<PAGE>
As filed with the Securities and Exchange Commission on December 31, 1998
Registration No. 333-________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM S-8
REGISTRATION STATEMENT
Under the Securities Act of 1933
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Nevada 13-3130236
- ------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
444 Madison Avenue, Suite 3203, New York, NY 10022
(Address of principal executive offices) (zip code)
1998 STOCK OPTION PLAN
1998 STOCK AWARD PLAN
(Full Title of the Plans)
Dr. George N. Faris, Chief Executive Officer
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
444 Madison Avenue
New York, New York 10022
(212) 688-3333
(Name, Address and telephone number including area code, of agent for service)
A copy of all communications, including communications sent to the agent for
service, should be sent to:
Charles Snow, Esq.
Snow Becker Krauss P.C.
605 Third Avenue
New York, N.Y. 10158-0125
(212) 687-3860
Approximate date of commencement of proposed sale to the public: Upon filing of
this registration statement
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum Amount of
Securities to Amount to be Offering Price Aggregate Registration
be Registered Registered Per Share Offering Price Fee
- ------------- ------------ ---------- -------------- ------------
<S> <C> <C> <C> <C>
Stock Options 5,000,000(1) ------ ------- (2)
Common Stock,
$.08 par value 500,000 shs.(3) $1.00(4) $ 500,000 $ 139.00
Common Stock,
$.08 par value 2,107,000 shs.(5)(6) $ 2.10(7) $4,424,700 $1,230.07(7)
Common Stock,
$.08 par value 2,893,000 shs.(6)(8) $1.00(4) $2,893,000 $ 804.25(7)
Common Stock,
$.08 par value 100,000 shs.(9) $ 1.25 $ 125,000 $ 34.75
-------------
Total $2,208.07
</TABLE>
- ----------------------------
(1) Represents options granted or to be granted pursuant to the 1998 Stock
Option Plan (the "Option Plan") of American International Petroleum
Corporation (the "Registrant").
(2) No registration fee is required pursuant to Rule 457(h)(2).
(3) Shares which may be issued pursuant to the 1998 Stock Award Plan (the
"Stock Plan") of the Registrant.
(4) Calculated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) based upon the closing sale price for the Common
Stock on the Nasdaq National Market on December 28, 1998.
(5) Shares issuable upon exercise of options granted under the Option Plan.
(6) Pursuant to Rule 416, includes an indeterminable number of shares of Common
Stock which may become issuable pursuant to the anti-dilution provisions of
the Option Plan.
(7) Calculated solely for the purpose of determining the registration fee
pursuant to Rule 457(h)(1) based upon the average exercise price.
(8) Shares issuable upon exercise of options available for grant under the
Option Plan.
(9) Shares issued as partial compensation for consulting services.
<PAGE>
EXPLANATORY NOTE
This Registration Statement includes a form of prospectus to be used by
certain persons who may be deemed to be affiliates of the Registrant in
connection with the resale of shares of Common Stock received by such persons
pursuant to the Registrant's 1998 Stock Award Plan and upon exercise of options
granted under the Registrant's 1998 Stock Option Plan, which shares are subject
to this Registration Statement, and upon exercise of options granted under the
Registrant's 1995 Stock Option Plan, which shares are subject to the
Registrant's Registration Statement on Form S-8, filed on August 27, 1997 (File
No. 333-34431).
-ii-
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents By Reference
The following documents filed by the Registrant under the Securities
Exchange Act with the Securities and Exchange Commission are incorporated by
reference in this registration statement.
(1) Annual Report on Form 10-K for the fiscal year ended December 31, 1997;
(2) Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
1998, June 30, 1998 and September 30, 1998;
(3) The description of the common stock contained in the Registrant's
Registration Statement on Form 8-A (File No. 0-14905) filed pursuant to Section
12(g) of the Securities Exchange Act, including any amendment or report filed
for the purpose of updating that description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act, prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this registration statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this registration statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Snow Becker Krauss P.C., counsel to the Registrant, owns 147,000 shares of
common stock, and SBK Investment Partners, an investment nominee of Snow Becker
Krauss P.C. owns 225,905 shares of common stock, all of which was issued to it
for legal fees and disbursements. Snow Becker Krauss P.C. is rendering an
opinion upon the validity of the securities being registered hereby.
II-1
<PAGE>
Item 6. Indemnification of Directors and Officers.
Under Section 78.7502 of the Nevada Corporation Law ("NCL"), directors and
officers may be indemnified against judgments, fines and amounts paid in
settlement and reasonable expenses (including attorneys' fees), actually and
reasonably incurred as a result of specified actions or proceedings (including
appeals), whether civil or criminal (other than an action by or in the right of
the corporation--a "derivative action") if they acted in good faith and for a
purpose which they reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. A
similar standard of care is applicable in the case of derivative actions, except
that indemnification only extends to amounts paid in settlement and reasonable
expenses (including attorneys' fees) actually and reasonably incurred by them in
connection with the defense or settlement of such an action (including appeals),
except in respect of a claim, issue or matter as to which such person shall have
been finally adjudged to be liable to the corporation, unless and only to the
extent a court of competent jurisdiction deems proper.
In accordance with Section 78.037(1) of the NCL, Article VIII of the
Registrant's Certificate of Incorporation, as amended, eliminates the personal
liability of the Registrant's directors to the Registrant or its shareholders
for monetary damages for breach of their fiduciary duties as directors, with
certain limited exceptions set forth in said Article VIII and Section 78.037(1).
Article VII of the Registrant's Bylaws provides for indemnification of
directors, officers and others as follows:
"On the terms, to the extent, and subject to the condition
prescribed by statute and by such rules and regulations, not
inconsistent with statute, as the Board of Directors may in its
discretion impose in general or particular cases or classes of cases,
(a) the Corporation shall indemnify any person made, or threatened to
be made, a party to an action or proceeding, civil or criminal,
including an action by or in the right of any other corporation of any
type or kind, domestic or foreign, or any partnership, joint venture,
trust, employee benefit plan or other enterprise which any director or
officer of the Corporation served in any capacity at the request of the
Corporation, by reason of the fact that he, his testator or intestate,
was a director or officer of the joint venture, trust, employee benefit
plan or other enterprise in any capacity, against judgments, fines,
amounts paid in settlement and reasonable expenses, including
attorneys' fees of any such action or proceeding, or any appeal
therein, and (b) the Corporation may pay, in advance of final
disposition of any such action or proceeding, expenses incurred by such
person in defending such action or proceeding.
On the terms, to the extent, and subject to the conditions
prescribed by statute and by such rules and regulations, not
inconsistent with statute, as the Board of Directors may in its
discretion impose in general or particular cases or classes of cases,
(a) the Corporation shall indemnify any person made a party to an
action by or in the right of the Corporation to procure a judgment in
its favor, by reason of the fact that he, his testator or intestate, is
or was a director or officer of the Corporation, against the reasonable
expenses, including attorneys' fees, actually and necessarily incurred
by him in connection with the defense of such action, or in connection
with an appeal therein, and (b) the Corporation may pay, in advance of
final disposition of any such action, expenses incurred by such person
in defending such action or proceeding."
The Registrant maintains insurance, at its expense, to reimburse itself and
directors and officers of the Registrant and of its direct and indirect
subsidiaries against any expense, liability or loss arising out of
indemnification claims against directors and officers and to the extent
otherwise permitted under the NCL.
II-2
<PAGE>
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT
MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE REGISTRANT
PURSUANT TO THE FOREGOING PROVISIONS, THE REGISTRANT HAS BEEN INFORMED THAT IN
THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION SUCH INDEMNIFICATION IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT AND IS THEREFORE
UNENFORCEABLE.
Item 7. Exemption From Registration Claimed.
On December 2, 1998, the Registrant issued 100,000 shares of common
stock to Yahaly Kahanoff pursuant to a consulting agreement dated December 2,
1998, as partial compensation for consulting services. The shares were issued
pursuant to the exemption from registration provided by section 4(2) of the
Securities Act.
Item 8. Exhibits.
Exhibit No. Description of Exhibit
- ----------- ----------------------
4.1 1998 Stock Option Plan (the "Option Plan").(*)
4.4 1998 Stock Award Plan.
5.1 Opinion of Snow Becker Krauss P.C.
10.1 Consulting Agreement dated December 2, 1998 between the
Registrant and Yahaly Kahanoff.
23.1 Consent of Snow Becker Krauss P.C. (included in Exhibit 5.1)
23.2 Consent of Hein + Associates LLP.
23.3 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney (included on the signature page of this
Registration Statement).
- -------------------
(*) Incorporated by reference to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1997.
Item 9. Required Undertakings.
The undersigned Registrant hereby undertakes:
(a)(l) To file, during any period in which offers or sales are being
made, 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 the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represents a fundamental change in the information set forth in the registration
statement;
II-3
<PAGE>
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information 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; and
(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 Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
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 or controlling persons of
the Registrant pursuant to any arrangement, provision or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant 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 Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent
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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-8 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York, State of New York, on December 30, 1998.
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
By: /s/George M. Faris By: /s/ Denis J. Fitzpatrick
-------------------------- -------------------------------
George M. Faris Denis J. Fitzpatrick
President and Chief Chief Financial Officer
Executive Officer (Principal financial and
(Principal executive accounting officer)
officer)
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints George
N. Faris or Denis J. Fitzpatrick, his true and lawful attorney-in-fact and
agent, with power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement, and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying all
that said attorney-in-fact and agent or his substitute or substitutes, or any of
them, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
on December 30, 1998.
Signature Title
--------- -----
/s/ George N. Faris President, Chief Executive Officer and
- --------------------------- Chairman of the Board of Directors
George N. Faris (principal executive officer)
/s/Denis J. Fitzpatrick Chief Financial Officer
- --------------------------- (principal financial
Denis J. Fitzpatrick and accounting officer)
Director
- ---------------------------
Donald G. Rynne
/s/Daniel Y. Kim Director
- ---------------------------
Daniel Y. Kim
Director
- ---------------------------
William R. Smart
/s/ Richard W. Murphy Director
- ---------------------------
Richard W. Murphy
II-5
<PAGE>
EXHIBIT 5.1
December 30, 1998
American International Petroleum Corporation
444 Madison Avenue
New York, New York 10022
Gentlemen:
We are counsel to American International Petroleum Corporation, a Nevada
corporation (the "Company"), in connection with the filing by the Company with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), of a registration statement on Form S-8 (the
"Registration Statement") relating to 5,600,000 shares (the "Shares") of the
Company's common stock, par value $.08 per share (the "Common Stock"). The
Shares include (i) 5,000,000 shares issuable upon the exercise of options
granted or to be granted pursuant to the Company's 1998 Stock Option Plan (the
"Option Plan"), (ii) 500,000 shares issuable pursuant to the Company's 1998
Stock Award Plan( together with the Option Plan, the "Plans"), and (iii) 100,000
shares issued to a consultant.
We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of the Certificate of Incorporation
and By-Laws of the Company, as each is currently in effect, the Registration
Statement, the Plan, the Consulting Agreement dated December 2, 1998 with Yahaly
Kahanoff, (the "Consulting Agreement"), resolutions of the Board of Directors of
the Company relating to the adoption of the Plans, the Consulting Agreement and
the proposed registration and issuance of the Shares and such other corporate
documents and records and other certificates, and we have made such
investigations of law as we have deemed necessary or appropriate in order to
render the opinions hereinafter set forth.
In our examination, we have assumed the genuineness of all signatures, the
legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such documents. As to any facts
material to the opinions expressed herein which were not independently
established or verified, we have relied upon statements and
representations of officers and other representatives of the Company and
others.
Based on the foregoing, we are of the opinion that:
1. The Company has been duly organized, is validly existing
and in good standing under the laws of the State of Nevada.
2. The stock options issuable under the Option Plan have been
duly authorized by the Board of Directors of the Company.
3. The shares of Common Stock issuable upon exercise of stock
options granted and to be granted pursuant to the Option Plan
have been duly authorized and reserved for issuance, and when
duly issued and paid for in accordance with the stock option
agreement between the Company and the individuals granted
options pursuant to the Option Plan will be legally issued,
fully paid and non-assessable.
.
4. The shares of Common Stock issuable under the 1998 Stock
Award Plan have been duly authorized and reserved for
issuance, and when duly issued in accordance with the 1998
Stock Award Plan will be legally issued, fully paid and
non-assessable.
5. The 100,000 shares issued to a consultant were duly
authorized, legally issued, fully paid and non-assessable.
<PAGE>
Our firm owns 147,000 shares of common stock, and an investment nominee of our
firm owns 225,905 shares of common stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference in the Registration Statement to
this firm under the heading "Interests of Named Experts and Counsel." In giving
this consent, we do not hereby admit that we are within the category of persons
whose consent is required under Section 7 of the Securities Act, or the rules
and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Snow Becker Krauss P.C.
-----------------------------
SNOW BECKER KRAUSS P.C.
<PAGE>
EXHIBIT 10.1
CONSULTING AGREEMENT
AGREEMENT made as of the 1st day of December, 1998 by and between
American International Petroleum Corp. (the "Company") with an address at
444Madison Avenue, New York, N.Y. and Yahaly Kahanoff, P.O. Box 71, Roadtown,
Tortola, BVI.
W I T N E S S E T H
WHEREAS, the Company desires to retain the Consultant to provide
ongoing consulting services; and
WHEREAS, the Consultant desires to be retained to render such
services.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
(2) The Company hereby retains the Consultant and the Consultant
hereby accepts such retention to perform consulting services. In regard to the
foregoing, subject to the terms set forth below, the Consultant shall from time
to time, upon reasonable request upon no less than five business day's notice
(unless the Consultant agrees to a lesser amount of notice for specific
requested services hereunder): (i) introduce the Company to certain entities and
/or individuals for potential energy projects, (ii) advise the Company as to
customs and procedures relating to certain foreign operations, (iii) advise and
liaison with certain foreign government procedures and compliance therewith, and
(iv) provide advice and recommendations with respect to the business and affairs
of the Company.
(3) In addition, the Consultant shall hold itself ready to assist
the Company in evaluating and negotiating particular contracts or transactions,
if requested to do so by the Company, upon reasonable notice. Nothing herein
shall require the Company to utilize the Consultant's services in any particular
transactions nor shall it limit the Company's obligations arising under any
other agreement or understanding.
(4) For the services described in Paragraphs 1 and 2 of the
Agreement, the Company shall pay to the Consultant the sum of $6,000, receipt of
which is acknowledged.
4. As additional compensation for the foregoing services the
Company shall deliver 100,000 shares of the Company's Common Stock and file a
registration statement with the Securities and Exchange Commission to cover the
public sale of such shares by the Consultant. Receipt of the foregoing shares is
acknowledged.
5. All obligations of the Consultant contained herein shall be
subject to the Consultant's reasonable availability for such performance, in
view of the nature of the requested service and the amount of notice received.
The Consultant shall devote such time and effort to the performance of its
duties hereunder as the Consultant shall determine is reasonably necessary for
such performance. The Consultant may look to such others for such factual
information, investment recommendations, economic advice and/or research, upon
which to base its advice to the Company hereunder, as it shall deem appropriate.
The Company shall furnish to the Consultant all information relevant to the
performance by the Consultant of its obligations under this Agreement, or
particular projects as to which the Consultant is acting as advisor, which will
permit the Consultant to know all facts material to the advice to be rendered,
and all material or information reasonably requested by the Consultant.
<PAGE>
6. Nothing contained in this Agreement shall limit or restrict the
right of the Consultant or of any partner, employee, agent or representative of
the Consultant, to be a partner, director, officer, employee, agent or
representative of, or to engage in, any other business, whether of a similar
nature or not, nor to limit or restrict the right of the Consultant to render
services of any kind to any other corporation, firm, individual or association.
7. The Consultant will hold in confidence any confidential
information which the Company provides to the Consultant pursuant to this
Agreement unless the Company gives the Consultant permission in writing to
disclose such confidential information to a specific third party.
Notwithstanding the foregoing, the Consultant shall not be required to maintain
confidentiality with respect to information which (i) is or becomes part of the
public domain; (ii) it had independent knowledge prior to disclosure; (iii)
comes into the possession of the Consultant in the normal and routine course of
its own business from and through independent non-confidential sources; or (iv)
is required to be disclosed by the Consultant by governmental requirements. If
the Consultant is requested or required (by oral questions, interrogatories,
requests for information or document subpoenas, civil investigative demands, or
similar process) to disclose any confidential information supplied to it by the
Company, or the existence of other negotiations in the course of its dealings
with the Company or its representatives, the Consultant shall, unless prohibited
by law, promptly notify the Company of such request(s) so that the Company may
seek an appropriate protective order. For the purposes set forth in this
Paragraph, Consultant shall also mean any affiliate of Consultant. Affiliate
shall mean any person, firm or corporation which controls or is controlled by
Consultant.
8. The Company and the Consultant agree to indemnify and hold each
other harmless, including their respective partners, employees, agents,
representatives and controlling persons (and the officers, directors, employees,
agents, representatives and controlling persons of each of them) from and
against any and all losses, claims, damages, liabilities, costs and expenses
(and all actions, suits, proceedings or claims in respect thereof) and any legal
or other expenses in giving testimony or furnishing documents in response to a
subpoena or otherwise (including, without limitation, the cost of investigating,
preparing or defending any such action, suit, proceeding or claim, whether or
not in connection with any action, suit, proceeding or claim in which the
Consultant or the Company is a party), as and when incurred, directly or
indirectly, caused by, relating to, based upon or arising out of the
Consultant's service pursuant to this Agreement. This Paragraph shall survive
the termination of this Agreement.
9. This Agreement may not be transferred, assigned or delegated by
any of the parties hereto without the prior written consent of the other party
hereto.
10. The failure or neglect of the parties hereto to insist, in any
one or more instances, upon the strict performance of any of the terms or
conditions of this Agreement, or their waiver of strict performance of any of
the terms or conditions of this Agreement, shall not be construed as a waiver or
relinquishment in the future of such term or condition, but the same shall
continue in full force and effect.
11. This Agreement is for a term of TWELVE (12) months from the
date hereof, unless mutually agreed to and extended in writing.
<PAGE>
12. Any notices hereunder shall be sent to the Company and to the
Consultant at their respective addresses set forth above. Any notice shall be
given by registered or certified mail, postage prepaid, and shall be deemed to
have been given when deposited in the United States mail. Either party may
designate any other address to which notice shall be given by giving written
notice to the other of such change of address in the manner herein provided.
13. This Agreement has been made in the State of New York and
shall be construed and governed in accordance with the laws thereof without
giving effect to principles governing conflicts of law.
(5) This Agreement contains the entire agreement between the
parties, may not be altered or modified, except in writing and signed by the
party to be charged thereby, and supersedes any and all previous agreements
between the parties relating to the subject matter hereof.
(6) This Agreement shall be binding upon the parties hereto, the
indemnified parties referred to in Section 7, and their respective heirs,
administrators, successors and permitted assigns.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto as of the date first above written.
American International Petroleum Corp.
By: /s/ George Faris
-----------------------------
George Faris, President
/s/ Yahaly Kahanoff
------------------------------
YAHALY KAHANOFF
<PAGE>
Exhibit 23.2
Independent Auditors Consent
The Board of Directors
American International Petroleum Corporation:
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8, and the accompanying Prospectus, of our
report dated March 17, 1998, appearing on page F-1 of American International
Petroleum Corporation's Annual Report on Form 10-K for the year ended December
31, 1997. We also consent to the reference to us under the heading "Experts" in
the Prospectus filed herewith.
HEIN + ASSOCIATES LLP
Houston, Texas
December 29, 1998
<PAGE>
PROSPECTUS
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
Common Stock
The selling stockholders named in this prospectus are offering and selling
shares of common stock of American International Petroleum Corporation which
they have acquired or may acquire upon exercise of options granted or to be
granted under our 1995 Stock Option Plan, 1998 Stock Option Plan, or 1998 Stock
Award Plan.
The selling stockholders may offer the shares from time to time in public or
private transactions on or off the Nasdaq National Market, at prevailing market
prices or privately negotiated prices. Sales may be made through brokers,
dealers or other agents who may receive compensation in the form of commissions,
discounts or concessions.
The common stock is quoted on the Nasdaq National Market under the symbol
"AIPN". On December 30, 1998, the closing sale price of one share of common
stock on the Nasdaq National Market was $1.03.
The common stock is a speculative investment and involves a high degree of risk.
You should read the description of certain risks under the caption "Risk
Factors" commencing on page 4 before purchasing the common stock.
These securities have not been approved or disapproved by the SEC or any state
securities commission nor has the SEC or any state securities commission passed
upon the accuracy or adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
The date of this Prospectus is December 31, 1998
Information Contained Herein Is Subject to Completion or Amendment. A
Registration Statement Relating to These Securities Has Been Filed With The
Securities And Exchange Commission. These Securities May Not Be Sold Nor May
Offers to Buy Be Sold Nor May Offers to Buy Be Accepted Prior to The Time The
Registration Statement Becomes Effective. This Prospectus Shall Not Constitute
an Offer to Sell or the Solicitation of an offer to Buy Nor Shall There Be Any
Sale of These Securities in Any State in Which Such Offer, Solicitation or Sale
Would Be Unlawful Prior to Registration or Qualification under the Securities
Laws of Any State.
<PAGE>
Information About The Company
At American International Petroleum Corporation, we through our wholly
owned subsidiaries:
o Produce, process and market conventional and technologically advanced
polymer asphalt, vacuum gas, oil and other products at our refinery in
Lake Charles, Louisiana utilizing low-cost, low-gravity, high sulphur
crudes.
o Blend and market asphalt to the Florida and Georgia asphalt markets
utilizing our refinery in St. Marks Florida as a distribution facility.
o Engage in oil and gas exploration and development in western Kazakstan,
where we own a 70% working interest in a 20,000 square kilometer
exploration block.
We also are seeking other oil and gas projects in the United States,
Russia and Central Asia.
We file reports, proxy statements and other information with the SEC. You
may read and copy any document we file at the Public Reference Room of the SEC
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Regional Offices of the SEC at Seven World Trade Center, Suite 1300, New York,
New York 10048 and at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Please call 1-800-SEC-0330 for further information concerning the
Public Reference Room. Our filings also are available to the public from the
SEC's website at www.sec.gov. We distribute to our stockholders annual reports
containing audited financial statements.
Information Incorporated by Reference
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we make with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act until
the offering is completed:
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1. Annual Report on Form 10-K for the fiscal year ended December 31, 1997,
including any amendment to that report.
2. Proxy Statement dated May 15, 1998.
3. Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
1998, June 30, 1998 and September 30, 1998, including any amendment to those
reports.
4. The description of the common stock contained in our Registration
Statement on Form 8-A (File No. 0-14905) under Section 12 of the Securities
Exchange Act, including any amendment or report updating that description.
You may request a copy of these filings, at no cost, by writing or calling us
at:
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
444 Madison Avenue
New York, New York 10022
Attention: Corporate Secretary
Telephone: (212) 688-3333
Recent Development
On December 14, 1998, we received 25% of the outstanding shares of Zao
Nafta, a Russian closed-end company with which we had planned to form a joint
venture. Zao Nafta has 17 oil and gas licenses covering approximately 877,000
acres in the Samara and Saratov regions of Southwestern Russia.
We had agreed to pay $11 million for a 75% working interest in the
proposed joint venture, and paid a $300,000 advance on the purchase price.
In June 1998 we withdrew from negotiations with Zao Nafta after we could
not reach agreement on operational control of the proposed joint venture. We
received the shares of Zao Nafta after Zao Nafta breached its obligation to
return our $300,000 advance.
---------------
This prospectus is part of a registration statement we filed with the SEC. You
should rely only on the information or representations provided in this
prospectus. We have not authorized anyone to provide you with different
information. The common stock will not be offered in any state where an offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the cover of this prospectus.
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RISK FACTORS
Before you invest in our common stock, you should be aware that there
are various risks, including those described below. You should consider
carefully these risk factors together with all of the other information included
in this prospectus, including the documents that we incorporate by reference,
before you decide to purchase shares of common stock.
Some of the information in this prospectus may contain forward-looking
statements. Such statements can be identified by the use of forward-looking
terminology such as may, "will," "expect," "believe," "intend," "anticipate,"
"estimate," "continue" or similar words. These statements discuss future
expectations, estimate the happening of future events or our financial condition
or state other "forward-looking" information. When considering such
forward-looking statements, you should keep in mind the risk factors and other
cautionary statements in this prospectus and the documents that we incorporate
by reference. The risk factors noted in this section and other factors noted
throughout this prospectus, including certain risks and uncertainties, could
cause our actual results to differ materially from those contained in any
forward-looking statement.
History of Losses. We have incurred losses since 1992. We incurred a net loss of
approximately $17,954,000 (on revenues of $828,000) for the fiscal year ended
December 31, 1997 and a net loss of approximately $4,652,000 (on revenues of
$4,003,000) for the fiscal year ended December 31, 1996. We incurred a net loss
of approximately $3,518,000 (on revenues of approximately $9,228,000) for the
nine months ended September 30, 1998, as compared to a net loss of approximately
$12,707,000 (on revenues of approximately $453,000) for the nine months ended
September 30, 1997. As a result of continuing losses, we had an accumulated
deficit of approximately $3,518,000 at September 30, 1998. We will continue to
incur operating losses unless we are successful in our efforts to develop our
refinery operations in Lake Charles, Louisiana and/or our oil and gas
exploration and development activities in Kazakstan and Russia.
Going Concern Opinion. In connection with the audit of our financial statements
as of December 31, 1997, Hein + Associates, LLP, our certified public
accountants, issued a report which included an explanatory paragraph relating to
our ability to continue as a "going concern".
Need For Additional Financing. During 1999, we may require additional financing
to supplement anticipated cash flows from our refinery operations in Lake
Charles, Louisiana in order to meet operating and certain other funding
obligations. In the event we are unable to obtain the necessary financing to
meet these obligations, our ability to continue operations at current levels
will be materially and adversely effected. In addition, our oil and gas license
in Kazakhstan could be revoked. We may need to raise additional funds through
public or private financings, including equity financings, with may be dilutive
to stockholders. There can be no assurance that we will be able to raise
additional funds if our capital resources are exhausted, or that funds will be
available on terms attractive to us or at all.
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Outstanding Convertible Notes. As of December 31, 1998, we had outstanding
approximately $6,474,000 principal amount of convertible notes due April 21,
2000. If we are unable to repay, refinance or renegotiate the terms of the
notes, our ability to continue our operations may be materially and adversely
effected.
Dilutive Effect of Conversion of Notes. Our convertible notes are convertible
into shares of our common stock at a discount to the market price of the common
stock prior to conversion. Consequently, the number of shares into which the
notes may be converted at any time depends upon the market price of our common
stock. Conversion of the notes could adversely effect the market price of the
common stock and will have a dilutive effect on our stockholders. If holders of
the notes had converted the outstanding notes at an assumed conversion price of
$.9297 per share as of December 31, 1998, they would have received 6,963,128
shares, representing approximately 10.5% of the outstanding common stock.
IRS Excise Tax Claim. In May 1992, we were advised by the Internal Revenue
Service it was considering an assessment of excise taxes, penalties and interest
of approximately $3,500,000 related to our sale of fuel products during 1989. We
reached an agreement with the IRS to settle this matter by agreeing to pay an
aggregate of $646,633 in tax, plus interest accrued for the applicable periods
involved. The agreement with the IRS calls for the payment of the tax and
interest over a period of thirteen months beginning in September 1998. The IRS
waived all penalties and 75% of the amount of the originally proposed tax
liability. We continue to maintain that we are not liable for the excise taxes
at issue, but agreed to settle the dispute at a significantly lower amount of
liability to resolve this dispute. We expect to make all of our scheduled
payments on a timely basis. However, in the event we are unable to make timely
payments to the IRS, there is a possibility the IRS would seize or force a sale
of our refinery in Lake Charles, Louisiana to recoup amounts due.
Lack of Proven Reserves of Gas or Oil. Although we have identified structures
within our Kazakstan license area, we have only just begun to drill these
prospects and accordingly, we do not have any proven reserves of oil and gas. In
order to establish such reserves, we will have to incur all of the risks
associated with such exploration described below.
Risk of Capital Losses Due to Speculative Nature of Oil and Gas Industry. Oil
and gas exploration is extremely speculative, involving a high degree of risk.
Even if reserves are found as a result of drilling, profitable production from
reserves cannot be assured. We may not recover any oil or gas from drilling and
if we do recover oil or gas, market conditions may be unfavorable and we may not
be able to recover the costs of the drilling or receive any profits. In
addition, our current financial condition and available cash resources may
prevent our ability to drill offset wells.
Exposure to Losses From Drilling And Other Hazards. Unusual or unexpected
formation pressures, down-hole fires or other hazardous conditions may be
encountered in drilling oil and gas wells and in the refining of oil. If we
encounter such hazards, completion of wells may be substantially delayed and the
costs significantly increased. Even though a well is completed and is found to
be productive, water or other deleterious substances may be encountered, which
may impair or prevent production of oil or gas, and which may adversely affect
our operations. In addition, floods and adverse weather conditions can hinder or
delay feedstock and product movements at our refinery in Lake Charles, Louisiana
and drilling and production operations. Labor disputes, work stoppages,
shortages of equipment and materials or the unavailability of oil barges and
drilling rigs can also disrupt drilling and production operations.
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<PAGE>
Environmental Hazards. Our operations are subject to all of the environmental
risks normally incident to oil and gas exploration, drilling, and refining
activities, which include, but are not limited to, blowouts, pollution and
fires. Any of these occurrences could result in environmental damage or
destruction, including the discharge of hazardous materials into the
environment. Although we maintain comprehensive and general liability coverage
as is customary in the oil and gas industry, and coverage against certain risks,
we are not fully covered for damages incurred as a consequence of environmental
mishaps. To the extent we are covered, the coverage may not be adequate
protection in the event of an environmental problem.
Potential Cost Increases And Delays Due to Possible Shortages of Personnel And
Drilling Equipment. It is possible that field personnel, drilling rigs, pipes,
casing, or other tubular goods will not be available when needed for the
drilling, completion or operation of our prospects and wells. This possibility
could result in drilling or completion delays and, in some instances, result in
additional costs beyond normal drilling and completion costs, which could
adversely effect us.
Intense Competition And Uncertain Markets. The oil and gas industry is highly
competitive. Many companies are likely to compete against us for producing
properties and most of these companies have greater experience and financial
resources than us. Our success is dependent not only on the productivity of
the producing properties and the ultimate sale of said production, but also on:
o market prices for oil and gas, which are highly unstable
o operating costs incurred in producing the oil and/or gas
o transportation costs
o the cost of crude oil feedstocks
Energy Market Subject to Fluctuation. The revenues generated from our oil and
gas operations and the carrying value of our oil and gas properties are highly
dependent on the prices for oil and natural gas. The price we receive for our
oil is dependent upon numerous factors which are beyond our control and are
unpredictable. Some of these factors are:
o the quantity and quality of the oil or gas produced
o the overall supply of domestic and foreign oil or gas from currently
producing and subsequently discovered fields
o the extent of importation of foreign oil or gas
o the marketing and competitive position of other fuels, including
alternative fuels, as well as other sources of energy
o the proximity, capacity and cost of oil or gas pipelines and other
facilities for the transportation of oil or gas
o the regulation of allowable production by governmental authorities
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<PAGE>
o international political developments, including nationalization of oil
wells and political unrest or upheaval in the areas of the world in
which we have an interest or plans to conduct operations
Government Legislation May Limit Revenues or Increase Costs. Our exploration in
western Kazakstan is subject to regulations imposed by the Kazakstan government.
The Kazakstan government may limit oil and gas production and impose taxes on
oil and gas when sold. We cannot predict, whether such governmental actions may
occur, nor anticipate the ultimate effect of governmental policies and contracts
upon us. We will also be subject to the laws of jurisdictions through which oil
and gas pipelines traverse. We cannot predict what policies these jurisdictions
may follow, nor the impact of local regulations on our business.
Political and Economic Situation in Kazakstan. A favorable political climate in
Kazakstan and the openness of its markets to United States trade is essential to
our success in Kazakstan. The Confederation of Independent States ("CIS"), of
which Kazakstan is part, have embraced political and economic reforms, but,
there remains political and economic instability the result of which could be
detrimental to our operations there.
Because the CIS countries are in the early stages of development of a market
economy, the commercial framework in still developing along with commercial
laws, their applications and the enforcement of these laws. Although Kazakstan's
laws regarding foreign investment provide for protection against
nationalization and confiscation, there is little or no judicial precedent in
this area. Foreign firms operating in this region may be subject to numerous
other risks that are not present in domestic operations, including political
strife, the possibility of expropriation, inadequate distribution facilities,
restrictions on royalties, dividends and currency remittances, inflation,
fluctuations of foreign currencies, high and unpredictable levels of taxation,
requirements for governmental approvals for new ventures and local participation
in operations.
Currency Risks. Trading in CIS currencies has been characterized by significant
declines in value and considerable volatility. Although in recent months, CIS
currencies have experienced relative stability against the U.S. dollar, there is
a risk of further declines in value and continued volatility in the future.
Where major capital expenditures involve importation of equipment and the like,
current law permits the conversion of CIS revenues into foreign currency to make
such payments. CIS currencies are generally not convertible outside CIS
countries. If we discover oil or gas in the license area, and sell the oil or
gas in a CIS country, currency liquidity and restrictions may adversely effect
us. However, we may receive and hold U.S. Dollars within the CIS countries,
which may mitigate the currency risk there. A market exists within CIS countries
for the conversion of CIS currencies into other currencies, but it is limited in
size and is subject to rules limiting the purposes for which conversion may be
effected. The limited availability of other currencies may tend to inflate their
values relative to CIS currencies and we cannot give you any assurance that such
a market will continue to exist. Moreover, the banking systems in CIS countries
are not yet as developed as its Western counterparts and considerable delays may
occur in the transfer of funds within, and the remittance of funds out of these
countries. Any delay in converting CIS currencies into a foreign currency in
order to make a payment or delay in the transfer of such foreign currency could
have a material adverse effect on us.
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<PAGE>
Currency Controls; Restrictions on Repatriation of Payments. While applicable
legislation in the CIS currently permits the repatriation of profits and capital
and the making of other payments in hard currency, our ability to repatriate
such profits and capital and to make such other payments is dependent upon the
continuation of the existing legal regimes for currency control and foreign
investment, administrative policies and practices in the enforcement of such
legal regimes and the availability of foreign exchange in sufficient quantities
in those countries.
Risks Associated with Refinery Operation: Asphalt Production Is a New Venture.
We recently became engaged in the production and sale of asphalt products and
this venture has all of the risks and hazards associated with the establishment
of a new business. Problems that can occur in the early stages of a business
include delays, unanticipated expenses, marketing burdens, the failure to
obtain market acceptance of products, competition and production problems.
Operation of The Refinery Is Subject to Many of The Risks Associated With The
Oil And Gas Industry. Asphalt is a petroleum product and its production and sale
is subject to many of the risks inherent in such industry. Accordingly,
investors should review the risk disclosures relative to the production of oil
and gas described above. In particular, the production of asphalt is subject to
the adverse effects of hazards, such as fire, adverse weather, labor disputes,
lack of availability of transportation facilities, environmental hazards, cost
increases, shortages of equipment and personnel, competition, fluctuation in the
costs of crude oil supplies for the Refinery, fluctuations in the price of
finished products and transportation, government regulation and inability to
adequately and fully insure potential casualty losses. See "Risks Associated
with Oil and Gas Exploration and Production" for a more complete description of
the manner in which such factors may adversely effect our oil and gas operations
generally, and our refinery in Lake Charles, Louisiana, in particular.
Possible Adverse Effect of Issuance of Preferred Stock. Our certificate of
incorporation authorizes the issuance of preferred stock with such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without shareholder
approval, to issue preferred stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or other
rights of the holders of the common stock. In the event of issuance, the
preferred stock could be used, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the company, since
the terms of the preferred stock that might be issued could effectively restrict
our ability to consummate a merger, reorganization, sale of all or substantially
all of our assets, liquidation or other extraordinary corporate transaction
without the approval of the holders of the preferred stock.
Shares Eligible for Future Sale. We cannot give you any assurance as to the
effect, if any, that future sales of common stock, or the availability of shares
of common stock for future sales, will have on the market price of the common
stock from time to time. Sales of substantial amounts of common stock, or the
possibility of such sales, could adversely affect the market price of the common
stock and also impair our ability to raise capital through an offering of equity
securities in the future. As of December 31, 1998, there were 66,091,889 shares
of common stock outstanding of which 2,934,962 shares are restricted securities.
An additional
o 6,963,128 shares are issuable upon conversion of convertible notes,
at an assumed conversion price of $0.9297 per share
o 5,382,750 shares are issuable upon exercise of stock options granted
pursuant to our employee stock option plans at exercise prices ranging
from $.50 to $2.00 per share
o 5,390,152 shares are issuable upon exercise of warrants having exercise
prices ranging from $.40 to $2.76 per share
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<PAGE>
The issuance of these securities may have a dilutive effect on our common stock
and adversely effect the price of the common stock in the market. Management
will have broad discretion with respect to the issuance of the remaining
authorized but unissued shares, including discretion to issue such shares in
compensatory and acquisition transactions. In the event that we seek to procure
additional financing through the sale and issuance of our securities, or in the
event that current warrant holders, option holders or debenture holders exercise
or convert their securities into shares of common stock, the shareholders may
suffer immediate and substantial dilution in their percentage ownership of
shares of the common stock. In addition, the future issuance of shares below the
market price of the common stock may have a depressive effect in the future
market price of the common stock, although such market price is subject to
numerous factors, many of which are beyond our control, including general
economic business conditions and the economic condition of the oil and gas
industry.
Dependence on Key Personnel. Our success is dependent upon the efforts,
abilities and expertise of our Chief Executive Officer, Dr. George N. Faris, as
well as other key management personnel. Dr. Faris is employed pursuant to an
employment agreement which renews automatically each year until written notice
of termination is given by either Dr. Faris or us not later than 180 days prior
to May 1 of any renewal term. We also maintain a $2,000,000 key man life
insurance policy on the life of Dr. Faris. Our future success also is dependent,
in part, on our ability to attract and retain qualified personnel. We cannot
give you any assurance that we will be able to attract and retain qualified
individuals. As compared to other publicly traded oil and gas companies, we have
fewer resources to attract and/or retain key personnel, and we do not have the
depth of managerial employees to rely upon in the event of the loss of any
single employee. Accordingly, the loss of any key employee could have a material
adverse affect on the operations of our business.
Possible Volatility of Market Price of Common Stock. The market price of the
common stock may be highly volatile. Factors such as our financial results,
financing efforts and various factors affecting the oil and gas industry
generally may have a significant impact on the market price of the common stock.
Additionally, in the last several years, the stock market has experienced a high
level of price and volume volatility, and market prices for many companies,
particularly small and emerging growth companies, the common stock of which
trade in the over-the-counter market, have experienced wide price fluctuations
and volatility which have not necessarily been related to the operating
performance of such companies. Any such fluctuations, or general economic and
market trends, could adversely affect the market price of the common stock. Due
to all of the foregoing factors, it is likely that in some future quarter our
operating results will be below the expectations of public market analysts and
investors. In that event, the price of the common stock would likely be
materially adversely affected.
Absence of Dividends. Since inception we have not paid any cash dividends on the
common stock and do not expect to declare or pay any cash dividends in the
foreseeable future. We intend to retain earnings, if any, to finance our
operations. Furthermore, contractual restrictions in our agreement with the
purchasers of our convertible notes limit our ability to pay cash dividends.
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Continued Listing Requirements for Nasdaq Securities. Our securities are traded
on the Nasdaq National Market System ("Nasdaq-NMS"). Continued listing on
Nasdaq-NMS requires, among other criteria, a company to have tangible assets of
at least $4,000,000 and that the listed security(s) (other than those owned by
directors, officers, and other beneficial owners of more than 10% of such
securities) have a market value of at least $5,000,000 and a minimum bid price
of $1.00. Although we currently satisfy these criteria, we cannot give you any
assurance that we will continue to do so. If in the future we are unable to
satisfy the criteria for continued listing of our securities for Nasdaq-NMS,
they may be delisted. In that event, we would seek to have our securities listed
on The Nasdaq SmallCap Market or other securities exchange, subject to our
ability to satisfy the eligibility criteria for listing. If we were unable to
obtain any such listing, trading, if any, in our securities would thereafter
have to be conducted in the OTC "Bulletin Board." As a result, an investor might
find it more difficult to dispose of the common stock due to our reduced
visibility on the market.
Risks Relating to Low-Priced Stocks. The SEC has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks." Penny
stocks generally are equity securities with a price of less than $5.00, other
than securities registered on certain national securities exchanges or quoted on
Nasdaq, provided that current price and volume information with respect to
transactions in that security is provided by the exchange or system. The penny
stock rules, particularly Rule 15g-9 under the Securities Exchange Act, require
a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized risk disclosure document prepared by
the SEC that provides information about penny stocks and the nature and level of
risks in the penny stock market. Bid and offer quotations, and the broker dealer
and salesperson compensation information, must be given to the customer orally
or in writing prior to effecting the transaction and must be given to the
customer in writing before or with the customer's confirmation. In addition, the
penny stock rules require that prior to a transaction in a penny stock not
otherwise exempt from such rules, the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules.
If the common stock were no longer traded on Nasdaq, the common stock, depending
on its market price, would be subject to the penny stock rules. If the common
stock becomes subject to the penny stock rules, investors may find it more
difficult to sell the common stock.
Effect of Issuance of Common Stock Upon Exercise of Warrants and Options. As of
December 31, 1998, there were outstanding:
o warrants to purchase 5,390,152 shares of common stock, at exercise
prices ranging from $.40 to $2.76 per share with expiration dates of
from January 12, 1999 to April 21, 2003
o employee stock options to purchase 5,382,750 shares of common stock
exercisable at exercise prices ranging from $.50 to $2.00 per share with
expiration dates of from December 31, 1999 to December 31, 2002.
The exercise of warrants or options and the sale of the underlying shares of
common stock (or even the potential of such exercise or sale) could have an
adverse effect on the market price of the common stock, and will have a
dilutive impact on other stockholders. Moreover, the terms upon which we will be
able to obtain additional equity capital may be adversely affected since the
holders of outstanding warrants and options can be expected to exercise them, to
the extent they are able, at a time when we would, in all likelihood, be able to
obtain any needed capital on terms more favorable than those provided in such
warrants or options.
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Selling Stockholders
The following table sets forth the names of the selling stockholders, the number
of shares of common stock beneficially owned by each selling shareholder as of
December 31, 1998, the number of shares that each selling stockholder may offer,
and the number of shares of common stock beneficially owned by each selling
stockholder upon completion of the offering, assuming all of the shares are
sold. The number of shares sold by each selling stockholder may depend upon a
number of factors, including, among other things, the market price of the common
stock.
Participants under our 1995 Stock Option Plan, 1998 Stock Option Plan or 1998
Stock Award Plan that we consider "affiliates" who may acquire common stock
under the plans may be added to the list of selling stockholders named below
from time to time by use of a prospectus supplement filed pursuant to Rule
424(b) under the Securities Act. An "affiliate" is defined in Rule 405 under the
Securities Act as a "person that directly, or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with,"
American International Petroleum Corporation.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Beneficial Maximum Number of Beneficial Ownership
Ownership Before Shares Subject to After Offering
Offering (1) Outstanding Options --------------------
Name Position ------------------- Which May be
----- -------- Number Reoffered by Number
of Shares % (2) this Prospectus (3) of Shares % (2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
George N. Faris(4) Chairman of the Board 4,080,000(5) 6.0%(6) 2,952,500 2,105,000 3.1%
and Chief Executive
Officer
- --------------------------------------------------------------------------------------------------------------------
Denis J. Vice President, 221,250 * 415,000 - *
Fitzpatrick(4) Secretary and
Chief Financial
Officer
- --------------------------------------------------------------------------------------------------------------------
Daniel Y. Kim(4) Director 213,500(7) * 205,500 8,000 *
- --------------------------------------------------------------------------------------------------------------------
William R. Smart(4) Director 332,608(9) * 242,000 90,608 *
- --------------------------------------------------------------------------------------------------------------------
Donald G. Rynne(4) Director 716,862(8) * 210,000 506,862 *
- --------------------------------------------------------------------------------------------------------------------
Richard W. Murphy(4) Director 50,000(10) * 100,000 - *
- --------------------------------------------------------------------------------------------------------------------
William Tracy(12) Treasurer, Controller 114,000(13) * 232,000 - *
- --------------------------------------------------------------------------------------------------------------------
Yahaly Kahanoff Consultant 100,000(14) * - 100,000 *
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
*Less than 1%
(1) Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares indicated, subject to community property
laws, where applicable. For purposes of computing the percentage of
outstanding shares held by each person or group of persons named above on
December 31, 1998, any security which such person or group of persons has
the right to acquire within 60 days after such date is deemed to be
outstanding for the purpose of computing the percentage ownership for such
person or persons, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person.
(2) Except as otherwise stated, based on 66,091,889 shares outstanding.
(3) Does not include shares that may be acquired by the selling stockholders
listed upon exercise of options which subsequently may be granted or
purchased pursuant to the plans, which shares (if any) will be added to the
number of shares listed by one or more supplements to this prospectus.
Furthermore, the inclusion in this prospectus of the stated number of
shares does not constitute a commitment to sell any or all of the stated
number of shares. The number of shares offered shall be determined from
time to time by each selling stockholder in his sole discretion.
(4) This person's address is c/o American International Petroleum Corporation,
444 Madison Avenue, New York, New York 10022.
(5) Includes 1,975,000 shares issuable upon exercise of options exercisable
within 60 days. Excludes 1,082,500 shares underlying options which are
not exercisable within 60 days.
(6) Based on 68,066,889 shares outstanding.
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(7) Includes 205,500 shares issuable upon exercise of options exercisable
within 60 days.
(8) Includes 210,000 shares issuable upon exercise of options exercisable
within 60 days.
(9) Includes 242,000 shares issuable upon exercise of options exercisable
within 60 days.
(10) Includes 50,000 shares issuable upon exercise of options exercisable
within 60 days. Excludes 50,000 shares underlying options which are not
exercisable within 60 days.
(11) Excludes 194,125 shares underlying options which are not exercisable
within 60 days.
(12) This person's address is c/o American International Petroleum Corporation,
2950 North Loop West, Suite 1000, Houston, Texas 77092.
(13) Excludes 116,750 shares underlying options which are not exercisable
within 60 days.
(14) These shares were issued for consulting services.
PLAN OF DISTRIBUTION
The selling stockholders (or, subject to applicable law, their pledgees, donees,
distributees, transferees or other successors in interest) may sell shares from
time to time in public transactions, on or off the Nasdaq National Market, or
private transactions, at prevailing market prices or at privately negotiated
prices, including but not limited to the following types of transactions:
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus; and
o face-to-face transactions between sellers and purchasers without a
broker-dealer.
The selling stockholders also may sell shares that qualify under Section 4(1) of
the Securities Act or Rule 144.
In effecting sales, brokers or dealers engaged by the selling stockholders may
arrange for other brokers or dealers to participate in the resales. The selling
stockholders may enter into hedging transactions with broker-dealers, and in
connection with those transactions, broker-dealers may engage in short sales of
the shares. The selling stockholders also may sell shares short and deliver the
shares to close out such short positions, except that the selling stockholders
have agreed that they will not enter into any put option or short position with
respect to the common stock prior to the date of the delivery of a conversion
notice. The selling stockholders also may enter into option or other
transactions with broker-dealers which require the delivery to the broker-dealer
of the shares, which the broker-dealer may resell pursuant to this prospectus.
The selling stockholders also may pledge the shares to a broker or dealer and
upon a default, the broker or dealer may effect sales of the pledged shares
pursuant to this prospectus.
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<PAGE>
Brokers, dealers or agents may receive compensation in the form of commissions,
discounts or concessions from selling stockholders in amounts to be negotiated
in connection with the sale. The selling stockholders and any participating
brokers or dealers may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales and any such commission, discount
or concession may be deemed to be underwriting compensation.
Information as to whether underwriters who may be selected by the selling
stockholders, or any other broker-dealer, is acting as principal or agent for
the selling stockholders, the compensation to be received by underwriters who
may be selected by the selling stockholders, or any broker-dealer, acting as
principal or agent for the selling stockholders and the compensation to be
received by other broker-dealers, in the event the compensation of such other
broker-dealers is in excess of usual and customary commissions, will, to the
extent required, be set forth in a supplement to this prospectus. Any dealer or
broker participating in any distribution of the shares may be required to
deliver a copy of this prospectus, including a prospectus supplement, if any, to
any person who purchases any of the shares from or through such dealer or
broker.
We have advised the selling stockholders that during such time as they may be
engaged in a distribution of the shares they are required to comply with
Regulation M promulgated under the Securities Exchange Act. With certain
exceptions, Regulation M precludes any selling stockholder, any affiliated
purchasers and any broker-dealer or other person who participates in such
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete. Regulation M also prohibits any bids
or purchases made in order to stabilize the price of a security in connection
with the distribution of that security. All of the foregoing may affect the
marketability of the common stock.
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EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
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We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated April 9, 1996 appearing on page F-2 of
American International Petroleum Corporation's Annual Report on Form 10-K for
the year ended December 31, 1997.
/s/ PricewaterhouseCoopers LLP
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PRICEWATERHOUSECOOPERS LLP
Houston, Texas
December 29, 1998
