SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission File No. 0-09482
MYSTIQUE DEVELOPMENTS, INC.
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(Exact Name of Small Business Issuer as Specified in its Charter)
WYOMING 83-0246080
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(State or other jurisdic- (I.R.S. Employer Iden-
tion of incorporation) tification No.)
or organization)
1820 South Elena Avenue, Suite B, Redondo Beach, California 90277
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(Address of Principal Executive Office including Zip Code)
(310)546-5741
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(Issuer's telephone number)
Check whether the issuer (1) has 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
---- ----
There were 1,535,076 shares of the Registrant's $.01 par value common stock
outstanding as of March 31, 1997.
Transitional Small Business Disclosure: Yes ( ) No ( X )
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MYSTIQUE DEVELOPMENTS, INC.
Balance Sheet
ASSETS March 31, June 30,
1997 1996
Current Assets:
Cash $ 809,408 $ 24,971
Accounts receivable-trade 4,894 10,553
Accounts receivable-related party 5,577 6,066
Other 500 --
Total current assets 820,379 41,590
Property and equipment, at cost using
successful efforts method, net 689,242 698,046
$1,509,621 $ 739,636
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Accounts payable $ 5,944 $ 14,522
Accounts payable-related party -- 15,000
5,944 29,522
Stockholders' Equity:
Common stock, $.01 par value:
authorized 75,000,000 shares;
issued and outstanding 1,535,076
and 550,076 at March 31, 1997 and
June 30, 1996, respectively 15,350 5,500
Additional paid-in capital 2,832,897 1,866,868
Accumulated deficit (1,344,570) (1,162,254)
1,503,677 710,114
$1,509,621 $ 739,636
See accompanying notes to financial statements
2
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MYSTIQUE DEVELOPMENTS, INC.
Statement of Operations
For the Nine Months Ended March 31, 1997 and 1996
1997 1996
Operating Revenue:
Oil and gas sales $ 54,013 $ 42,685
Management and consulting
fees 3,150 501,500
57,163 544,185
Operating costs and expenses:
Lease operating costs 53,691 28,340
Depreciation and depletion 18,000 11,400
General and administrative expenses 174,348 15,693
246,039 55,433
Operating income (loss) (188,876) 488,752
Other Income (expense):
Interest income 6,560 220
6,560 220
Income(loss) before income taxes (182,316) 488,972
Income taxes -- --
Net income (loss) $(182,316) $ 488,972
Net income (loss) per common share $ (.18) $ .89
Weighted average common shares outstanding 987,812 550,000
See accompanying notes to financial statements.
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MYSTIQUE DEVELOPMENTS, INC.
Statement of Operations
For the Three Months Ended March 31, 1997 and 1996
1997 1996
Operating Revenue:
Oil and gas sales $ 18,682 $ 25,100
Management and consulting
fees 1,050 500,450
19,732 525,550
Operating costs and expenses:
Lease operating costs 20,280 9,330
Depreciation and depletion 6,000 6,000
General and administrative expenses 123,701 499
149,981 15,829
Operating income (loss) (130,249) 509,721
Other Income (expense):
Interest income 6,399 85
6,399 85
Income(loss) before income taxes (123,850) 509,806
Income taxes -- --
Net income (loss) $ (123,850) $509,806
Net income (loss) per common share $ (.08) $ .93
Weighted average common shares outstanding 1,535,076 550,000
See accompanying notes to financial statements.
4
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MYSTIQUE DEVELOPMENTS, INC.
Statements of Cash Flows
For the Nine Months Ended March 31, 1997 and 1996
1997 1996
Cash Flows from operating activities:
Cash received from customers $ 63,311 $ 42,540
Cash paid to suppliers & employees (252,117) (52,290)
Interest income 6,560 220
Net cash provided by (used in)
operating activities (182,246) (9,530)
Cash flows used in investing activities:
Purchase of assets (9,196) --
Net cash provided by (used in)
investing activities (9,196) --
Cash flows used in financing activities:
Proceeds from sale of stock 975,879 --
Net cash provided by (used in)
financing activities 975,879 --
Net increase (decrease) in cash and
cash equivalents 784,437 (9,530)
Cash and cash equivalents at beginning of year 24,971 27,537
Cash and cash equivalents at end of year $ 809,408 $ 18,007
Reconciliation of net income to net cash
used in operating activities:
Net income (loss) $(182,316) $ 488,972
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation, depletion and impairments 18,000 11,400
(Increase) decrease in accounts receivable 6,148 (501,645)
(Increase) decrease in other current assets (500) --
(Decrease) increase in accounts payable (23,578) (8,257)
$(182,246) $ (9,530)
See accompanying notes to financial statements.
5
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MYSTIQUE DEVELOPMENTS, INC.
Notes to Financial Statements
NOTE 1: BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The Company operates principally in the exploration, development and production
of oil and gas properties and consulting in the oil and gas industry.
PROPERTY AND EQUIPMENT
The Company uses the successful efforts method of accounting for oil and gas
producing activities. Under this method, the costs of unsuccessful exploratory
wells, delay rentals, and dry hole contributions are expensed as incurred. Lease
acquisition costs and costs of drilling and equipping productive exploratory
wells and all development wells are capitalized.
Depreciation and depletion of producing properties and equipment is computed by
the unit-of-production method using management estimates or independent
engineer's estimates of unrecovered proved producing oil and gas reserves. The
total capitalized costs for individual proved oil and gas properties is limited
to the estimated future net revenues from production of proved reserves. A
recoverability test "ceiling test" of proved properties is performed on an
undiscounted basis, net of income taxes, on a well by well basis. An impairment
amount equal to all costs above ceiling is charged to operations during the
period. Other equipment is depreciated by use of accelerated methods using
estimated asset lives of 3 to 7 years. When assets are retired or otherwise
disposed of, the cost and accumulated depletion, depreciation or impairment are
removed from the accounts and any resulting gain or loss is reflected in
operations in the period realized. No accrual has been provided for estimated
future abandonment costs as management estimates that the salvage value will
approximate such costs.
INCOME TAXES
The Company uses the liability method of accounting for income taxes. Under the
liability method, income taxes are recorded for future events at tax rates in
effect when the balances are expected to be settled.
EARNINGS PER COMMON SHARE
The earnings per share is based on the weighted-average number of shares of
common stock outstanding.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.
RISKS AND UNCERTAINTIES
Historically, the market for oil and gas has experienced significant price
fluctuations. Increases or decreases in prices received could have a significant
impact on the Company's future results of operations.
6
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The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent asset and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
BASIS OF PRESENTATION
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, such interim statements reflect all adjustments (consisting of
normal recurring accruals) necessary to present fairly the financial position
and the results of operations and cash flows for the interim periods presented.
The results of operations for these interim periods are not necessarily
indicative of the results to be expected for the full year. These financial
statements should be read in conjunction with the audited financial statements
and footnotes for the year ended June 30, 1996, filed with the Company's 10-KSB.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company has a working capital of $814,435. The Company
completed a $975,000 private placement this quarter. The Company plans to
acquire producing oil and gas properties. The Company has no commitments for any
capital improvements, however subject to financing, a major improvement project
for the Canadian property is planned for the next fiscal year.
During the nine months ended March 31, 1997, operating activities used $182,246
in cash, an increase of $172,716 over the nine months ended the previous fiscal
year. This increase in cash used is due mainly to administrative costs related
to increasing the activities of the Company. During the nine months ended March
31, 1997, financing activities provided $975,879 in cash, an increase of
$975,879 over the nine months ended the previous fiscal year. This increase is
due to sale of stock in the private placement.
During the nine months ended March 31, 1997, investing activities used $9,196 in
cash an increase of $9,196 over the nine months ended the previous year. This
increase is due to property and equipment acquisitions.
RESULTS OF OPERATIONS
During the three months ended March 31, 1997, oil and gas sales were $18,682, a
decrease of $6,418 from the quarter ended the previous year. This decrease is
due to less production. During the three months ended March 31, 1997, other
income was $1,050, a decrease of $499,400 from the quarter ended the previous
year. This decrease is due to a reduction in consulting services provided.
During the three months ended March 31, 1997, lease operating
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costs were $20,280 an increase of $10,950 from the quarter ended in the previous
year. This increase is due to some workovers. During the three months ended
March 31, 1997, depreciation, depletion and impairments were $6,000, the same as
the quarter ended in the previous year. During the quarter ended March 31, 1997,
general and administrative expenses were $123,701, an increase of $123,202 from
the previous year. This increase is due to increased activity of the Company.
Effect of Changes in Prices.
Changes in prices during the past few years have been a significant factor in
the oil and gas industry. The price received for the oil and gas produced by
Mystique fluctuated significantly during the last three years. Changes in the
price that Mystique receives for its oil and gas are set by market forces beyond
Mystique's control as well as governmental intervention. The recent volatility
and uncertainty in oil and gas prices make it more difficult for a company like
Mystique to increase its oil and gas asset base and become a significant
participant in the oil and gas industry.
8
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
On March 15, 1997, the Company entered into an Agreement for
Administrative Services (the "Agreement") with Trinity Petroleum Management LLC,
a Nevada limited liability company ("Trinity"), with its principal office in
Denver, Colorado. Pursuant to the terms of the Agreement, Trinity will perform
certain management functions for the Company for a fee of $2,000 per month and
reimbursement of third-party expenses. The Agreement is for an initial term of
six months, continuing thereafter on a month-to-month basis, terminable upon 30
days written notice by either party. Trinity's sole stockholder, J. Samuel
Butler, serves as a member of the Company's Board of Directors. The Agreement
was approved by the Board of Directors, with Mr. Butler abstaining from the
vote. Also in connection with the Agreement, the Company's Board of Directors
(Mr. Butler abstaining) approved the issuance of a warrant to Trinity for the
purchase of up to 100,000 shares of the Company's Common Stock, $.01 par value,
at a price of $1.00 per share.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 10.1 Administrative Services Filed herewith
Agreement dated March 15, electronically
1997, between the Company
and Trinity Petroleum
Management, LLC.
Exhibit 10.2 Common Stock Purchase Filed herewith
Warrant dated as of electronically
March 31, 1997, from the
Company to Trinity
Petroleum Management LLC.
Exhibit 27 Financial Data Schedule Filed herewith
electronically
(b) Reports on From 8-K.
None.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Issuer caused this
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
MYSTIQUE DEVELOPMENTS, INC.
Dated: By /s/ DENNIS R. STAAL
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Dennis R. Staal, Chief Accountant
10
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EXHIBIT INDEX
EXHIBIT METHOD OF FILING
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10.1 ADMINISTRATIVE SERVICES AGREEMENT Filed herewith electronically
10.2 COMMON STOCK PURCHASE WARRANT Filed herewith electronically
27. FINANCIAL DATA SCHEDULE Filed herewith electronically
AGREEMENT FOR ADMINISTRATIVE SERVICES
THIS AGREEMENT FOR ADMINISTRATIVE SERVICES ("Agreement") is made the
15th day of March, 1997, by and between TRINITY PETROLEUM MANAGEMENT, LLC,
a Nevada limited liability company, 1801 Broadway, Suite 600, Denver, CO 80202
("Trinity"), and MYSTIQUE DEVELOPMENTS, INC., a Wyoming corporation, 1820 South
Elena Avenue, Redondo Beach, California 90277 ("Mystique").
RECITALS
Mystique desires to retain the services of Trinity to manage certain
oil and gas properties, and Trinity desires to provide the services under the
terms hereinafter set forth.
NOW THEREFORE, in consideration of the mutual promises contained
herein, and for other good and valuable consideration, the parties agree as
follows:
ARTICLE I.
RETENTION OF SERVICES
1.1 SERVICES RETAINED. Mystique agrees to retain Trinity to perform
certain functions relating to the management of oil and gas properties located
in the United States and Canada (the "Properties"). Said functions include
accounting services (such as rental and royalty payments, disbursement of
revenues to co-owners of oil and gas leases, and the preparation of monthly
financial statements), computer support, contract and lease administration, and
day-to-day operations.
ARTICLE II.
DUTIES OF TRINITY
2.1 PERFORMANCE OF SERVICES. Trinity shall undertake to perform the
services described in Article I, above, on behalf of Mystique. In performing the
services set forth in this Agreement, Trinity shall be subject to the
supervision and control of Mystique's officers and its Board of Directors. In no
event shall Trinity incur any obligation or enter into any transaction on behalf
of Mystique without the prior approval of an officer or the Board of Directors
of Mystique. All work shall be performed in accordance with applicable laws and
industry standards of diligence and care.
2.2 INDEPENDENT CONTRACTOR. Trinity is and shall be an independent
contractor in the performance of this Agreement and is solely responsible for
all of it's employees, including labor costs and expenses arising in connection
with them. Trinity shall have no responsibility for any expense or obligation of
Mystique under this Agreement.
<PAGE>
ARTICLE III.
TERM
3.1 TERM. The term of this Agreement shall be for a period of six
months commencing on the date hereof, and shall continue thereafter on a
month-to-month basis, terminable upon 30 days prior written notice by either
party .
ARTICLE IV.
COMPENSATION
4.1 COMPENSATION FOR SERVICES. As compensation for services rendered,
Mystique shall pay to Trinity a fee of $2,000 per month, payable on the first
day of each month; provided, however, that the fee for the month of March 1997
shall be pro-rated and shall by paid by Mystique to Trinity on the date hereof.
4.2 THIRD-PARTY Expenses. The compensation described in Section 4.1,
above, does not include third-party expenses of Mystique that are paid by
Trinity which may include, without limitation, annual audit fees and expenses,
annual independent reservoir engineering fees and expenses, annual tax
preparation fees and expenses, legal fees, insurance and bonding expenses and
other miscellaneous expenses. Trinity shall obtain Mystique's approval prior to
incurring and paying such expenses on behalf of Mystique.
ARTICLE V.
INDEMNITY
5.1 INDEMNITY.
A) Mystique hereby agrees to indemnify and hold harmless
Trinity, its directors, officers, employees, agents, consultants and
representatives, to the fullest extent permitted by law, from and against all
losses, claims, damages, liabilities, costs and expenses (including without
limitation attorneys fees and costs of litigation) which (1) are related to or
arise out of (a) actions taken or omitted to be taken by Mystique; or (b)
actions taken or omitted by an indemnified person pursuant to this Agreement; or
(2) are otherwise related to or arise out of Trinity's activities on behalf of
Mystique under this Agreement, and Mystique will reimburse Trinity and any other
person indemnified hereunder for all expenses (including attorney's fees and
costs of litigation) as they are incurred by Trinity or such other indemnified
persons in connection with investigating, preparing or defending any such action
or claim, in connection with pending or threatened litigation in which Trinity
or any other indemnified person is or may be a party; provided however, Mystique
shall not be responsible for any losses, claims, damages, liabilities, costs or
expenses pursuant to
<PAGE>
this Paragraph 5.1 (A) which are finally and judicially determined to have
resulted primarily from the bad faith, gross negligence or willful misconduct of
Trinity or its directors, officers, employees, agents, consultants and
representatives.
B) Trinity hereby agrees to indemnify and hold harmless Mystique, its
directors, officers, employees, agents and representatives, to the fullest
extent permitted by law, from and against all losses, claims, damages,
liabilities, costs and expenses (including without limitation attorney's fees
and costs of litigation) which (1) are related to compensation or any other
claim of Trinity employees, contractors or consultants retained to perform the
services hereunder; or (2) are finally and judicially determined to have
resulted primarily from the bad faith, gross negligence or willful misconduct of
Trinity or its directors, officers, employees, agents, consultants and
representatives.
ARTICLE VI.
MISCELLANEOUS
6.1 ENTIRE AGREEMENT. This Agreement represents the entire agreement of
the parties with respect to the transactions contemplated hereby and may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties.
6.2 COMPLIANCE WITH LAW. Trinity shall obtain such authorizations,
licenses, permits and other governmental or regulatory agency approvals as are
required for the performance of this Agreement by Trinity, and Mystique shall
incur no liability arising from Trinity's possession, or lack of possession, of
such requisite governmental authorizations and approvals, except that Mystique
shall reimburse Trinity for applicable third-party expenses as described in
Section 4.2 herein.
6.3 DOCUMENTS AND OTHER PROPERTY. Upon termination of this Agreement as
set forth herein, Trinity will deliver to Mystique all documents, data, and
property of any nature pertaining to the performance of the services hereunder
and will not, without the prior written consent of Mystique, retain any
documents, data or property of any description belonging to Mystique or any
reproduction or any description containing or pertaining to any proprietary
information.
6.4 ASSIGNMENT. No party may assign any of its rights or obligations
under this Agreement without the prior written consent of the other party.
6.5 BINDING AGREEMENT. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by Mystique and Trinity and their
respective successors and permitted assigns.
6.6 NOTICES. Unless otherwise amended in writing, all notices
required or permitted
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hereunder shall be in writing and shall be deemed to have been given when
deposited in the United States mail, postage prepaid and addressed as follows:
If to Trinity: Trinity Petroleum Management LLC
1801 Broadway, Suite 600
Denver, CO 80202
Attn: J. Samuel Butler
If to Mystique: Mystique Developments, Inc.
1820 South Elena Avenue
Redondo Beach, CA 90277
Attn: Kim Fuerst
6.7 COLORADO LAW. This Agreement shall be governed by and construed
in accordance with Colorado law.
6.8 SEVERABILITY. The determination that any term or provision hereof
is invalid or unenforceable shall not affect or invalidate the remaining terms
and provisions of this Agreement.
6.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
shall constitute but one Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
TRINITY PETROLEUM MANAGEMENT, LLC
/s/ J. SAMUEL BUTLER
-----------------------------------
J. Samuel Butler
President
MYSTIQUE DEVELOPMENTS, INC.
/s/ KIM FUERST
-----------------------------------
Kim Fuerst
President
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS SUCH SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN
ACCORDANCE WITH SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
No. of Shares of Common Stock: 100,000 Warrant No. ____
WARRANT
to Purchase
Common Stock, $.01 Par Value
of
Mystique Developments, Inc.
a Wyoming corporation
THIS IS TO CERTIFY THAT for value received, Trinity Petroleum Management, LLC
("Trinity"), or its registered assigns, is entitled to purchase from Mystique
Developments, Inc., a Wyoming corporation (hereinbelow called the "Issuer" or
the "Company"), on or after the dates specified herein, but not later than 5:00
p.m. Denver time, on March 31, 2002 (the "Expiration Date"), 100,000 shares of
the Company's Common Stock, in whole or in part, at a purchase price of $1.00
per share of Common Stock, all on the terms and conditions hereinbelow provided.
Section 1. CERTAIN DEFINITIONS. As used in this Warrant, unless the
context otherwise requires:
"COMMON STOCK" shall mean the Issuer's authorized Common Stock, par
value $0.01 per share.
"COMMON STOCK WARRANTS" OR "WARRANT" shall mean this Warrant for the
purchase of up to 100,000 shares, in the aggregate, of Common Stock, and all
additional or new warrants issued upon division or combination of, or in
substitution for, this Warrant. All such additional or new warrants shall at all
times be identical as to terms and conditions and date, except as to the number
of shares of Common Stock for which they may be exercised.
<PAGE>
"EXERCISE PRICE" shall mean the purchase price of $1.00 per share of
Common Stock, as adjusted from time to time pursuant to Section 3 hereof.
"MARKETABLE SECURITIES" shall mean securities registered under the
Securities Act of 1933 (the "Securities Act") and, if such securities are held
by an affiliate of the Issuer, which are permitted to be sold under Rule 144 in
a single ninety-day period.
"WARRANT STOCK" shall mean the shares of Common Stock purchasable by
the holder of a Warrant upon the exercise of such Warrant.
Section 2. EXERCISE OF WARRANT. This Warrant may be exercised in
whole or in part on or after March 31, 1997 and ending on the Expiration Date.
The holder of this Warrant may exercise this Warrant, in whole or in
part by delivering to the Issuer at its office maintained for such purpose
pursuant to Section 14 (i) a written notice of such holder's election to
exercise this Warrant, which notice shall specify the number of shares of Common
Stock to be purchased, (ii) this Warrant and (iii) a sum equal to the aggregate
of the Exercise Price for such shares of Common Stock, in immediately available
funds.
Such notice shall be in the form of the Subscription Form set out at
the end of this Warrant. Upon delivery thereof, the Issuer shall cause to be
executed and delivered to such holder within ten business days, a certificate or
certificates representing the aggregate number of fully-paid and nonassessable
shares of Common Stock issuable upon such exercise.
Subject to the restrictions in Sections 10 and 11, the stock
certificate or certificates for Warrant Stock so delivered shall be in such
denominations as may be specified in said notice and shall be registered in the
name of such holder or such other name or names as shall be designated in said
notice. Such certificate or certificates shall be deemed to have been issued and
such holder or any other person so designated to be named therein shall be
deemed to have become a holder of record of such shares, including to the extent
permitted by law the right to vote such shares or to consent or to receive
notice as a shareholder, as of the time said notice is delivered to the Issuer
as aforesaid. If this Warrant shall have been exercised only in part, the Issuer
shall, at the time of delivery of said certificate or certificates, deliver to
such holder a new Warrant dated the date it is issued, evidencing the rights of
such holder to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of such holder, appropriate notation may be made on
this Warrant and the Warrant shall be returned to such holder.
The Issuer shall pay all expenses, taxes and other charges payable in
connection with the preparation, issue and delivery of stock certificates under
this SECTION 2.
All shares of Common Stock issuable upon the exercise of this Warrant
in accordance with the terms hereof shall be validly issued, fully paid and
nonassessable, and
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free from all liens and other encumbrances thereon, other than liens or other
encumbrances created by the holder hereof.
The Issuer will not close its books in any manner which interferes
with the timely exercise of this Warrant. The Issuer will from time to time take
all such action as may be necessary to assure that the par value per share of
the unissued Common Stock acquirable upon exercise of this Warrant is at all
times equal to or less than the Exercise Price then in effect.
In no event shall any fractional share of Common Stock of the Issuer
be issued upon any exercise of this Warrant. If, upon exercise of this Warrant
as an entirety, the registered holder would, except as provided in this
paragraph, be entitled to receive a fractional share of Common Stock, then the
Company shall issue the next higher number of full shares of Common Stock,
issuing a full share with respect to such fractional share.
In the event that a holder's employment with Trinity is terminated
(otherwise than by reason of death), the Warrant shall be exercisable (TO THE
EXTENT THAT THE HOLDER SHALL HAVE BEEN ENTITLED TO DO SO AT THE TERMINATION OF
HIS EMPLOYMENT) at any time prior to the expiration of the period of three
months after such termination, but no later than the Expiration Date, in any
event. Nothing in this Warrant shall confer upon the holder any right to be
continued in the employ of Trinity or any subsidiary or interfere in any way
with the right of Trinity or any such subsidiary to terminate or otherwise
modify the terms of the holder's employment; provided, however, that a change in
the holder's duties or position shall not affect holder's Warrant so long as the
holder is still an employee of Trinity or any subsidiary.
In the event of the holder's death, any unexercised portion of the
Warrant shall be exercisable (TO THE EXTENT THAT THE HOLDER SHALL HAVE BEEN
ENTITLED TO DO SO AT THE TIME OF HIS DEATH) at any time prior to the expiration
of the period of three months after his death but no later than the Expiration
Date, in any event, and only by such person or persons to whom the holder's
rights shall have passed under the holder's will or by the laws of descent and
distribution.
Section 3. ADJUSTMENT OF EXERCISE PRICE AND WARRANT STOCK. If the
Issuer shall at any time prior to the Expiration Date subdivide its outstanding
Common Stock, by split-up or otherwise, or combine its outstanding Common Stock,
or issue additional shares of its Common Stock in payment of a stock dividend in
respect of its Common Stock, the number of shares of Warrant Stock then issuable
on the exercise of the unexercised portion of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination, and the Exercise Price
then applicable to shares covered by the unexercised portion of this Warrant
shall forthwith be proportionately decreased in the case of a subdivision or
stock dividend, or proportionately increased in the case of a combination.
Whenever the Exercise Price is adjusted as herein provided, the Issuer shall
promptly deliver to the registered holder of this Warrant a certificate of its
principal financial officer setting forth the Exercise Price after such
adjustment and a brief statement of the facts requiring such adjustment.
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Section 4. DIVISION AND COMBINATION. This Warrant may, subject to
Sections 10 and 11, be divided by or combined with other Warrants upon
presentation at the office of the Issuer, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the holder hereof or his agent or attorney. The Issuer shall pay all
expenses, taxes and other charges incurred by the Issuer in the performance of
its obligations in connection with the preparation, issuance and delivery of
Warrants under this Section 4. The Issuer agrees to maintain at its office,
books for the registration of the Warrants.
Section 5. RECLASSIFICATION, ETC. In case of any reclassification or
change of the outstanding Common Stock of the Issuer (other than as a result of
a subdivision, combination or stock dividend), or in case of any consolidation
of the Issuer with, or merger of the Issuer into, another corporation or other
business organization (other than a consolidation or merger in which the Issuer
is the continuing corporation and which does not result in any reclassification
or change of the outstanding Common Stock of the Issuer), at any time prior to
the Expiration Date, then, as a condition of such reclassification,
reorganization, change, consolidation or merger, lawful provision shall be made,
and duly executed documents evidencing the same from the Issuer or its successor
shall be delivered to the registered holder of this Warrant, so that the
registered holder of this Warrant shall have the right prior to the expiration
of this Warrant to purchase, at a total price not to exceed that payable upon
the exercise of the unexercised portion of this Warrant, the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, reorganization, change, consolidation or merger by a holder of
the number of shares of Common Stock of the Issuer which might have been
purchased by the registered holder of this Warrant immediately prior to such
reclassification, reorganization, change, consolidation or merger, and in any
such case appropriate provisions shall be made with respect to the rights and
interest of the registered holder of this Warrant to the end that the provisions
hereof (including without limitation, provisions for the adjustment of the
Exercise Price and of the number of shares purchasable upon exercise of this
Warrant) shall thereafter be applicable in relation to any shares of stock and
other securities and property thereafter deliverable upon exercise hereof.
Notwithstanding the foregoing, if pursuant to the terms of such consolidation or
merger, the consideration to be received by the holders of Common Stock of the
Issuer is cash and/or Marketable Securities, this Warrant shall expire to the
extent unexercised on the closing of such merger or consolidation.
Section 6. CERTAIN NOTICES. If at any time prior to the expiration or
exercise of this Warrant, the Issuer shall pay any dividend or make any
distribution upon its Common Stock or shall make any subdivision or combination
of or other change in its Common Stock, the Company shall cause notice thereof
to be mailed, first class, postage prepaid, to the registered holder of this
Warrant at least ten days prior to the date as of which holders of Common Stock
who shall participate in such dividend, distribution, subdivision, combination
or other change are to be determined. Such notice shall also specify the time as
of which holders of Common Stock who shall participate in such event are to be
determined. The Company shall also provide to the registered holder of this
Warrant at least ten days prior written notice of the closing of the sale of
shares of Common Stock in an underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as
-4-
<PAGE>
amended. Failure to give any such notice, or any defect therein, shall not
affect the legality or validity of any such event.
Section 7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION
WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY. The Issuer shall at all times
reserve and keep available for issuance upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants.
Section 8. STOCK AND WARRANT BOOKS. The Issuer will not at any
time, except upon dissolution, liquidation or winding up, close its stock books
or Warrant books so as to result in preventing or delaying the exercise of any
Warrant.
Section 9. NO VOTING RIGHTS. This Warrant shall not entitle the
holder hereof to any voting rights or other rights as a shareholder of the
Issuer.
Section 10. TRANSFER. This Warrant is transferable in whole or
in part, at the office or agency of the Issuer at which this Warrant is
exercisable, by the registered holder hereof in person or by duly authorized
attorney, upon surrender of this Warrant together with the assignment hereof
properly endorsed, and promptly thereafter a new warrant shall be issued and
delivered by the Issuer, registered in the name of the assignee. Until
registration of transfer hereof on the books of the Issuer, the Issuer may treat
the registered holder hereof as the owner hereof for all purposes.
Section 11. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON TRANSFER OF
WARRANT AND WARRANT STOCK. The holder represents and agrees that: (i) the
Warrant shall not be exercisable unless the purchase of Warrant Stock is
pursuant to an applicable effective registration statement under the Securities
Act of 1933, as amended (the "Act"), or unless in the opinion of counsel for the
Company, the proposed purchase of such Warrant Stock would be exempt from the
registration requirements of the Act, and from the qualification requirements of
any applicable state securities law; (ii) if the Warrant Stock is not issued
pursuant to an applicable effective registration statement under the Act, upon
exercise of the Warrant, holder will acquire the Warrant Stock for its own
account for investment and not with any intent or view to any distribution,
resale or other disposition of the Warrant Stock; (iii) it will not sell or
transfer the Warrant or the Warrant Stock, unless such are registered under the
Act, except in a transaction that is exempt from registration under the Act; and
(iv) if the Warrant Stock is not issued pursuant to an applicable effective
registration statement under the Act, each certificate issued to represent any
of the Warrant Stock shall bear a legend calling attention to the foregoing
restrictions and agreements. The Company may require, as a condition of the
exercise of the Warrant, that the Holder sign such further representations and
agreements as it reasonably determines to be necessary or appropriate to assure
and to evidence compliance with the requirements of the Act.
Section 12. LOSS, DESTRUCTION OF WARRANT CERTIFICATES. Upon receipt
of evidence satisfactory to the Issuer of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity and/or
-5-
<PAGE>
security satisfactory to the Issuer or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Issuer will make and deliver, in
lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like
tenor and representing the right to purchase the same aggregate number of shares
of Common Stock.
Section 13. AMENDMENTS. The terms of this Warrant may be amended, and
the observance of any term herein may be waived, but only with the written
consent of the Issuer as authorized by its Board of Directors and the holder of
this Warrant or the holders of Common Stock Warrants then exercisable for a
majority of the shares of Common Stock issuable upon exercise of all of the then
outstanding Common Stock Warrants.
Section 14. OFFICE OF THE ISSUER. So long as any of the Warrants
remain outstanding, the Issuer shall maintain an office in California where the
Warrants may be presented for exercise, transfer, division or combination as in
this Warrant provided. Such office shall be at 1820 South Elena Avenue, Suite B,
Redondo Beach, CA 90277, unless and until the Issuer shall designate and
maintain some other office for such purposes and deliver written notice thereof
to the holders of all outstanding Warrants.
Section 15. NOTICES GENERALLY. Any notice, demand or delivery pursuant
to the provisions hereof shall be sufficiently delivered or made if sent by
first class mail, postage prepaid, addressed to any holder of a Warrant at its
last known address appearing on the books of the Issuer, or, except as herein
otherwise expressly provided, to the Issuer at its principal executive office at
the address set forth in SECTION 14, or such other address as shall have been
furnished to the party giving or making such notice, demand or delivery.
Section 16. SUCCESSORS AND ASSIGNS. This Warrant shall bind and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and heirs, and, without limiting the generality of the foregoing,
shall inure to the benefit of and be enforceable by each person who shall from
time to time be a holder of any of the Warrants.
-6-
<PAGE>
Section 17. GOVERNING LAW. This Warrant shall be governed by and
construed in accordance with the laws of the State of Colorado.
IN WITNESS WHEREOF, the Issuer has caused this Warrant to be signed in
its name by its President or a Vice President and attested by its Secretary or
an Assistant Secretary.
Dated: March 31, 1997.
MYSTIQUE DEVELOPMENTS, INC., a
Wyoming corporation
By: /s/ KIM FUERST
--------------------------------
Kim Fuerst, President
ATTEST:
- --------------------------------
Name:
Title:
-7-
<PAGE>
SUBSCRIPTION FORM
(to be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases _______ shares of the Common Stock of Mystique
Developments, Inc., a Wyoming corporation, and herewith makes payment therefor
(by check in the amount of $___________), all at the price and on the terms and
conditions specified in this Warrant, and requests that a certificate or
certificates for the shares of Common Stock hereby purchased (and any securities
or other property issuable upon such exercise) be issued in the name of and
delivered to _______________________________ whose address is and, if such
shares of Common Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant, that a new Warrant of like tenor and date
for the balance of the Common Stock issuable hereunder be delivered to the
undersigned.
Dated:
--------------------------------------------
(Signature of Registered Owner)
--------------------------------------------
(Street Address)
--------------------------------------------
(City) (State) (Zip Code)
NOTICE: The signature to this subscription must correspond with the
name as written upon the face of the within Warrant in
every particular, without alteration or enlargement or any
change whatever.
The signature to this subscription must be guaranteed by a
bank or trust company or by a firm having membership on the
New York Stock Exchange.
<PAGE>
FORM OF ASSIGNMENT
For value received _____________________________ hereby sells,
assigns and transfers unto
- ------------------------------------------------------------------------------
Please print or typewrite name and address of assignee
- -----------------------------------------------------------------------------
the within Warrant, and does hereby irrevocably constitute and appoint
___________________ __________________________ attorney to transfer the within
Warrant on the books of the within named Company with full power of substitution
in the premises.
Dated: _____________________
- ------------------------------------------
In the presence of:
- ---------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of operations found on
pages 2 and 3 of the Company's Form 10-QSB for the year to date, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000318852
<NAME> MYSTIQUE DEVELOPMENTS, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JAN-1-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 809,408
<SECURITIES> 0
<RECEIVABLES> 10,471
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 820,379
<PP&E> 689,242
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,509,621
<CURRENT-LIABILITIES> 5,944
<BONDS> 0
0
0
<COMMON> 15,350
<OTHER-SE> 1,488,327
<TOTAL-LIABILITY-AND-EQUITY> 1,509,621
<SALES> 54,013
<TOTAL-REVENUES> 57,163
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 246,039
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (182,316)
<INCOME-TAX> 0
<INCOME-CONTINUING> (182,316)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (182,316)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> (.18)
</TABLE>
