SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 1998 Commission File Number 000-18081
RAMEX SYNFUELS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Nevada 87-0360039
(State of Incorporation) (IRS Employer Ident. No.)
2204 W. Wellesley
Spokane, Washington 99205 (509) 328-9633
(Address of principal executive offices) (Registrant's telephone number)
Securities registered pursuant to Sections 12(b) of the Act:
Title of Each Class Name of Exchange on Which Registered
------------------- ------------------------------------
None None
Securities registered pursuant to Sections 12(g) of the Act:
Title of Class
--------------
(Common Stock ($0.01)
Indicate by check mark whether the registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports): Yes _x_ No ___, and (2) has been subject to such filing
requirements for the past 90 days: Yes _x_ No ___.
State the aggregate market value of the voting stock held by non-affiliates of
the registrant.
Approximately $123,337 as of January 31, 1998 (determined by reference to the
average bid and ask prices of such stock on January 31, 1998).
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
As of January 31, 1998,
Common Stock, $0.01 Par Value - 14,823,465
Total pages: 37
Documents incorporated herein by reference:
None.
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Part I
Item 1. DESCRIPTION OF BUSINESS.
Ramex is inactive, it was organized for the purpose of and involved in
developing and extracting oil, gas, and other energy sources from oil bearing
shale. As of January 31, 1998, Ramex was not producing oil or oil shale
products. Ramex had been in the development stage until 1992, when all
operations closed. Subsequently, the Registrant on December 13, 1993 entered
into a Contractual Agreement with Southwest Research Institute of San Antonio,
Texas, for first phase testing of the patented Ramex in situ gasification
process.
While the oil shale process has been tested in the laboratory and in
several field tests in Wyoming and Indiana, the results from the Process, as
utilized on a commercial basis, are unknown and no assurance can be given as to
the amount of gas the process will produce, if any, or the longevity of any such
production.
Ramex Synfuels International, Inc., a Nevada corporation ("Ramex") was
originally incorporated and commenced operations as Cache Oil Corporation in
March, 1980 under the laws of the State of Utah.
In July, 1980, Cache Oil Corporation purchased in a business combination
all of the outstanding common stock of Rams Horn, Inc. , a Wyoming Corporation
which was subsequently dissolved. In December, 1980 Cache Oil Corporation merged
with the wholly owned subsidiary of Rams Horn, Inc., Ramex Synthetic Fuels
International, Inc., a Utah Corporation, with the name of the surviving Utah
Corporation being changed to Ramex Synfuels International, Inc. Ramex changed
its domicile to Nevada from Utah in December, 1988. All of these entities were
in the development stage at the time of acquisition or merger.
The Process
The oil shale gasification Process is an "in situ" process, which means
that the shale is not mined. Rather, wells are drilled, similar to natural gas
wells, into the shale formation, which is fired by propane or natural gas. The
heater raises the temperature of the shale to approximately 1,200 degrees
Fahrenheit. This causes a reaction to take place in the oil shale somewhat
similar to the reaction in coal when it is turned into coke, or the process when
a charcoal briquette is lit at one point and the heat moves through the
briquette and releases the hydrocarbons that are stored in the briquette. There
is no combustion , however, that actually takes place in the shale. This
reaction causes the molecules of hydrocarbon trapped in the shale to be released
in the form of kerogen gas, which is then transported to the surface and
processed.
Environmental Aspects of the Ramex Process
Of paramount concern to Ramex is the effect the Process will have on the
environment. Particular interest is directed toward its effect on ground water
quality.
In order to obtain a further understanding of the mobilization of trace
elements and to indicate the environmental and health effects of the Process,
Ramex has conducted a survey of literature looking for similar scenarios on
equivalent strata. Ramex has also conducted actual field tests on ground water
in and around a production well. In order to assure reliability, both the
Indiana Geological Survey and Environmental Consultants of Clarkville, Indiana
conducted a series of tests for Ramex as well. The tests compared leachate
composition and the results showed that the Process did not materially affect
the water in the area near well sites.
Corporate Developments.
On May 29, 1990 Ramex was issued the United States Patent for its oil shale
gasification process.
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The patent gives Ramex exclusive rights to it's process whereby a hole is
drilled into oil shale and a heater is inserted therein and gas is produced back
through the same hole. This is an important development for Ramex since it gives
Ramex the exclusive right to the process in the United States. The low cost and
efficient economic use of currently uneconomic resources makes the Process very
important to the energy industry in general and specifically important to the
future of Ramex. The Ramex patent will be valid until May 28, 2007.
Ramex may apply for foreign patents concerning the process in several
countries that have significant oil shale deposits. Ramex considers the patent
important to the industry.
Since 1980 , Ramex has been in the process of researching and developing a
method to extract synthetic natural gas from oil shale.
Work began in the laboratory and progressed to an initial field test near
Duchesne, Utah, followed by a second field test and two additional field tests
near Rock Springs, Wyoming. In April, 1988, Ramex began field-testing near
Henryville, Indiana. Eight wells were drilled in Indiana. From each well, Ramex
has learned more about the Process and has been able to further develop its
technology.
Based on conclusions derived from the above mentioned tests, Ramex has
learned about the process and what is yet to be learned, Ramex has tentatively
arrived at the following conclusions:
1. Ramex has proven that it can produce synthetic natural gas by drilling a
hole into the shale and inserting a heater and raising the temperature to
over 1,000 degrees Fahrenheit.
2. Ramex has developed a heater which will allow Ramex to put substantial
BTU's of heat into the shale and has developed the surface equipment and
controls to control the heater temperature and monitor the temperature of
the shale as it is being heated.
3. Ramex has a patent on the process and may, if it has the necessary funds,
to monitor patent infringement on the process. The Registrant is trying to
obtain money from outside sources to test the commercial potential of the
process.
Questions yet to be answered from the research obtained prior to using the
process on a commercial basis are:
1. How fast does the heat reaction move through the shale?
2. How far will the reaction go from the heat source and how much heat is
necessary on an incremental basis to keep the reaction zone moving outward
from the source heat?
3. What is the exact chemical composition of the gas that is produced from the
process over a period of time and does the composition change with varying
amounts of heat and if so, what is the ideal amount of heat to produce the
most desirable chemical composition of the gas?
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In all of the field tests in Indiana, Ramex was unable to answer the above
questions because water incursions into the heating area after the burner was
installed. This problem occurred in every well that was drilled in that area.
Management has determined that it needs a lengthy burn in a water free
environment, and could not be assured that Ramex's lease holdings in Indiana
would provide us that kind of environment, nor the surrounding five state area.
The technology is available to dewater an area of shale. It is done simply
analyzing the water table in the area and drilling a number of wells around the
perimeter of the area intended to react with, then process and pump the water
out creating a cone of depression. On a commercial application of the process
that would be the way to handle it. The cost per well would be relatively
minimal, but to do so for one well on a research basis is cost prohibitive.
So, while ultimately the commercial production of gas from the shale in
Indiana and other states where high water tables are present is very real and
possible, it isn't suitable for research purposes.
Ramex has had extensive meetings with a recognized leading research
institution in dealing with gas technology. Ramex has asked the research
institution for a proposal to duplicate the down hole conditions in a laboratory
setting and to answer the questions that Ramex has been unable to answer in the
field experiments so far. The tremendous advantage of laboratory simulation
compared to continued trial and error research in the field is that variables
can be introduced, such as higher or lower temperatures and their effects
studied to determine exactly the correct temperature necessary to achieve the
best reaction and to maintain the thermal front moving in the most economic
manner.
The composition of the gas can also be tested using variable conditions.
What would require tremendous outlays of capital in the field can be done with
simple inexpensive changes in a laboratory setting. Also, it can be done
completely free of incursion by outside influences such as ground water. The
volume of gas produced, its composition and the ultimate economics of the
process can be determined and perfected much more quickly in a laboratory than
in the field. The next step Ramex must take is the completion of laboratory
experiments designed to answer the above questions. Ramex is currently
evaluating the cost of conducting additional laboratory testing.
On September 30, 1993, the Registrant, as sponsor of a private placement of
limited partnership interests in Ramex Research Partners, Ltd. closed its
offering at the minimum amount intended to be sold of $110,000 and issued a
press release regarding same. The partnership interests were offered to
investors' meeting suitability standards in multiples of $5,000 with a minimum
purchase of one unit. The Registrant is the General Partner of Ramex Research
Partners, Ltd. (the "Partnership").
The Partnership was formed for the purpose of participating with the
Registrant in further enhancement and development of the oil shale gasification
process (the "Process") which patent is owned by the Registrant. The funds which
Ramex receives from the Partnership, as well as funds received from other
sources, including funds received from the sale of shares of common stock in the
future, if any, will be utilized by the Registrant to conduct additional
research of the process which will have as its goals (i) the further
understanding of the process involved in the in-situ gasification of shale oil;
(ii) the further development of the technology utilized in the design of the
down-hole heaters, which are an integral part of the application of the process,
in order to increase the efficiency of such heaters; (iii) the development of
more efficient
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methods for handling the gases produced as a result of the application of the
process; (iv) the development of more efficient drilling methods for penetrating
and exploiting oil shale through the application of the process; and (v) the
development of water containment methods to eliminate the problem of down-hole
water flowing in the heater; and (vi) payment of outstanding accounts payable
and to fund current operating expenses, to the extent possible, of Registrant.
In consideration of the capital which the Partnership makes available to
the Registrant to fund its research and development activities, the Registrant
will grant to the Partnership a limited term royalty, payable out of the
proceeds of gas produced from the application of the process. The limited term
royalty shall continue until the Partnership has received the greater of (i)
payments aggregating 1.10% of the net profits received from the first 1,000
wells drilled and produced using the Ramex process or (ii) payments the limited
partners receive aggregates ten times their original contribution.
The Registrant on December 13, 1993 entered into a Contractual Agreement
with Southwest Research Institute of San Antonio, Texas, for first phase testing
of the patented Ramex in situ gasification process. The funds obtained as
described above were utilized to conduct this research.
Results of Operations
During the three-month period ending January 31, 1998, the Company's only
activity was to evaluate the Ramex Oil Shale Gasification Process and negotiate
with potential financing entities for the Process and possible other ventures.
This first phase was intended to establish the recommended scope of work
required to initiate the multi-phase project as hereafter described, which may
lead to a possible pilot-scale phased field demonstration. The scope of work
represents a plan, which should match the technical, financial and time
scheduling objectives of Ramex for research and developing the Process.
In a report dated August 25, 1995, Southwest Research Institute reported
the following results concerning the first phase testing of the Ramex Process:
Phase I Studies
The technical efforts presented in this report represent Phase I of a
multiple-stage research program aimed at investigating and demonstrating the
Ramex Synfuels International oil shale gasification process. This report
presents the results of Phase I; Preliminary Laboratory Demonstration Tests
designed to: (1) investigate the gasification process on a small scale using
electric heaters in oil shale samples approximately 0.25 cu. ft. in volume; and
(2) sample internal temperatures to determine the effective thermal properties
over the temperature range in which the kerogen in the shale undergoes changes
from semisolid to liquid vapor or gas. The first of these objectives required
development and refinement of appropriate test apparatus to achieve a successful
testing methodology and procedure. The second objective successfully provided
experimental data needed to understand the shale gasification process and heat
transfer properties of the oil shale and to plan more thorough studies of the
high-temperature heat transfer process for follow-on phases of the research
program.
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The laboratory demonstration tests performed in Phase I revealed a basis
for interpreting and characterizing the in situ oil shale gasification process.
Interpretations listed below, as conclusions and recommendations for future
work, are summary highlights for Phase I.
Phase I Conclusions
(1) The experimental investigations of Phase I have successfully
demonstrated the basic shale gasification process described in Ramex Synfuels
International Patent No. 4,928,765 dated May 29, 1990. The small scale of these
experiments did not permit the shale gas energy production efficiency to be
determined. Instead, Phase I provided valuable data and insight into the thermal
properties of the oil shale materials and the testing procedures necessary for
more complete gasification similitude evaluation tests on larger oil shale
samples.
(2) Heating the oil shale samples in a manner representative of a
full-scale field setup was successful in producing both liquid shale oil and in
liberating shale gas. Shale oil and gas production was consistent with the
kerogen richness of the samples. In addition, the experimental arrangement
permitting cyclic liquid-vapor reflux processing yielded a proportionately
greater amount of shale gas. As a result, the origins of the shale gas must, at
present, be considered to be twofold; namely, liberation of methane and other
hydrocarbon gases originally trapped in the semi-solid kerogen and thermal
cracking of the kerogen vapors in the heated production and gas delivery zone of
the sample. The reflux process observed in the laboratory experiments appears to
be adaptable as a full-scale field system feature to utilize downhole waste heat
to enhance gas production. The residual shale oil liquids and vapors potentially
can be used as fuel for the downhole heater in the full-scale system. The net
shale gas product is then available for other external energy applications or
for pipeline transport.
(3) The heat transfer characteristics derived for the tested oil shale
samples are comparable with those of other oil shales reported in the literature
and provide adequate data for designing future laboratory experiments with the
objective of truly simulating the complete shale gasification process.
(4) Important technical lessons learned in Phase I will be of particular
benefit in the planning and design of follow-on laboratory experiments in Phase
II. The sequence of experiments in Phase I have led to refined sample testing
configurations and now provide a database of heating power and shale heat
transfer information on which to base new experimental tests using larger size
shale samples and increased heating power. Electrical heating methods are
preferred for these tests because of their accurate heat control and heater
durability. Shale oil vapor and gas collection techniques are now well
understood from the Phase I tests and can be used for quantitative analysis and
design of more advance laboratory experiments in Phase II.
(5) Successful results from the preliminary demonstration tests performed
in Phase I indicate that the Ramex Process shows good promise for further study
and development. More advanced laboratory experiments are now recommended to
study the net energy recovery efficiency of the method and to develop the
necessary downhole heaters and associated system components required to begin
pilot field evaluation tests.
<PAGE>
Recommendations for Future Work
(1) Additional laboratory tests are recommended to be performed on a wider
selection of oil shale samples to better characterize and understand the heat
transfer process in the shale. These tests should encompass a range of oil shale
richness and different types of shale rock matrix (Eastern and Western oil
shales). These tests will also be valuable in establishing a routine method for
evaluating future field sites for potential gasification.
(2) Larger scale laboratory demonstration experiments using larger heating
power are recommended to more accurately quantify the heat energy required for
gasification and to better evaluate the gas production process. Sample sizes
having a volume in the range of ten cubic feet or larger are recommended. Data
collected on the smaller samples tested to date can be used to accurately
specify the sample sizes needed for future testing.
(3) Field site geological reconnaissance and sampling is needed for
purposes of gathering appropriate oil shale samples for future laboratory tests.
These efforts could be broadened to include characterization of various field
sites for future pilot-scale field testing of the shale gasification process.
(4) Prototype downhole heater design and development is necessary for
testing shale gasification on a pilot scale in the field. Based on certain
downhole operational and design constraints emerging from the Phase I tests,
prototype gas-fired heater system designs are recommended to be developed,
including the specification of any special materials needed for long-term
operational life. Prototype heater designs are recommended to be tested in
controlled and instrumented shallow limestone rock locations prior to testing in
oil shale settings.
(5) Numerical modeling of the oil shale gasification process is an
important aspect of predicting the performance of the method under the various
conditions that may be encountered in the field. The laboratory tests
recommended above will yield the thermal parameters needed for developing and
applying such models. Certain existing and commercially available computer
models for heat transfer applications are recommended to be adapted to the
special needs of this project, including the ability to handle kerogen
phase-change phenomena, the problem of heat transfer in a porous rock matrix,
and the nonconservative process of removing heated hydrocarbon mass from the
system. Properly developed, a computer simulation model will be particularly
valuable in characterizing and optimizing the full-scale field experiments and
in the selection of practical pilot-scale test sites.
(6) A pilot-scale oil shale gasification system is recommended to be
designed and specified for construction. This design should be specifically
oriented toward initiating operational tests at a field test site where
controlled performance testing and measurements are possible. A follow-on phase
of this project is recommended to be dedicated to the construction and field
operational testing of the pilot-scale system.
Ramex is attempting to obtain financing for the second, third and fourth
phases, while the first phase has been completed The following is a proposed
summary of the additional three phases of this project:
Phase II. Laboratory Studies and Analytical Modeling of Shale Gasification:
The experimental heat transfer testing techniques used in Phase I will be
refined and applied to additional samples of oil shale and samples of shale
boundary rock materials from several representative field sties. The effective
thermal conductivity and thermal diffusion constant of these materials,
incorporating combined rock matrix heat conduction and pore-space heat
radiation, will be determined to accurately characterize the thermal properties
<PAGE>
of the oil shales and other geological boundary rock materials that are most
representative of typical oil shale gasification sites. In addition to this
work, a mathematical model of the in situ heat transfer characteristics of the
gasification process will be formulated to predict the full-scale performance of
the technique in a layered oil shale formation using the laboratory-derived
shale and boundary rock thermal parameters. Typical model cases will be
evaluated to yield idealized estimates of the heat transfer process. Numerical
models will be evaluated to yield idealized estimates of the heat transfer
process. Numerical models will also be computed to allow the effects of
inhomogeneities in kerogen content and the presence of fractures to be
evaluated. The results of this phase of work will be a comprehensive process
parameter study from which a full-scale field test can be designed and
implemented in Phase III.
Phase III. Instrumented Field Experiment: An appropriate shallow oil shale
test site will be selected at which a controlled and instrumented field
evaluation experiment of the shale gasification process can be performed.
Experimental downhole heater equipment, down hole temperature monitor probes,
and a surface gas recovery system will be designed and constructed for use in
this experiment. The scope of this experiment will be sufficient to demonstrate
the gasification technique in situ and to allow the reliability of the various
experimental equipment components to be determined. This field experiment will
also provide important information on the practical gas production efficiency,
self-heating efficiency, and safety of the process for the particular test site
selected.
Phase IV. Pilot-Scale Shale Gasification Project: A pilot-scale field
demonstration shale gasification system will be constructed and installed in a
representative oil shale field for the purpose of operational testing and
performance evaluation. The goals of this phase of work are to produce shale
gas, convert it to commercially assessable energy, and evaluate the operating
performance and endurance /maintenance characteristics of the overall
installation.
Therefore, based on the above-described program, Ramex will prepare a
proposed overall plan/program, that may ultimately reach commercial production.
Ramex will continue to seek funding to allow the Ramex process to proceed
through phases 2, 3 and 4 of the research and development stage to possible
production.
The financing discussed herein is crucial to the ongoing development of the
process as well as the corporate existence. Management is considering a possible
restructure of the corporation as a means of further financing possibilities,
although this is in preliminary discussions only and is predicated upon the
proposed plan. Any changes in corporate structure are subject to shareholder
approval and at the present no proposed changes have been formulated.
Affiliates
Ramex had issued an exclusive license to use the Tar Sands Process for the
Tar Sands of Canada and a non-exclusive license to use the Process anywhere else
in the world to a private corporation named Terr Sant International, Inc. ("Terr
Sant") a Nevada corporation. Donald L. Walker, the former President of Ramex
bought out the primary stockholder in Terr Sant and renamed the corporation
Tri-Gas Technology, Inc. Tri-Gas will utilize the Process under Ramex's
supervision in the exploration and development of oil and gas. Ramex's license
agreement with Tri-Gas is to develop the Process in Indiana, Kentucky,
Tennessee, Ohio and West Virginia; however, they have reached the end of a
performance clause of their contract with Ramex.
<PAGE>
Competitive Conditions
Oil shale gasification is a relatively new process for the commercial
production of synthetic natural gas, and there are comparatively few companies
involved in this activity. At least initially, Ramex does not anticipate any
significant competition for geological prospects suitable for conducting its
operations from other entities in the oil shale gasification industry. However,
Ramex may encounter competition in obtaining future prospects and in selling
natural gas by other companies and individuals engaged in traditional
exploration for oil and gas; as well as in the organization and conduct of
drilling programs, many of whom have greater financial resources and technical
capabilities than the Registrant.
Government Regulations
The following discussion of regulation of the oil and gas industry is
necessarily brief, and is not intended to constitute a complete discussion of
the various statutes, rules, regulations or governmental orders to which
operations of registrant may be subject.
Regulation of Production Operation
The production of oil and gas is subject to extensive federal and state
laws, rules, orders, and regulations governing a wide variety of matters,
including the drilling and spacing of wells, allowable rates of production,
prevention of waste, and pollution and protection of the environment. Although
the particular regulations applicable in each state in which operations are
conducted vary, such regulations are generally designed to ensure that oil and
gas operations are carried out in a safe and efficient manner and to ensure that
similarly-situated operators are provided with reasonable opportunities to
produce their respective fair shares of available oil and gas reserves. In
addition to the direct costs borne in complying with such regulations,
operations and revenues may be impacted to the extent that certain regulations
limit oil and gas production to below economic levels.
Regulation of Sales and Transportation of Natural Gas
The federal government and various state governments have adopted laws and
regulations regarding the control and contamination of the environment, which
may affect the operations of the Registrant. Moreover, in the areas where the
Registrant would conduct its activities, there are statutory provisions
regulating the production of natural gas and administrative agencies may
promulgate rules in connection with the operation and production of natural gas
wells, determine the reasonable market demand for natural gas, and establish
allowable rates for production. Such regulatory orders may restrict the rate at
which the Registrant's wells, if any, produce natural gas below the rate at
which such wells would be produced in the absence of such regulatory orders.
It is anticipated that the Registrant's natural gas may be sold in either
intrastate commerce or interstate commerce. In either case, the sale of natural
gas may be subject to regulation by the Federal Energy Regulatory Commission
("FERC") under the Natural Gas Policy Act of 1978 (the "NGPA") enacted November
9, 1978, which became effective with respect to certain first sales of natural
gas delivered on or after December 1, 1978. On January 1, 1985, Section 121 of
the NGPA deregulated the prices for
<PAGE>
substantial amounts of interstate and intrastate natural gas, and FERC has
amended its regulations to take account-said deregulation. Additional volumes of
natural gas were deregulated July 1, 1987. The NGPA and regulations promulgated
thereunder by FERC provide for maximum lawful ceiling prices for certain
categories of natural gas and do not supersede or nullify the effectiveness of
any contractual agreement to pay a lower price. Although the Registrant intends
to negotiate purchase contracts there is a virtual certainty under current
market conditions that the Registrant will not receive the maximum ceiling
prices which might be otherwise permitted under the NGPA. It is anticipated that
the registrant will receive current market value for its production.
The NGPA provides that, in addition to the ceiling prices, producers may
collect reimbursement of state severance taxes and, to the extent allowed by
order or rule of FERC may be reimbursed for compressing, gathering and
transporting natural gas, and other similar costs.
All FERC regulatory rates are ceiling rates, and to the extent the
Registrant's natural gas sales contracts do not permit it to sell natural gas at
such rates, natural gas will be sold at such lower contract rates.
If the Registrant sells for resale natural gas which was committed or
dedicated to interstate commerce prior to or on November 6, 1978, to the extent
such natural gas does qualify as new natural gas, high cost natural gas, or
natural gas produced from a new, on shore production well, such sales will be
subject to the NGPA and the regulations issued thereunder which require, among
other things, that producers selling natural gas for resale in interstate
commerce obtain a certificate of public convenience and necessity before
commencing most sales and that they secure approval for increase in prices and
authorization for abandonment of service once commenced.
The FERC has been pursuing a policy of encouraging the development of a
natural gas market driven by competitive forces and has, over the last several
years, implemented a number of regulations to enhance competition in the natural
gas market. The domestic natural gas industry remains under federal regulation,
pursuant to the Natural Gas Act and the Natural Gas Policy Act. In 1989 Congress
passed the Natural Gas Decontrol Act and by 1993 all wellhead regulation of gas
prices will end.
Regulation of the Environment
The exploration, development, production, and processing of oil and gas are
subject to various federal and state laws and regulations designed to protect
the environment. Various states and governmental agencies are considering, and
some have adopted, other laws and regulations regarding environmental control
which could adversely affect the business of the registrant. Compliance with
such legislation and regulations, together with all penalties resulting from
noncompliance therewith, may increase the cost of oil and gas development,
production, and processing operations or may affect the ability of the
registrant to complete, in a timely fashion, existing or future activities.
Certain of these costs may ultimately be borne by the Registrant.
Employees
At January 31, 1998, the Registrant had no salaried employees.
<PAGE>
ITEM 2. PROPERTIES.
PATENT. In November, 1989, Ramex received approval from the U.S. Patent
Office for it's patent application for oil shale gasification process. The
actual patent was issued on May 29, 1990. Ramex's patent covers the drilling of
a hole into hydrocarbon bearing shale, inserting a heater and applying heat to
the shale formation to cause a reaction which will produce synthetic natural gas
and to extract that gas through the same bore hole. It also includes the
description of the equipment itself. The Registrant's executive offices are
located at 2204 W. Wellesley, Spokane, Washington 99205.
ITEM 3. LEGAL PROCEEDINGS.
A judgment was granted in 1990 to Jack Guthrie and Associates, Inc. of
Louisville, Kentucky to recover $12,076.70. Nothing has occurred during this
period on the judgment. A lawsuit was filed by Paul A. Petzrick of Annapolis,
Maryland to recover $11,524.00 for consulting services. As of the date of this
Form 10-K, no activity occurred during this period on this lawsuit and the
Registrant intends to settle both of these obligations.
The officers and directors of the Registrant certify that to the best of
their knowledge, neither the Registrant nor any of its officers or directors are
parties to any material legal proceedings or litigation other than that
referenced herein. The officers and directors of the registrant do not know of
any other litigation being threatened or contemplated. To the best of the
knowledge of the officers and directors of the Registrant, there are no
investigations of any felonies, misfeasance or securities investigations nor are
there any other pending or threatening litigation at the present time other than
that referenced herein.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no submissions to a vote of security holders during the fourth
fiscal quarter ended January 31, 1998.
Part II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS
MATTERS.
The Registrant's common stock is listed on the OTC Bulletin Board of the
NASD under the symbol "RAMX". No assurance can be given that the present market
for the Registrant's common stock will continue.
The following table sets forth the high-ask and low-bid quotations per
share as published by the National Quotation Bureau, Inc. for the fiscal
quarterly periods indicated are set forth below:
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Market price:
1996 1997
----------------------- ------------------------
Period High Low High Low
------ ---- --- ---- ---
First Quarter $ 0.015 $ 0.001 $ 0.015 $ 0.001
Second Quarter $ 0.015 $ 0.001 $ 0.017 $ 0.001
Third Quarter $ 0.015 $ 0.001 $ 0.017 $ 0.003
Fourth Quarter $ 0.015 $ 0.001 $ 0.017 $ 0.003
Such over-the-counter market quotations reflect inter-dealer prices,
without retail mark-up, markdown or commission and may not necessarily represent
actual transactions.
Holders
As of January 31, 1998 there were approximately 3,979 holders of record of
the Common Stock of the Company
Dividends
The Company has paid no cash dividends to date, and it does not intend to
pay any cash dividends in the foreseeable future. At the present time, the
Company intends to use any earnings (if any) which may be generated to finance
the growth of the Company's business.
Item 6. SELECTED FINANCIAL DATA.
(Not covered by report of independent accountants)
Years
Ended January 31,
--------------------------------------------
1995 1996 1997 1998
-------- -------- -------- --------
Revenues -0- -0- -0- -0-
Net Income (loss) (15,622) (21,081) (19,168) (19,091)
from Operations
Income from Forgiveness
of Debt -0- 17,692 -0- -0-
Income from Interest -0- -0- 18 27
Net Income (loss) (15,622) (21,081) (19,168) (19,901)
Net Income (loss)
per common share: (0.00122) (0.00152) (0.00139) (0.00139)
Current Assets 251 9,408 2,209 1,281
Current Liabilities 142,507 144,052 156,003 169,949
Total Assets 251 9,408 2,209 1,281
Stockholder's equity
(deficit) (142,256) (134,644) (153,794) (168,668)
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
Ramex has been a research and development company from its inception in
1980. Its sole activity prior to the current fiscal period has been to conduct
research and development of the Process. This Process for extracting synthetic
natural gas from oil shale is described in detail elsewhere in this report. The
funds used to complete this research and development have been provided by the
sale of common restricted stock from the authorized, but unissued, shares of
common stock of Ramex, loans made by shareholders and by the sale of limited
partnership interests in Ramex Research Partners, Ltd. This private placement
offering has generated $110,000 in revenues as of September 30, 1993. No actual
field research activity was conducted during the fiscal year ending January 31,
1998. It was determined after the completion of the last field project in
Indiana that it would be necessary to next go to a laboratory research
arrangement to answer some of the basic questions developed as a result of the
field work done by Ramex.
Efforts during the past fiscal year have been primarily directed toward
developing funding arrangements for the cost of the laboratory and fieldwork yet
to be performed.
Liquidity and Capital Resources:
As of January 31, 1998 Ramex's current assets were $1,281. Since there is
no certainty of the success in negotiations for financing the continued research
and development of the Ramex Process, nor is there any certainty of the success
of such research, uncertainties do exist with respect to the future levels of
Liquidity and Capital, which will be necessary to fund the Company's operations
and its ability to maintain adequate levels thereof.
The Company has a net operating loss carryover of $4,889,139 to the year
ended January 31, 1999. These loss carryovers will commence to expire in 1999.
The Company has not recorded a deferred tax asset for the possible benefit of
these net operating loss carryovers because it is uncertain if the Company will
have future taxable income.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial statements appear on sequential pages 29 to 38 of this Annual
Report on Form 10-K.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There were no disagreements in connection with the audits of the three most
recent fiscal years and any subsequent interim period with Terrence J. Dunne,
CPA.
The Auditor states, in his report to the Board of Directors, that there are
serious doubts as to the ability of the Registrant to continue as a going
concern because of recurring losses from operations and a net capital
deficiency. The Company has very limited capital and has substantial
liabilities. Therefore, Mr. Dunne states in his report to the Board of Directors
that these conditions raise substantial doubt about the Company's ability to
continue in business.
<PAGE>
Part III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Members of the Board of the Directors and/or Executive Officers of the
Registrant, and further information concerning them are as follows:
Name Age Position
- ---- --- --------
Maynard M. Moe 56 President, Chief Executive
Officer and Director
Kerry L. Weger 51 Secretary-Treasurer
Director
George Shutt 77 Director
John F. Mayer 56 Director
Sigurd "Morris" Mathisen 65 Vice-President
There are no family relationships among the current Directors and Officers
of the Company.
Maynard M. Moe, age 56, President, Chief Executive Officer and a Director, he
was elected to these positions by the Board of Directors on October 8, 1993. He
was a Vice-President from January 20, 1993 to October 8, 1993. Mr. Moe was first
hired as a consultant by the Registrant to handle day-to-day operations of Ramex
as well as shareholder relations. He attended Eastern Washington College of
Education in 1959 and 1960. He attended the Spokane Community College for Oil
Advance Burner Technology courses in 1965 and he received his oil burner
mechanics license in 1965. Prior to his consulting work with Ramex, Mr. Moe was
a stockbroker with Dillon Securities in Spokane, Washington from 1978 to 1992.
Mr. Moe obtained a Washington State Series 63, NASD Series 7 and Principle
Series 23 Licenses. Mr. Moe served as a committee chairman and vice president
and director of the Spokane Stock Exchange for eighteen months. On August 31,
1992, Mr. Moe's chapter 11 plan of reorganization was confirmed, in order to pay
all personal/business debts in full over three years. On March 13, 1996, Mr. Moe
received a conformed copy of the Final Decree from the Court closing this case.
During the past ten years Mr. Moe has worked with different companies as a
consultant for shareholder relations.
Kerry L. Weger, age 51, a Director and Secretary-Treasurer since June 22, 1992.
Mr. Weger attended Indiana University and received a B.A. in Business and a JD
from the Indiana University School of Law in 1971. He is a member of the Indiana
and Michigan State Bar Associations. Mr.
<PAGE>
Weger has been in the continuous practice of law for twenty years and is
currently practicing law in the State of Indiana. His area of practice
encompasses oil and gas and corporate law. Mr. Weger has represented several oil
and gas drilling and development companies and is familiar with all phases of
drilling and development. Mr. Weger is active in his community, is a member of
the Bloomington Planning Commission, the Chamber of Commerce Erosion Development
Committee and a past member of the Bloomington Little League Board of Directors
and Monroe County Economic Development Council.
George Shutt, age 77, a Director since June 22, 1992. Mr. Shutt is presently the
owner and sole proprietor of GESCO Consultants. GESCO Consultants provides
consulting and manufacturing representative services to selected segments of the
aerospace industry. Prior to forming GESCO Consultants in 1981, Mr. Shutt was
employed by Hughes Aircraft Company for thirty years in various capacities,
including subcontract's administrator, project engineer, manufacturing planning
for complex electronic systems and manufacturing supervisor. Mr. Shutt also
worked for Ford Motor Company for five years in commercial sales and development
of specialized vehicles. Mr. Shutt has worked variously for Lockheed Aircraft
Co. in Research and Development Department. He was with the U.S. Air Force as an
instructor on instrument flying techniques.
John F. Mayer, age 56, a Director since October, 1988. President and Chief
Executive Officer from June 22, 1992 until his resignation from these positions
effective October 1, 1993. Mr. Mayer attended Southwest Texas Junior College
(Associate of Arts degree), Colorado State University (Bachelor of Science
degree) and the University of Kansas (two years of post service where he was
employed as a civilian scientist and weapons graduate work in physics). Mr.
Mayer retired in 1992 from civil system analyst with the Department of Defense
for 20 years, 13 years of which were in management positions.
Sigurd "Morris" Mathisen, age 65, a Vice-President since October 29, 1993. Mr.
Mathisen attended the Virginia Polytechnical Institute, majoring in Civil
Engineering/Building Construction. Mr. Mathisen's work experience has included
management, administration, planning, budgeting, scheduling, contracting,
inspecting, directing all phases of construction, with profit and loss
responsibility on all types of commercial, industrial, fossil and nuclear power
generation, and hazardous waste facilities.
Mr. Mathisen was instrumental in the Installation baghouses, wet scrubber
systems, and or electrostatic precipitators on four separate 500 mega watt
fossil fuel power generation units. Four plus years assistant Resident Manager
for J.A. Jones Construction Co. at Hanford, Washington. Responsible for
direction of 1,500 employees plus subcontractors, on new and maintenance
construction of nuclear and nuclear waste facilities. Involved with the
construction of many other multi-million dollar projects, with a total of
twenty-six.
The terms of such Directors and Officers are for a period of one year or
until their successors are duly elected and qualified.
<PAGE>
Item 11. REMUNERATION OF DIRECTORS AND OFFICERS.
Officers:
For the fiscal year ended January 31, 1998, none of the Officers of the
Registrant had cash compensation, which exceeded $40,000.00
Directors:
The Directors of the Company received no compensation for services rendered
the Registrant during the fiscal year ended January 31, 1998 in excess of
$40,000.00.
Stock Option and Compensation Bonus Plan:
Ramex's Stock Option and Compensation Bonus Plan (the "Plan") authorizes
3,000,000 shares of Common Stock for issuance to directors, officers,
key-employees, consultants and advisors who contribute materially to the success
and profitability of Ramex and who provide key services, consultation or advice
to Ramex. As of January 31, 1991, there were 666,666 shares issued pursuant to
the Plan. The Plan is intended to advance the interests of Ramex by encouraging
and enabling the directors, officers, key employees, consultants and advisors to
acquire and retain a proprietary interest in Ramex by ownership of its stock.
The Plan is administered by the Board of Directors. The exercise price of each
option is to be not less than 76% of the fair market value of the Common Stock
on the date of grant or issuance. An option may be exercised for the following
maximum amounts: 33% of the amount granted any time at least six months
subsequent to the date of grant, an additional 33% of the amount granted any
time at least 15 months subsequent to the date of grant an additional 34% of the
amount granted any time at least 27 months subsequent to the date of grant.
Options under the Plan may not be sold, pledged, signed, hypothecated,
transferred or otherwise disposed of and are exercised only by the Optionee or
upon his death by his legal representative.
In the event of termination for cause of an Optionee's employment with
Ramex, the options shall expire immediately upon such termination. If the
Optionee dies during his employment with Ramex, his options shall be exercisable
by his personal representative to the extent the Optionee would have been
entitled to exercise such option if he had continued to live and be in such
employment, for the lesser of one year after his death or for the remaining term
of the Option.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information, as of January 31, 1998, as to
each person who is known to the Company to be the beneficial owner of more than
5% of the Common Stock of the Company, and as to the security ownership of each
Director of the Company and all Officers and Directors of the Company as a
group. Except where specifically noted, each person listed in the table has sole
voting and investment power to the shares listed.
Security Ownership
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class (2)
- ------------------- ------------------------ ------------
Donald L. Walker (1) 4,339 0.030%
1501 Azure Hills
Van Buren, Arkansas 72956
Gail Sue Walker (2) -0- -0-
1501 Azure Hills
Van Buren, Arkansas 72956
Lucros International Corp. (2) 570,000 3.979%
P. O. Box 647
Van Buren, Arkansas 72956
Greenway Corporation (2) 551,500 3.850%
P. O. Box 647
Van Buren, Arkansas 72956
Maynard M. Moe 710,001 4.957%
President, Chief Executive
Officer, Director
2204 W. Wellesley
Spokane, WA 99205
John F. Mayer 575,000 4.014%
Director
534 Valley Drive
Kerrville, Texas 78028
George Shutt 27,450 0.192%
Director
17582 Meredith Dr.
Santa Ana, CA 92705
Kerry L. Weger 341,000 2.381%
Secretary-Treasurer, Director
635 N. College Avenue
Bloomington, IN 47404
Sigurd "Morris" Mathisen 81,750 0.571%
Vice-President
6415 N. Fleming
Spokane, WA 99208
All Directors and 12.115%
Executive Officers
as a Group (5 persons)
as of the date of this
Form 10-K
(1) Mr. Walker is the husband of Gail Sue Walker.
(2) Mrs. Walker is the sole shareholder of Lucros International Corporation and
Greenway Corporation, therefore this reflects that ownership/beneficial
interest as of January 31, 1998.
<PAGE>
Item 13. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
There were no transactions between management and Registrant during the
period covered by this report.
<PAGE>
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) (1) The financial statements listed in the following index are filed as part
of this Annual Report on Form 10-K:
Sequential
Page
----
Consent of Auditor 28
Report of Independent Auditor 31
Statement of Financial Position at 32
January 31, 1998, 1997 and 1996.
Statement of Operations for the Years ended 33
January 31, 1998, 1997 and 1996.
Statement of Changes in Stockholders' Equity 34
for the years ended January 31, 1998, 1997 and 1996.
Statement of Cash Flows for the Years Ended January 31, 1998, 1997
and 1996. 35
Notes to Financial Statements at January 31, 1998, 1997
and 1996. 36-38
(a) (2) Financial Statement Schedules are not filed with this Annual Report on
Form 10-K because the Schedules are either inapplicable or the required
information is presented in the Financial Statements or Notes hereto.
(a) (3) Exhibits*.
(b) There were no reports filed on Form 8-K during the fiscal fourth quarter
ended January 31, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Ramex Synfuels International, Inc.
Registrant
Dated: April 17, 1998 By: sgd. Maynard M. Moe
--------------------
Maynard M. Moe
President, CEO and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
and on the dates indicated.
Dated: April 17, 1998 By: sgd. Maynard M. Moe
--------------------
Maynard M. Moe
President, Director and
Chief Executive Officer
Dated: April 17, 1998 By: sgd. Kerry L. Weger
--------------------
Kerry L. Weger, Secretary-Treasurer
and Director
Dated: April 17, 1998 By: sgd. George E. Shutt
--------------------
George E. Shutt
Director
Dated: April 17, 1998 By: sgd. John F. Mayer
--------------------
John F. Mayer
Director
<PAGE>
To The Board of Directors of
Ramex Synfuels International, Inc.
I consent to the use of my name in regard to the audited financial statements of
Ramex Synfuels International, Inc. in the 10-K report for the year ended January
31, 1998.
sgd. Terrence J. Dunne
Terrence J. Dunne
Certified Public Accountant
April 8, 1998
<PAGE>
RAMEX SYNFUELS
INTERNATIONAL, INC.
FINANCIAL STATEMENTS
<PAGE>
Contents
PAGE
----
Independent Auditor's Report 1
Statement of Financial Position as of January 31, 1998 and 1997 2
Statement of Operations For the Years Ended January 31, 1998, 1997 and 1996 3
Statement of Changes in Stockholders' Equity For the Years Ended January 31,
1998,1997 and 1996 4
Statement of Cash Flows For the Years Ended January 31, 1998, 1997 and 1996 5
Notes to Financial Statements 6-8
<PAGE>
To The Board of Directors of
Ramex Synfuels International, Inc.
INDEPENDENT AUDITOR'S REPORT
I have audited the statement of financial position of Ramex Synfuels
International, Inc. as of January 31, 1998 and January 31, 1997 and the related
statements of operations, changes in stockholders' equity, and cash flows for
the years ended January 31, 1998, January 31, 1997 and January 31, 1996. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentations.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ramex Synfuels international,
Inc. as of January 31, 1998 and January 31, 1997 and the results of operations,
changes in stockholders' equity and cash flows for the years ended January 31,
1998, January 31, 1997 and January 31, 1996 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company has no working capital and substantial liabilities. These conditions
raise substantial doubt about the Company's ability to continue in business. The
financial statements do not include any adjustments that might result from the
inability to continue in business.
sgd. Terrence J. Dunne
Terrence J. Dunne
Certified Public Accountant
Spokane, Washington
April 8, 1998
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC. Statement of Financial Position as of
January 31, 1998 and January 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
January 31, January 31,
1998 1997
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,281 $ 2,209
----------- -----------
TOTAL ASSETS $ 1,281 $ 2,209
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable (Note 2) $ 64,295 $ 62,782
Due to Officers and Directors (Note 4) 105,654 93,221
----------- -----------
Total Current Liabilities 169,949 156,003
----------- -----------
STOCKHOLDERS' EQUITY
Common Stock $.01 Par Value; 125,000,000 Shares Authorized, 13,823,465
Shares Issued and outstanding as of January 31, 1997; 14,323,465 shares
issued and outstanding
as of January 31, 1998 143,234 138,234
Additional Paid-In Capital 4,577,237 4,577,237
Accumulated Deficit (4,889,139) (4,869,265)
----------- -----------
Total Stockholders' Equity (168,668) (153,794)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,281 $ 2,209
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC. Statement of Operations for the Years Ended
January 31, 1998, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
January 31, January 31, January 31,
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
REVENUE $ -0- $ -0- $ -0-
-------- -------- --------
GENERAL AND ADMINISTRATIVE EXPENSES 19,901 19,168 21,080
-------- -------- --------
(Loss) From Operations (19,901) (19,168) (21,080)
OTHER INCOME
Interest 27 18 --
Forgiveness of debt (Note 3) -- -- 17,692
-------- -------- -------
Total other income 27 18 17,692
-------- -------- --------
NET (LOSS) $(19,874) $(19,150) $ (3,388)
======== ======== ========
NET (LOSS) PER SHARE $ (NIL) $ (NIL) $ (NIL)
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC. Statement of Changes in Stockholders' Equity
For the Years Ended January 31, 1998, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock Additional
-------------------------- Paid-In Accumulated
Shares Amount Capital (Deficit) Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balances as of
January 31, 1995 12,753,465 $ 127,534 $ 4,576,937 $(4,846,727) $ (142,256)
Common stock issued for
cash at $.01 per share 1,100,000 11,000 11,000
Net (loss) (3,388) (3,388)
----------- ----------- ----------- ----------- -----------
Balances as of
January 31, 1996 13,853,465 138,534 4,576,937 (4,850,115) (134,644)
Cancellation of 30,000
shares of common stock (30,000) (300) 300
Net (loss) for the year
(19,150) (19,150)
----------- ----------- ----------- ----------- -----------
Balances as of
January 31, 1997 13,823,465 138,234 4,577,237 (4,869,265) (153,794)
Common stock issued for
cash at $.01 per share 500,000 5,000 5,000
Net (loss) (19,874) (19,874)
----------- ----------- ----------- ----------- -----------
Balances as of
January 31, 1998 14,323,465 $ 143,234 $ 4,577,237 $(4,889,139) $ (168,668)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC. Statement of Cash Flows For the Years
Ended January 31, 1998, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
January 31, January 31, January 31,
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net (Loss) $(19,874) $(19,150) $ (3,388)
Increase (decrease) in accounts payable
amounts due officer and directors 13,946 11,951 (1,545)
-------- -------- --------
Net cash used from operating activities (5,928) (7,199) (1,843)
-------- -------- --------
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from sale of common stock 5,000 11,000
-------- -------- --------
NET INCREASE (DECREASE) IN CASH (928) (7,199) 9,157
CASH AT BEGINNING OF YEAR 2,209 9,408 251
-------- -------- --------
CASH AT END OF YEAR $ 1,281 $ 2,209 $ 9,408
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE I - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The history of the Company began when Cache Oil Corporation was incorporated in
March, 1980, under the laws of the State of Utah. In July, 198O, Cache Oil
Corporation purchased, in a business combination, all of the outstanding common
stock of Ramex Horn, Inc., a Wyoming corporation which was subsequently
dissolved. In December, 1980, Cache Oil merged with a wholly owned subsidiary of
Ramex Horn, Inc., Ramex Synthetic Fuels International, Inc., a Utah corporation,
with the name of the surviving Utah corporation being changed to Ramex Synfuels
International, Inc. The Company had been in the development stage until 1992,
when all operations closed.
In September, 1993, the Company as the general partner in newly formed Ramex
Research Partners, Ltd., a Texas limited partnership, raised $110,000 for
further development of an oil shale gasification process. This process is
protected by a patent (issued on May 29, 1990) owned by the Company. In return
for this funding, the Company has granted to the limited partners a limited term
royalty payable from the future proceeds, if any, of gas produced from the
application of this process. This limited term royalty will continue until the
limited partners have received the greater of (1) payments aggregating 1.10% of
the net profits derived from the first 1,000 productive wells using this
process, or (2) payments aggregating ten times the limited partners' original
investment. On December 13, 1993, the Company entered into a contractual
agreement with Southwest Research Institute of San Antonio, Texas, for the first
phase testing of this patented gasification process. Ramex Research Partners,
Ltd., has provided the funding for this testing.
Equipment is recorded at cost and depreciated over the estimated useful life on
straight-line basis.
Common stock issued for expenses, services, and payment of liabilities is
accounted for at the estimated fair market value as determined by the board of
directors at the date of issue.
Intangible oil and gas drilling costs (extraction processes) are amortized on a
straight-line basis over ten years
Earnings (losses) per share are computed on the basis of the weighted average
number of common outstanding shares during the year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
<PAGE>
NOTES TO FINANCIAL STATEMENTS Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 2 - ACCOUNTS PAYABLE
For the years ended January 31, 1998 and January 31, 1997, two creditors had
outstanding judgments against the Company totaling $23,525. Other trade payables
comprised the remaining balances as follows:
January 31, Amount
----------- ------
1997 $39,257
-------
1998 $40,770
-------
NOTE 3 - FORGIVENESS OF DEBT
A former president of the Company paid a liability of $17,692, during the fiscal
year ended January 31, 1996, and he is not expecting repayment from the Company;
therefore, this results in forgiveness of debt to the Company.
NOTE 4 - DUE TO OFFICERS AND DIRECTORS AND RELATED PARTY TRANSACTIONS
As of January 31, 1998, the Company owed the current president (Maynard Moe)
$69,832 for accrued consulting fees, and owed $10,000 to the current
secretary-treasurer (Kerry Weger), and $25,821 to another former president (John
Mayer) for advances and expenses paid on behalf of the Company. As of January
31, 1997, the Company owed the current president (Maynard Moe) $57,400 for
consulting fees, and owed $10,000 to the current secretary-treasurer (Kerry
Weger), and $25,821 to another former president (John Mayer) for advances and
expenses paid on behalf of the Company.
NOTE 5 - STOCK OPTION AND COMPENSATION BONUS PLAN
The Company originally set aside 3,O00,000 shares of common stock which is
available for issuance to directors, officers, key employees, consultants and
advisors who contribute to the success of the Company. This stock option plan is
administered by the hoard of directors and the exercise price of each option is
not to be less than 76% of the fair market value of the common stock on the date
of grant or issuance. Upon the issuance of a stock option, an option may be
exercised for the following maximum amounts: 33% of the amount granted any time
at least six months subsequent to the date of grant, an additional 33% of the
amount granted any time at least 15 months subsequent to the date of grant, and
an additional 34% of the amount granted any time at least 27 months subsequent
to the date of grant. Options under the plan may not be sold, pledged,
hypothecated, transferred or otherwise disposed of and are exercisable only by
the optionee or, upon his death, by his legal representative. As of January 31,
1998, there were 2,333,334 shares of common stock available to be issued under
this plan.
<PAGE>
NOTES TO FINANCIAL STATEMENTS Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 6 - INCOME TAXES
The Company has a net operating loss carryover of $4,889,139 to the year ended
January 31, 1999. These loss carryovers will commence to expire in 1999. The
Company has not recorded a deferred tax asset for the possible benefit of these
net operating loss carryovers because it is uncertain if the Company will have
future taxable income.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> JAN-31-1998
<CASH> 1,281
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,281
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,281
<CURRENT-LIABILITIES> 169,949
<BONDS> 0
0
0
<COMMON> 143,234
<OTHER-SE> (311,902)
<TOTAL-LIABILITY-AND-EQUITY> 1,281
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 19,901
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,901)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
