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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO _____________
COMMISSION FILE NUMBER 0-9355
CUBIC ENERGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 87-0352095
(STATE OR OTHER JURISDICTION OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
GARLAND, TX 75041
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(972) 686-0369
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Roseland Oil and Gas, Inc.
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 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 [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common Stock, $.05 Par Value - 18,238,347 shares as of November 18, 1999.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
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CUBIC ENERGY, INC.
(FORMERLY ROSELAND OIL AND GAS, INC.)
TABLE OF CONTENTS
PART I -- Financial Information
<TABLE>
<CAPTION>
<S> <C>
ITEM 1. Financial Statements
Balance Sheets, Unaudited
As of September 30, 1999 3
Statements of Operations, Unaudited
For the three months ended September 30, 1999 and 1998 5
Statement of Cash Flows, Unaudited
For the three months ended September 30, 1999 6
Notes to Unaudited Financial Statements 7
ITEM 2. Management's Discussion and Analysis 8
PART II -- Other Information
ITEM 1. Legal Proceedings 9
ITEM 4. Submission of Matters to a Vote of Security Holders 9
ITEM 5. Other Information 10
ITEM 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 10
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CUBIC ENERGY, INC.
BALANCE SHEET
September 30, 1999 and June 30, 1999
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
For the period ended For the period ended
September 30, 1999 June 30, 1999
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 20,520 $ 1,374
Accounts receivable 22,441 23,600
Marketable securities 46,280 101,711
---------- ----------
Current assets 89,241 126,685
Property and equipment, at cost:
Oil and gas properties 1,559,573 1,559,573
Office and other equipment 910 910
---------- ----------
Total property and equipment 1,560,483 1,560,483
Less accumulated depreciation, depletion
and amortization 201,951 179,228
---------- ----------
Net property and equipment 1,358,532 1,381,255
Other assets: 48,320 29,545
---------- ----------
TOTAL ASSETS $1,496,093 $1,537,485
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE PART OF THESE FINANCIAL STATEMENTS
3
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CUBIC ENERGY, INC.
BALANCE SHEET
September 30, 1999 and June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
LIABILITIES & STOCKHOLDERS EQUITY
For the period ended For the period ended
September 30, 1999 June 30, 1999
<S> <C> <C>
Current liabilities:
Accounts payable $ 63,933 $ 67,946
Accrued liabilities 26,147 26,155
Due to affiliates 505,143 456,351
------------ -----------
Total current liabilities 595,223 550,452
Long term debt 118,760 118,760
Stockholders' equity:
Common stock, $.05 par value, authorized
50,000,000 shares, issued 18,238,347 and
18,238,347 shares 911,918 911,918
Additional paid in capital 2,817,138 2,817,138
Stock subscribed and paid - to be issued 120,000 120,000
Accumulated deficit (3,033,032) (2,946,869)
Accumulated other comprehensive income (33,914) (33,914)
------------ -----------
Total stockholders' equity 782,110 868,273
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,496,093 $1,537,485
============ ==========
</TABLE>
THE ACCOMPANYING NOTES ARE PART OF THESE FINANCIAL STATEMENTS
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CUBIC ENERGY, INC.
STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
For the Three For the Three
Months Ended Months Ended
September 30, 1999 September 30, 1998
<S> <C> <C>
Revenue:
Oil and gas sales $ 18,668 $ 22,214
Other 4 0
---------- ---------
Total revenue 18,672 22,214
Costs and expenses:
Oil and gas production, operating
And development costs 7,191 27,828
Selling, general and administrative expense 93,643 168,755
Depreciation, depletion and amortization 3,947 8,090
---------- ---------
Total costs and expenses 104,781 204,673
Operating income (loss) (86,109) (182,459)
Non-operating income (expenses):
Interest income 0 0
Gain (loss) on sale of assets 0 (4,698)
Interest expense (62) (3,288)
---------- ---------
Total non-operating income (expenses) (62) (7,986)
Net income (loss) before income tax (86,171) (190,445)
---------- ---------
(Provision) benefit for income taxes 0 0
Net Income (Loss) (86,171) (190,445)
========== =========
</TABLE>
THE ACCOMPANYING NOTES ARE PART OF THESE FINANCIAL STATEMENTS
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CUBIC ENERGY, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three For the Three
Months Ended Months Ended
September 30, 1999 September 30, 1998
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $ (86,171) $(190,445)
Adjustments to reconcile net income (loss) to cash
provided (used) by operating activities:
Depreciation, depletion and amortization 3,947 8,090
Provision (gain) loss for deferred income tax 0 4,698
Net Change in assets and liabilities:
(Increase) decrease in accounts receivable 1,159 38,076
(Increase) decrease in notes receivable 0 0
(Increase) decrease in other assets 55,398 116,250
Increase (decrease) in loan from affiliate 48,792 0
Increase (decrease) in accounts payable and accrued liabilities (3,979) (26,279)
Increase (decrease) in other accounts payable 0 (60,469)
Net Cash Provided (Used) By Operating Activities $ 19,146 $(110,079)
Cash flows from investing activities:
Changes to oil & gas properties 0 0
Changes in other assets 0 $ 131,834
Net Cash Provided (Used) By Investing Activities $ 0 $ 131,834
Cash flows from financing activities:
Affiliate loan 0 57,768
Changes in common stock 0 (110,000)
Changes in debt 0 13,000
Net Cash Provided (Used) By Financing Activities $ 0 $ (39,232)
Net increase (decrease) in cash and cash equivalents $ 19,146 $ 17,477
Cash beginning of period 1,374 303
Cash at end of period $ 20,520 $ 17,780
</TABLE>
THE ACCOMPANYING NOTES ARE PART OF THESE FINANCIAL STATEMENTS
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CUBIC ENERGY, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1999
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies followed by Cubic Energy, Inc., a Texas
corporation (the "Company" or "Cubic"), formerly known as Roseland Oil and
Gas, Inc., an Oklahoma corporation, are set forth in Note 2 to the Company's
financial statements in its June 30, 1999 Form 10-KSB and should be read in
conjunction with the financial statements for the three months ended
September 30, 1999, contained herein.
The financial statements included herein as of September 30, 1999, and
the three month period ended September 30, 1999 have been prepared by the
Company, without an audit, pursuant to generally accepted accounting
principles for interim financial information and the rules and regulations of
the Securities and Exchange Commission. The Company believes that the
disclosures are adequate to make the information presented not misleading.
The information presented reflects all adjustments (consisting solely of
normal recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of results for the period.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1998.
Gross revenues for the three months ended September 30 decreased from
$22,214 in 1998 to $18,668 in 1999 primarily due to the disposal of oil and gas
wells and decreased oil and gas prices.
Oil and gas production, operating and development costs decreased from
$27,828 (125.3% of oil and gas sales) in the three months ended September 30,
1998 to $7,191 (38.5% of oil and gas sales) in the three months ended September
30, 1999. The decrease in costs was attributable to the reduced number of
producing wells. Selling, general and administrative expenses decreased from
$168,755 in the three months ended September 30, 1998 to $93,643 in the three
months ended September 30, 1999 due to legal, accounting and audit costs that
the Company incurred in the 1998 period related to the restatement of prior
period financial statements.
Operating income (loss) improved from a loss of $182,459 in the three
months ended September 30, 1998 to a loss of $86,109 in the three months ended
September 30, 1999 due primarily to the reduced selling, general and
administrative costs, and reduced oil and gas production, operating and
development costs resulting from the disposal of several wells.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1999, long term debt was $118,760 of which none was
classified as current. This compares to total long term debt of $118,760 as of
June 30, 1999 of which none was classified as current. See the Company's June
30, 1999 Form 10-KSB, Footnote 4.
Year 2000 issue
The Company is working to resolve the potential impact of the year 2000 on
the ability of the Company's computerized information systems to accurately
process information that may be date sensitive. Any of the Company's programs
that recognize a date using "00" as the year 1900 rather than the year 2000
could result in errors or system failures. The Company utilizes a number of
computer programs across its entire operation. Management believes that all
of the Company's systems, which are primarily purchased software systems, are
year 2000 compliant and therefore anticipates that this issue will have
minimal impact on the Company's operations and that future costs relating to
year 2000 will be minimal. Because of the unprecedented nature of the year
2000 issue, its effects and the success of related remediation efforts will
not be fully determinable until the year 2000 and thereafter. The Company
believes that it is taking all reasonable steps to ensure Year 2000
readiness. Its ability to meet the projected goals, including the costs of
addressing the Year 2000 issue and the dates upon which compliance will be
attained, depends on the Year 2000 readiness of its key suppliers and
customers and the successful development and implementation of contingency
plans. Although these and other unanticipated Year 2000 issues could have an
adverse effect on the results of operations or financial condition of the
Company, it is not possible to estimate the extent of the impact at this
time. The foregoing is a year 2000 readiness disclosure pursuant to the Year
2000 Readiness and Disclosure Act.
Safe Harbor Statements Under The Private Securities Litigation Reform Act Of
1995
This report contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1993, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking statements
are based on current expectations that involve a number of risks and
uncertainties that could cause actual results to differ materially from the
results discussed in the forward-looking statements. Generally,
forward-looking statements include words or phrases such as "management
anticipates", "the Company believes", "the Company anticipates" and words and
phrases of similar impact. The forward-looking statements are made pursuant
to safe harbor provisions of the Private Securities Litigation Reform Act of
1995. The factors that could cause actual results to differ materially from
the forward-looking statements include, but are not limited to: (i) industry
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conditions and competition, (ii) the cyclical nature of the industry, (iii)
domestic and worldwide supplies and demand for oil and gas, (iv) operational
risks and insurance, (v) environmental liabilities which may arise in the
future which are not covered by insurance or indemnity, (vi) the impact of
current and future laws and government regulations, as well as repeal or
modification of same, affecting the oil and gas industry and the Company's
operations in particular, (vii) production levels and other activities of
OPEC and other oil and gas producers, and the impact that the above factors
and other events have on the current and expected future pricing of oil and
natural gas, and (viii) the risks described from time to time in the
Company's reports to the Securities and Exchange Commission, including the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1999.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the spring of 1999, the Company became aware of the claim of Clifford
Kees, Jr. ("Kees"), a geologist, to a 1% overriding royalty interest in the
Company's oil and gas properties located in the Reagan Sections 11 and 12,
Palo Pinto County, Texas. Kees filed an assignment in Palo Pinto County,
Texas, after December 1, 1997, upon which Kees bases his claim. The Company,
after its initial investigation, disputes Kees' legal rights to the
overriding royalty and has filed suit to challenge this royalty as described
below.
William Vandever, during the period of time in which he served as the
President and Chief Executive Officer of the Company, purportedly granted
some preferential rights with respect to 75% of the Reagan leases in Section
11, Palo Pinto County, Texas, to participants (including Kees and Vandever
himself) in the re-work of the Reagan #2-11 well. Mr. Vandever also
purportedly granted the same rights to himself as a participant. The Company
discovered this in March, 1999. Claims related to preferential rights with
regard to the Reagan lease in Section 11 could materially and adversely
affect the financial condition and the outlook of the Company. Based upon
information obtained by the Company, the Company has filed suit in the 29th
Judicial District Court in Palo Pinto County, Texas, styled "Roseland Oil and
Gas, Inc. v. William Vandever, et al.", against Kees, Vandever and various
persons, seeking a judicial determination that all grants of preferential
rights in the Reagan Section 11 are void. This suit also seeks monetary
damages against the named defendants. This lawsuit was filed on April 26,
1999. The Company plans to vigorously pursue this action.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended September 30, 1999, the Company's Annual Stockholder
was held August 16, 1999. Shareholders were asked to ratify the selection of
the Company's accounting firm, Weaver and Tidwell L.L.C., to vote on
directors of the Company for terms of one year or until their replacement is
elected, and to approve the Company's proposal to execute a reincorporation
merger with Cubic Energy, Inc., a Texas corporation and a wholly-subsidiary
of the Company.
The shareholders approved the Company's selection of accounting firm, elected
the directors and approved the merger with the following votes:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
APPROVAL OF ACCOUNTANTS YES VOTES NO VOTES ABSTENTIONS
Weaver and Tidwell L.L.C. 14,357,788 417 0
ELECTION OF DIRECTORS
Calvin A. Wallen III 14,357,005 1,200 0
William Bruggeman 14,356,995 1,210 0
Gene Howard 14,349,608 8,597 0
Jon S. Ross 14,357,005 1,200 0
REINCORPORATION MERGER
WITH CUBIC ENERGY 14,356,805 400 1,000
</TABLE>
9
ITEM 5. OTHER INFORMATION.
As discussed above under Item 4, in August 1999, the shareholders of the
Company approved the reincorporation of the Company into the state of Texas
pursuant to a reincorporation merger between the Company (formerly known as
Roseland Oil and Gas, Inc., an Oklahoma corporation) and a wholly-owned
subsidiary, Cubic Energy, Inc., a Texas corporation.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.1 Agreement and Plan of Merger between Roseland Oil and Gas, Inc.,
an Oklahoma corporation, and Cubic Energy, Inc., a Texas corporation and a
wholly-owned subsidiary of Roseland.
3.1 Articles of Incorporation of the Company.
3.2 Bylaws of the Company. (Incorporated by reference previously
filed in the Company's June 30, 1999 Form 10-KSB)
27 Financial Data Schedule.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CUBIC ENERGY, INC.
DATE: November 22, 1999 BY: /s/ Calvin A. Wallen III
-------------------------
Calvin A. Wallen III, President
(Principal Executive, Financial and
Accounting Officer)
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and entered
into as of August __, 1999, by and among Cubic Energy, Inc., a Texas
corporation ("Cubic"), and Roseland Oil and Gas, Inc., an Oklahoma corporation
("Roseland").
A. Roseland desires to merge with and into Cubic, and Cubic desires to
merge with Roseland (the "Merger").
B. The terms and conditions of Merger, the mode of carrying the Merger
into effect, the manner and basis of canceling the shares of $.05 par value
common stock of Roseland ("Roseland Common Stock"), the issuance of the shares
of $.05 par value common stock of Cubic ("Cubic Common Stock"), and such other
terms and provisions as the parties desire to be stated in this Agreement are
set forth below.
C. The current shareholders of Roseland shall be the only shareholders of
Cubic immediately upon the completion of the Merger, and each such shareholder
shall own the same percentage of Cubic Common Stock as such shareholder owned
of Roseland Common Stock prior to the Merger.
D. The Boards of Directors of Roseland and Cubic deem the Merger to be
desirable and in the best interests of their respective corporations and
shareholders, and a majority of the shareholders of each of Roseland and Cubic
have approved the Merger.
THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto agree as follows:
ARTICLE I -- THE MERGER
1.1 Merger. At the Effective Time (as defined in Section 1.2), Roseland
shall be merged with and into Cubic, the separate existence of Roseland shall
cease, and Cubic, as the surviving corporation (the "Surviving Corporation"),
shall continue to exist by virtue of and shall be governed by the laws of the
State of Texas, and the name of the Surviving Corporation shall be "Cubic
Energy, Inc."
1.2 Effective Time of Merger. The Articles of Merger (the "Articles of
Merger") setting forth the information required by, and otherwise in compliance
with, the Texas Business Corporation Act with respect to the Merger, shall be
delivered for filing with the Secretary of State of the State of Texas. The
Certificate of Merger (the "Oklahoma Certificate") setting forth the
information required by, and otherwise in compliance with, the Oklahoma General
Corporation Act with respect to the Merger, shall be delivered for filing with
the Secretary of State of the State of Oklahoma. The Merger shall become
effective on the day and at the time the Secretary of State of the State of
Texas files such Articles of Merger (the time of such effectiveness is herein
called the "Effective Time") and upon the filing with the Secretary of State of
the State of Oklahoma of the Oklahoma Certificate. Notwithstanding the
foregoing, either Roseland or Cubic, by action of its Board of Directors, may
terminate this Agreement at any time prior to the earlier of (i) the filing of
the Articles of Merger with the Secretary of State of the State of Texas or
(ii) the filing of the Oklahoma Certificate with the Oklahoma Secretary of
State.
1.3 Effects of Merger. At the Effective Time, Cubic, without further
action, as provided by the laws of the State of Oklahoma and the laws of the
State of Texas, shall succeed to and possess all of the rights, privileges,
powers, and franchises, of a public as well as of a private nature, of
Roseland; and all property, real, personal and mixed, and all debts due on
whatsoever account, including subscriptions to shares, and all and every other
interest, of or belonging to or due to Roseland shall be deemed to be vested in
Cubic without further act or deed; and the title to any real estate, or any
interest therein, vested in Cubic or Roseland shall not revert or be in any way
impaired by reason of the Merger. Such transfer to and vesting in Cubic shall
be deemed to occur by operation of law, and no consent or approval of any other
person shall be required in connection with any such transfer or vesting unless
such consent or approval is specifically required in the event of merger or
consolidation by law or
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express provision in any contract, agreement, decree, order, or other
instrument to which Cubic or Roseland is a party or by which either of them
is bound. Cubic shall thenceforth be responsible and liable for all debts,
liabilities, and duties of Roseland which may be enforced against Cubic to
the same extent as if said debts, liabilities, and duties had been incurred
or contracted by it. Neither the rights of creditors nor any liens upon the
property of Roseland and Cubic shall be impaired by the Merger.
1.4 Articles of Incorporation. The Articles of Incorporation of Cubic
before the merger shall be and remain the Articles of Incorporation of Cubic
after the Effective Time, until the same shall thereafter be altered, amended,
or repealed in accordance with law and Cubic's Articles of Incorporation.
1.5 Bylaws. The Bylaws of Cubic as in effect at the Effective Time shall
be and remain the Bylaws of Cubic, as the Surviving Corporation, until the same
shall be altered, amended, or repealed in accordance with law, Cubic's Articles
of Incorporation, or such Bylaws.
ARTICLE II -- EFFECT ON OUTSTANDING STOCK
2.1 Cubic Common Stock. At the Effective Time, all of the shares of Cubic
Common Stock that were outstanding immediately before the Effective Time shall,
without any action on the part of the holder thereof, be canceled.
2.2 Roseland Common Stock. At the Effective Time, each outstanding share
of Roseland Common Stock shall, without any action on the part of the holders
thereof, be deemed converted into and represent the same number of shares of
Cubic Common Stock as each holder of Roseland Common Stock owned prior to the
Merger.
2.3 Surrender of Certificates of Roseland Common Stock. At the Effective
Time, the certificate(s) representing Roseland Common Stock shall be deemed for
all purposes to evidence shares of Cubic Common Stock.
ARTICLE III -- OFFICERS AND DIRECTORS
3.1 Directors. At the Effective Time, each of the persons who was serving
as a director of Cubic immediately prior to the Effective Time shall continue
to be a director of Cubic, and shall serve in such capacity until the next
annual meeting of shareholders of Cubic and until his successor is duly elected
and qualified or, if earlier, until his death, resignation, or removal from
office.
3.2 Officers. At the Effective Time, each of the persons who was serving
as an officer of Cubic immediately prior to the Effective Time shall continue
to be an officer of Cubic and shall continue to serve in such capacity at the
direction of the Board of Directors of Cubic or, if earlier, until their
respective death or resignation.
ARTICLE IV -- MISCELLANEOUS
4.1 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
4.2 Amendment. To the extent permitted by law, this Agreement may be
amended or supplemented at any time and in any respect, to the extent such
amendment or supplement relates to the Merger, by action taken by the Boards of
Directors of Roseland and Cubic, if prior to the Effective Time, or by the
Board of Directors of Cubic, if on or after the Effective Time.
4.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas with respect to all matters,
except to the extent the laws of the State of Oklahoma apply to matters of
corporate governance relating to Roseland.
4.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
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4.5 Service of Process. In accordance with Section 1082(D) of the Oklahoma
General Corporation Act, Cubic agrees that it may be served with process in the
State of Oklahoma in any proceeding for enforcement of any obligation of
Roseland, as well as for enforcement of any obligation of Cubic arising from
the merger or consolidation, including any suit or other proceeding to enforce
the right of any shareholders as determined in appraisal proceedings pursuant
to the provisions of Section 1091 of the Oklahoma General Corporation Act, and
Cubic irrevocably appoints the Secretary of State as Cubic's agent to accept
service of process in any suit or other proceedings and specifies 1720
Northwest Highway, Suite 320, Garland, Texas 75041 as the address to which a
copy of process shall be mailed by the Oklahoma Secretary of State.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first written above.
CUBIC ENERGY, INC.,
a Texas corporation
By:
-------------------------------
Calvin A. Wallen III, President
ROSELAND OIL AND GAS, INC.,
an Oklahoma corporation
By:
-------------------------------
Calvin A. Wallen III, President
The undersigned secretary of Roseland Oil and Gas, Inc. hereby certifies that a
majority of the outstanding stock of Roseland entitled to vote thereon has been
voted for the adoption of this Agreement and the Merger.
ROSELAND OIL AND GAS, INC.,
an Oklahoma corporation
By:
-------------------------------
Jon S. Ross, Secretary
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EXHIBIT 3.1
ARTICLES OF INCORPORATION OF CUBIC ENERGY, INC.
ARTICLE ONE
The name of the Corporation is Cubic Energy, Inc.
ARTICLE TWO
The period of duration of the Corporation is perpetual.
ARTICLE THREE
The purpose for which the Corporation is organized is to engage in the
transaction of any and all lawful business for which corporations may be
incorporated under the Texas Business Corporation Act.
ARTICLE FOUR
The total number of shares of all classes of capital stock which the
Corporation has authority to issue is sixty million (60,000,000), of which
(a) fifty million (50,000,000) shares are designated Common Stock, par value
$.05 per share, and (b) ten million (10,000,000) shares are designated
Preferred Stock, par value $.01 per share.
The following is a statement of the designations, preferences,
limitations, and relative rights, including voting rights, in respect of the
classes of stock of the Corporation and of the authority with respect thereto
expressly vested in the Board of Directors of the Corporation:
A. Common Stock
(1) Each share of Common Stock of the Corporation shall have identical
rights and privileges in every respect. The holders of shares of Common
Stock shall be entitled to vote upon all matters submitted to a vote of the
shareholders of the Corporation and shall be entitled to one vote for each
share of Common Stock held.
(2) Subject to the prior rights and preferences, if any, applicable to
shares of the Preferred Stock or any series thereof, the holders of shares
of the Common Stock shall be entitled to receive such dividends (payable in
cash, stock, or otherwise) as may be declared thereon by the Board of
Directors at any time and from time to time out of any funds of the
Corporation legally available therefor.
(3) In the event of any voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation, after distribution in full of
the preferential amounts, if any, to be distributed to the holders of shares
of the Preferred Stock or any series thereof, the holders of shares of the
Common Stock shall be entitled to receive all of the remaining assets of the
Corporation available for distribution to its shareholders, ratably in
proportion to the number of shares of the Common Stock held by them. A
liquidation, dissolution, or winding-up of the Corporation, as such terms are
used in this Paragraph (3), shall not be deemed to be occasioned by or to
include any merger of the Corporation with or into one or more corporations
or other entities, any acquisition or exchange of the outstanding shares of
one or more classes or series of the Corporation, or any sale, lease,
exchange, or other disposition of all or a part of the assets of the
Corporation.
B. Preferred Stock
(4) Shares of the Preferred Stock may be issued from time to time in
one or more series, the shares of each series to have such designations,
preferences, limitations, and relative rights, including voting rights, as
shall be stated and expressed herein or in a resolution or resolutions
providing for the issue of such series adopted by the Board of Directors of
the Corporation. Each such series of Preferred Stock shall be designated so
as to distinguish the shares thereof from the shares of all other series and
classes. The Board of Directors of the Corporation is hereby expressly
authorized, subject to the limitations provided by law, to establish and
designate series of the Preferred Stock, to fix the number of shares
constituting each series, and to fix the designations and the
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preferences, limitations, and relative rights, including voting rights, of
the shares of each series and the variations of the relative rights and
preferences as between series, and to increase and to decrease the number of
shares constituting each series, provided that the Board of Directors may not
decrease the number of shares within a series to less than the number of
shares within such series that are then issued. The relative powers, rights,
preferences, and limitations may vary between and among series of Preferred
Stock in any and all respects so long as all shares of the same series are
identical in all respects, except that shares of any such series issued at
different times may have different dates from which dividends thereon
cumulate. The authority of the Board of Directors of the Corporation with
respect to each series shall include, but shall not be limited to, the
authority to determine the following:
(a) The designation of such series;
(b) The number of shares initially constituting such series;
(c) The rate or rates and the times at which dividends on the shares
of such series shall be paid, the periods in respect of which dividends are
payable, the conditions upon such dividends, the relationship and
preferences, if any, of such dividends to dividends payable on any other
class or series of shares, whether or not such dividends shall be cumulative,
partially cumulative, or noncumulative, if such dividends shall be cumulative
or partially cumulative, the date or dates from and after which, and the
amounts in which, they shall accumulate, whether such dividends shall be
share dividends, cash or other dividends, or any combination thereof, and if
such dividends shall include share dividends, whether such share dividends
shall be payable in shares of the same or any other class or series of shares
of the Corporation (whether now or hereafter authorized), or any combination
thereof and the other terms and conditions, if any, applicable to dividends
on shares of such series. The Board of Directors of the Corporation is hereby
expressly empowered, subject to the limitations provided by law, to authorize
the Corporation to pay share dividends on any class or series of capital
stock of the Corporation (whether now or hereafter authorized) payable in
shares of the same or any other class or series of capital stock of the
Corporation (whether now or hereafter authorized) or any combination thereof;
(d) Whether or not the shares of such series shall be redeemable or
subject to repurchase at the option of the Corporation or the holder thereof
or upon the happening of a specified event, if such shares shall be
redeemable, the terms and conditions of such redemption, including but not
limited to the date or dates upon or after which such shares shall be
redeemable, the amount per share which shall be payable upon such redemption,
which amount may vary under different conditions and at different redemption
dates, and whether such amount shall be payable in cash, property, or rights,
including securities of the Corporation or another corporation;
(e) The rights of the holders of shares of such series (which may
vary depending upon the circumstances or nature of such liquidation,
dissolution, or winding up) in the event of voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation and the
relationship or preference, if any, of such rights to rights of holders of
stock of any other class or series. A liquidation, dissolution, or winding up
of the Corporation, as such terms are used in this subparagraph (e), shall
not be deemed to be occasioned by or to include any merger of the Corporation
with or into one or more corporations or other entities, any acquisition or
exchange of the outstanding shares of one or more classes or series of the
Corporation, or any sale, lease, exchange, or other disposition of all or
part of the assets of the Corporation;
(f) Whether or not the shares of such series shall have voting
powers and, if such shares shall have such voting powers, the terms and
conditions thereof, including, but not limited to, the right of the holders
of such shares to vote as a separate class either alone or with the holders
of shares of one or more other classes or series of stock and the right to
have more (or less) than one vote per share; provided, however, that the
right to cumulate votes for the election of directors is expressly denied and
prohibited;
(g) Whether or not a sinking fund shall be provided for the
redemption of the shares of such series and, if such a sinking fund shall be
provided, the terms and conditions thereof;
(h) Whether or not a purchase fund shall be provided for the shares of
such series and, if such a purchase fund shall be provided, the terms and
conditions thereof;
15
<PAGE>
(i) Whether or not the shares of such series, at the option of
either the Corporation or the holder or upon the happening of a specified
event, shall be convertible into stock of any other class or series and, if
such shares shall be so convertible, the terms and conditions of conversion,
including, but not limited to, any provision for the adjustment of the
conversion rate or the conversion price;
(j) Whether or not the shares of such series, at the option of
either the Corporation or the holder or upon the happening of a specified
event, are exchangeable for securities, indebtedness, or property of the
Corporation and, if such shares shall be so exchangeable, the terms and
conditions of exchange, including, but not limited to, any provision for the
adjustment of the exchange rate or the exchange price; and
(k) Any other preferences, limitations, and relative rights as shall
not be inconsistent with the provisions of this Article Four or the
limitations provided by law.
(5) Except as otherwise required by law or in any resolution of the
Board of Directors creating any series of Preferred Stock, the holders of
shares of Preferred Stock and all series thereof who are entitled to vote
shall vote together with the holders of shares of Common Stock, and not
separately by class.
ARTICLE FIVE
No holder of any shares of capital stock of the Corporation, whether
now or hereafter authorized, shall, as such holder, have any preemptive or
preferential right to receive, purchase, or subscribe to (a) any unissued or
treasury shares of any class of stock (whether now or hereafter authorized)
of the Corporation, (b) any obligations, evidences of indebtedness, or other
securities of the Corporation convertible into or exchangeable for, or
carrying or accompanied by any rights to receive, purchase, or subscribe to,
any such unissued or treasury shares, (c) any right of subscription to, any
right to receive, or any warrant or option for the purchase of, any of the
foregoing securities, or (d) any other securities that may he issued or sold
by the Corporation.
ARTICLE SIX
The Corporation will not commence business until it has received for
the issuance of its shares consideration of the value of $1,000.00,
consisting of money, labor done, or property actually received.
ARTICLE SEVEN
Cumulative voting for the election of directors is expressly denied and
prohibited.
ARTICLE EIGHT
The Corporation has power and authority to indemnify any person to the
fullest extent permitted by law.
ARTICLE NINE
Any action of the Corporation which, under the provisions of the Texas
Business Corporation Act or any other applicable law, is required to be
authorized or approved by the holders of any specified fraction which is in
excess of one-half or any specified percentage which is in excess of fifty
percent of the outstanding shares (or of any class or series thereof) of the
Corporation shall, notwithstanding any law, be deemed effectively and
properly authorized or approved if authorized or approved by the vote of the
holders of more than fifty percent of the outstanding shares entitled to vote
thereon (or, if the holders of any class or series of the Corporation's
shares shall be entitled by the Texas Business Corporation Act or any other
applicable law to vote thereon separately as a class, by the vote of the
holders of more than fifty percent of the outstanding shares of each such
class or series). Without limiting the generality of the foregoing, the
foregoing provisions of this Article Nine shall be applicable to any required
shareholder authorization or approval of: (a) any amendment to these
articles of incorporation; (b) any plan of merger, share exchange, or
reorganization involving the Corporation; (c) any sale, lease, exchange, or
16
<PAGE>
other disposition of all, or substantially all, the property and assets of
the Corporation; and (d) any voluntary dissolution of the Corporation.
Directors of the Corporation shall be elected by a plurality of the
votes cast by the holders of shares entitled to vote in the election of
directors of the Corporation at a meeting of shareholders at which a quorum
is present.
Except as otherwise provided in this Article Nine or as otherwise
required by the Texas Business Corporation Act or other applicable law, with
respect to any matter, the affirmative vote of the holders of a majority of
the Corporation's shares entitled to vote on, and voted for or against, that
matter at a meeting of shareholders at a meeting of shareholders at which a
quorum is present shall be the act of the shareholders.
Nothing contained in this Article Nine is intended to require
shareholder authorization or approval of any action of the Corporation
whatsoever unless such approval is specifically required by the other
provisions of these articles of incorporation, the bylaws of the Corporation,
or by the Texas Business Corporation Act or other applicable law.
ARTICLE TEN
The street address of the initial registered office of the Corporation
is 1720 Northwest Highway, Suite 320, Garland, Texas 75041, and the name of
its initial registered agent at such address is Calvin A. Wallen III.
ARTICLE ELEVEN
The number of directors constituting the initial Board of Directors is
four (4) and the names and addresses of each person who is to serve as
director until the first annual meeting of shareholders and until such
director's successor is elected and qualified or, if earlier, until such
director's death, resignation, or removal as director, are as follows:
NAME ADDRESS
Calvin A. Wallen III 1720 Northwest Highway
Suite 320
Garland, Texas 75041
Jon S. Ross 1720 Northwest Highway
Suite 320
Garland, Texas 75041
Gene C. Howard 1720 Northwest Highway
Suite 320
Garland, Texas 75041
William Bruggeman 1720 Northwest Highway
Suite 320
Garland, Texas 75041
ARTICLE TWELVE
To the fullest extent permitted by applicable law, a director of the
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for an act or omission in the director's capacity as a
director.
Any repeal or amendment of this Article Twelve by the shareholders of
the Corporation shall be prospective only and shall not adversely affect any
limitation on the personal liability of a director of the
17
<PAGE>
Corporation arising from an act or omission occurring prior to the time of
such repeal or amendment. In addition to the circumstances in which a
director of the Corporation is not personally liable as set forth in the
foregoing provisions of this Article Twelve, a director shall not be liable
to the Corporation or its shareholders to such further extent as permitted by
any law hereafter enacted, including without limitation any subsequent
amendment to the Texas Miscellaneous Corporation Laws Act or the Texas
Business Corporation Act.
ARTICLE THIRTEEN
Any action which may be taken, or which is required by law or the
Articles of Incorporation or bylaws of the Corporation to be taken, at any
annual or special meeting of shareholders may be taken without a meeting,
without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall have been signed by the
holder or holders of shares having not less than the minimum number of votes
that would be necessary to take such action at a meeting at which the holders
of all shares entitled to vote on the action were present and voted.
ARTICLE FOURTEEN
The name and address of the incorporator are as follows:
NAME ADDRESS
David A. Wood Wood, Exall & Bonnet, L.L.P.
714 Jackson Street, Suite 300
Dallas, Texas 75202
IN WITNESS WHEREOF, I have hereunto set my hand this ___th day of August, 1999.
David A. Wood, Incorporator
18
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