As filed with the Securities and Exchange Commission on August 17, 2000
Registration No. 333-40262
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to Form S-3
REGISTRATION STATEMENT
Under the
Securities Act of 1933
EuroGas, Inc.
(Exact name of registrant as specified in its charter)
Utah 87-0427676
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
Copies to:
Bryan T. Allen, Esq. Brian G. Lloyd, Esq.
PARR WADDOUPS BROWN GEE & LOVELESS PARR WADDOUPS BROWN GEE & LOVELESS
185 South State Street, Suite 1300 185 South State Street, Suite 1300
Salt Lake City, Utah 84111 Salt Lake City, Utah 84111
(801) 532-7840 (801) 532-7840
(Name, address, including zip
code, and telephone number,
including area code, of agent
for service)
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration
Statement as determined by the Registrant.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans,
check the following box: [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
maximum Proposed
Title of each class Amount offering maximum Amount of
of securities to to be price per aggregate registration
be registered registered Share(1) offering price(1) fee(1)
------------------------ -------------- ----------- ----------------- ------------
<S> <C> <C> <C> <C>
Common stock, par value 21,000,000 (2) $0.66953 $14,601,300 $3,854*
$.001 per share
</TABLE>
* Previously paid.
(1) Estimated pursuant to Rule 457 solely for the purpose of
calculating the registration fee, based upon the average of the
high and low sales prices for the shares of common stock as
reported on the Nasdaq OTC Bulletin Board on August 10, 2000.
(2) Pursuant to Rule 416 of the Securities Act of 1933, this
Registration Statement covers a presently indeterminate number of
shares of common stock issuable upon the occurrence of a stock
split, stock dividend, or other similar transaction.
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the SEC, acting pursuant
to said Section 8(a), may determine.
<PAGE>
Prospectus
EUROGAS, INC.
21,000,000 Shares of Common Stock
__________________
EuroGas, Inc. is in the business of acquiring rights to
explore for and exploit natural gas, coal bed methane gas, crude
oil and other fuels in various parts of the world. Our current
projects include the following:
. an approximately 50% interest in Canadian full-service oil
and gas producer;
. a minority interest in two planning-stage power plant
projects in Poland;
. a minority interest in an planning-stage talc deposit in
Slovakia; and
. a minority interest in an exploratory-stage natural gas
project in the Sakha Republic.
As used in this prospectus, the terms "we," "EuroGas" and the
"Company" refer to EuroGas, Inc. and its subsidiaries.
We may use this prospectus from time to time to offer up to
12,000,000 shares of our common stock (the "EuroGas Shares"). In
addition, the persons designated as selling shareholders in the
section of this prospectus entitled "Selling Shareholders" may
use this prospectus from time to time to offer up to 9,000,000
shares of our common stock (the "Selling Shareholder Shares";
collectively with the EuroGas Shares, the "Shares"). The Selling
Sharholders Shares include issued and outstanding Shares and
Shares that are issuable to the selling shareholders pursuant to
existing contractual rights or upon the exercise of outstanding
options or warrants to purchase our common stock. In addition,
pursuant to Rule 416 of the Securities Act of 1933, as amended,
this prospectus and the registration statement of which it is a
part cover a presently indeterminate number of shares of our
common stock issuable upon the occurrence of a stock split, stock
dividend, or other similar transaction.
EuroGas and the selling shareholders may sell the Shares
through underwriters, agents, brokers, or dealers or directly to
investors. The price at which the Shares are offered and sold
may be a fixed price, the market price prevailing at the time of
sale, a price based on the prevailing market price, a negotiated
price or the cancellation of debt or settlement of claims against
us. EuroGas or the selling shareholders may pay commissions to
persons assisting them with the offer and sale of their Shares.
Shares of our common stock are listed for trading on the
NASDAQ OTC Bulletin Board under the symbol "EUGS" and on the
Frankfurt Exchange under the symbol "EUGS.F." On August 11,
2000, the last reported sales price of shares of our common stock
on the NASDAQ OTC Bulletin Board was $0.8281 per share.
---------------------------------------------------------------
Consider carefully the Risk Factors beginning on page 9 of this
prospectus before investing in the securities being sold with
this prospectus.
----------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed on the adequacy or accuracy of this
Prospectus. Any representation to the contrary is a criminal
offense.
Dated August 14, 2000
<PAGE>
TABLE OF CONTENTS
TABLE OF CONTENTS 2
ABOUT THIS PROSPECTUS 4
PROSPECTUS SUMMARY 4
EuroGas, Inc. 4
The Offering 6
Plan of Distribution 6
The Selling Shareholders 7
Subsequent Events 7
FORWARD-LOOKING STATEMENTS 9
RISK FACTORS 9
Risks Related To Proposed Teton Transactions 9
The Proposed Transactions With Teton Probably Will Not Be Consummated 9
Issuance of Shares in the Merger Will Create Substantial Dilution 9
Properties Obtained As a Result of the Merger May Prove to
Have No Value 10
Risks Related To General Activities 10
We Have A Working Capital Deficit And Will Continue To Need
Significant Funds 10
We Are Dependent Upon Financing Activities to Fund Our Operations 10
We Have Significant Future Obligations Under a Settlement Agreement 10
Our Projects Are Highly Speculative And Generally Only At the
Exploration Stage 11
Many of Our Projects Are In Locations Where The Infrastructure
is Inadequate to Support Our Needs 11
Many Of Our Projects Are In Countries That Have Fragile and
Unpredictable Political and Socio-Economic Systems 11
The Continuance, Completion Or Renewal of Many of Our Licenses
Are Subject to Our Ability to Obtain Additional Permits
From Government Authorities 12
We Are The Subject Of An Inactive SEC Investigation and A
Defendant In Various Other Lawsuits 12
Our Projects May Never Begin Producing Valuable Hydrocarbons 12
We are Dependent Upon Certain Officers, Key Employees, and
Consultants 13
We Are Thinly Staffed 13
Subsequent Evaluation May Reveal That Our Unproved Properties
Are Not Valuable, and We May Need to Record an Impairment of
the Value of Such Properties 13
Severe Weather Will Interrupt, and May Adversely Affect, Our
Activities In Various Parts of the World 13
Risk Factors Related To The Oil And Gas Industry 14
The Price Of The Various Hydrocarbons We Produce or May
Produce Are Volatile and Unstable 14
Our Operations Involve Numerous Hazards, and We Maintain No
Insurance Against Such Risks 14
The Oil and Gas Industry Is Highly Competitive, and We Are At
a Competitive Disadvantage 15
Our Operations Are Subject to Numerous Environmental Laws,
Compliance With Which May be Extremely Costly 15
Other Risks Relating To The Common Stock 15
Most of Our Outstanding Shares Are Free Trading And, If Sold
In Large Quantities, May Adversely Affect the Market Price
For Our Common Stock 15
We Have A Substantial Number of Warrants, Options and
Debentures Outstanding 16
We Have The Right To, and Expect to, Issue Additional Shares
of Common Stock Without Shareholder Approval 16
We Have Not Paid Any Dividends and Do Not Expect To Pay
Dividends In the Near Future 16
THE COMMON STOCK AND SHAREHOLDERS 16
Price Range Of Shares Of common stock 16
Dividends 17
Outstanding Shares and Number of Shareholders 17
USE OF PROCEEDS 18
The Selling Shareholder Shares 18
2
<PAGE>
DILUTION 18
SELLING SHAREHOLDERS 19
Beneficial Ownership of Selling Shareholders 19
Mr. Jeu and Ms. Calvo 21
KUKUI, Inc. 22
Finance & Credit Development Corporation, Ltd. 22
PLAN OF DISTRIBUTION 24
The EuroGas Shares 24
The Selling Shareholder Shares 25
DESCRIPTION OF SHARES 27
LEGAL MATTERS 27
EXPERTS 27
SUBSEQUENT EVENTS 28
Proposed Beaver River Sale 28
Memorandum of Understanding Settling FCDC Judgment 28
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 29
WHERE YOU CAN FIND MORE INFORMATION 29
3
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we
filed with the SEC utilizing a "shelf" registration process.
Under this shelf process, we and the selling shareholders may,
over the next two years, sell any or all of the Shares in one or
more offerings. This prospectus provides you with a general
description of EuroGas, certain risk factors associated with
investment in the Shares, and a limited description of the
contemplated offering(s). If required by the rules promulgated
under the Securities Act in connection with any specific offering
of Shares, we or the selling shareholders will provide a
prospectus supplement that containing specific information about
the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus.
You should read both this prospectus and any prospectus
supplement, together with additional information described under
the heading "Incorporation of Certain Documents by Reference" on
page 29 of this prospectus.
PROSPECTUS SUMMARY
This summary highlights some information from this
prospectus. Because it is a summary, it necessarily does not
contain all of the information necessary to your investment
decision. To understand this offering fully, you should read
carefully the entire prospectus and any prospectus supplement
provided by us.
EuroGas, Inc.
We are primarily engaged in the acquisition of rights to
explore for and exploit natural gas, coal bed methane gas, crude
oil and other hydrocarbons. We have acquired interests in
several large exploration concessions and are in various stages
of identifying industry partners, farming out exploration rights,
undertaking exploration drilling, and seeking to develop
production. We are also involved in co-generation and mineral
reclamation projects. Unless otherwise indicated, all dollar
amounts in this prospectus are reflected in United States
dollars.
Activities in Canada. We hold an equity interest of
slightly more than 50% of the capital stock of Big Horn Resources
Ltd., a Canadian full-service oil and gas producer. Big Horn's
business is conducted primarily in western Canada, particularly
in the provinces of Alberta and Saskatchewan, and its stock is
currently traded on the Toronto Stock Exchange. Although we
currently hold one seat on Big Horn's board of directors, we are
not involved in the day-to-day management or operations of Big
Horn.
Activities in Poland. EuroGas Polska, our wholly-owned
subsidiary, has created a consortium with two European utility
companies to develop a power project in Zielona Gora (Western
Poland). As an initial step, we created and registered
"Energetyka Lubuska." Energetyka Lubuska intends to submit a
proposal to the Ministry of Treasury of Poland to acquire the
existing EC Zielona Gora power plant through privatization. We
expect the Ministry of Treasury to make a final decision on this
matter sometime during 2000. If privatization is approved, the
multi-year process of obtaining financing for and updating the
proposed power plant can commence. If acquired, the power plant
is expected to deliver 180 Mega Watts of electricity and 180 Mega
Watt Thermal (generated heat to be used for district heating
system).
4
<PAGE>
Separately, Energetyka Lubuska executed a letter of intent
with the Polish Oil and Gas Company to develop a new power plant
near Gorzow in north-western Poland. The proposed project
involves the construction of a 5 Megawatt power plant that uses
gas produced by a nearby oilfield to produce electricity that
will be marketed to a nearby de-sulfurisation plant owned by
Polish Oil and Gas Company. The project is at a conceptual
stage, and we must enter into a final agreement with the Polish
Oil and Gas Company, complete design of the plant and obtain
financing before the 12-24 month construction process can
commence. We expect to enter into a final agreement by the end
of 2000.
Activities in Slovakia. We are pursuing four projects in
Slovakia, including the development of the Gemerska-Poloma talc
deposit located near Roznava. We own a 24.5% indirect interest
in this talc deposit, operated by Rozmin s.r.o., with the
remaining interest being held by Belmont Resources, Ltd, a
Vancouver British Columbia entity and an affiliate of a
significant shareholder of EuroGas. Our work schedule for the
talc mine calls for an accelerated drive to commercial production
in 2001, subject to our being able to obtain financing for the
development of the deposit.
Our remaining three Slovakian projects involve the
exploration for oil or natural gas in the Trebisov gas field in
eastern Slovakia, the Maseva (Kralovsky-Chlmec) concession in
eastern Slovakia and the Evigeo (Medzilaborce) in the
northeastern corner of Slovakia. We have six shut-in wells and
had proved reserves on the Trebisav gas field. The other two
projects are at an early exploratory or appraisal stage.
Activities in Sakha Republic. In 1997, we acquired OMV
(Jakutien) GmbH, which holds a 50% interest in the TAKT Joint
Venture, an entity based in Yakutsk, Sakha Republic, Russia.
The TAKT Joint Venture held two oil and gas exploration licenses.
We participated in a work program of seismic reprocessing of over
1,700km of data and its interpretation prior to the expiry of the
licenses in October 1998. Recently, we have been negotiating to
have the licenses renewed to allow us to move forward towards
choosing a drilling location for a future well.
Activities in the United Kingdom. UK Gas Limited, a United Kingdom
company, and Slovgold GesmbH, an Austrian company, are negotiating a
50/50 joint venture to engage in coalbed methane gas exploration
activities in South Wales. On January 20, 2000, we entered into an
agreement with Slovgold pursuant to which we purchased 50% of
Slovgold's 50% interest in this joint venture if and when Slovgold
finalizes its agreement with UK Gas. If the joint venture agreement
between UK Gas and Slovgold is finalized, we anticipate conducting a
six-well pilot program on a 500 sq. kilometer (125,000 sq. acre)
concession in South Wales held by UK Gas to test for coalbed methane
gas. Our agreement with Slovgold calls for us to cover the costs for
the six-well pilot program (estimated at $700,000) and the first stage
of any subsequent development program in exchange for 40% of the cash
flow until payout, after which our contribution obligation and cash
flow interest will be reduced to 25%. In order to minimize the amount
of capital we need to contribute to conduct the pilot program, we have
entered into discussions with UK Gas in order to permit us to
participate in the pilot program by utilizing drilling equipment owned
by our Polish subsidiary. In light of the absence of a binding
agreement between Slovgold and UK Gas (or any approval by UK Gas of
our participation), we remain uncertain about the prospects of
pursuing the pilot program in any form.
Our principal executive offices are located at 942 East 7145
South, #101A, Midvale, Utah 84047. Our telephone number at that
location is (801) 255-0862.
5
<PAGE>
The Offering
-----------------------------------------------------------------------------
Shares offered by EuroGas 12,000,000
-----------------------------------------------------------------------------
Shares offered by the selling shareholders 9,000,000
-----------------------------------------------------------------------------
Shares of common stock outstanding prior
to this offering 104,786,979(1)
-----------------------------------------------------------------------------
Shares of common stock outstanding
following this offering, if all Shares are
sold 121, 986,979(1)
-----------------------------------------------------------------------------
Use of Proceeds Working capital, capital
expenditures, and other general
corporate purposes.
-----------------------------------------------------------------------------
Risk Factors You should read the "Risk
Factors," beginning on page 7,
as well as other cautionary
statements throughout this
prospectus, before investing in
the Shares.
-----------------------------------------------------------------------------
____________________
(1) Excludes 31,892,858 shares of common stock subject to
outstanding warrants, debentures and similar rights, shares
of common stock issuable to Stephen Jeu and Susanna Calvo
pursuant to governing settlement documents and shares common
stock, if any, issuable pursuant to our option value
guarantee arrangement with Finance & Credit Development
Corporation.
Pursuant to Rule 416 of the Securities Act, this prospectus and
the registration statement of which it is a part cover a
presently indeterminate number of shares of our common stock
issuable upon the occurrence of a stock split, stock dividend, or
other similar transaction.
Plan of Distribution
The 21,000,000 Shares will be offered and sold by EuroGas
and the selling shareholders. Each of EuroGas and the selling
shareholders may sell the Shares through one of various methods,
which may involve the engagement or underwriters, agents,
brokers, or dealers or may be directly to purchasers. The price
at which the Shares are offered and sold may be a fixed price,
the market price prevailing at the time of sale, a price based on
the prevailing market price, a negotiated price or other
consideration. EuroGas and the selling shareholders may pay
commissions to persons assisting them with the offer and sale of
the Shares.
6
<PAGE>
The Selling Shareholders
Of the Shares, the 12,000,000 EuroGas Shares will be offered
and sold by EuroGas.
The remaining 9,000,000 Selling Shareholder Shares are to be
sold by persons who have been issued or may be issued share of
our common stock pursuant to the terms of options, warrants and
existing litigation settlement agreements.
Subsequent Events
Re-Negotiation and Possible Termination of Our Agreements
with Teton Petroleum Company. On April 5, 2000, we entered into
a Master Transaction Agreement (and related merger agreement)
with Teton Petroleum Company, a Delaware corporation, and Goltech
Petroleum, LLC, a Texas limited liability company and wholly-
owned subsidiary of Teton. Due to the delay of both Teton and
EuroGas in completing related due diligence, and to liabilities
associated with a default judgment entered against us, such
Master Transaction Agreement has been amended pursuant to various
side letters, is presently being renegotiated and, if not
successfully renegotiated, will likely be terminated in the near
future. Until the end of an indefinite due diligence period, the
Master Transaction Agreement (and related merger agreement) are
terminable at will and without penalty by either party.
As of the date of this prospectus, the Master Transaction
Agreement and accompanying agreements describe and contemplate
the following three interrelated transactions:
. Teton has agreed to merge with and into a wholly-owned
subsidiary of EuroGas in exchange for shares of our common
stock. The initial merger agreement provided that Teton
would receive approximately 14,981,744 shares of common
stock and warrants to purchase an additional 2,599,249
shares of common stock in the merger; if the parties are
able to reach agreement on revised terms for the proposed
merger, we expect that the number of shares issuable to
Teton will increase substantially.
. EuroGas has agreed to purchase, and Goltech has agreed to
sell, a 35% membership interest in Goltech for $2,300,000.
To date, EuroGas, has paid a deposit of $300,000 toward its
purchase of an interest in Goltech, which deposit will be
forfeited if the Master Transaction Agreement is terminated
prior to completion of due diligence.
. EuroGas has agreed to provide an up to $4,000,000 credit
facility for Teton. To date, we have loaned Teton $500,000
under the credit facility. In anticipation of a possible
termination of the Master Transaction Agreement, we have
agreed that, if the Master Transaction Agreement is
terminated, we will cancel such $500,000 in indebtedness in
exchange for 1,000,000 shares of Teton common stock.
Teton's primary asset is its 100% ownership interest in
Goltech, and Goltech's primary asset is its ownership of 70.59%
of a Russian closed joint stock company known as Goloil. Teton
has represented to EuroGas that Goloil is the operator of the
Eguryakhskiy License Territory, also referred to as the Goloil
Project, a 187 sq. kilometer (46,200 acre) oil field centrally
located in the southern half of the West Siberian basin in
7
<PAGE>
Russia. Goltech is in the early stages of constructing an
approximately 20 mile-long pipeline from the Eguryakhskiy license
area to an existing pipeline in order to increase the volume of
oil extracted from the Eguryakhskiy license area.
Proposed Beaver River Sale. We hold a 15% interest in the
"Beaver River" natural gas project, which is an attempt to
reestablish commercial production in an old Amoco field; however,
we are presently negotiating an agreement pursuant to which we
expect to return such 15% interest to the former owners in
exchange for the return of the shares of our common stock issued
to purchase such interest.
Memorandum of Understanding Settling FCDC Judgment. On
March 16, 2000, the United States District Court, District of
Utah, Central Division entered a default judgment against
EuroGas, and in favor of Finance & Credit Development
Corporation, Ltd., in the amount of $19,773,113, in a case styled
Finance & Credit Development Corporation Ltd., an Ireland
Corporation vs. EuroGas, Inc., a Utah corporation, Case No.
2:00VC-1024K. On or about June 16, 2000, we entered into a
memorandum of understanding with FCDC in satisfaction of default
judgment. In consideration for FCDC's stipulation to vacate the
default judgment, we agreed, among other things, to issue to FCDC
3,700,000 shares of common stock, to grant FCDC an option
exercisable for the 30-day period following June 30, 2001 to
purchase an additional 3,000,000 shares of common stock at an
exercise price of $0.65, and to pay to FCDC in cash or shares of
common stock the difference between $3.00 per share and the
market value of the shares of common stock received upon exercise
of the option.
8
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus contains various forward-looking statements.
Such statements can be identified by the use of the forward-
looking words "anticipate," "estimate," "project," "likely,"
"believe," "intend," "expect," or similar words. These
statements discuss future expectations, contain projections
regarding future developments, operations, or financial
conditions, or state other forward-looking information. When
considering such forward-looking statements, you should keep in
mind the risks noted in "Risk Factors" below and other cautionary
statements throughout this prospectus, any prospectus supplement,
and our periodic filings with the SEC that are incorporated
herein by reference. You should also keep in mind that all
forward-looking statements are based on management's existing
beliefs about present and future events outside of management's
control and on assumptions that may prove to be incorrect. If
one or more risks identified in this prospectus, a prospectus
supplement, or any applicable filings materializes, or any other
underlying assumptions prove incorrect, our actual results may
vary materially from those anticipated, estimated, projected, or
intended.
RISK FACTORS
Risks Related To Proposed Teton Transactions
The Proposed Transactions With Teton Likely Will Not Be Consummated
We have entered into a Master Transaction Agreement (and
related merger agreement) with Teton Petroleum Company, a
Delaware corporation, and Goltech Petroleum, LLC, a Texas limited
liability company and wholly-owned subsidiary of Teton. Such
agreements provide, however, until the end of indefinite due
diligence period, the Master Transaction Agreement (and related
merger agreement) are terminable at will by either party.
Due to the delay of both Teton and EuroGas in completing due
diligence, and to liabilities associated with a default judgment
entered against us, the Master Transaction Agreement has been
amended pursuant to various side letters and is presently being
renegotiated. We can provide no assurance that such
renegotiations will be successful. If we are unable to
renegotiate our proposed transaction with Teton and Goltech
during the next month, we expect Teton to terminate the Master
Transaction Agreements, merger agreement and all related agreements.
Issuance of Shares in the Merger Will Create Substantial Dilution
If the proposed merger is consummated, of which there can be
no assurance, each of the outstanding shares of Teton common
stock will be converted into the right to receive a number of
shares of EuroGas common stock that is subject to ongoing
negotiations. The issuance of shares of our common stock in
9
<PAGE>
connection with the proposed merger with Teton, if such
transaction is consummated, may substantially dilute the interest
of our shareholders.
Properties Obtained As a Result of the Merger May Prove to Have
No Value
Our primary motivation in entering into the Teton Master
Agreement (and related merger agreement) was to obtain all or
part of the rights presently held by Goltech in the Eguryakhskiy
license area. Even if the proposed Teton merger and transactions
contemplated by the Teton Master Agreement are consummated, the
amount of extractable oil in the Eguryakhskiy license area may
be less than reserve estimates, and/or extracting or transporting
such oil may be economically or logistically impracticable. Even
if the Teton merger and Goltech purchase transaction are
consummated, we can provide no assurance that our interest in the
Eguryakhskiy license area will generate revenues in excess of
costs, or otherwise prove valuable to us.
Risks Related To General Activities
We Have A Working Capital Deficit And Will Continue To Need
Significant Funds
EuroGas has historically been undercapitalized. We had a
working capital deficit of approximately $15.6 million on June
30, 2000, and most of our partially- or wholly-owned projects
require significantly more capital than is currently available to
us. Although we are unable to determine at this time the
additional amount of outside capital we will need or be able to
raise in the future, the interest of our shareholders will
continue to be diluted as we seek funding through the sale of
additional securities or through joint venture or industry
partnering arrangements.
We Are Dependent Upon Financing Activities to Fund Our Operations
Prior to our acquisition of an approximately 50% interest in
a Canadian gas production entity (Big Horn) in 1998, we had not
earned any cash revenues since our incorporation other than a
one-time $500,000 payment received in 1997 in connection with
transferring certain interests to Texaco. Because revenues
earned by Big Horn will probably not be distributed to EuroGas in
the immediate future, we do not currently have a source of
revenues and expect to continue to incur operating losses in the
foreseeable future. As a result, we are entirely dependent on
our existing working capital, financing from the sale of
securities or loans in the future, and/or amounts made available
by industry partners in the future. We expect to continue to
incur significant costs as part of our ongoing and planned
projects and do not anticipate that these costs will be offset
fully, if at all, by revenues for the foreseeable future. If we
are unable to raise capital from the sale of securities, loans,
or industry partnerships in the future, we will have to scale
back our operations and may, at some point, become insolvent.
10
<PAGE>
We Have Significant Future Obligations Under a Settlement Agreement
On March 16, 2000, the United States District Court,
District of Utah, Central Division entered a default judgment
against EuroGas in the amount of $19,773,113 in a case styled
Finance & Credit Development Corporation, Ltd., an Ireland
Corporation vs. EuroGas, Inc., a Utah corporation, Case No.
2:00VC-1024K. We entered into a memorandum of understanding with
Finance & Credit Development Corporation, Ltd. on June 16, 2000.
We agreed, among other things, to issue to FCDC 3,700,000 shares
of common stock, to grant FCDC an option exercisable for the 30-
day period following June 30, 2001 to purchase an additional
3,000,000 shares of common stock at an exercise price of $.65,
and to pay to FCDC in cash or shares of common stock the
difference between $3.00 per share and the market value of the
shares of common stock received upon exercise of the option. If
the option were to have been exercised on July 31, 2000, we would
have been obligated to issue 3,000,000 shares of common stock and
pay FCDC an aggregate of $6,930,000 in cash or additional shares
of common stock upon exercise of an option.
Our Projects Are Highly Speculative And Generally Only At the
Exploration Stage
Our assets and interests are primarily in methane gas,
natural gas, and crude oil exploration and development projects.
All such projects are highly speculative, whether we are still at
the exploratory stage or have commenced development. We can
provide no assurance that any drilling, testing, or other
exploration project will locate recoverable gases or other fuels
in sufficient quantities to be economically extracted. Several
test wells are typically required to explore each concession or
field. We may continue to incur significant exploration costs in
specific fields, even if initial test wells are plugged and
abandoned or, if completed for production, do not result in
production of commercial quantities of natural gas or other fuel.
Many of Our Projects Are In Locations Where The Infrastructure is
Inadequate to Support Our Needs
Many of the projects in which we have invested are located
in areas of the world, primarily eastern Europe and the former
Soviet Union, in which the necessary infrastructure for
transporting, delivering, and marketing any natural gas, methane
gas or other fuels that may be recovered is significantly
underdeveloped or, in some cases, nonexistent. Even if we are
able to locate natural gas, methane gas, or other valuable fuels
in commercial quantities, we may be required to invest
significant amounts in developing the infrastructure necessary to
support the transportation and delivery of such fuels. We do not
currently have a source of funding available to meet these costs.
Many Of Our Projects Are In Countries That Have Fragile and
Unpredictable Political and Socio-Economic Systems
Our operations in Poland, Slovakia, Ukraine, and the Sakha
Republic carry with them certain risks in addition to the risks
normally associated with the exploration for, and development of,
natural gas and other fuels. Although recent political and socio-
economic trends in these countries have been toward the
development of market economies that encourage foreign
investment, the risks of political instability, a change of
government, unilateral renegotiation of concessions or contracts,
nationalization, foreign exchange restrictions, and other
uncertainties must be taken into account when operating in these
11
<PAGE>
areas of the world. The terms of the agreements governing our
projects are subject to administration by the various governments
and are, therefore, subject to changes in the government itself,
changes in government personnel, the development of new
administrative policies or practices, the adoption of new laws,
and many other factors.
Moreover, we may be required to obtain and renew licenses
and permits on an ongoing basis in connection with further
exploration, the drilling of wells, the construction of
transportation facilities and pipelines, the marketing of any
fuel that may be produced, and financial transactions necessary
for all of the foregoing. The rules, regulations, and laws
governing all such matters are subject to change by the various
governmental agencies involved. We can provide no assurance that
the laws, regulations, and policies applicable to our interests
in various countries in which our projects are located will not
be radically and adversely altered at some future date.
The Continuance, Completion Or Renewal of Many of Our Licenses
Are Subject to Our Ability to Obtain Additional Permits From
Government Authorities
In general, we have the right to conduct basic exploration
on all concessions or fields in which we have an interest.
However, in order to drill for, recover, transport or sell any
gas or other hydrocarbons, we will generally be required to
obtain additional licenses and permits and enter into agreements
with various landowners and/or government authorities. The
issuance of most such permits and licenses will be contingent
upon the consent of national and local governments having
jurisdiction over the production area, which entities have broad
discretion in determining whether or not to grant permits and
licenses. Moreover, even if obtained, such licenses, permits,
and agreements will generally contain numerous restrictions and
require payment by us of a development/exploration fee, typically
based on the market value of the economically recoverable
reserves. The amount of any such fee and other terms of any such
license, permit, or agreement will affect the commercial
viability of any extraction project. We can provide no assurance
that we will be able to obtain the necessary licenses, permits,
and agreements. Even if we do obtain such items, the associated
costs, delays and restrictions may significantly affect our
ability to develop the affected project.
We Are The Subject Of An Inactive SEC Investigation and A
Defendant In Various Other Lawsuits
We are presently subject to a formal order of investigation
issued by the SEC on August 1, 1995 to investigate whether
violations of applicable law may have occurred. In connection
with such investigation, we have produced numerous documents for
the SEC, and the SEC has questioned our current and past
officers, directors, former accountants, and other agents. We
have not been contacted by the SEC with respect to this matter
for several years; however, we cannot currently predict the
duration or outcome of this investigation.
If the SEC concludes that we or our representatives have
violated the securities laws, it has available a large range of
civil and criminal remedies. Such remedies include the
suspension of trading in the common stock, the levying of
substantial fines, and the exclusion of our current officers and
directors from participating in a public company. In addition,
we are subject to certain other pending or threatened legal
claims. The adverse resolution of the SEC investigation or any
pending litigation affecting us would have a material adverse
effect on our operations and proposed business.
12
<PAGE>
Our Projects May Never Begin Producing Valuable Hydrocarbons
Other than the production of an average of approximately
1,000 barrels of oil equivalent per day by Big Horn Resources
Ltd., a Canadian company in which we have an approximate 50%
ownership interest, none of the projects in which we own an
interest is presently producing gas or other hydrocarbons.
Texaco drilled and abandoned test wells on the concession in
Poland in which we own an interest, and we have drilled test
wells on our Slovakia concessions. None of these wells has been
developed or commenced production, and we can provide no
assurance that any of our projects will at any time commence
production of any valuable resource.
We are Dependent Upon Certain Officers, Key Employees, and
Consultants
We are dependent on the services of Mr. Karl Arleth, the
President of EuroGas, Inc. We are also dependent on certain key
employees, including Andrew J. Andraczke in connection with our
business activities. Mr. Andraczke has been instrumental in
establishing our operations in Poland. The loss of one or more
of these individuals could materially and adversely impact our
operations. We have not entered into employment agreements with
any of these individuals other than Mr. Arleth and do not
maintain key-man life insurance on any EuroGas officers or
employees.
We Are Thinly Staffed
We have numerous projects throughout the world, which we
attempt to direct and manage with only a few employees. In
addition to our president and chief financial officer (expected
to commence employment on September 1, 2000), we have 9 full-time
equivalent employees, 3 significant consultants and a contract
with a geo-engineering firm. Unless and until additional
employees are hired, our attempt to manage our numerous projects
and obligations with such a limited staff could have serious
adverse consequences, including without limitation, a possible
failure to meet a material contractual, court or SEC deadline or
a possible failure to consummate investment or acquisition
opportunities.
Subsequent Evaluation May Reveal That Our Unproved Properties Are
Not Valuable, and We May Need to Record an Impairment of the
Value of Such Properties
We capitalize costs related to unproved gas properties and
recognize the expenses for drilling and other exploration costs
that do not result in proved reserves at the time the well is
plugged and abandoned. We review our unproved properties
periodically to assess whether an impairment allowance should be
recorded. On June 30, 2000, we had capitalized costs related to
the acquisition of oil and gas properties not subject to
amortization in the amount of approximately $26,844,845. Should
future events, such as the drilling of dry holes, evidence that
an impairment of an unproved oil or gas property has taken place,
we will be obligated to proportionately reduce the recorded value
of such respect asset on our balance sheet.
13
<PAGE>
Severe Weather Will Interrupt, and May Adversely Affect, Our
Activities In Various Parts of the World
Severe weather conditions frequently interrupt much of our
exploratory and testing work. Heavy precipitation sometimes makes
travel to exploration sites or drilling locations difficult or
impossible. Extremely cold temperatures may delay or interrupt
drilling, well servicing, and production (if commenced, of which
we can give no assurance). The temperatures in all of the
regions in which we have exploratory or other operations are
extremely cold, and the temperatures in the Sakha Republic are
especially extreme and include some of the coldest areas of the
northern hemisphere. The average temperature of the entire
region from October to April is below freezing with winter
temperatures dipping to minus 70 to 80 degrees Fahrenheit. Even
if recoverable reserves are discovered in the Sakha Republic or
other regions prone to severe weather, the above-described
adverse weather conditions may limit production volumes, increase
production costs, or otherwise prohibit production during
extended portions of the year.
Risk Factors Related To The Oil And Gas Industry
The Price Of The Various Hydrocarbons We Produce or May Produce
Are Volatile and Unstable
The prices of oil, natural gas, methane gas and other fuels
have been, and are likely to continue to be, volatile and subject
to wide fluctuations in response to numerous factors, including
the following:
. changes in the supply and demand for such fuels;
. political conditions in oil, natural gas, and other fuel-
producing and fuel-consuming areas;
. the extent of domestic production and importation of such
fuels and substitute fuels in relevant markets;
. weather conditions;
. the competitive position of each such fuel as a source of
energy as compared to other energy sources;
. the refining capacity of crude purchasers;
. the effect of governmental regulation on the production,
transportation, and sale of oil, natural gas, and other fuels.
Low prices, and/or highly volatile prices, for any fuel being
explored or produced at one of our projects will adversely affect
our ability to secure financing or enter into suitable joint
ventures or other arrangements with industry participants. In
addition, in the event we commence recovery of fuel at any of our
projects, a low or volatile price for the fuel being recovered
will adversely affect revenue and other operations.
Our Operations Involve Numerous Hazards, and We Maintain No
Insurance Against Such Risks
Exploring for fuel, drilling wells, and producing fuel
involves numerous hazards, including the following:
<PAGE> 14
. fire,
. explosions,
. blowouts,
. pipe failures,
. casing collapses,
. unusual or unexpected formations and pressures, and
. environmental hazards such as spills, leaks, ruptures, and
discharges of toxic substances.
If any such event occurs, we may be forced to cease any or all of
our exploration, drilling, or production activities on a
temporary or permanent basis. In addition, such events may lead
to environmental damage, personal injury, and other harm
resulting in substantial liabilities to third-parties. We do not
maintain insurance against these risks. Even if we obtain
insurance, we may not be insured against all losses or
liabilities which may arise from such hazards because such
insurance may be unavailable at economic rates, due to
limitations in the insurance policies, or other factors. Any
uninsured loss may have a material adverse impact on our business
and operations.
The Oil and Gas Industry Is Highly Competitive, and We Are At a
Competitive Disadvantage
The oil and gas industry is highly competitive. Most of our
current and potential competitors have far greater financial
resources and a greater number of experienced and trained
managerial and technical personnel than we do. We can provide no
assurance that we will be able to compete with, or enter into
cooperative relationships with, any such firms.
Our Operations Are Subject to Numerous Environmental Laws,
Compliance With Which May be Extremely Costly
Our operations are subject to environmental laws and
regulations in the various countries in which they are conducted.
Such laws and regulations frequently require completion of a
costly environmental impact assessment and government review
process prior to commencing exploratory and/or development
activities. In addition, such environmental laws and regulations
may restrict, prohibit, or impose significant liability in
connection with spills, releases, or emissions of various
substances produced in association with fuel exploration and
development.
We can provide no assurance that we will be able to comply
with applicable environmental laws and regulations or that those
laws, regulations or administrative policies or practices will
not be changed by the various governmental entities. The cost of
compliance with current laws and regulations or changes in
environmental laws and regulations could require significant
expenditures. Moreover, if we breach any governing laws or
regulations, we may be compelled to pay significant fines,
penalties, or other payments. Costs associated with
environmental compliance or noncompliance may have a material
adverse impact on our financial condition or results of
operations in the future.
15
<PAGE>
Other Risks Relating To The Common Stock
Most of Our Outstanding Shares Are Free Trading And, If Sold In
Large Quantities, May Adversely Affect the Market Price For Our
Common Stock
Most of the approximately 104,786,979 shares of the common
stock issued and outstanding as of July 31, 2000; (i) are free-
trading; (ii) have been held for in excess of one year and are
eligible for resale under Rule 144 promulgated under the
Securities Act; or (iii) will be registered for resale in a
registration statement that we are contractually obligated to
file. Although the resale of certain of these shares may be
subject to the volume limitations and other restrictions under
Rule 144, the possible resale of the remaining shares may have an
adverse effect on the market price for the common stock.
We Have A Substantial Number of Warrants, Options and Debentures
Outstanding
As of the date of this prospectus, there are outstanding warrants
and options to purchase up to 31,892,858 shares of common stock at
exercise prices ranging from $0.35 to $11.79. This is in addition
to the shares of our common stock we are obligted to issue to
Stephen Jeu and Susanna Calvo pursuant to governing settlement
documents and any additional shares we may be required to issue to
FCDC pursuant to our option value guaranty. The existence of such
warrants, options and other rights may hinder our future equity
offerings, and the exercise of such warrants and options may futher
dilute the interests of all of our shareholders. Future resale of the
shares of common stock issuable on the exercise of such warrants and
options may have an adverse effect on the prevailing market price of
our common stock. Furthermore, the holders of warrants and options may
exercise them at a time when we would otherwise be able to obtain additional
equity capital on terms more favorable to us.
We Have The Right To, and Expect to, Issue Additional Shares of
Common Stock Without Shareholder Approval
EuroGas, Inc. has authorized capital of 325,000,000 shares
of common stock, par value $0.001 per share, and 3,661,968 shares
of preferred stock, par value $0.001 per share. As of the date
of this prospectus, 104,786,979 shares of common stock and
2,392,228 shares of preferred stock were issued and outstanding.
In addition, there are 31,892,858 shares of common stock reserved
for issuance on the exercise or conversion of outstanding
warrants, options, and similar rights to acquire common stock
we are obligated to issue to Stephen Jeu and Susan Calvo common
shares pursuant to governing settlement documents. We may also issue
additional shares of common stock pursuant to our option value
guarantee arrangement with FCDC. We have no means to control the
timing of the conversion of convertible securities. Our board of
directors has authority, without action or vote of our shareholders,
to issue all or part of the authorized but unissued shares.
Any such issuance will dilute the percentage ownership of our
shareholders and may dilute the book value of the common stock.
16
<PAGE>
We Have Not Paid Any Dividends and Do Not Expect To Pay Dividends
In the Near Future
We have not paid, and do not plan to pay, dividends on our
common stock in the foreseeable future, even if we become
profitable. Earnings, if any, are expected to be used to advance
our activities and for general corporate purposes, rather than to
make distributions to shareholders.
THE COMMON STOCK AND SHAREHOLDERS
Price Range Of Shares Of common stock
Our common stock is quoted on the NASDAQ OTC Bulletin Board
under the symbol "EUGS" and is traded under the symbol "EUGS.F"
on the Frankfurt Stock Exchange. The following table sets forth
the approximate range of high and low bids for common stock
during the periods indicated, as quoted by the NASDAQ OTC
Bulletin Board. Such quotations reflect interdealer prices,
without retail markup, markdown, commissions, or other
adjustments and may not necessarily represent actual transactions
in our common stock.
Quarter Ended High Bid Low Bid
------------- -------- -------
Year Ended December 31, 1998
---------------------------------
Quarter Ended March 31, 1998 6.8125 3.9375
Quarter Ended June 30, 1998 5.75 3.625
Quarter Ended September 30, 1998 4.97 2.0625
Quarter Ended December 31, 1998 2.25 1.1875
Year Ended December 31, 1999
---------------------------------
Quarter Ended March 31, 1999 2.50 1.0312
Quarter Ended June 30, 1999 1.0938 0.5469
Quarter Ended September 30, 1999 0.9375 0.5469
Quarter Ended December 31, 1999 0.7969 0.4531
Year Ended December 31, 2000
---------------------------------
Quarter Ended March 31, 2000 1.875 0.4219
Quarter Ended June 30, 2000 1.09 0.718
Quarter Ended September 30, 2000 0.90 0.61
(through August 14, 2000)
The liquidity of our common stock may be limited, and the
reported price quotes may not be indicative of prices that could
be obtained in actual transactions. On August 11, 2000, the high
and low sale prices for our common stock on the NASDAQ OTC
Bulletin Board were $0.75 and $0.875, respectively.
Dividends
No dividends have been paid on our common stock, and we do
not have retained earnings from which to pay dividends. We
accrued cumulative preferred dividends of $1,442,345, $2,861,301
and $423,530 in 1999, 1998 and 1997, respectively. Of this
amount, $39,502 was paid in 1999 and $165,008 was paid in 1998 by
the issuance of shares of common stock in connection with the
17
<PAGE>
conversion of a portion of the preferred stock. All cumulative
dividends with respect to our preferred stock would be required
to be paid prior to our declaring or paying any dividend on our
common stock. Even if we were able to generate the necessary
earnings, it is not anticipated that dividends will be paid in
the foreseeable future, except to the extent required by the
terms of the cumulative preferred stock currently issued and
outstanding.
Outstanding Shares and Number of Shareholders
As of the date of this prospectus, the number of shares of
common stock outstanding was 104,786,979, held by an estimated
2,000 beneficial owners. In addition, as of the same date, we
are obligated to issue common shares to Stephen Jeu and Susan Calvo
pursuant to governing settlement documents. We have reserved
31,892,858 shares of common stock for issuance upon exercise of
options and warrants that have been or may be granted.
USE OF PROCEEDS
The EuroGas Shares
Unless the applicable prospectus supplement states otherwise, we
intend to use net proceeds from the sale of the Shares, following
the payment of any placement agent or underwriting fees, legal
costs, and other offering expenses, for each of the following:
Use Estimated Cost
-------------------------------- --------------
Payment of Offering Expenses $40,000
Working capital, general $9,800,000(1)
corporation expenses and possible
future acquisitions
(1) We have estimated the amount of proceeds we will
receive by assuming the sale of all 12,000,000 EuroGas
Shares at $0.82 per Share, the last reported sales price of
a share of common stock on the NASDAQ OTC Bulletin Board on
August 11, 2000. The actual proceeds from the offer and sale
of the EuroGas Shares will vary, and may vary materially,
from such estimated amount.
Working capital, general, corporation and acquisition expenses
may include the use of up to $5,000,000 of proceeds to fund our
conditional commitment to loan Goltech $3,000,000 and to purchase
a minority interest in Goltech. If EuroGas determines that a
material part of the proceeds are to be used to finance the
acquisition of another business, EuroGas will identify in a
prospectus supplement the identity of such businesses, the status
of any negotiations with respect to the acquisition and, if pro
forma financial statements reflecting such transaction are
required by Regulation S-X promulgated under the Securities Act,
additional information about the business being acquired and the
terms of the proposed transaction.
Pending utilization of the net proceeds of the offering, we
intend to make temporary investments in an interest-bearing
demand account or short-term, interest-bearing securities. We
18
<PAGE>
anticipate that we will incur costs of approximately $40,000 in
connection the offering, including filing fees, transfer agent
costs, printing costs, listing fees, and legal and accounting
fees, all of which will be paid by us.
The Selling Shareholder Shares
We will not receive any proceeds from the sale of the
Selling Shareholder Shares by the selling shareholders.
DILUTION
Our net tangible book value applicable to common stock as of
June 30, 2000 was approximately $34,642,000, or $0.33 per share.
Net tangible book value applicable to common stock is the
remaining tangible book value after deducting the book value of
the preferred stock outstanding.
Our pro forma net tangible book value applicable to the
common stock as of June 30, 2000 was approximately $35,082,000
or $0.33 per share of common stock. Pro forma adjustments have
been made assuming the issuance of 1,250,000 shares of common stock
related to a settlement agreement of $0.35 per share. Pro forma net
tangible book value per share is determined by dividing the amount
of our pro forma tangible assets less total liabilities by the pro forma
number of shares of common stock outstanding.
After giving effect to the issuance of the 12,000,000 shares of common
stock that may be offered by us at an assumed public offering price of $0.67
per share, net of estimated offering expenses payable by us, the exrcise
of 3,950,000 options from selling shareholders at a weighted average exercise
price of $0.46 per share, and the application of the estimated net
proceeds from this offering, our pro forma as adjusted net tangible book value
applicable to common stock as of June 30, 2000 would have been approximately
$45,494,000 or $0.37 per share. This represents an immediate increase in pro
forma net tangible book value to our existing stockholders of $0.04 per share
and an immediate dilution to purchasers in this offering of $0.30 per share.
Dilution in net tangible book value per share represents the difference
between the amount paid per share by purchasers of shares of common stock
in this offering and the pro forma as adjusted net tangible book value per
share of common stock immediately after the completion of this offering.
If the initial public offering price is higher or lower, the dilution
to purchasers in this offering will be greater or less, respectively.
The following table illustrates this per share dilution:
Assumed initial public offering price per share $0.67
Pro forma net tangible book value per share at
June 30, 2000 $0.33
Increase in pro forma net tangible book value per
share attributable to this offering 0.04
-----
Pro forma as adjusted net tangible book value per
share after this offering 0.37
-----
Dilution per share to new investors $0.30
=====
19
<PAGE>
SELLING SHAREHOLDERS
Of the Shares, the 12,000,000 EuroGas Shares will be offered
and sold by EuroGas. The 9,000,000 Selling Shareholder Shares
are to be sold by persons who are existing shareholders of
EuroGas or have been granted options, warrants or other rights to
purchase or receive shares of our common stock.
Beneficial Ownership of Selling Shareholders
The table on the page that follows sets forth, as of the
date of this prospectus:
. the name of each selling shareholder,
. certain beneficial ownership information with respect to the
selling shareholders,
. the number of Shares that may be sold from time to time by
each selling shareholder pursuant to this prospectus, and
. the amount (and, if one percent or more, the percentage) of
common stock to be owned by each selling shareholder if all
Shares are sold.
Beneficial ownership is determined in accordance with SEC
rules and generally includes voting or investment power with
respect to securities. Shares of common stock that are issuable
upon the exercise of outstanding options, warrants or other
purchase rights, to the extent exercisable within 60 days of the
date of this prospectus, are treated as outstanding for purposes
of computing each selling shareholder's percentage ownership of
outstanding common stock.
<TABLE>
<CAPTION>
Shares Beneficially
Beneficial Ownership Owned Upon Completion
Prior to Offering of the Offering(1)
-------------------------- Number ---------------------
Number of of Shares Number
Beneficial Owner Shares Percent(2) Being Offered of Shares Percent(2)
------------------------ -------------- ---------- -------------- --------- ----------
<S> <C> <C> <C> <C> <C>
Finance & Credit 7,500,000(4) 7% 6,700,000(4) 800,000 *
Development Corporation,
Ltd. (3)
Stephen Jeu and Susanna Calvo 1,250,000(5) 1.1% 1,250,000(5) 0 --
Andrew Andraczke 350,000(6) * 350,000(6) 0 --
Armando Ulrich 350,000(7) * 350,000(7) 0 --
Dr. Gregory Fontana 250,000(8) * 250,000(8) 0 --
KUKUI, Inc. 100,000 * 100,000 0 --
All Selling Shareholders
as a group 9,800,000 8.9% 9,000,000 800,000 *
</TABLE>
* Represents less than one percent of the outstanding shares
of common stock.
<PAGE> 20
(1) Assuming the sale by each selling shareholder of all of the
Selling Shareholder Shares offered hereunder by such selling
shareholder. There can be no assurance that any of the
Selling Shareholder Shares or other Shares offered hereby
will be sold.
(2) The percentages set forth above have been computed assuming
the number of shares outstanding equals the sum of (a)
104,786,979, which is the number of shares of common stock
actually outstanding as of the date of this prospectus, and
(b) shares of common stock subject to options, warrants and
other purchase rights held by the person(s) with respect to
which such percentage is calculated.
(3) FCDC intends to distribute some or all of its Shares to its
partners, including Michael Ilgen, who may sell such Shares
into the public market by means of this prospectus.
(4) Includes the 3,000,000 shares of stock subject to the option
granted to FCDC under our settlement agreement with FCDC.
(5) Includes 1,000,000 shares of common stock representing the
Shares issuable by us pursuant to a settlement agreement
requiring us to issue to Mr. Jeu and Ms. Calvo, a married
couple, shares of our common stock with a market value of
$440,000 on the date of issuance, which is expected to be
the effective date of the registration statement to which
this prospectus relates. The actual number of Shares that
will be issued to Mr. Jeu and Ms. Calvo pursuant to such
agreement will vary, and may vary materially, from (but not
exceed) the 1,000,000 shares registered with respect to such
agreement. In addition, such number includes 250,000 shares
of common stock issuable by us upon exercise of an option to
purchase common stock held by Mr. Calvo and Ms. Jeu.
(6) Includes shares subject to a presently exercisable option to
purchase 350,000 shares of common stock.
(7) Includes shares subject to a presently exercisable option to
purchase 350,000 shares of common stock.
(8) Includes shares subject to a presently exercisable option to
purchase 250,000 shares of common stock.
There can be no assurance that any of the Shares will be
issued to the selling shareholders in satisfaction of the claims
they hold against the Company or that any of the Shares offered
hereby will be sold. We believe the persons named in the table
have sole voting and investment power with respect to all Selling
Shareholder Shares shown as beneficially owned by them, subject
to community property laws, where applicable.
Pursuant to Rule 416 of the Securities Act, this prospectus
and the registration statement of which it is a part cover a
presently indeterminate number of shares of common stock issuable
upon the occurrence of a stock split, stock dividend, or other
similar transaction.
Mr. Jeu and Ms. Calvo
In January 1999, Stephen Jeu and Susanna Calvo initiated an
action in District Court, Harris County, Texas, 55th Judicial
District, asserting claims against EuroGas stemming from an
alleged breach of contract. On or about November 1, 1999, we
entered into a settlement agreement with Mr. Jeu and Ms. Calvo
pursuant to which we are required to make specified cash payments
to Mr. Jeu and Ms. Calvo and to issue to Mr. Jeu and Ms. Calvo
shares of common stock having a market value of $440,000 on the
date of issuance in a private placement exempt from the
registration under the Securities Act. Such issuance is expected
to occur on the effective date of the registration statement of
which this prospectus is a part. The Selling Shareholder Shares
include the Shares, up to a maximum of 1,000,000 shares, that are
issued to Mr. Jeu and Ms. Calvo pursuant to such settlement
agreement.
For purpose of this prospectus, we have conservatively
estimated that 1,000,000 (approximately 139% of the 721,311
Shares that would be issuable were such issuance to have occurred
on July 31, 2000) Shares will be issued to Mr. Jeu and Ms. Calvo
Pursuant to such settlement agreement. The actual number of
shares of common stock issued to Mr. Jeu and Ms. Calvo in
satisfaction of our obligation to them will likely differ, and
may differ materially, from such estimated number.
<PAGE> 21
In addition, pursuant to the settlement agreement, EuroGas
agreed to amend a Stock Option agreement dated March 20, 1995
granted to Mr. Calvo and Ms. Jeu and to register for resale under
the Securities Act the shares of common stock issuable upon
exercise of the option. As amended, the option grants the holder
the right to purchase 250,000 shares of common stock at an
exercise price of $1.00 on any date on or before December 31,
2004. The option contains standard antidilution provisions
providing for an adjustment of the number of shares issuable upon
exercise of such option upon the occurrence of a stock split,
stock dividend, or other similar transaction. The Selling
Shareholder Shares include the Shares issuable upon the exercise
of the option and, pursuant to Rule 416 of the Securities Act of
1933, as amended, a presently indeterminate number of shares of
our common stock issuable with respect to such option upon the
occurrence of a stock split, stock dividend, or other similar
transaction.
KUKUI, Inc.
Since 1996, KUKUI, Inc., the Unsecured Creditors Trust of
the Bankruptcy Estate of McKenzie Methane Corporation (McKenzie
Methane Corporation was an affiliate of the former owner of Pol-
Tex), the Trustees of the Estate of Bernice Pauahi Bishop and
various related parties (collectively "KUKUI") have initiated
various actions against EuroGas related to our purchase of the
entities that hold our interest in the Pol-Tex methane gas
concession in Poland. On or about December 3, 1999, we signed a
settlement agreement with KUKUI settling such litigation. That
settlement, in part, requires us to make specified cash payments
each month during the 2000 fiscal year and to issue 100,000
shares of common stock to KUKUI. The Selling Shareholder Shares
include the 100,000 Shares issued pursuant to such settlement
agreement.
Finance & Credit Development Corporation, Ltd.
On March 16, 2000, the United States District Court,
District of Utah, Central Division entered a default judgment
against EuroGas, and in favor of Finance & Credit Development
Corporation, Ltd. ("FCDC"), in the amount of $19,773,113, in a
case styled Finance & Credit Development Corporation Ltd., an
Ireland Corporation vs. EuroGas, Inc., a Utah corporation, Case
No. 2:00VC-1024K. On June 16, 2000, we entered into a memorandum
of understanding, with FCDC in satisfaction of its default
judgment. In consideration for FCDC's stipulation to vacate its
default judgment and to enter into mutual releases, we agreed to
do the following:
. issue to FCDC 3,700,000 shares of our common stock,
. grant FCDC an option to purchase up to 3,000,000 shares of
our common stock at an exercise price of $.65 during a 30
day period commencing June 30, 2001, and
. guarantee that the market price of the shares of our
common stock issuable upon exercise of the option would be
$3.00 per share on the date of exercise by compensating FCDC
in cash or by additional shares of our common stock in an
amount equal to the difference between $3.00 and the market
price of our common stock on the date of exercise,
<PAGE> 22
. guarantee that the value of the shares of our common stock
issuable upon exercise of the option will retain their value
throughout the period during which FCDC is permitted to
liquidate the shares by compensating FCDC in cash or by
additional shares of our common stock, with respect to the
400,000 shares FCDC is permitted to sell and deemed to have
sold during every month, in an amount equal to the
difference between $3.00 per share and the sum of the market
price of such share and the per-share amount received
pursuant to the above-described exercise date top-up
requirement,
. cause our subsidiary EuroGas GmbH to back up our guarantee
by pledging its stock in Rima Muran S.R.O., which indirectly
holds a 24% interest in a talc deposit in Slovakia,
. nominate and use best efforts to elect a designee of FCDC
to serve on our board of directors,
. register for resale all of the shares of our common stock
issuable to FCDC pursuant to the settlement agreement.
The Selling Shareholder Shares include the 3,700,000 shares of
our common stock issued pursuant to the memorandum of
understanding, the 3,000,000 shares of our common stock issuable
upon exercise of the option and, pursuant to Rule 416 of the
Securities Act of 1933, as amended, a presently indeterminate
number of shares of our common stock issuable with respect to
such option upon the occurrence of a stock split, stock dividend,
or other similar transaction. The Selling Shareholder Shares do
not include shares of our common stock, if any, issuable in
connection with our guarantee of the value of the common stock
issuable upon exercise of such option.
<PAGE> 23
Option Holder Shares
On October 22, 1999, we granted the following number of
options to purchase shares of our common stock to the following
directors, employees and consultants:
Name Relationship to Us No. of Options
---------- ------------------ --------------
Andrew Director and 350,000
Andraczke Employee
Dr. Gregory Director 250,000
Fontana
Armando Ulrich Consultant 350,000
The strike price for each of these options is $0.45 per
share, and they expire on October 22, 2009. Mr. Ulrich received
the options as consideration for past consulting services he has
provided to us. Messrs. Andraczke and Fontana were granted their
options in order to reward their past service and in order to
further align their interests with the interests of our
shareholders. These options contain standard anti-dilution
provisions providing for an adjustment of the number of shares
issuable upon exercise of the options upon the occurrence of a
stock split, stock dividend or similar transaction. The Selling
Shareholder Shares include the Shares issuable upon the exercise
of these options.
PLAN OF DISTRIBUTION
The EuroGas Shares
We may sell the EuroGas Shares (a) through placement agents
(b) through underwriters or dealers, (c) through brokers or (d)
directly to one or more purchasers.
Placement Agents. The EuroGas Shares may be sold through
placement agents designated by us. The placement agents will
agree to act in good faith to assist us in soliciting purchases
for the period of their appointment in exchange for a commission
that will be negotiated at the time of their engagement.
Underwriters. If underwriters are used in the sale of the
EuroGas Shares, we anticipate that the EuroGas Shares will be
acquired by underwriters for their own account. The underwriters
may resell the securities in one or more transactions, including
negotiated transactions, at a fixed public offering price, or at
varying prices determined at the time of sale. The obligations
of the underwriters to purchase the securities will be subject to
certain conditions. Any offering price and any discounts or
concessions allowed or paid to dealers may be changed from time
to time.
Brokers. If brokers are used in the sale of the EuroGas Shares,
we anticipate that the EuroGas Shares will be sold by the brokers
through market makers and in directly negotiated transactions at
the current market price reported on the OTC Bulletin Board or
Frankfurt Stock Exchange or at a discount from the current market
price. Such brokers will receive a commission that will be
negotiated at the time of their engagement.
<PAGE> 24
Direct Sales. We may directly sell the EuroGas Shares. In this
case, no underwriters, brokers or agents would be involved.
General Information. Underwriters, dealers, brokers and agents
that participate in the distribution of the Shares may be
underwriters as defined in the Securities Act, and any discounts
or commissions received by them from us and any profit on the
resale of the EuroGas Shares by them may be treated as
underwriting discounts and commissions under the Securities Act.
If we enter into a material arrangement with an underwriter,
dealer, broker or agent for the sale of Shares, we will file a
prospectus supplement, if required pursuant to Rule 424 under the
Securities Act of 1933, setting forth:
. the name of each of the participating underwriters, dealers,
brokers and agents,
. the number and type of Shares involved,
. the price at which the Shares are to be offered and sold (or
general method by which such price will be determined),
. the commissions, discounts, or other fees allowed to the
participating underwriters, dealers, brokers and agents, where
applicable,
. any other facts material to the transaction.
We may have agreements with the underwriters, brokers,
dealers, or agents to indemnify them against civil liabilities,
including liabilities under the Securities Act, or to contribute
with respect to payment which the underwriters, dealers or agents
may be required to make. Underwriters, brokers dealers, and
agents may engage in transactions with, or perform services for,
us in the ordinary course of their businesses.
In order to comply with the securities laws of certain
states, if applicable, the EuroGas Shares will be sold in such
jurisdictions only through registered or licensed brokers or
dealers. In addition, in certain states the EuroGas Shares may
not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the
registration or qualification requirement is available.
The Selling Shareholder Shares
The Selling Shareholders Shares offered by this prospectus
may be sold from time to time by the selling shareholders, who
consist of the persons named as "selling shareholders" above and
those persons' pledgees, assigns, donees, transferees or other
successors in interest. The selling shareholders may sell the
Selling Shareholder Shares on the NASDAQ OTC Bulletin Board,
Frankfurt Exchange, or otherwise, at market prices or at
negotiated prices. They may sell Selling Shareholder Shares by
one or a combination of the following:
. a block trade in which a broker or dealer so engaged will
attempt to sell the Selling Shareholder Shares as agent, but may
position and resell a portion of the block as principal to
facilitate the transaction;
. purchases by a broker or dealer as principal and resale by
the broker or dealer for its account pursuant to this prospectus;
<PAGE> 25
. ordinary brokerage transactions and transactions in which a
broker solicits purchasers;
. an exchange distribution in accordance with the rules of
such exchange;
. privately negotiated transactions;
. short sales;
. if such a sale qualifies, in accordance with Rule 144
promulgated under the Securities Act rather than pursuant to this
prospectus;
. any other method permitted pursuant to applicable law.
In making sales, brokers or dealers engaged by the selling
shareholders may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions or
discounts from such selling shareholders in amounts to be
negotiated prior to the sale. Such selling shareholder and any
broker-dealers that participate in the distribution may be deemed
to be "underwriters" within the meaning of Section 2(11) of the
Securities Act of 1933, and any proceeds or commissions received
by them, and any profits on the resale of Selling Shareholder
Shares sold by broker-dealers, may be deemed to be underwriting
discounts and commissions. If a selling shareholder notifies us
that a material arrangement has been entered into with a
broker-dealer for the sale of Selling Shareholder Shares through
a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, we
will file a prospectus supplement, if required pursuant to Rule
424 under the Securities Act, setting forth:
. the name of each of the participating broker-dealers,
. the number of Selling Shareholder Shares involved,
. the price at which the Selling Shareholder Shares are to be
offered and sold,
. the commissions paid or discounts or concessions allowed to
the broker-dealers, where applicable;
. a statement to the effect that the broker-dealers did not
conduct any investigation to verify the information set out or
incorporated by reference in this prospectus, and
. any other facts material to the transaction.
We have not retained any underwriter, broker or dealer to
facilitate the offer or sale of the Selling Shareholder Shares
offered hereby. We will pay no underwriting commissions or
discounts in connection therewith, and we will not receive any
proceeds from the sale of the Selling Shareholder Shares.
We are paying the expenses incurred in connection with
preparing and filing this prospectus and the registration
statement to which it relates, other than selling commissions of
the selling shareholders. In addition, in the event a selling
shareholder effects a short sale of common stock, this prospectus
may be delivered in connection with such short sale and the
Selling Shareholder Shares offered by this prospectus may be used
to cover such short sale. To the extent, if any, that a selling
shareholder may be considered an "underwriter" within the meaning
of the Securities Act, the sale of the Selling Shareholder Shares
by it shall be covered by this prospectus. There can be no
assurance that the selling shareholders will receive, offer or
sell the Selling Shareholder Shares.
<PAGE> 25
DESCRIPTION OF SHARES
The Articles of Incorporation of EuroGas currently authorize
the issuance of up to 325,000,000 shares of common stock and
3,661,968 shares of Preferred Stock. Our common stock is
currently listed on the NASDAQ OTC Bulletin Board. Our board of
directors can authorize the issuance of additional shares of any
class of capital stock, up to the amount of the authorized
capital set forth in the articles of incorporation, without
further action by or approval of our shareholders.
The holders of our common stock are entitled to one vote per
share on each matter submitted to a vote at any meeting of
shareholders. The holders of our common stock do not have
cumulative voting rights and, therefore, a majority of the shares
represented, in person or by proxy, at a meeting of shareholders
at which a quorum is present are able to elect all members of the
board of directors then standing for election, and if they do so,
minority shareholders would not be able to elect any members to
the board of directors.
The holders of our common stock have no preemptive rights to
acquire additional shares of common stock or other securities.
Our common stock is not subject to redemption and carries no
subscription or conversion rights. In the event of liquidation
of EuroGas, the shares of common stock are entitled to share
equally in corporate assets after satisfaction of all liabilities
of EuroGas and the payment of any liquidation preferences.
Our common stock is subject to any voting, dividend, or
liquidation preferences that may be established by the board of
directors of EuroGas in designating a class of preferred stock.
We currently have outstanding shares of Preferred Stock with
rights, privileges, and preferences superior to those of the
common stock.
The holders of our common stock are entitled to receive such
dividends as the board of directors may from time to time declare
out of funds legally available for the payment of dividends,
subject to the preferential rights of the holder of outstanding
Preferred Stock. We have not paid dividends with respect to
common stock. Management anticipates retaining any potential
earnings for working capital and investment in growth and
expansion of the business of EuroGas and does not anticipate
paying dividends on the common stock in the foreseeable future.
LEGAL MATTERS
The validity of the shares of common stock being offered
hereby is being passed upon for us by Parr Waddoups Brown Gee &
Loveless.
<PAGE> 26
EXPERTS
The consolidated balance sheets of the company as of
December 31, 1999 and 1998 and the consolidated statements of operations,
stockholders' equity (deficit) and cash flows for each of the three years
in the period ended December 31, 1999, included in the company's Annual
Report as amended by Amendment No. 2 on Form 10-K/A for the year ended
December 31, 1999 filed with the SEC on August 11, 2000, and incorporated
by reference in this prospectus have been included herein in reliance on
the report of Hansen, Barnett and Maxwell, independent certified public
accountants, given on the authority of that firm as experts in auditing and
accounting.
SUBSEQUENT EVENTS
Proposed Beaver River Sale
We hold a 15% interest in the "Beaver River" natural gas
project, which is an attempt to reestablish commercial production
in an old Amoco field; however, we are presently negotiating an
agreement pursuant to which we expect to return such 15% interest
to the former owners in exchange for the return of the shares of
common stock issued to purchase such interest.
Memorandum of Understanding Settling FCDC Judgment
On March 16, 2000, the United States District Court,
District of Utah, Central Division entered a default judgment
against EuroGas, and in favor of Finance & Credit Development
Corporation, Ltd. ("FCDC"), in the amount of $19,773,113, in a
case styled Finance & Credit Development Corporation Ltd., an
Ireland Corporation vs. EuroGas, Inc., a Utah corporation, Case
No. 2:00VC-1024K. On or about June 16, 2000, we entered into a
memorandum of understanding, with FCDC in satisfaction of its
default judgment. The material terms of such memorandum of
understanding are set forth in "Selling Shareholders - Finance of
Credit Development Corporation, Ltd."
<PAGE> 27
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
As permitted by SEC rules, this prospectus does not contain
all of the information that prospective investors can find in the
Registration Statement or the exhibits to the Registration
Statement. The SEC permits us to incorporate by reference into
this prospectus information filed separately with the SEC. The
information incorporated by reference is deemed to be part of
this prospectus, except as superseded or modified by information
contained directly in this prospectus or in a subsequently filed
document that also is (or is deemed to be) incorporated herein by
reference.
This prospectus incorporates by reference the documents set
forth below that the Company (File No. 33-1381-D) has previously
filed with the SEC pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"). These documents contain
important information about the Company and its financial
condition.
(a) Our Annual Report on Form 10-K for the year ended
December 31, 1999, filed with the SEC on April 14, 2000, as
amended by Amendment No. 1 on Form 10-K/A filed with the SEC on
May 1, 2000, as further amended by Amendment No. 2 on Form 10-K/A
filed with the SEC on August 11, 2000.
(b) Our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000, filed with the SEC on May 15, 2000, as amended by
Amendment No. 1 on Form 10-Q/A filed with the SEC on August 11,
2000.
(c) Our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000, as filed with the SEC on August 17, 2000.
(d) The description of our shares of common stock contained
in the Form 8-A we filed with the SEC on March 6, 1995, including
any amendment or report filed under the Exchange Act for the
purpose of updating such description.
We hereby incorporate by reference all reports and other
documents we file pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and
prior to the termination of this offering.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy
statements, and other information with the SEC. You may read and
copy any reports, statements, or other information that the we
file at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-
0330 for further information on the Public Reference Room. The
SEC also maintains an Internet site (http://www.sec.gov) that
makes available to the public reports, proxy statements, and
other information regarding issuers, such as EuroGas, that file
electronically with the SEC.
In addition, we will provide, without charge, to each person
to whom this prospectus is delivered, upon written or oral
request of any such person, a copy of any or all of the foregoing
documents (other than exhibits to such documents which are not
specifically incorporated by reference in such documents).
Please direct written requests for such copies to our shareholder
relations firm at WPH Consultants, 80 Broad Street, New York, New
York 10004, Attention: Phillip Niemetz. Telephone requests may
be directed to such office at (212) 785-2626.
<PAGE> 29
------------------------------------------ -----------------------------
We have not authorized any dealer,
salesperson or other person to give any
information or represent anything not
contained in this prospectus. This 21,000,000
prospectus does not offer to sell or buy
any securities in any jurisdiction where Shares of Common Stock
it is unlawful. The information in this
prospectus is current as of August 14, 2000.
---------------------------
SUMMARY
TABLE OF CONTENTS EUROGAS, INC.
(For a more detailed Table of Contents, see
page 2) COMMON STOCK
Heading Page
------- ----
Table of Contents 2
About this Prospectus 4
Prospectus Summary 4
Forward-Looking Statements 9
Risk Factors 9 ---------------------------
The Common Stock and Prospectus
Shareholders 16
---------------------------
Use of Proceeds 18
Dilution 18
August 17, 2000
Selling Shareholders 19
Plan of Distribution 24
Description of Shares 27
Legal Matters 27
Experts 27
Subsequent Events 28
Incorporation of Certain 29
Where You Can Find More 29
-------------------
----------------------------------- ---------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses of the
offering, sale and distribution of the Shares being registered
pursuant to this registration statement (the "Registration
Statement"). All of the expenses listed below will be borne by
the Company. All of the amounts shown are estimates except the
SEC registration fees.
Item Amount
---- ------
SEC Commission registration fees $ 3,493
Accounting fees and expenses $10,000
Legal fees and expenses $12,000
Blue Sky fees and expenses $ 5,000
Printing Expenses $ 5,000
Miscellaneous Expenses $ 4,507
Total: $40,000
Item 15. Indemnification of Directors and Officers
The Company's articles of incorporation provide that
officers and directors of the Company shall be indemnified to the
maximum extent permitted by law. The provisions of the Utah
Revised Business Corporation Act (the "Revised Act") are, and
provide, as follows:
Section 16-10a-902 ("Section 902") of the Revised Act
provides that a corporation may indemnify any individual who was,
is, or is threatened to be made a named defendant or respondent
(a "Party") in any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal (a "Proceeding"),
because he is or was a director of the corporation or, while a
director of the corporation, is or was serving at its request as
a director, officer, partner, trustee, employee, fiduciary or
agent of another corporation or other person or of an employee
benefit plan (an "Indemnifiable Director"), against any
obligation incurred with respect to a Proceeding, including any
judgment, settlement, penalty, fine or reasonable expenses
(including attorneys' fees), incurred in the Proceeding if his
conduct was in good faith, he reasonably believed that his
conduct was in, or not opposed to, the best interests of the
corporation, and, in the case of any criminal Proceeding, he had
no reasonable cause to believe his conduct was unlawful; provided
however, that, pursuant to Subsection 902(4), (i) indemnification
under Section 902 in connection with a Proceeding by or in the
right of the corporation is limited to payment of reasonable
expenses (including attorneys' fees) incurred in connection with
the Proceeding and (ii) the corporation may not indemnify an
Indemnifiable Director in connection with a Proceeding by or in
the right of the corporation in which the Indemnifiable Director
was adjudged liable to the corporation, or in connection with any
other Proceeding charging that the Indemnifiable Director derived
an improper personal benefit, whether or not involving action in
his official capacity, in which Proceeding he was adjudged liable
on the basis that he derived an improper personal benefit.
<PAGE> II-32
Section 16-10a-903 ("Section 903") of the Revised Act
provides that, unless limited by its articles of incorporation, a
corporation shall indemnify an Indemnifiable Director who was
successful, on the merits or otherwise, in the defense of any
Proceeding, or in the defense of any claim, issue or matter in
the Proceeding, to which he was a Party because he is or was an
Indemnifiable Director of the corporation, against reasonable
expenses (including attorneys' fees) incurred by him in
connection with the Proceeding or claim with respect to which he
has been successful.
In addition to the indemnification provided by Sections 902
and 903, Section 16-10a-905 ("Section 905") of the Revised Act
provides that, unless otherwise limited by a corporation's
articles of incorporation, an Indemnifiable Director may apply
for indemnification to the court conducting the Proceeding or to
another court of competent jurisdiction. On receipt of an
application and after giving any notice the court considers
necessary, (i) the court may order mandatory indemnification
under Section 903, in which case the court shall also order the
corporation to pay the director's reasonable expenses to obtain
court-ordered indemnification, or (ii) upon the court's
determination that the director is fairly and reasonably entitled
to indemnification in view of all the relevant circumstances and
regardless of whether the director met the applicable standard of
conduct set forth in Section 902 or was adjudged liable as
described in Subsection 902(4), the court may order
indemnification as the court determines to be proper, except that
indemnification with respect to certain Proceedings resulting in
a director being found liable as described in Subsection 902(4)
is limited to reasonable expenses (including attorneys' fees)
incurred by the director.
Section 16-10a-904 ("Section 904") of the Revised Act
provides that a corporation may pay for or reimburse the
reasonable expenses (including attorneys' fees) incurred by an
Indemnifiable Director who is a Party to a Proceeding in advance
of the final disposition of the Proceeding if (i) the director
furnishes the corporation a written affirmation of his good faith
belief that he has met the applicable standard of conduct
described in Section 902, (ii) the director furnishes to the
corporation a written undertaking, executed personally or in his
behalf, to repay the advance if it is ultimately determined that
he did not meet the required standard of conduct, and (iii) a
determination is made that the facts then known to those making
the determination would not preclude indemnification.
Section 16-10a-907 of the Revised Act provides that, unless
a corporation's articles of incorporation provide otherwise, (i)
an officer of the corporation is entitled to mandatory
indemnification under Section 903 and is entitled to apply for
court ordered indemnification under Section 905, in each case to
the same extent as an Indemnifiable Director, (ii) the
corporation may indemnify and advance expenses to an officer,
employee, fiduciary or agent of the corporation to the same
extent as an Indemnifiable Director, and (iii) a corporation may
also indemnify and advance expenses to an officer, employee,
fiduciary or agent who is not an Indemnifiable Director to a
greater extent than the right of indemnification granted to
Indemnifiable Directors, if not inconsistent with public policy,
and if provided for by its articles of incorporation, bylaws,
general or specific action of its board of directors or contract.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and
controlling persons pursuant to the foregoing provisions, the
Registrant has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is
contrary to public policy as expressed in the Securities Act and,
therefore, is unenforceable.
<PAGE> II-33
Item 16. Exhibits.
The following exhibits required by Item 601 of Regulations S-K
promulgated under the Securities Act have been included herewith
or have been filed previously with the SEC as indicated below.
Exhibit
Number Title of Document Location
------- ------------------------- ----------------------
4.1 Articles of Incorporation Registration Statement
on Form S-18, File
No. 33-1381- D.*
4.2 Amended Bylaws Annual Report on
Form 10-K for the
fiscal year ended
September 30, 1990.*
5 Opinion Re Legality Filed herewith.
23.1 Consent of Hansen Barnett
& Maxwell Filed herewith.
23.2 Consent of Parr Waddoups Brown Included in Exhibit No. 5
Gee & Loveless
24 Power of Attorney Registration Statementon
Form S-3, File No. 333-40262,
filed June 28, 2000.*
*Incorporated by Reference.
Item 17. Undertakings.
(a) The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective
amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement;
notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the change in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.
<PAGE> II-34
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
Registration Statement or any material change to such information
in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by the Company pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Company hereby undertakes that, for purposes
of determining any liability under the Securities Act, each
filing of the Company's annual report pursuant to Section 13(a)
or Section 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Company, the Company has been informed
that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act, and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
<PAGE> II-35
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Amendment No. 1 to Registration
Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Salt Lake,
State of Utah, on August 8, 2000.
EUROGAS INC.
By: /s/ Karl Arleth
------------------------------
Karl Arleth, President & Chief
Executive Officer
POWER OF ATTORNEY AND ADDITIONAL SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 1 to Registration Statement has been signed by
the following persons in the capacities and on the dates
indicated.
Signature Title Date
---------------------- ----------------------------------- --------------
/s/ Karl Arleth
---------------------- President, Chief Executive Officer, August 17, 2000
Karl Arleth Director, and Interim Chief Financial
Officer (Principal Executive Officer,
Principal Financial and Accounting
Officer)
/s/ Gregory Fontana* Director August 17, 2000
---------------------
Gregory Fontana
/s/ Andrew Andraczke* Director August 17, 2000
---------------------
Andrew Andraczke
* By: /s/ Karl Arleth
---------------
Karl Arleth, Attorney-in-Fact
<PAGE> II-36
EXHIBIT INDEX
The following exhibits required by Item 601 of Regulations S-K
promulgated under the Securities Act have been included herewith
or have been filed previously with the SEC as indicated below.
Exhibit Title of Document Location
Number
-------- ------------------------ ---------------------
4.1 Articles of Incorporation Registration
Statement
on Form S-18,
File No. 33-1381- D.*
4.2 Amended Bylaws Annual Report
on Form 10-K for
the fiscal year
ended September 30, 1990.*
5 Opinion Re Legality Filed herewith.
23.1 Consent of Hansen Barnett & Filed herewith.
Maxwell
23.2 Consent of Parr Waddoups Brown Included In Exhibit No. 5
Gee & Loveless
24 Power of Attorney Registration Statementon
Form S-3, File No. 333-40262,
filed June 28, 2000.*
*Incorporated by Reference.
<PAGE> II-37
