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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 December 31, 1996.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from______to______. Commission file number 0-6540.
OCEANIC EXPLORATION COMPANY
(Exact name of small business issuer as specified in its charter)
DELAWARE 84-0591071
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5000 South Quebec Street, Suite 450, Denver, CO 80237
(Address of principal executive offices)
(303) 220-8330
(Issuer's Telephone number)
---------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES X NO
----- -----
Shares outstanding at Common $.0625 Par Value
January 31, 1997
9,916,154
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, 1996 March 31, 1996
----------------- --------------
Cash $ 296,472 642,650
Receivables:
Affiliates 5,053 2,765
Other 9,864 683
----------- -----------
14,917 3,448
Prepaid expenses 1,875 1,500
----------- -----------
Total current assets 313,264 647,598
----------- -----------
Oil and gas property interests, full-cost method
of accounting -- Greece 39,000,000 39,000,000
Less accumulated amortization, depreciation
and valuation allowance (38,168,021) (37,926,522)
----------- -----------
831,979 1,073,478
----------- -----------
$ 1,145,243 1,721,076
----------- -----------
----------- -----------
(Continued)
2
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OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, CONTINUED
LIABILITIES AND STOCKHOLDERS' DEFICIT
December 31, 1996 March 31, 1996
----------------- --------------
Current liabilities:
Notes payable to affiliate (note 2) $ 980,151 1,308,201
Accounts payable 161,984 232,363
Accounts payable to affiliate 60,000 60,000
United Kingdom taxes payable, including
accrued interest 471,079 405,319
Accrued expenses 122,464 94,017
----------- ---------
Total current liabilities 1,795,678 2,099,900
----------- ---------
Deferred income taxes (note 5) 607,939 708,198
----------- ---------
Total liabilities 2,403,617 2,808,098
----------- ---------
Stockholders' deficit:
Preferred stock, $10 par value. Authorized
600,000 shares; none issued -- --
Common stock, $.0625 par value. Authorized
12,000,000 shares; issued and outstanding
9,916,154 shares (note 3) 619,759 619,759
Capital in excess of par value 155,696 155,696
Accumulated deficit (2,033,829) (1,862,477)
----------- ---------
Total stockholders' deficit (1,258,374) (1,087,022)
----------- ---------
Contingencies (note 4)
$ 1,145,243 1,721,076
----------- ---------
----------- ---------
See accompanying notes to consolidated financial statements.
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OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Ended Three Months Ended
December 31, December 31,
1996 1995 1996 1995
----------------- ------------------
Revenues:
Oil and gas sales - Greece (note 4) $ 745,828 1,468,120 206,780 1,468,120
Other 222,603 370,944 72,963 168,701
--------- --------- ------- ---------
968,431 1,839,064 279,743 1,636,821
--------- --------- ------- ---------
Costs and expenses:
Interest and financing costs 92,194 118,127 29,777 40,085
Exploration expenses 12,540 25,508 4,285 (419)
Amortization and depreciation 241,500 205,505 80,500 68,505
General and administrative 595,477 538,123 213,161 190,200
--------- --------- ------- ---------
941,711 887,263 327,723 298,371
--------- --------- ------- ---------
Income (loss) before income taxes 26,720 951,801 (47,980) 1,338,450
Income tax expense (note 5) (198,072) (498,282) (49,314) (557,482)
--------- --------- ------- ---------
Net (loss) income $(171,352) 453,519 (97,294) 780,968
--------- --------- ------- ---------
--------- --------- ------- ---------
(Loss) income per common share $ (.02) .12 (.01) .20
--------- --------- ------- ---------
--------- --------- ------- ---------
See accompanying notes to consolidated financial statements.
4
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OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
December 31,
1996 1995
--------------------
Cash flows from operating activities:
Net (loss) income $(171,352) 453,519
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
Amortization and depreciation 241,500 205,505
Deferred income tax benefit (100,259) (88,967)
(Increase) decrease in receivables (11,470) 282
Decrease in restricted cash -- 15,629
(Increase) decrease in prepaid expenses and other
assets (375) 2,954
(Decrease) increase in accounts payable and accounts
payable to affiliates (70,379) 73,398
Increase in United Kingdom taxes payable, including
accrued interest payable, and accrued expenses 94,207 29,259
Increase in other noncurrent liabilities -- 1,712
--------- --------
Net cash used in operating activities (18,128) 693,291
--------- --------
Cash flows from financing activities:
Repayments to affiliates (328,050) (515,241)
--------- --------
Net (decrease) increase in cash (346,178) 178,050
--------- --------
Cash at beginning of period 642,650 154,628
--------- --------
Cash at end of period $ 296,472 332,678
--------- --------
--------- --------
See accompanying notes to consolidated financial statements.
5
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OCEANIC EXPLORATION COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated balance sheet as of March 31, 1996, which has been
derived from audited statements and the unaudited interim consolidated
financial statements included herein have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to those rules and
regulations, although the Registrant believes that the disclosures made are
adequate to make the information presented not misleading. In the opinion of
management, all adjustments consisting of normal reoccurring accruals have
been made which are necessary for the fair presentation of the periods
presented. The accounting policies of the Registrant are set forth in the
financial statements and notes thereto and are included in the Registrant's
latest annual report on Form 10-KSB. It is suggested that these consolidated
financial statements be read in conjunction with that document.
(2) NOTES PAYABLE
Notes payable to affiliate at March 31, 1996 and December 31, 1996
represent borrowings under a $2,000,000 line of credit established in favor
of the Registrant by NWO Resources, Inc. (NWO), the parent company of
International Hydrocarbons, the Registrant's majority stockholder. On
September 19, 1995, the Registrant entered into a Modification Agreement with
NWO, modifying the existing line of credit arrangement between the Registrant
and NWO. Prior to entering into the Modification Agreement, the NWO line of
credit provided for cumulative draws of up to $2,000,000 with interest
payable monthly on the outstanding balance at the greater of the U.S. bank
prime lending rate or 1-3/4% above the 30-day LIBOR in effect on the date of
each draw against the line of credit. Draws under the line of credit were
evidenced by promissory notes which were originally payable no later than
January 1, 1996 with interest at annual rates of 7% to 9%. Cumulative draws
on the NWO line of credit had reached $2,000,000 by February 15, 1995. The
line of credit is secured by the Registrant's 15% net earnings interest in
certain oil and gas producing areas offshore Greece. At the time the
Modification Agreement was entered into, the Registrant was in default under
the terms of the line of credit as it had not made its interest payments for
May, June, July and August 1995.
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The Modification Agreement provides as follows:
1. Except as provided below, NWO will forebear on collection until December
31, 1996 (subsequently extended to March 31, 1997 pursuant to an Extension
Agreement dated December 11, 1996) of the interest and principal on the
$2,000,000 of promissory notes evidencing draws on the NWO line of credit
("Oceanic Notes") which it holds from the Registrant.
2. Any monies collected by the Registrant from Denison Mines Limited
(Denison) either before or after December 31, 1996 will first be applied
to paying accrued interest on the Oceanic Notes. After all accrued
interest has been paid, and prior to December 31, 1996, the Registrant
will be permitted to use up to $200,000 of monies collected from Denison
for working capital purposes. All remaining collections from Denison will
be applied first to accrued interest and then to reducing principal on the
Oceanic Notes.
3. The Security Agreement between the Registrant and NWO will be
amended to provide that NWO has a full security interest in all proceeds
from the Registrant's lawsuit against Denison and any existing and
future Registrant receivables from Denison.
4. The interest rate on the Oceanic Notes is adjusted to 8.25%.
5. The Registrant agrees to diligently pursue its lawsuit against
Denison.
6. The Registrant will use its best efforts to file a Registration
Statement with the Securities and Exchange Commission with respect to
the rights offering described below and use its best efforts to cause
the Registration Statement to become effective by December 31, 1995
(subsequently extended by sixty (60) days pursuant to an Extension
Agreement dated December 27, 1995).
7. In order to enable the Registrant to diligently pursue its lawsuit
against Denison, NWO agrees to make advances to the Registrant for
ongoing legal fees as reflected in statements received by the Registrant
subsequent to August 1, 1995 in connection with the Denison litigation
up to an estimated $100,000 in litigation expenses.
8. The Registrant agrees to reimburse NWO for such advances up to an
estimated $100,000 together with interest thereon computed at the annual
rate of 10% upon receipt of the proceeds of the rights offering or
January 31, 1996, whichever occurs earlier.
On November 27, 1995, the Registrant received $810,522 from Denison
representing unpaid revenues on its net earnings interest. These revenues
covered the period from January 1, 1993 through October 31, 1995, and were
calculated under the terms of the License Agreement as amended in 1993.
Pursuant to the Modification Agreement, the Registrant retained $200,000
from the payment received from Denison. On November 30, 1995 the Registrant
paid NWO $610,522. $92,402 was applied to accrued interest and $518,120 was
applied to the loan leaving an outstanding balance of $1,481,880. Future
payments by Denison for the Registrant's 15% net earnings interest
7
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will also be applied to the Registrant's obligations to NWO pursuant to the
Modification Agreement. As of December 31, 1996, the outstanding loan balance
was $980,151. The Registrant does not believe that the payments made under
the net earnings interest as calculated under the terms of the amended
License Agreement at current production and price levels will be sufficient
to repay the obligations owed to NWO by March 31, 1997.
(3) COMMON STOCK
In accordance with the terms of the Modification Agreement, the
Registrant filed a Form SB-2 with the Securities and Exchange Commission on
October 6, 1995 for the purpose of registering 6,001,000 shares of additional
common stock to be issued pursuant to a rights offering ("Rights Offering").
In January 1996, the Registrant raised $524,093, net of offering costs, from
the Rights Offering. Each shareholder was offered the right to purchase
1.5325 shares of additional common stock for each share of common stock owned
as of the record date at the price of $.10 per share. The Registrant used
the proceeds to reimburse NWO for advances of legal fees and accrued interest
thereon, and retained the remainder to fund future operations.
(4) OIL AND GAS SALES - GREECE
Effective January 1, 1993, the operator of the Greek properties
negotiated an agreement with the Greek government which amended the original
license agreement entered into in June 1975 (the "License Agreement"). The
amendment provides for a sliding scale for calculating the operator's
recoverable costs and expenses and for the calculation of the Greek royalty
interest. The working interest owner who has the contractual obligation to
the Registrant for the 15% net profits interest has asserted that the
calculation of the amounts due to the Registrant should be based on the
amended agreement with the Greek government. The Registrant disagrees with
this interpretation and has commenced a legal action in Canada seeking a
declaration by the Court that amounts due the Registrant attributable to its
15% net profits interest be calculated based on the terms of the License
Agreement before this amendment. The Registrant is seeking $27,000,000, or
alternatively an accounting and payment of the 15% net earnings interest
effective January 1, 1993. Currently, the estimate of unpaid revenues for the
period from January 1, 1993 to December 31, 1996 is $6,700,000 plus
undetermined future damages. The trial, which began on September 30, 1996,
was concluded two weeks later. On December 13, 1996, the Registrant received
notification that the Ontario Court of Justice (General Division) in Toronto,
Canada, had issued a judgment in its favor. Denison subsequently filed a
Notice of Appeal requesting that the judgment be set aside. Therefore, it
appears that the final determination will likely have to be made by the
Appellate Court. While the Registrant believes it has a reasonable
probability of prevailing in its action, the ultimate outcome of the matter
cannot presently be determined. Accordingly, no amounts have been recorded
in the accompanying financial statements for current revenues or damages, if
any, that may ultimately be awarded to the Registrant.
8
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In response to the legal action, the working interest owner had ceased
remitting payment to the Registrant and, accordingly, no revenue was recorded
for the six months ended September 30, 1995. In November 1995, the
Registrant received a payment from the working interest owner representing
unpaid revenues relating to the royalty interest from January 1, 1993 through
October 31, 1995. In December 1995, the working interest owner resumed
monthly revenue payments. All of these revenue payments were calculated
under the terms of the amended License Agreement.
(5) INCOME TAXES
Income tax expense (benefit) consists of the following:
Nine Months Ended
December 31,
1996 1995
--------- -------
Current:
Foreign - Greece $ 298,331 587,249
Deferred:
Foreign - Greece (100,259) (88,967)
--------- -------
Total income tax expense $ 198,072 498,282
--------- -------
--------- -------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Registrant's principal source of revenue, its net earnings interest
in an oil and gas concession located offshore Greece, is currently the
subject of litigation. Denison, who has the contractual obligation to pay
the net earnings interest, has asserted that the calculation of the amounts
due the Registrant should be based upon the 1993 amendment to the License
Agreement. Payments received under the amended License Agreement are
significantly lower.
The Registrant also receives revenues from sales of seismic data
gathered in its oil and gas exploration and development activities. This
revenue is sporadic and is not sufficient to fund the Registrant's ongoing
operations.
The Registrant currently receives approximately $322,000 per year in
connection with services it renders to Cordillera Corporation and San Miguel
Valley Corporation pursuant to management agreements providing for
reimbursement of costs for actual time and expenses incurred in activities
conducted on behalf of those entities. The amounts received under the
management agreements are a reimbursement for employee salaries and other
operating expenses.
9
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Denison's reduced payments to the Registrant under the net earnings
interest have resulted in the Registrant's inability to fulfill its financial
obligations as they become due and therefore the Registrant faces potential
insolvency. Accordingly, the Registrant's auditors have issued an opinion on
the Registrant's financial statements for the year ended March 31, 1996 that
includes an explanatory paragraph discussing the uncertainty regarding the
Registrant's ability to continue as a going concern. The financial
statements do not contain any adjustments that may be necessary if the
Registrant is unable to continue as a going concern.
When payments for the net earnings interest were suspended, the
Registrant funded its operations through draws against the line of credit
established with NWO. Prior to the end of fiscal year 1995, the Registrant's
credit line was exhausted. During the first half of fiscal year 1996, the
Registrant had no resources to make monthly interest payments on the advances
under the line of credit.
On September 19, 1995, the Registrant entered into the Modification
Agreement with NWO. The Modification Agreement provides for limited funding
of litigation expenses and temporary relief from any collection actions by
NWO. The Modification Agreement also allows the Registrant to retain up to
$200,000 of any proceeds received for its net earnings interest for general
working capital purposes. The Modification Agreement does not provide any
further funding for operating expenses of the Registrant other than limited
funding of the litigation with Denison.
On November 27, 1995, the Registrant received $810,522 from Denison
representing unpaid revenues for its net earnings interest. These revenues
cover the period from January 1, 1993 through October 31, 1995, and are
calculated under the terms of the License Agreement as amended in 1993. This
payment was made in connection with the agreement of Denison to withdraw the
counterclaim filed by Denison against the Registrant. As of December 1995,
Denison has resumed monthly revenue payments to the Registrant for its net
earnings interest as calculated under the terms of the amended License
Agreement.
Pursuant to the Modification Agreement, the Registrant retained $200,000
from the payment received from Denison. On November 30, 1995 the Registrant
paid NWO $610,522. $92,402 was applied to accrued interest and $518,120 was
applied to the loan leaving an outstanding balance under the line of credit
of $1,481,880. Future payments by Denison for the net earnings interest will
also be applied to the Registrant's obligations to NWO pursuant to the
Modification Agreement. As of December 31, 1996, the outstanding balance
under the line of credit was $980,151. The Registrant does not believe that
the payments made for the net earnings interest as calculated under the terms
of the amended License Agreement at current production and price levels will
be sufficient to repay the obligations owed to NWO by March 31, 1997.
In February 1996, Registrant was able to successfully raise $524,093,
net of offering costs, in connection with the sale of 6,001,000 shares of
additional common stock through the Rights Offering. Pursuant to the terms
of the Modification Agreement with NWO, $64,107 from the Rights Offering was
used to reimburse NWO for advances made to the Registrant for legal fees;
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$61,876 and $2,231 were applied to the principal and accrued interest,
respectively. The Registrant estimates that the funding provided from the
Rights Offering will be sufficient to fund the litigation and limited
operations through June 30, 1997.
In August 1996, the Registrant received a press release from Denison
stating that the producing well into the previously non-producing development
area known as Prinos North had been successfully completed. The well was
drilled horizontally from the existing production platform in the Prinos
field. At that time, it was expected that the selling price of Prinos North
crude oil would be $2.50 to $3.50 per barrel less than the Prinos crude.
However, the Registrant has not yet received sufficient production or sales
information regarding Prinos North to accurately determine the impact on its
net earnings interest. The Prinos North well underwent two workovers in
December 1996 and January 1997 and is again producing at levels comparable to
September 1996; however, the optimum production rate has yet to be
determined. The Registrant's 15% net earnings interest will be calculated on
a smaller portion of Prinos North revenue as the Greek government acquired a
15% working interest in this well in 1985 and 1987 which, by Agreement
between the Registrant and Denison, is excluded from the calculation of the
Registrant's net earnings interest. Subsequently, in 1996, the Greek
government acquired an additional 20% working interest under the Second
Supplemental Agreement, to which the Registrant has not agreed.
On December 13, 1996, the Registrant received notification of a
favorable judgment in the Denison litigation. Denison subsequently filed a
Notice of Appeal requesting that the judgment be set aside. Therefore, it
appears that the final determination will likely have to be made by the
Appellate Court. Consequently, it appears that the Registrant will now
require additional capital until a final determination in the Denison
litigation can be made. The Registrant is currently negotiating an increase
in funds available under the existing NWO line of credit to fund continuing
operations past June 1997.
Even if a final determination in the Registrant's favor is obtained, of
which there is no assurance, there can be no guarantee that the Registrant
would be able to collect that judgment and, if able to collect, when the
judgment would be actually collected. Until recently, it appeared, based on
Denison's public filings, that the financial stability of Denison was
questionable and that Denison continued to operate at the sufferance of its
secured creditors. Denison announced on October 16, 1995 that Denison's
Board had approved a Plan of Arrangement which, among other things,
incorporates agreements restructuring the debt held by Denison's major
lenders, the Toronto Dominion Bank, Bank of America Canada, and Canada
Mortgage and Housing Corporation. In a press release dated December 21,
1995, Denison announced that it had obtained the final order of the Ontario
Court of Justice, General Division approving its Plan of Arrangement. The
press release indicated that as a result of the contribution of all
stakeholders, Denison has been preserved as a going concern and its capital
structure has been substantially improved. The Court approval of the Plan
may increase the likelihood that Denison would have assets available for
satisfaction of a judgment in favor of the Registrant. However, the
Registrant does not have sufficient information to determine whether any
assets of Denison are unsecured and available for satisfaction of a judgment
in favor of the Registrant.
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If the final determination is not favorable, the Registrant would likely
still have its net earnings interest; however, the revenue stream will likely
be substantially reduced. If such unfavorable outcome occurs, the Registrant
does not believe that the payments made for the net earnings interest as
calculated under the terms of the amended License Agreement at current
production and price levels will be sufficient to repay the obligations owed
to NWO by March 31, 1997. The Registrant may be forced to liquidate its
assets, and in such case, little if any assets will be available for
distribution to shareholders.
If the litigation with Denison is resolved in the Registrant's favor and
payments are resumed under the net earnings interest as calculated under the
License Agreement prior to the 1993 amendment, that revenue should be
sufficient to fund on-going operations and limited new exploration
activities. All revenues from the net earnings interest will be initially
applied to repay the Registrant's obligations to NWO under the Modification
Agreement. There is no assurance as to how long the Prinos property will
continue to produce oil and gas and, accordingly, how long the Registrant can
expect revenue from its net earnings interest.
The financial statements do not include any adjustments that might
result from the uncertainties described above.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In June 1994, the Registrant commenced legal action against Denison
seeking a declaration by the Court that amounts due the Registrant
attributable to its net earnings interest in certain oil and gas producing
areas offshore Greece be calculated based on the terms of the License
Agreement prior to a 1993 amendment agreed to by the consortium and the Greek
government. The Registrant is seeking damages of approximately $27,000,000
or alternatively, an accounting and payment of its net earnings interest in
respect of the period commencing January 1, 1993. A court hearing commenced
on September 30, 1996 and continued for two weeks. On December 13, 1996, the
Registrant received notification that the Ontario Court of Justice (General
Division) in Toronto, Canada, had issued a judgment in its favor. On January
10, 1997, Denison filed a Notice of Appeal with the Court in which it
requested that the judgment be set aside for errors in the judge's findings.
The Registrant disagrees that there were errors made. Therefore, it appears
that the final determination will likely have to be made by the Appellate
Court. While the Registrant believes there is a reasonable probability of
prevailing in the litigation, the ultimate outcome of the lawsuit cannot be
determined at this time. Accordingly, no amounts have been recorded in the
accompanying financial statements for current revenues or damages, if any,
that may ultimately be awarded to the Registrant.
In November, 1995, Denison agreed to withdraw its counterclaim filed
against the Registrant in connection with the litigation between the parties.
12
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See the Registrant's Form 10-KSB for the fiscal year ended March 31,
1996, for a more detailed discussion of these legal proceedings.
ITEM 2. CHANGE IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
The Registrant has failed in several respects to maintain the minimum
standards for maintaining its listing as a Tier II Security on the Pacific
Stock Exchange (the "Exchange"). On August 25, 1995, the Registrant was
notified that it was subject to the initiation of delisting procedures. Its
listing status was reviewed by the Exchange at a meeting of the Equity
Listing Committee (the "Committee") held on October 3, 1995. The Registrant
was informed that the Committee had decided to delist its common stock. The
Registrant's common stock was suspended from trading on October 4, 1995. The
Committee based its decision upon the Registrant's deficiencies with respect
to the following components of the Exchange's listing maintenance
requirements: net tangible assets of at least $500,000, aggregate market
value of publicly held shares of at least $500,000, a minimum bid price per
share of at least $1, and the Committee's serious doubts about the
Registrant's ability to meet the requirements for an ongoing concern. On
December 8, 1995, representatives of the Registrant appealed the decision to
delist the stock before the Board Appeals Committee of the Exchange. Finding
no compelling evidence to recommend that the October 3, 1995, decision of the
Committee be revised, the decision to delist was upheld and affirmed. The
delisting of the Registrant from the Exchange will likely have an adverse
effect on the market value of the common stock.
On January 24, 1996 the National Association of Securities Dealers,
Inc. approved the right for the Registrant's common stock to be quoted on the
OTC Bulletin Board under the symbol OCEX.U. The Registrant has secured a
broker-dealer to serve as a market maker for trades in its common stock.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed herewith are listed below and if not located in
another previously filed registration statement or report, are attached to
this Report at the pages set out below. The "Exhibit Number" below refers to
the Exhibit Table in Item 601 of Regulation S-B. Those reports previously
filed with the Securities and Exchange Commission as required by Item 601 of
Regulation S-B are incorporated herein by reference, in accordance with the
provisions of Rule 12b-32, to the reports or registration statements
identified below.
Exhibit Number Name of Exhibit Location
- -------------- --------------- --------
10.1 Extension Agreement Page 16 of
with NWO Resources, Inc. signed original of
dated December 11, 1996 this Report
(b) One report on Form 8-K was filed during the quarter for which this
Report is filed.
On December 18, 1996, Form 8-K was filed which reported a decision in
favor of the Registrant in the lawsuit against Denison Mines, Ltd. as issued
by the Ontario Court of Justice (General Division) in Toronto, Canada.
14
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
OCEANIC EXPLORATION COMPANY
Date: February 10, 1997 /s/ Charles N. Haas
-------------------------------- -------------------------------------
Charles N. Haas
President
Date: February 10, 1997 /s/ Lori A. Brundage
-------------------------------- -------------------------------------
Lori A. Brundage
Treasurer and Chief Financial Officer
<PAGE>
Exhibit 10.1
EXTENSION AGREEMENT
This Extension Agreement (this "Agreement") is entered into as of the
11th day of December 1996, by and among Oceanic Exploration Company, a
Delaware corporation ("OEC"), Oceanic International Properties Corporation, a
Colorado corporation and wholly-owned subsidiary of OEC ("OIPC"), and NWO
Resources, Inc., an Ohio corporation ("NWO").
WHEREAS, OEC, OIPC and NWO entered into that certain Modification
Agreement dated September 19, 1995 which provided among other things that NWO
would forbear collection of principal or interest on the Oceanic Notes until
December 31, 1996; that OEC would file a registration statement with the
Securities and Exchange Commission with respect to the rights offering
described in the Modification Agreement and use its best efforts to cause the
registration statement to become effective by December 31, 1995; and that OEC
would diligently pursue its pending lawsuit against Denison Mines, Ltd.; and
WHEREAS, OEC, OIPC and NWO entered into that certain Extension Agreement
dated December 27, 1995 which provided that the effective date for the
above-described registration statement was extended for a period of sixty
(60) days, commencing December 31, 1995; and
WHEREAS, OEC received approval of its registration statement from the
Securities and Exchange Commission effective January 19, 1996. OEC
successfully raised $524,093, net of offering costs, from the sale of
6,001,000 shares of additional common stock through the rights offering; and
WHEREAS, OEC reimbursed NWO for its advancement of legal fees and accrued
interest thereon using funds received in the rights offering as provided for
in the Modification Agreement; and
WHEREAS, OEC has pursued its lawsuit against Denison Mines, Ltd. as
provided for in the Modification Agreement. The trial began in Toronto on
September 30, 1996 and continued through October 11, 1996. No decision from
the judge has yet been forthcoming; and
WHEREAS, based on the uncertainty of the outcome of the trial, the
parties hereto wish to extend the period of forbearance on collection of
principal or interest on the Oceanic Notes;
16
<PAGE>
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereby agree as follows:
1. The period of time during which NWO will forbear collection of
principal or interest on the Oceanic Notes shall be extended for a
period of three months commencing December 31, 1996 to March 31, 1997.
2. Except as modified herein and in the Extension Agreement dated
December 27, 1995, the Modification Agreement will continue in full
force and effect and the remaining terms, provisions, covenants and
conditions shall remain unchanged.
IN WITNESS HEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
OEC
OCEANIC EXPLORATION COMPANY
By: /s/ Charles N. Haas
------------------------------------------
Charles N. Haas
President
OIPC
OCEANIC INTERNATIONAL
PROPERTIES CORPORATION
By: /s/ Charles N. Haas
------------------------------------------
Charles N. Haas
President
NWO
NWO RESOURCES, INC.
By: /s/ John E. Jones
------------------------------------------
John E. Jones
Secretary-Treasurer
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 296,472
<SECURITIES> 0
<RECEIVABLES> 14,917
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 313,264
<PP&E> 39,000,000
<DEPRECIATION> (38,168,021)
<TOTAL-ASSETS> 1,145,243
<CURRENT-LIABILITIES> 1,795,678
<BONDS> 0
0
0
<COMMON> 619,759
<OTHER-SE> 155,696
<TOTAL-LIABILITY-AND-EQUITY> 1,145,243
<SALES> 0
<TOTAL-REVENUES> 968,431
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 849,517
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 92,194
<INCOME-PRETAX> 26,720
<INCOME-TAX> 198,072
<INCOME-CONTINUING> (171,352)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (171,352)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
