM LOAN NOTE
- --------------------------------------------------------------------------------
$125,000.00 August 18, 1999
Maker:
FIELDPOINT PETROLEUM CORPORATION
P.O. Box 200685
Austin, Texas 78720
Payee:
UNION PLANTERS BANK, N.A.
5005 Woodway
Houston, Texas 77056
FOR VALUE RECEIVED, the undersigned Maker named above promises to pay
to the order of Payee named above at its offices at the address set forth above
in lawful money of the United States of America, the principal sum of ONE
HUNDRED TWENTY-FIVE THOUSAND and no/100 DOLLARS ($125,000.00) or so much thereof
as may be advanced and outstanding pursuant to that certain Credit Agreement of
even date herewith entered into by and between Maker and Payee, to which
reference is here made for all purposes (the "Credit Agreement"), together with
interest on the principal balance from time to time remaining unpaid at the rate
and upon the terms provided in this Note. Unless otherwise defined herein or
unless the context hereof otherwise requires, each term used herein with its
initial letter capitalized has the meaning given to such term in the Credit
Agreement.
1. Schedule of Payments. Commencing on September 18, 1999, and on the eighteenth
day of each succeeding calendar month thereafter, Borrower shall make seventy
(70) equal monthly payments of $1,785.72, together with all accrued and unpaid
interest. The unpaid balance of all principal and all accrued but unpaid
interest shall be due and payable on June 18, 2005, the Maturity Date.
2. Interest Rate. The unpaid principal balance from day to day outstanding
hereunder shall bear interest at a rate per annum which shall from day to day be
equal to the lesser of (a) the Floating Base Rate, as hereinafter defined (the
"Contract Rate;" calculated on the basis of actual days elapsed, but computed as
if each calendar year consisted of 360 days), or (b) the Highest Lawful Rate.
Notwithstanding the foregoing, if at any time the Contract Rate exceeds
the Highest Lawful Rate, the rate of interest hereon shall be limited to the
Highest Lawful Rate, but any subsequent reductions in the Contract Rate shall
not reduce the rate of interest hereon below the Highest Lawful Rate until the
total amount of interest accrued hereon approximately equals the amount of
interest which would have accrued hereon if a rate equal to the Contract Rate
had at all times been in effect. In the event that at maturity of this Note
(stated or by acceleration), or at final payment of this Note, the total amount
of interest paid or accrued hereon is less than the amount of interest which
would have accrued hereon if the Contract Rate had at all times been in effect,
then at such time and to the extent permitted by law, Maker shall pay to Payee
an amount equal to the difference between (x) the lesser of the amount of
interest which would have accrued hereon if the Contract Rate had at all times
been in effect and the amount of interest which would have accrued hereon if the
Highest Lawful Rate had at all times been in effect, and (y) the amount of
interest actually paid or accrued on this Note. Each change in the rate charged
hereunder shall, subject to the foregoing, become effective, without notice to
Maker, upon the effective date of each change in the Floating Base Rate or the
Highest Lawful Rate, as the case may be.
As used herein, the term (x) "Floating Base Rate" means the prime
interest rate as quoted by the Wall Street journal from time to time, plus one
percent, floating, (y) "Highest Lawful Rate" means the maximum rate (or, if the
context so requires, an amount calculated at such rate) of interest which the
holder hereof is allowed to contract for, charge, take, reserve, or receive
under applicable law after taking into account, to the extent required by
applicable law, any and all relevant payments or charges. To the extent the laws
of the State of Texas are applicable for the purposes of determining the Highest
- 1 -
----------
Initials
<PAGE>
Lawful Rate hereunder, such term shall mean the "indicated rate ceiling" from
time to time in effect under Article 1.04, Title 79, Revised Civil Statutes of
Texas, 1925, as amended, or to the extent permitted by law and effective upon
the giving of the notices required by such Article 1.04 (or effective upon any
other date specified by applicable law), the "quarterly ceiling" or the
"annualized ceiling" from time to time in effect under such Article 1.04,
whichever the holder hereof shall elect to substitute for the "indicated rate
ceiling," and vice versa, such substitution to have the effect provided in such
Article 1.04; the holder hereof shall be entitled to make such election from
time to time and one or more times and to leave any such substitute rate in
effect, without notice to Maker, for subsequent periods in accordance with
subsection (h)(1) of such Article 1.04.
3. Prepayment. Maker may prepay this Note in whole or in part at any time
without being required to pay any penalty or premium for such privilege. All
prepayments hereunder, whether designated as payments of principal or interest,
shall be applied to the principal or interest of this Note or to expenses
provided herein or in the Credit Agreement, or any combination of the foregoing,
as directed by Payee at its option.
4. Past Due Interest. All principal and interest which remain in arrears three
(3) days or more after their respective due dates shall bear interest, payable
on demand, for each day until paid, commencing on the fourth (4th) day after
their respective due dates until paid, at a rate equal to 3% per annum above the
Contract Rate (the "Default Rate"), but in no event to exceed the maximum
non-usurious rate permitted by applicable law.
5. Events of Default and Remedies. Without notice or demand (each of which is
hereby waived), the entire unpaid principal balance of this Note shall
immediately become due and payable at the option of the holder hereof upon the
occurrence of any one or more of the events of default described in Section 7.1
of the Credit Agreement (individually or collectively, herein called a
"Default").
6. Acceleration. In the event that Maker fails or refuses to pay any part of the
principal of or interest on this Note when due, or in the event of the
occurrence of a Default under the Credit Agreement or under any Security
Document, then in any such event, the holder hereof shall be entitled to declare
the entire unpaid principal of and accrued interest on this Note immediately due
and payable, without notice of intent to accelerate, notice of acceleration, any
other notice whatsoever, demand, or presentment, all of which are hereby waived,
foreclose any liens or security interests securing all or any part hereof,
offset against this Note any sum or sums owed by the holder hereof to Maker or
any guarantor, or may proceed to protect and enforce, and exercise any other
right or remedy to which the holder hereof may be entitled by agreement, at law,
or in equity. Each right and remedy available to the holder hereof shall be
cumulative of and in addition to each other such right and remedy. No delay on
the part of the holder hereof in the exercise of any right or remedy available
to the holder hereof shall operate as a waiver thereof, nor shall any single or
partial exercise thereof or exercise of any other such right or remedy.
7. Collection Costs. If this Note is placed in the hands of an attorney for
collection, or if it is collected through any legal proceedings, Maker agrees to
pay the court costs, reasonable attorneys' fees, and other costs of collection
of the holder hereof.
8. Waiver. Except as provided herein, Maker and any party which may be or become
liable for the payment of any sums of money payable on this Note (including any
surety, endorser, or guarantor) jointly and severally waive (to the extent
permitted by law) all applicable exemption rights (whether arising by
constitution, law, or otherwise), all valuation and appraisement rights,
presentment and demand for payment, protest, notice of protest and nonpayment,
and notice of the intention to accelerate, and agree that their liability on
this Note shall not be affected by any renewal or extension in the time of
- 2 -
----------
Initials
<PAGE>
payment hereof, by any indulgences, or by any release or change in any security
for the payment of this Note, and hereby consent to any and all renewals,
extensions, indulgences, releases, or changes, regardless of the number of such
renewals, extensions, indulgences, releases, or changes.
9. Legal Interest Limitation. Regardless of any provision contained herein or in
any agreement, document, or instrument securing or assuring payment hereof or
executed in connection herewith, the holder hereof shall never be entitled to
receive, collect, or apply, as interest on this Note, any amount in excess of
the Highest Lawful Rate, and, in the event the holder hereof ever receives,
collects, or applies as interest, any such excess, such amount which would be
excessive interest shall be deemed a partial prepayment of principal and treated
hereunder as such; and, if the principal hereof is paid in full, any remaining
excess shall forthwith be paid to Maker. In determining whether or not the
interest paid or payable, under any specific contingency, exceeds the Highest
Lawful Rate, Maker and the holder hereof shall, to the maximum extent permitted
under applicable law, (a) characterize any nonprincipal payment as an expense,
fee, or premium rather than as interest, (b) exclude voluntary prepayments and
the effects thereof, and (c) spread the total amount of interest throughout the
entire contemplated term of this Note; provided that, if this Note is paid and
performed in full prior to the end of the full contemplated term hereof, and if
the interest received by the holder hereof for the actual period of existence
hereof exceeds the Highest Lawful Rate, the holder hereof shall refund to Maker
the amount of such excess, and, in such event, the holder hereof shall not be
subject to any penalties provided by any laws for contracting for, charging,
taking, reserving, or receiving interest in excess of the Highest Lawful Rate.
Pursuant to Article 15.10(b) of Chapter 15, Subtitle 3, Title 79, Revised Civil
Statutes of Texas, 1925, as amended, the holder hereof and Maker agree that the
other provisions of such Chapter 15 shall not apply to this Note or to any
provision hereunder.
10. Conflicts. This Note has been executed and delivered pursuant to the terms
of the Credit Agreement, and Payee is entitled to the benefits of and security
provided for in the Credit Agreement. Advances hereunder by Payee to Maker shall
be governed by the terms and provisions of the Credit Agreement. Any Default
under the terms of the Credit Agreement by Maker or under any other Security
Document will automatically be a Default hereunder. The terms of the Credit
Agreement will govern in the event of any conflict with the terms of this Note.
11. Additional Security. This Note is secured by all security agreements,
collateral assignments, assignments, pledges, guaranties, deeds of trust and
lien instruments executed by Maker (or by any other liable party) in favor of
Payee or any other holder of this Note, including those executed simulta neously
herewith, those executed heretofore and those executed hereafter.
12. Set-off Rights. Maker agrees that Payee may apply any deposits of Maker with
Payee to the payment of Maker's obligations under this Note in the event of any
Default under the terms and provisions of this Note or the documents securing
same.
13. Deed of Trust. This Note is secured by the liens of Deeds of Trust,
Mortgage, Assignment of Production, Security Agreement and Financing Statement
(the "Deeds of Trust") of even date herewith given to Rebecca Dozier, Trustee,
for the benefit of Payee, and any other holder of holders of this Note, covering
the lands and other property in each of Coal, Logan, McClain, Oklahoma, and
Pontotoc Counties, Oklahoma, and other property owned by Maker and described in
the Deeds of Trust (the "Subject Property"), to the recording of which reference
is made for all purposes.
14. Cumulative Rights. No delay on the part of the holder of this Note in the
exercise of any power or right under this Note, or under any document or
instrument executed in connection herewith, shall operate as a waiver thereof,
nor shall a single or partial exercise of any other power or right. Enforcement
by the holder of this Note of any security for the payment hereof shall not
- 3 -
----------
Initials
<PAGE>
constitute any election by it of remedies so as to preclude the exercise of any
other remedy available to it.
15. Notices. Any notice or demand given hereunder by the holder shall be in
writing and be deemed to have been given and received (a) when actually received
by Maker, if delivered in person or by courier or messenger, or (b) two Business
Days (hereinafter defined) after a letter containing such notices, certified or
registered, with postage prepaid addressed to Maker, is deposited in the United
States Mail. The address of Maker is set forth at the top of this Note, or such
other address as Maker shall advise the holder hereof by certified or registered
letter.
16. Governing Law. THIS NOTE IS BEING EXECUTED AND DELIVERED, AND IS INTENDED TO
BE PERFORMED, IN THE STATE OF TEXAS, AND THE LAWS OF SUCH STATE SHALL GOVERN THE
CONSTRUCTION, VALIDITY, ENFORCEMENT, AND INTERPRETATION HEREOF, EXCEPT TO THE
EXTENT FEDERAL LAWS OTHERWISE GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT,
AND INTERPRETATION HEREOF.
17. Headings. The headings of the sections of this note are inserted for
convenience only and shall not be deemed to constitute a part hereof.
18. Successors and Assigns. All of the covenants, stipulations, promises, and
agreements in this Note by or on behalf of Maker shall bind its successors and
assigns, whether so expressed or not; provided, however, that Maker may not,
without the prior written consent of the holder hereof, assign any rights,
duties, or obligations under this Note. Any assignment in violation of the
foregoing shall be null and void.
19. Business Day; Payments. As used herein, the expression (a) "Business Day"
means every day on which Payee is open for business, and (b) "Nonbusiness Day"
means every day which is not a Business Day. Payment of the principal of this
note shall be due and payable in lawful money of the United States of America,
in Harris County, Texas at the office of Payee set forth at the top of this Note
at or before 3:00 p.m., Houston, Texas time on the day such payment is due. In
any case where a payment of principal is due on a Nonbusiness Day, Maker shall
be entitled to delay such payment until the next succeeding Business Day.
IN WITNESS WHEREOF, the undersigned has executed this note as of the
day and year first above written.
MAKER:
FIELDPOINT PETROLEUM CORPORATION
By:
--------------------------------
Ray D. Reaves, Jr., President
- 4 -
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<NAME> FieldPoint Petroleum Corporation
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
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<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Dec-31-1999
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<SECURITIES> 2,880
<RECEIVABLES> 219,973
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<PP&E> 2,856,677
<DEPRECIATION> (675,424)
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0
0
<COMMON> 63,319
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<TOTAL-LIABILITY-AND-EQUITY> 2,549,881
<SALES> 786,361
<TOTAL-REVENUES> 917,810
<CGS> 465,601
<TOTAL-COSTS> 775,313
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<INTEREST-EXPENSE> 83,826
<INCOME-PRETAX> 78,233
<INCOME-TAX> 12,768
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