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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JULY 31, 1996
COMMISSION FILE NUMBER 0-9898
SUMMIT PETROLEUM CORPORATION
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
COLORADO 84-0838160
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NUMBER)
16701 GREENSPOINT PARK DRIVE, SUITE 200 77060
HOUSTON, TEXAS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(713) 873-4828
ISSUER'S TELEPHONE NUMBER
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.01 Par Value
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days. Yes X
---
Check if there is no 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
---
State issuer's revenues for fiscal 1996: $659,179
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price offered by Midland Resources, Inc. for
such stock : $310,543
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. Common Stock, Par
Value $.01 2,400,184 Shares as of November 21, 1996
DOCUMENTS INCORPORATED BY REFERENCE
None
Transitional Small Business Disclosure Format: Yes___ No X
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ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
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PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
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The information given below is for all directors and executive officers of
the Company:
NAME (AND AGE) SINCE POSITION WITH COMPANY
- -------------- ----- ---------------------
Deas H. Warley III (54) 1989 Chairman, President & Treasurer
Darrell M. Dillard (49) 1995 Director
Wayne M. Whitaker (48) 1995 Director
DEAS H. WARLEY III
Mr. Warley, President, Treasurer, Secretary and Chairman of the Board,
has been employed in the oil and gas industry since 1979. Mr. Warley has
been the Chairman and President of Midland Resources, Inc.(MRI), a public
oil and gas company, since its organization in July 1990. From October 1988
to present, Mr. Warley has been the Chairman and President of Midland
Resources Operating Company (MRO), a wholly owned subsidiary of MRI since
January 1, 1994. From May 1984 until its dissolution in October 1988, Mr.
Warley was the founder, Chairman, and co-owner of another entity also then
known as Midland Resources, Inc., also an oil and gas company. Mr. Warley
received a Bachelor of Science Degree in Engineering from Arizona State
University in 1971 and Master of Science Degree in Engineering from the Air
Force Institute of Technology in 1973. Mr. Warley is a registered
Professional Engineer in the state of Texas. He is a member of the
Independent Petroleum Association of America, the Permian Basin Petroleum
Association, the North Texas Oil and Gas Association, and the Society of
Petroleum Engineers.
DARRELL M. DILLARD
Darrell M. Dillard is an independent Certified Public Accountant who has
been engaged in public and industry accounting for the oil and gas industry
in Midland, Texas since 1980. He was elected a director of MRI in July 1994,
the Vice-President-Finance of MRI in April 1995, and Chief Financial Officer
of MRI on December 1, 1995. Prior to 1980, Mr. Dillard worked for the
Treasury Department. He served from 1981 to 1982 on the board of directors
and as treasurer for a large independent oil and gas exploration and
production company with operations in various states. He is a member of the
American Institute of Certified Public Accountants, the Texas Society of
Certified Public Accountants, the Petroleum Accounting Society, and the
Independent Petroleum Association of America. Mr. Dillard graduated from
Midwestern State University with a Bachelor's degree in Business
Administration in Accounting in 1975.
WAYNE M. WHITAKER
Mr. Whitaker has been a partner in the firm Michener Larimore Swindle
Whitaker Flowers Sawyer Reynolds & Chalk, L.L.P. (and its predecessor firms)
since 1978. He was elected a director of MRI in January 1996. He received his
business and law degrees from Baylor University in 1971, and his Master of
Laws from Southern Methodist University in 1972. From 1972 until 1978 he
worked for the Securities and Exchange Commission in Fort Worth, Texas.
ITEM 10. EXECUTIVE COMPENSATION
----------------------
None of the officers of the Company receive direct compensation from the
Company for their service in those capacities. Officers of the Company are
also officers of and receive compensation from MRI. MRI, through MRO, has a
contract to provide management services for the Company (See "Certain
Relationships and Related Transactions").
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SUMMARY COMPENSATION TABLE
<TABLE>
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Long Term
Annual Compensation(1) Compensation Awards(2)
---------------------- ---------------------- All Other
Name and Principal Position Securities Underlying Compensation
Fiscal Year Salary ($) Option/SARs (#) ($)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Deas H. Warley III 1996 -0- -0- -0-
President, Chief Financial Officer, 1995 -0- 150,000 -0-
Director 1994 -0- -0- -0-
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) The column for "Bonus and Other Annual Compensation" provided in
the SEC's standard summary compensation table is omitted because
no such benefits or other compensation were provided.
(2) The Company did not award restricted stock or stock appreciation
rights ("SARs") during fiscal years 1994 through 1996, nor did it
make any payouts pursuant to long-term incentive plans during
such period. Accordingly, the columns for such items provided in
the SEC's standard summary compensation table have been omitted.
The Company has no existing or proposed plan for the provision of
annuity, pension or retirement benefits to its officers and directors.
Other than the Summit Petroleum Corporation Directors' Stock Option
Plan, and the existing 1995 Summit Petroleum Corporation Long-Term Incentive
Plan, the Company has no existing or proposed plan involving any incentive
compensation for officers and directors or for stock purchase, profit sharing
or thrift plans for any officer or director.
The Company has no existing or proposed plan or arrangement for any
officer or director to receive remuneration resulting from his resignation,
retirement or other termination or from a change in control of the Company or
a change in the individual's responsibilities after such a change in control.
Further, the Company has not engaged in any transactions with third parties
where the primary purpose of such transaction was to furnish remuneration to
any officer or director of the Company.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR AND FY-END OPTION/SAR VALUES
The table below lists the described information for all stock options of
the Company under existing plans. No SARs have been granted and no options
were exercised during the fiscal year. As described under Certain
Transactions outstanding options were acquired in September, 1996 pursuant to
a tender offer for all of the Company's common stock by Midland Resources,
Inc. as a net price of $0.6375 per option share. All options were
exercisable at $0.0625 per share.
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Name Shares Value Number of Value of
Acquired on Realized Securities Unexercised
Exercise (#) ($) Underlying in-the-Money
Unexercised Options/SARs
Options/SARs at FY-End
at FY-End (#) ($)(4)
Exercisable/ Exercisable/
Unexercisable Unexercisable
- --------------------------------------------------------------------------------
Deas H. 0 0 150,000/0 $95,625/$0
Warley III(1)
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Linda J. 0 0 25,000/0 $15,937/$0
Crass (1)
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Marilyn 0 0 15,000/0 $ 9,562/$0
Wade (1)
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Mark 0 0 10,000/0 $ 6,375/$0
Longhurst(2)
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Darrell M. 0 0 50,000/0 $31,875/$0
Dillard(3)
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Wayne M. 0 0 50,000/0 $31,875/$0
Whitaker(3)
- --------------------------------------------------------------------------------
(1) Officer and Director of the Company
(2) Employee of the Company
(3) Director
(4) Calculated at a value of $0.6375 per option share which represents the
amount Midland Resources, Inc. agreed to pay to extinguish outstanding
options pursuant to the tender offer commenced July 18, 1996 by its wholly
owned subsidiary MRI Acquisition Corp.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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The following table sets forth, as of November 21,1996, certain information
regarding beneficial ownership of Common Stock by (a) each person known by
the Company to own beneficially more than 5% of its outstanding Common Stock,
(b) each director of the Company, and (c) all directors and officers as a
group. Each person listed below is a director. Each person listed below has
sole voting and dispositive power over the shares indicated.
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AMOUNT & NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OUTSTANDING
OF BENEFICIAL OWNER OWNERSHIP SHARES
- ------------------- --------------- -----------
MRI Acquisition Corp.(1)........................ 1,956,552 81.5
16701 Greenspoint Park Drive, Suite 200
Houston, Texas 77060
Midland Resources, Inc.(2)...................... 1,956,552 81.5
16701 Greenspoint Park Drive, Suite 200
Houston, Texas 77060
Deas H. Warley III(3)
16701 Greenspoint Park Drive, Suite 200
Houston, Texas 77060 ......................... -0- -0-
Darrell M. Dillard(3)
415 West Wall, Suite 1510,
Midland, Texas 79701 ......................... -0- -0-
Wayne M. Whitaker(3)
3500 City Center Tower II, 301 Commerce Street
Fort Worth, Texas 76102 ...................... -0- -0-
All officers and directors as a group(3)........ -0- -0-
(5 persons)
- ----------------------------------------
(1) Owns directly.
(2) Owns beneficially through ownership of 100% of the stock of MRIAcq.
(3) Director.
Pursuant to the Agreement and Plan of Merger between the Company and
Midland Resources, Inc., and its wholly owned subsidiary MRI Acquisition
Corp, dated July 17, 1996, upon approval of the merger by the Company's
shareholders, it will become a wholly owned subsidiary of Midland Resources,
Inc.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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The Company and Midland Resources Operating Company ("MRO"), a wholly owned
subsidiary of Midland Resources, Inc. ("MRI"), entered into a management
agreement on August 28, 1989 which provides that MRO will provide day-to-day
management, administrative, bookkeeping and accounting services to the
Company. Legal, auditing, income tax advice and other third party provided
services, including well operation charges for those wells MRO operated under
written operating agreements with all of the working interest owners, were
either paid directly by the Company or reimbursed to MRO. The management
agreement was extended and amended on December 31, 1993 whereby the Company
paid MRO a fee equal to $8,500 per month during 1995, and was to pay $8,000
per month during 1996, and $7,500 per month during 1997 and thereafter, if it
was then further extended without amendment. However, effective January 1,
1996 the management agreement was further amended whereby the Company will
pay a reduced fee equal to $5,000 per month during 1996, $4,500 per month
during 1997 and $4,000 per month during 1998. As a result of the management
agreement the Company does not maintain offices separate from those of MRI
and MRO, nor does it employ a separate staff of
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administrative employees or compensate its officers or directors. Management
fees incurred under this agreement for the years ended July 31, 1993, 1994,
1995 and 1996 were $120,000, $113,000, $104,500 and $77,500 respectively.
This agreement may be terminated by either party at any time.
MRO acts as operator of a substantial portion of the Company's oil and gas
properties. For all services performed as operator of those properties, MRO
is entitled to receive the compensation and reimbursements provided the
operator under the applicable operating agreement. However, any charges by
MRO under an operating agreement in such a situation for the use of its
personnel, properties and equipment, as well as the prices of materials sold
by it, must be at rates equal to the competitive charges of unaffiliated
third parties for comparable services or materials in the same geographic
area. Further, those services can be provided only pursuant to a written
agreement which precisely describes the services to be rendered and the
compensation to be paid. The Company's share of operation and supervision
charges incurred on these properties for the years ended July 31, 1993, 1994,
1995 and 1996 was $13,854, $18,852, $28,106 and $47,803 respectively. Until
May, 1995, the Company leased a truck for use by its field personnel, and at
times prior thereto, the Company had leased two trucks for such purpose, from
MRO. In May, 1995 the Company purchased, at trade in value, the two trucks
formerly being leased. Lease expenses incurred under these agreements for
the years ended July 31, 1993, 1994 and 1995 were $13,326, $8,283, and
$4,200, respectively. Terms of the lease agreement were determined from and
are less than competitive market leases in the area.
Effective January 1, 1994 the Company purchased a 10% working interest with
an approximate 8.75% revenue interest in certain oil and gas properties in
Ward County, Texas from MRI for $85,696, which was MRI's actual cost adjusted
for revenues and expenses through December 31, 1993.
Effective August 1, 1994 the Company acquired 10% of MRI's working interest
in certain oil and gas properties in Coke and Howard Counties, Texas for
$201,596, which was MRI's actual cost adjusted for revenues and expenses from
August 1, 1994 through August 15, 1994, the closing date, and transaction
costs.
Effective May 26, 1995, the Company, in participation with MRI, acquired a
five percent working interest in certain oil and gas leases and seismic
options in the Sunburst Project, Terry County, Texas, and the Latigo Project,
Hockley County, Texas in exchange for a commitment to expend certain monies
in connection with certain oil and gas leases, seismic options, conducting
3-D geophysical surveys, interpretation of 3-D seismic data and the drilling
of two or more test wells. MRO will operate the projects. Closing occurred
on July 14, 1995.
Effective July 11, 1995, the Company acquired a five percent working interest
in certain oil and gas leases and seismic options in the Lakota Project,
Hockley County, Texas in exchange for a commitment to expend certain monies
in connection with certain oil and gas leases, seismic options, conducting
3-D geophysical surveys, interpretation of 3-D seismic data and the drilling
of one or more test wells. MRO will operate the project.
Effective September 1, 1995, the Company participated with MRI in the
acquisition of working interests in certain Redfish Bay properties in Nueces
County, Texas. The Company acquired approximately a 4% working interest (on
the same basis as MRI) for approximately $82,000.
Beginning July 18, 1996 and ending September 18, 1996, MRI, through its wholly
owned subsidiary MRI Acquisition Corp., conducted a tender offer ("Offer") for
all of the Company's common stock at a per share price of $0.70 and all
outstanding options at a net price per option share of $0.6375, pursuant to an
Agreement and Plan of Merger dated July 17, 1996. MRI acquired 81.5% of the
Company's common stock pursuant to the Offer. Deas H. Warley III, is the
President and Chairman of the Company and prior to his sale pursuant to the
Offer owned directly and beneficially approximately 37.50% of the Company shares
through direct ownership of 806,250 shares and options granted June 1, 1995 to
acquire 150,000 shares at $0.0625 per share. The options
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were canceled under the Offer upon payment of a net price of $0.6375 per
share. Mr. Warley is the President and Chairman of MRIAcq. and MRI and owns
directly and beneficially approximately 37% of MRI. Prior to the acquisition
of MRO by MRI in December 1993 for common stock, Mr. Warley owned 80% of MRO.
MRO has managed the Company under a management agreement since 1989. The two
other members of the Company's board of directors are Messrs. Darrell Dillard
and Wayne Whitaker. Mr. Dillard was the Company's independent auditor for
fiscal years 1991 through 1993, was the auditor MRI for fiscal years 1989
through 1993, was the auditor of MRO from 1989 through 1993, has been a
director of MRI since 1994 and been a director, vice president and Chief
Financial Officer of MRI since 1995. During fiscal years 1991 through 1993
the Company paid Mr. Dillard $46,890, $14,600 and $14,000, respectively for
auditing and related accounting and tax advice, and for fiscal years 1994
through 1996 the Company paid Mr. Dillard $14,600, $18,485 and $4,000,
respectively, for accounting and tax advice. Mr. Dillard was granted on June
1, 1995 options to acquire 50,000 shares (2.04% of the outstanding shares
after exercise) at $0.0625 per share that were canceled upon a net payment of
$0.6375 per option share pursuant to the Offer. Mr. Dillard owns less than 1%
of MRI's outstanding common stock. Mr. Whitaker and the law firm of which he
is a partner has represented the Company since 1989, MRI since 1990, MRO
since 1990, and represents MRIAcq. Mr. Whitaker has been a director of the
Company since 1995 and MRI since 1996. The Company has paid Mr. Whitaker's
law firm $2,116, $12,964, $11,859 and $7,986 during 1993, 1994, 1995 and
through July 31, 1996, respectively, for legal services (which did not amount
to 5% of such firm's total fees during such years). Mr. Whitaker owned prior
to his sale pursuant to the Offer, directly and beneficially 120,000 shares
(4.9% of the outstanding shares after exercises) through his direct ownership
of 25,000 shares, options (granted June 1,1995) to acquire 50,000 shares at
$0.0625 per share that were be canceled upon a net payment of $0.6375 per
option share pursuant to the Offer, and as trustee of two trusts for Mr.
Warley's children that each owned prior to their sale pursuant to the Offer
22,500 shares. Mr. Whitaker beneficially owns less than 1% of MRI's common
stock.
SIGNATURES
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Pursuant to the requirements of Section 12 of the Securities Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SUMMIT PETROLEUM CORPORATION
Date: November 22, 1996 By:/s/ Deas H. Warley III
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Deas H. Warley III, President
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