U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(AMENDMENT NO. 1 TO FORM 10-KSB)
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ___________ to ____________
Commission file number 0-10701
TATONKA ENERGY, INC.
(Name of small business issuer in its charter)
Oklahoma, USA 73-1457920
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
9603 White Rock Trail, Suite 100
Dallas, Texas 75238
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (214) 340-9912
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None
Securities registered under Section 12(g) of the Exchange Act:
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Common Stock, Par Value of $.001 per Share
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes __ No X
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B 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. [ ]
State issuer's revenues for its most recent fiscal year: $ 7,467.
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common equity
as of a specified date within the past 60 days: $435,557 based on the average of
the bid and asked price on June 1, 1998.
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 49,099,069 shares of Common
Stock, $.001 par value, as of June 1, 1998.
Transitional Small Business Disclosure Format (check one): Yes No X
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TABLE OF CONTENTS
PART I
Item 1. Description of Business 4
PART II
Item 11. Security Ownership of Certain Beneficial Owners and Management 7
Item 12. Certain Relationships and Related Transactions 11
Signature Page 15
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FORM 10-KSB/A
(AMENDMENT NO. 1 TO FORM 10-KSB)
This is Amendment No. 1 to the Form 10-KSB filed June 16, 1998, by
Tatonka Energy, Inc. The Items set forth below are amended by this filing.
PART I
Item 1. Description of Business
Business Development
The Registrant was organized under the laws of British Columbia,
Canada, on March 12, 1980, under the name of Sooner Energy Corp.
("Sooner-British Columbia"). On June 1, 1994, at an extraordinary general
meeting of members of Sooner-British Columbia, a special resolution was passed
for the continuance of the company as a Wyoming corporation in the United
States. On such date, Sooner-British Columbia was then "continued" as a Wyoming
corporation with the same name ("Sooner-Wyoming") and was immediately merged
into a wholly-owned subsidiary of Sooner-Wyoming which had been incorporated in
Oklahoma under the name of Tatonka Energy, Inc. ("Tatonka"). Tatonka was the
surviving corporation in the merger and is referred to in this report as
"Tatonka" or the "Company."
On April 3, 1998, the Company acquired 80% of the outstanding common
shares of Phy.Med., Inc., a Texas corporation ("PhyMed") in a reverse triangular
merger.
In connection with the Merger the Company issued and George C. Barker,
individually, and as Trustee of the Phy.Med., Inc. Employee Stock Ownership Plan
(the "ESOP"), acquired from the Company, in the aggregate, immediate ownership
of and the right to receive an aggregate of 68,915,409 authorized but unissued
shares of Common Stock, $.001 par value, of the Company, as presently
constituted, which, if all such shares were outstanding, would constitute 87.9%
of the Company's then outstanding 78,430,965 shares of Common Stock.
The parties involved in the merger contemplate a 1-for-10 reverse stock
split which will become effective shortly after the 1998 annual meeting of
shareholders. Upon the effectiveness of such reverse split, Mr. Barker and the
ESOP will own 6,941,540 shares of the 7,843,097 shares, $.01 par value,
outstanding (7,933,190 shares on a fully diluted basis). The Company will
continue to have 50,000,000 shares of Common Stock authorized.
The Company's registered office for service in Oklahoma is 1601 N.W.
Expressway, Suite 1910, Oklahoma City, Oklahoma 73118. The executive offices of
the Company are located in Dallas, Texas at 9603 White Rock Trail, Suite 100,
Dallas, Texas 75238. The main business telephone number of the Company at
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such address is (214) 340-9912.
Business of the Company
The Registrant formerly engaged in the exploration and development of
oil and gas products. Arum Petroleum Corp., a wholly-owned subsidiary of the
Registrant, was dissolved in 1993 with its remaining assets and liabilities
distributed to its parent corporation. Effective May 1, 1994, the stock of
Sooner Acquisition Corp., another wholly-owned subsidiary, was sold with the
Registrant incurring a loss of $27,076 on the sale. Gallatin Resources, Inc.,
yet another wholly-owned subsidiary was dissolved in December, 1994 with the
remaining assets and liabilities being distributed to the Company.
The Company explored for and developed oil and gas reserves in the
Mid-Continent region of the United States. The majority of the Company's proved
developed reserves were located in Caddo, Custer, Ellis and Kingfisher Counties
in Northwestern Oklahoma. The Company's exploration and production was conducted
for its own account. In 1996, the Company participated in no new wells. 1996 was
the second consecutive year that the Company saw no new revenue from oil and gas
production. As of December 31, 1996 the Company was no longer actively engaged
in the oil and gas industry.
In August 1996, Richard A. Green, Sr. acquired control of the Company
through Verde, Inc., a corporation he controlled. At the time of the change in
control, the Company had experienced more than 12 months of inactivity in the
oil and gas industry. The new Management decided that there was little realistic
hope of profitable operation in the oil and gas industry and determined to
explore new business opportunities in an attempt to bring revenue to the
Company.
On September 11, 1996, as part of the new research and development
efforts, the Company invested in a new restaurant concept modeled upon certain
aspects of successful franchises. As part of this research, the Company obtained
items of restaurant supplies and equipment for $30,000.00, and contributed them
to be used in the operation of the first store. That equipment was returned to
the Company upon the closure of the store. The Company contributed an additional
$8,550.00 in cash to assist in various aspects of the operation of the
restaurant before making the decision to reject the opportunity as not being
viable for the Company. The Company decided that the new restaurant concept was
not appropriate for the Company and decided to liquidate the investment.
In a further attempt to find new revenue for the Company, on November
6, 1996, the Company invested $1,000 dollars in the establishment of a
wholly-owned subsidiary, Crescent Contractors, Inc., in the State of Texas. This
subsidiary was formed for the purpose of seeking and developing new lines of
business, particularly in the commercial construction industry. On November 27,
1996, Crescent Contractors, Inc. entered into a Motel Construction Agreement
with AmeriTel, Inc., for the construction of a motel facility in Gainesville,
Texas. Crescent Contractors, Inc. simultaneously entered a Joint Venture
Agreement with Rustown Homes, Inc. This agreement provided for only nominal
participation by Rustown and a final distribution to Rustown of One Thousand
Dollars ($1,000) upon completion of the project as its share of any profit. The
Joint Venture agreement was considered necessary and was designed to reassure
AmeriTel by including a company with an operating history in the project while
allowing Crescent Contractors, Inc. to
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build a history as an operating business.
On or about July 21, 1997, Richard A. Green, Sr., ceased to control the
Company. Verde, Inc. sold its holdings to Richard Bowes and Joe R. Love, and Mr.
Green resigned all positions with the Company.
In March 1997, the Company sold all remaining items of restaurant
equipment it owned to Food Franchises, Inc. for an extension of credit of
$37,448.00 Food Franchises, Inc. was an affiliate Richard A. Green, Sr. On July
7, 1997, in connection with the sale of Mr. Green's control, the Company sold
the $37,448.00 receivable to Verde, Inc., in exchange for the assumption of
liabilities of the Company in the amount of $25,636.00. The Company recognized a
loss on the transaction of $11,812.00. See"Item 12. Certain Relationships and
Related Transactions."
Also, in connection with the sale of Mr. Green's control, the Company
sold its wholly owned subsidiary, Crescent Contractors, Inc., to Rustown Homes,
Inc. on June 11, 1997, for $414.00. At the same time, the Company sold its
wholly owned subsidiary Cresthaven, Inc. to Crestmont International, Inc. for
$414.00. In each case, the amount of the consideration constituted full
reimbursement to the Company of all expenditures paid on behalf of the
subsidiary. In addition, in each case the buyer was owned or partly owned by
Richard A. Green, Sr. No gain or loss was realized by the Company on these
sales.
Therefore, at December 31, 1997, the Company had only nominal assets
and no active business operations.
Canadian Regulation
The Company does not believe that it is subject to the provisions of
Investment Canada Act ("ICA") because as of December 31, 1996, it has not had
any employees in Canada for at least two years and did not maintain a business
establishment in Canada which would cause it to be considered a Canadian
business enterprise subject to ICA. The Company does not plan to alter its
contacts with Canada and, therefore, believes that ICA will continue not to be
applicable to the common stock of the Company and the acquisition thereof by a
non-resident or non-citizen of Canada. However, in the event that management of
the Company should, for whatever reason, decide that it is in the best interests
of the Company to hire employees in Canada, lease office space in Canada, or
acquire oil and gas properties in Canada, the Company would probably be deemed
to be a Canadian business enterprise and ICA would be applicable.
Employees
As of December 31, 1997, the Company had no full-time employees.
Recent Acquisition
As discussed above, the Company acquired 80% of PhyMed on April 3,
1998. In connection with the acquisition, a change of control occurred and
George C. Barker became the controlling shareholder of the Company. Mr. Barker
filed a Schedule 13D with the Commission on April 13, 1998, and the Company
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filed a Form 8-K on April 20, 1998, to report these events.
PhyMed's Present Business and Contemplated Growth. PhyMed is a
seven-year-old company engaged in the operation and management of medical
diagnostic imaging centers, which provide a full scope of medical diagnostic
imaging services including magnetic resonance imaging (MRI), computer axial
tomography (CAT) scans, x-rays and other radiological services to physicians.
Currently, PhyMed owns and operates a diagnostic imaging center (the "Center" or
the "Dallas Center") in Dallas, Texas, which provides diagnostic services to
physicians in the greater Dallas area. The Dallas Center occupies approximately
13,000 square feet in leased premises. PhyMed also manages an imaging center in
Plano, Texas for other owners.
Prior to the acquisition, PhyMed was a privately-held company and the
transaction with PhyMed was undertaken as part of an overall plan for expanding
the business of PhyMed through, among other possible endeavors, the development
of new centers, acquisitions of existing centers and commencing and expanding
the use of exclusive capitated services contracts, with a view towards
increasing the per-share value of the Company for the benefit of the
shareholders. There is no assurance any of these expansion efforts will take
place or that, if undertaken, they will be undertaken on terms favorable to the
Company, will be continued, or will be profitable.
PhyMed also has plans to establish a radiological professional
practices division and a capitated services division to market its radiological
services to self-insured corporations, health maintenance organizations,
preferred provider organizations and insurance companies; and a physician
practice management and services division. There is no assurance either of these
divisions will become actual business operations, or that, if commenced, any
such business operations will be conducted on terms favorable to the Company,
will be continued, or will be profitable.
This expansion will require additional capital, and the managements of
the Company and PhyMed believe that raising additional capital can best be
achieved through PhyMed having access to the public shareholders and reporting
company status under the Securities Exchange Act of 1934, which the Company
affords.
In furtherance of this goal of raising additional capital for
expansion, the Company commenced a private offering of securities to accredited
investors only in April 1998. The offering seeks to raise a minimum of $200,000
and a maximum of $3,000,000 from the sale of Units of a new Series B 12%
Convertible Preferred Stock and Warrants to purchase Common Stock. No securities
have been sold in this offering as of October 1, 1998.
PART II
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information, as of June 1, 1998,
concerning the beneficial ownership of Common Stock by all Directors and
nominees, certain executive officers, all Directors and
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executive officers of the Company, as a group, and each person who beneficially
owns more than 5% of the 49,099,069 outstanding shares of Common Stock, $.001
par value. Unless otherwise indicated, each person named has sole voting and
investment power over the shares indicated.
<TABLE>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership (1) of Class (1)
------------------- ------------------------ ------------
<S> <C> <C>
George C. Barker 68,915,409 (2)(3)(4) 87.9%
9603 White Rock Trail, Suite 100
Dallas, Texas 75238
Joe R. Love 5,117,143 (5) 9.9%
1601 N.W. Expressway, Suite 2101
Oklahoma City, Oklahoma
Joe P. Foor 4,554,080 (6) 8.8%
3535 Northwest Parkway
Dallas, Texas 75225
Judith F. Barker 68,915,409 (2)(3)(4) 87.9%
9603 White Rock Trail, Suite 100
Dallas, Texas 75238
Marilyn Moss 10,000 (7)
9603 White Rock Trail, Suite 100
Dallas, Texas 75238
All directors and officers 78,596,632 94.1%
as a group (5 persons)
</TABLE>
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(1) In April 1998, the Board of Directors authorized, subject to shareholder
approval, a 1-for-10 reverse stock split, which includes increasing the par
value of the Common Stock from $.001 to $.01.
(2) Includes 30,924,620 outstanding shares owned directly by Mr. Barker and
8,658,893 outstanding shares owned by the Phy.Med., Inc. Employee Stock
Option Plan, as to which Mr. Barker is the sole trustee and has sole voting
power. Also includes shares the Company is still obligated to issue to Mr.
Barker (22,915,544 shares) and the ESOP (6,416,352 shares) in connection
with the Merger. Such shares would have been issued at the time of the
Merger but the Company did not have the necessary authorized but unissued
shares. See "Proposed 1-for-10 Reverse Stock Split" below. Mr. and Mrs.
Barker own in the aggregate approximately 70% of the vested interests of
participants in the ESOP.
(3) Does not include shares which can be purchased upon the exercise of a
recently granted stock
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option. On May 4, 1998, the Board of Directors granted Mr. Barker an option
to purchase 5,000,000 shares of Common Stock, as presently constituted
(500,000 shares after the effectiveness of the 1- for-10 reverse stock
split), with vesting to be contingent upon the attainment by the Company of
certain financial objectives. Therefore, it is not presently exercisable
and will not be exercisable within the next 60 days. For additional
information, see "Item 10. Executive Compensation-1998 Stock Option
Grants."
(4) George C. Barker and Judith F. Barker are married. Mr. Barker is the owner
of record or has the power to vote all the outstanding shares beneficially
owned by him. Mrs. Barker is also deemed to be the beneficial owner of the
same shares. Mrs. Barker disclaims any beneficial ownership of shares held
by Mr. Barker as sole trustee of the ESOP but allocated to the accounts of
ESOP participants other than Mr. or Mrs. Barker.
(5) Includes (a) holdings of family members of Mr. Love, (b) 68,280 shares
issuable upon conversion of Series A Preferred Stock held by a corporation
controlled by Mr. Love, and (c) 2,500,000 shares which can be purchased
upon the exercise of a recently granted stock option. See "Item 10.
Executive Compensation-1998 Stock Option Grants."
(6) Includes (a) 26,667 shares issuable upon conversion of Series A Preferred
Stock held by Mr. Foor's wife, Anne Foor, and (b) 2,500,000 shares which
can be purchased upon the exercise of a recently granted stock option. See
"Item 10. Executive Compensation-1998 Stock Option Grants."
(7) Less than 1%.
By virtue of his beneficial ownership of Common Stock, Mr. Barker may
be deemed to be a "parent" of the Company as such term is defined in the rules
and regulations of the Securities and Exchange Commission.
Contemplated 1-for-10 Reverse Stock Split
In connection with the Merger on April 3, 1998, George C. Barker,
individually, the Phy.Med., Inc. Employee Stock Ownership Plan (the "ESOP"),
acquired from the Company, in the aggregate, immediate ownership of and the
right to receive an aggregate of 68,915,409 authorized but unissued shares of
Common Stock, $.001 par value, of the Company, as presently constituted, which,
if all such shares were outstanding, would constitute 87.9% of the 78,430,965
shares of Common Stock the Company would then have outstanding.
The parties to the Merger Agreement contemplate a 1-for-10 reverse
stock split which will become effective shortly after the annual meeting of
shareholders. Upon the effectiveness of such reverse split, Mr. Barker and the
ESOP will own 6,891,541 shares of the 7,843,097 shares, $.01 par value,
outstanding (7,933,190 shares on a fully diluted basis). The Company will
continue to have 50,000,000 shares of Common Stock authorized.
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The Company has 50,000,000 shares of Common Stock authorized for
issuance and, at the time of the Merger, had 9,916,487 shares issued and
outstanding or reserved for issuance. To the extent that the terms of the Merger
would have resulted in the issuance of more than 50,000,000 shares, the excess
over 50,000,000 shall not be issued until such time as the shareholders of the
Company have approved an appropriate amendment to the Company's Certificate of
Incorporation. Prior to such approval, Barker and the ESOP will continue to have
a contractual right, pursuant to the Merger and the Articles of Merger filed
with the Secretary of State of Texas at the time of the Merger, to receive such
excess shares, subject to such required shareholder approval.
In summary, Mr. Barker and the ESOP received an aggregate of 39,583,513
shares of the Company at the time of the Merger, the same being 80.6% of the
49,099,069 shares outstanding immediately following the merger. Of such number,
Barker, individually, received 30,924,620 shares (approximately 63%) of the
outstanding shares, and the ESOP received 8,658,893 shares (approximately
17.6%).
Barker and the ESOP continue to have a contractual right to receive, in
the aggregate, an additional 29,331,896 shares, which will result in their
having, collectively, 87.9% of the then-outstanding Common Stock of the Company.
Of such additional shares, 22,915,544 will be received by Barker, individually,
and 6,416,352 shares will be received by the ESOP.
The parties to the Merger Agreement contemplate that the shareholders
of the Company will approve an amendment to the Company's Certificate of
Incorporation approving a 1-for-10 reverse stock split (including an increase in
the par value of the Common Stock from $.001 to $.01). Upon the effectiveness of
such reverse stock split, all outstanding shares of common stock of the Company,
including the shares which were issued to Barker and the ESOP upon the
effectiveness of the Merger, will represent one-tenth (1/10th) as many shares.
In addition, all shares reserved for issuance, including the shares which the
Company will still have a contractual obligation to issue to Barker and the
ESOP, will become rights to receive one-tenth (1/10th) as many shares. The
unissued shares due Barker and the ESOP from the Merger will then be immediately
issued because the Company will then have a sufficient number of authorized but
unissued shares to issue for this purpose.
Possible Change of Control
Prior to the Merger on April 3, 1998, there were 800 common shares of
PhyMed outstanding, of which 500 were owned by Mr. Barker, individually, and 300
were owned by the ESOP.
In the Merger, the 500 PhyMed common shares owned by Barker were
converted into immediate ownership of and the right to receive 53,840,163 shares
of Common Stock of the Company, and 140 of the 300 PhyMed common shares owned by
the ESOP were converted in like manner into 15,075,246 shares of Common Stock of
the Company. The remaining 160 PhyMed common shares held by the ESOP now
constitute the 20% of PhyMed common shares not owned by the Company.
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The 800 shares of PhyMed owned by Barker and the ESOP at the time of
the Merger were pledged to Patrick Alan Luckett ("Luckett") to secure the
payment of (a) two promissory notes payable to the order of Luckett, which were
issued to him as partial payment for shares of PhyMed purchased from him, and
(b) a guaranty of such notes.
On September 21, 1993, Barker and Luckett owned all the then
outstanding common shares of PhyMed, Inc., each of them owning of 500 common
shares. On such date Luckett sold 200 of his shares to PhyMed and 300 shares to
the ESOP. The sales were for cash and promissory notes. One note was issued by
PhyMed in the original principal amount of $800,000 pursuant to the terms of a
Loan and Security Merger dated September 21, 1993, and the second promissory
note was issued by the ESOP in the original principal amount of $800,000. Both
notes were guaranteed by Barker. The PhyMed note was secured by the 200 shares
repurchased from Luckett by PhyMed; the ESOP note was secured by the 300 shares
the ESOP purchased from Luckett; and the 500 shares already owned by Barker were
pledged to secure his guaranty of the two notes.
The aggregate of 68,915,409 shares of Common Stock of the Company
received and to be received by Barker and the ESOP as a result of the Merger
have been and will be substituted in the pledge for the 640 PhyMed shares which
were released from the pledge and converted into such shares of Common Stock of
the Company. The 20% of PhyMed still owned by the ESOP remains pledged for such
purpose.
At November 24, 1998, a non-monetary event of default existed under
this financing. It was waived by Mr. Luckett on October 24, 1998, See the
Registrant's Form 10-QSB for the quarter ended June 30, 1998, Item 2(b),
"Liquidity and Capital Resources."
As of June 1, 1998, the unpaid principal balance on the PhyMed note was
$115,070, and the ESOP note was $363,601.
Item 12. Certain Relationships and Related Transactions
On or about July 21, 1997, Richard A. Green, Sr., controlled the
Company through Verde, Inc. It owned 2,051,136 shares of Common Stock, and Mr.
Green was a Director and President of the Company. On or about July 21, 1997,
Verde, Inc. sold its holdings to Richard Bowes and Joe R. Love for $50,000 cash,
and Mr. Green resigned all positions with the Company.
In connection with the sale of control, the Company sold its wholly
owned subsidiary, Crescent Contractors, Inc., to Rustown Homes, Inc. on June 11,
1997, for $414.00. Also, on the same date, the Company sold its wholly owned
subsidiary Cresthaven, Inc. to Crestmont International, Inc. for $414.00. In
each case, the amount of the consideration constituted full reimbursement to the
Company of all expenditures paid on behalf of the subsidiary. In addition, in
each case the buyer was owned or partly owned by Richard A. Green, Sr. No gain
or loss was realized by the Company on these sales.
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In March 1997, the Company sold all remaining items of restaurant
equipment it owned to Food Franchises, Inc. for an extension of credit of
$37,448.00. Food Franchises, Inc. was an affiliate Mr. Green. On July 7, 1997,
in connection with the sale of Mr. Green's control, the Company sold the
$37,448.00 receivable to Verde, Inc., in exchange for the assumption of
liabilities of the Company in the amount of $25,636.00. The Company recognized a
loss on the transaction of $11,812.00.
During the first six months of the year ending December 31, 1997,
International Green Team, Inc. ("IGT") managed the Company under a monthly fee
arrangement. IGT was an affiliate of Mr. Green and provided the Company with
office space and managerial, accounting and clerical services. The Company paid
IGT total fees of $15,600 and $24,000 for the years ended December 31, 1997 and
1996.
During 1997, Messrs. Joe R. Love, Joe P. Foor and an outside
consultant, Richard Bowes, rendered services to the Company, partly for services
rendered in connection with Board meetings and partly for consulting services
consisting of due diligence efforts regarding merger candidates. In
consideration of such services, on October 16, 1997, the Board of Directors
authorized the issuance of an aggregate of 3,000,000 shares, as presently
constituted, to such persons (1,000,000 shares to each of such persons). The
Company treated the shares as having been earned in full and issued at the end
of the year, December 31, 1997. The Company valued such services at $60,000 and
recorded that amount as an expense for 1997. The Common Stock was trading at
approximately $0.06 per share on December 31, 1997. The shares were valued at
$0.02 per share, on the basis of the market value of the stock, discounted for
being "restricted securities" and lack of liquidity, as well as the Company's
lack of earnings and book value.
Effective December 31, 1997, the Board of Directors authorized the
Company to issue to Joe P. Foor 1,000,000 shares of Common Stock, as presently
constituted (which will be 100,000, after giving effect to a proposed 1-for-10
reverse stock split), as a finder's fee for his services in introducing the
Company and Phy.Med., Inc., and assisting in the consummation of an acquisition
of PhyMed, such shares to be issuable only in the event of the consummation of a
business combination transaction whereby the Company acquires Phy.Med., Inc. On
such date, the Common Stock was trading at about $0.06 per share (or $20,000).
The 1,000,000 shares were valued at $0.02 per share, on the basis of the market
value of the stock, discounted for being "restricted securities" and lack of
liquidity, as well as the Company's lack of earnings and book value. The Company
became obligated to issue such 1,000,000 shares of Common Stock to Joe Foor for
his services when the merger transaction which became effective on April 3,
1998, and the shares are deemed to have been issued on such date.
On March 31, 1998, the Company entered into a letter agreement with Joe
P. Foor and CCDC, Inc., a company controlled by Joe R. Love. Mr. Foor and CCDC,
Inc. (the "consultants") have agreed to provide certain specified consulting and
advisory services of a corporate development nature as the Company may need.
These include the identification, evaluation and negotiation of acquisitions,
strategic planning, optimization of capital structure, access to capital
markets, and similar services. The agreement is for a term of one year and will
continue after one year until terminated by either party upon 30 days' notice.
The Company will pay the consultants a $36,000 annual retainer, plus
out-of-pocket expenses. The consultants will also earn a transaction fee for
each acquisition or capital placement completed the Company
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completes. The amount of the retainer will be credited against any transaction
fees earned by the consultants. The transaction fee will be based on the total
amount paid by the acquiring party or the total capital raised and will be a
minimum of 3% of such transaction amount. If greater than 3%, the transaction
fee will be determined by what is generally referred to as the "Lehman Formula,"
which is an amount equal to the sum of:
5% of the first $1,000,000 of transaction amount;
4% of the second $1,000,000;
3% of the third $1,000,000;
2% of the fourth $1,000,000; and
1% of the remainder of the transaction amount.
The Company is currently seeking to raise additional capital for the
expansion of the business of PhyMed and has recently commenced a private
offering of securities. See "Item 1. Description of Business- Recent
Acquisition." The offering is being made to accredited investors only and seeks
to raise a minimum of $200,000 and a maximum of $3,000,000 from the sale of new
securities that are convertible into or exercisable to purchase Common Stock.
The consultants will earn a transaction fee on any capital the Company raises in
this securities offering.
George C. Barker owns a 50% interest in and is President of American
Medical Imaging Corporation ("AMIC"), which operates a mobile magnetic resonance
imaging ("MRI") machine in west Dallas. PhyMed and AMIC have a business
relationship which is embodied in a Radiology Services Provider Agreement
Contracted Services dated February 1, 1996. This agreement has a one year term
which renews automatically each year for one additional year unless terminated
by one of the parties. AMIC refers patients to PhyMed for MRI procedures AMIC is
unable to perform on its own MRI machine. PhyMed invoices AMIC directly for such
procedures at a discounted fee of $300.00 per procedure, and AMIC pays the
invoices directly to PhyMed upon receipt. PhyMed received revenues of $176,000
from AMIC in 1997 and no revenues in 1996.
Through PhyMed, the Company owns and operates PhyMed Diagnostic Imaging
Center in Dallas, Texas. PhyMed entered into a 10-year Management/Licensing
Agreement with Medical Imaging of Plano, Inc. ("MIPI") effective January 14,
1998 with respect to the operation of a new full service radiology center in
Plano, Texas, a suburb of Dallas, under the name of "PhyMed Diagnostic Imaging
Center Plano." The Company manages the new center, and licenses MIPI to use the
"PhyMed Diagnostic Imaging Center" name, in exchange for a monthly management
fee of 3% of net sales. Mr. Barker owns 12.5% and is President of MIPI. Mr.
Barker has personally guaranteed for three years $200,000 of MIPI's obligations
under equipment leases for equipment used at the new center. The Company
contemplates negotiating to acquire MIPI or the center. However, negotiations
have not yet begun, and there is no assurance that such acquisition will take
place or, if it does, on terms that will be favorable to the Company.
George C. Barker d/b/a "A/G Partners" manages several physician
practices for a monthly fee. PhyMed does not have a direct relationship with A/G
Partners. One of the managed practices is The PRS Group, P.A., and Philip R.
Shalen, M.D. is the sole radiologist employed by it.
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On January 1, 1996, PhyMed and The PRS Group, P.A. entered into a
10-year Radiology Services Agreement which provided that The PRS Group, P.A.
would provide the professional service component and PhyMed would provide the
technical component of the diagnostic radiological services rendered by PhyMed
at its Center. PHYMed and The PRS Group, P.A. each bill patients separately for
their components of the diagnostic services.
The 1996 Radiology Services Agreement also provided that The PRS Group,
P.A. would provide PhyMed with a Medical Director who would perform certain
enumerated services for a fee of $6,500 per month. Dr. Shalen served as the
Medical Director from January 1, 1996, until August 31, 1996, when the parties
terminated the position by mutual agreement.
On September 1, 1997, the parties entered into a new 10-year Radiology
Services Agreement which contains substantially the same provisions as the 1996
agreement except that it omits the provisions providing for a Medical Director
and the remuneration associated with it.
PhyMed paid the PRS Group, P.A. $58,500 in 1997 and $78,000 in 1996 for
the services of the Medical Director. The parties do not pay each other anything
under any of the provisions of the new 1997 agreement.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TATONKA ENERGY, INC.
Registrant
Date: December 3, 1998 BY: /s/ George C. Barker
---------------------------------------------------------
George C. Barker, President and Chief Executive Officer
(Principal Executive Officer, Principal Financial Officer
and Director)
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Date: December 3, 1998 BY: /s/ Joe R. Love
---------------------------------------------------------
Joe R. Love, Director
Date: December 3, 1998 BY: /s/ Joe P. Foor
---------------------------------------------------------
Joe P. Foor, Director
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