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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (Revised)
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
Documents incorporated herein by reference:
Form 8-K filed January 15, 1999
*******************************************************************************
Document page 1 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
<TABLE>
TABLE OF CONTENTS
PART 1
<C> <S>
Item 1 Description of Business 1
Item 2 Properties 8
Item 3 Legal Proceedings 9
Item 4 Submission of Matters to a Vote of Security Holders 9
PART II
Item 5 Market for Registrant's Common Equity and Related
Stockholders' Matters 9
Item 6 Selected Financial Data 10
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operation 10
Item 8 Financial Statements and Supplementary Data 12
Item 9 Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure 12
PART III
Item 10 Directors and Executive Officers of the Registrant 13
Item 11 Remuneration of Directors and Officers 14
Item 12 Security Ownership of Certain Beneficial Owners and
Management 15
Item 13 Interest of Management and Others in Certain Transactions 17
PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 17
SIGNATURES 18
Consent of Auditors 19
Audited Financial Statements and Notes to Financial Statements 20
</TABLE>
Document page 2 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
PART 1
ITEM 1. DESCRIPTION OF BUSINESS.
Overview
Ramex Synfuels International, Inc., a Nevada corporation ("Ramex" or
the "Company") 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 entities involved were in the development stage at
the time of acquisition or merger.
Ramex was organized for the purpose of developing and extracting of
oil, gas, and other energy sources from oil bearing shale. On May 29, 1990
the Company was issued a United States Patent for its oil shale gasification
process and retains exclusive rights to this process in the United States.
The patent is valid until May 28, 2007. The Company believes that the low
cost and efficient economics of the process make it very important to the
energy industry in general and specifically important to the future of Ramex.
At present, the oil shale gasification process has been tested in the
laboratory and in several field tests in Wyoming and Indiana. However, 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.
As of January 31, 1998, Ramex was not producing oil or oil shale
products.
Ramex Research Partners, Ltd.
Ramex Synfuels International, Inc. is the General Partner of Ramex
Research Partners, Ltd. (the "Partnership"). Ramex was in the development
stage until 1992, when initial investigations closed. For the purposes of
funding the further testing, on September 30, 1993, the Company, 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.
Document page 3 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
The Partnership was formed for the purpose of participating with the
Company in further enhancement and development of the oil shale gasification
process (the "Process"). The funds which Ramex received 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, have been and are
scheduled to be utilized by the Company 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 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 Company.
In consideration of the capital which the Partnership has made available
To Ramex to fund its research and development activities, the Company grants
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.
Subsequent to establishing the above relationship, on December 13,
1993, the Company 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. After to the completion of the
first phase, a plan was developed for further phases of testing; however, it
was not implimented due to lack of available funding. The Contractual
Agreement with Southwest Research Institute expired in September, 1997.
The Oil Shale Gasification Process
Since 1980, Ramex has been researching and developing a method to
extract synthetic natural gas from oil shale. The oil shale gasification
process invented and patented by Ramex is an in-situ operation requiring no
mining. A well similar to a natural gas well is drilled into an oil shale
formation, and then fired by a specially developed propane or natural gas
powered heater. The heater raises the temperature of the immediately
surrounding shale to approximately 1,200 degrees Fahrenheit. Based on
laboratory and field tests, raising the temperature of oil shale to that
point causes a molecular reaction somewhat similar to the reaction in coal
when it is turned into coke. No combustion takes place in the shale.
Instead, hydrocarbons trapped in the shale are released predominantly as
shale gas with a small amount of shale oil produced as well.
Document page 4 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
Development of the method began in the laboratory and progressed to
initial and second field tests near Duchesne, Utah, followed by two
additional field tests near Rock Springs, Wyoming. In April, 1988, Ramex
began field-testing near Henryville, Indiana, where a total of eight
wells were drilled. Throughout the testing the Company continued to
develop and refine its process.
Based on information derived from the above mentioned tests, Ramex
has proven that it can produce synthetic natural gas by drilling a hole
into oil shale, inserting a heater and raising the temperature over 1,000
degrees Fahrenheit. The Company developed a heater which will allow the
Company to put substantial BTU's of heat into the shale, including surface
equipment and mechanisms to control the heater temperature and monitor the
temperature of the shale as it is being heated.
Questions yet to be answered 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?
In all of the field tests in Indiana, Ramex was unable to answer the above
questions due to water incursions into the heating area after the burner was
installed. Management determined that it needs a lengthy burn in a water free
environment, and could not be assured that Ramex's lease holdings at the time
in Indiana would provide that kind of environment.
The technology is available to dewater an area of shale. Dewatering
requires analyzing the water table in the intended gasification area and
drilling a number of wells around the perimeter from which the water is pumped
out creating a cone of depression. The Company believes that in a commercial
application of the dewatering process, cost per well would be minimal, but to
do so for one well on a research basis is cost prohibitive. Therefore, while
the commercial production of gas from the oil shale in Indiana and other
states where high water tables are present is very possible, those locations
are not suitable for further research development studies.
For the purposes of the Company, laboratory simulation represents a
tremendous advantage over continued trial and error research in the field.
Variables can be introduced, such as higher or lower temperatures and the
effects studied to determine exactly the correct temperature necessary to
achieve the best reaction and to maintain the most economical thermal front
movement within the shale. The composition of the gas produced can be tested
using variable conditions. Volume of gas produced, its composition and the
ultimate economics of the process can be determined and perfected much more
quickly.
Ramex is currently evaluating the costs of conducting additional
laboratory testing.
Document page 6 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
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.
REGULATION
General
RAMEX has no operations that are currently affected by political
developments and federal and state laws and regulations. In particular, oil
and natural gas production operations and economics are or have been affected
by price control, tax and other laws relating to the oil and natural gas
industry, by changes in such laws and by changing administrative regulations.
There are currently no price controls on oil, condensate or NGLs; to the
extent price controls remain applicable after the enactment of the Natural Gas
Wellhead Decontrol Act of 1989
Legislation affecting the oil and natural gas industry is under constant
review for amendment or expansion, frequently increasing the regulatory burden.
Also, numerous departments and agencies, both federal and state, are authorized
by statute to issue and have issued rules and regulations binding on the oil
and natural gas industry and its individual members, compliance with which is
often difficult and costly and certain of which carry substantial penalties for
the failure to comply. RAMEX cannot predict how existing regulations may be
interpreted by enforcement agencies or the courts, nor whether amendments or
additional regulations will be adopted, nor what effect such interpretations
and changes may have on RAMEX's business or financial condition.
Natural Gas Regulation
Historically, interstate pipeline companies generally acted as wholesale
merchants by purchasing natural gas from producers and reselling the natural
gas to local distribution companies and large end users. Commencing in late
1985, the Federal Energy Regulatory Commission (the "FERC") issued a series of
orders that have had a major impact on interstate natural gas pipeline
operations, services, and rates, and thus have significantly altered the
marketing and price of natural gas. The FERC's key rule making action, Order
No. 636 ("Order 636"), issued in April 1992, required each interstate pipeline
to, among other things, "unbundle" its traditional bundled sales services and
create and make available on an open and nondiscriminatory basis numerous
constituent services (such as gathering services, storage services, firm and
interruptible transportation services, and standby sales and natural gas
balancing services), and to adopt a new rate making methodology to determine
appropriate rates for those services. To the extent the pipeline company or
its sales affiliate makes natural gas sales as a merchant in the future, it
does so pursuant to private contracts in direct competition with all other
sellers; however, pipeline companies and
Document page 6 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
their affiliates were not required to remain "merchants" of natural gas, and
most of the interstate pipeline companies have become "transporters only."
In subsequent orders, the FERC largely affirmed the major features of Order
636 and denied a stay of the implementation of the new rules pending judicial
review. By the end of 1994, the FERC had concluded the Order 636 restructuring
proceedings, and, in general, accepted rate filings implementing Order 636 on
every major interstate pipeline. However, even though the implementation of
Order 636 on individual interstate pipelines is essentially complete, many of
the individual pipeline restructuring proceedings, as well as Order 636 itself
and the regulations promulgated thereunder, are subject to pending appellate
review and could possibly be changed as a result of future court orders. RAMEX
cannot predict whether the FERC's orders will be affirmed on appeal or what the
effects will be on its
business.
In recent years the FERC also has pursued a number of other important
policy initiatives which could significantly affect the marketing of natural
gas. Some of the more notable of these regulatory initiatives include (i) a
series of orders in individual pipeline proceedings articulating a policy of
generally approving the voluntary divestiture of interstate pipeline owned
gathering facilities by interstate pipelines to their affiliates (the
so-called "spin down" of previously regulated gathering facilities to the
pipeline's nonregulated affiliate), (ii) the completion of a rule making
involving the regulation of pipelines with marketing affiliates under Order
No. 497, (iii) the FERC's ongoing efforts to promulgate standards for
pipeline electronic bulletin boards and electronic data exchange, (iv) a
generic inquiry into the pricing of interstate pipeline capacity, (v)
efforts to refine the FERC's regulations controlling operation of the
secondary market for released pipeline capacity, and (vi) a policy statement
regarding market based rates and other non-cost-based rates for interstate
pipeline transmission and storage capacity. Several of these initiatives
are intended to enhance competition in natural gas markets, although some,
such as "spin downs," may have the adverse effect of increasing the cost of
doing business on some in the industry as a result of the monopolization of
those facilities by their new, unregulated owners. The FERC has attempted to
address some of these concerns in its orders authorizing such "spin downs,"
but it remains to be seen what effect these activities will have on access to
markets and the cost to do business. As to all of these recent FERC
initiatives, the ongoing, or in some instances, preliminary evolving nature
of these regulatory initiatives makes it impossible at this time to predict
their ultimate impact on RAMEX's business.
Federal Taxation
The federal government may propose tax initiatives that affect the oil
and natural gas industry, including RAMEX. Due to the preliminary nature of
these proposals, RAMEX is unable to determine what effect, if any, the
proposals would have on product demand or RAMEX's results of operations.
Other Proposed Legislation
In the past, Congress has been very active in the area of natural gas
regulation. Legislative proposals are pending in various states which, if
enacted, could significantly affect the petroleum industry. RAMEX cannot
predict which proposals, if any, may actually be enacted by Congress or any
of the state legislatures, and what impact, if any, such proposals may have
on RAMEX's operations.
Document page 7 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
Environmental.
RAMEX currently has no operations. If RAMEX were to initiate any
drilling or exploitation of oil shale, the Company would be subject to
numerous laws and regulations governing the discharge of materials into the
environment or otherwise relating to environmental protection. These laws
and regulations require the acquisition of a permit before drilling
commences, restrict the types, quantities and concentration of various
substances that can be released into the environment in connection with
drilling and production activities, limit or prohibit drilling activities
on certain lands lying within wilderness, wetlands and other protected
areas, and impose substantial liabilities for pollution which might result
from RAMEX's operations. Moreover, the recent trend toward stricter standards
in environmental legislation and regulation is likely to continue.
For instance, legislation has been proposed in Congress from time to
time that would reclassify certain crude oil and natural gas exploitation
and production wastes as "hazardous wastes" which would make the reclassified
wastes subject to much more stringent handling, disposal and clean-up
requirements. If such legislation were to be enacted, it could have a
significant impact on the operating costs for the oil and natural gas industry
in general. Initiatives to further regulate the disposal of crude oil and
natural gas wastes are also pending in certain states, and these various
initiatives could have a similar impact. This could incur substantial costs
to comply with environmental laws and regulations. In addition to compliance
costs, government entities and other third parties may assert substantial
liabilities against owners and operators of oil and natural gas properties
for oil spills, discharge of hazardous materials, remediation and clean-up
costs and other environmental damages, including damages caused by previous
property owners
The Oil Pollution Act of 1990 ("OPA") imposes a variety of regulations
on "responsible parties" related to the prevention of oil spills. The
implementation of new, or the modification of existing, environmental laws
or regulations, including regulations promulgated pursuant to the Oil
Pollution Act of 1990, could have a material adverse impact on RAMEX. While
RAMEX does not anticipate incurring material costs in connection with
environmental compliance and remediation, it cannot guarantee that material
costs will not be incurred.
Employees
At January 31, 1998, the Registrant had no salaried employees.
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.
Document page 8 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
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 the
fiscal period ended January 31, 1998 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/A for the period ended January 31,
1998, no activity has occurred on this lawsuit. 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:
<TABLE>
Market Price: Fiscal year ending
January 31,
--------------------------------------------------
1997 1998
----------------------- ------------------------
Period High Low High Low
------ ---- --- ---- ---
<C> <S> <S> <S> <S>
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
</TABLE>
Such over-the-counter market quotations reflect inter-dealer prices,
without retail mark-up, markdown or commission and may not necessarily represent
actual transactions.
Document page 9 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
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 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)
<TABLE>
<CAPTION>
Years
Ended January 31,
-------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
<C> <S> <S> <S> <S> <S>
Revenues -0- -0- -0- -0- -0-
Net Income (loss) (58,494) (15,622) (21,081) (19,168) (19,091)
from Operations
Income from Forgiveness
of Debt -0- -0- 17,692 -0- -0-
Income from Interest -0- -0- -0- 18 27
Net Income (loss) (58,494) (15,622) (21,081) (19,168) (19,901)
Net Income (loss)
per common share: (0.000472) (0.00122) (0.00152) (0.00139) (0.00139)
Current Assets 786 251 9,408 2,209 1,281
Current Liabilities 145,170 142,507 144,052 156,003 169,949
Total Assets 786 251 9,408 2,209 1,281
Stockholder's equity
(deficit) (144,170) (142,256) (134,644) (153,794) (168,668)
</TABLE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
Since inception, the Company's activity has been limited to conducting
research and development of the Process for extracting synthetic natural gas
from oil shale as described elsewhere in this report. The funds used to
complete this research and development were initially 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.
Document page 10 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
It was determined after the completion of the last field project in Indiana
in 1995, 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. The Company's efforts during the fiscal years ending
in 1996, 1997, and 1998 have been primarily directed toward developing funding
arrangements for the cost of the laboratory and fieldwork yet to be performed.
No actual laboratory or field research activity was conducted during the fiscal
years ending January 31, 1996, 1997 or 1998.
Liquidity and Capital Resources:
As of January 31, 1998 Ramex's current assets were $1,281. The Company
had no income in the fiscal year ending January 31, 1996, and had interest
income of $18 and $27 during the fiscal years ending January 31, 1997 and 1998,
respectively. The Company had total expenses of $21,080, $19,168 and $19,901
during the fiscal years ending January 31, 1996, 1997 and 1998. Said expenses
were incurred in the course of minimal daily operations of the Company and for
consulting services.
Results of Operations
During the twelve month period ending January 31, 1998, the Company's only
activity was to evaluate the Ramex Oil Shale Gasification Process and search
for potential financing entities for the Process and possible other ventures.
Ramex will continue to seek funding to allow the Ramex process to proceed
through additional phases of development to answer previously mentioned
questions. Once research and development is complete the Company intends to
investigate partnerships for possible shale oil and gas production.
Obtaining additional financing 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. Any changes in corporate structure are subject to shareholder
approval and at the present no specific changes have been proposed.
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, questions do exist with respect to
the future funding of the Company, which will be necessary to maintain the
Company's operations.
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.
Environmental Ramifications of the Ramex Process
The Company has made in-depth inquiries to ascertain the environmental
safety of it's gasification process. To obtain a further understanding of
the mobilization of trace elements and to indicate the environmental and health
effects of the Process, Ramex conducted a survey of literature looking for
similar scenarios on equivalent strata. The survey discovered no relevant
information indicating a possible negative environmental impact of the Ramex
process.
Document page 11 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
Ramex 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 the tested well sites.
Further discussion of both government and environmental regulations
that may impact future operations of the Company is reported in Item 1.
The Company has no way to predict what impact, if any, such laws and
regulations may have on any of its future operations.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial statements appear on sequential pages 20 to 28 of this
Revised Annual Report on Form 10-K/A.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There were no disagreements by the Company in connection with the audits
of the three most recent fiscal years and any subsequent interim period with
Terrence J. Dunne, CPA.
Due to additional information required by the Securities Exchange
Commission, Ramex retained the services of Williams & Webster, P.S. to perform
a secondary audit of information presented for the fiscal year ended January
31, 1998. Aside from a secretarial error, Williams & Webster found no
substantial difference in any portion of the previously reported audit.
Certain information regarding the proceeds of a loan from a former officer was
restated to comply with current auditing standards.
The Auditors state, in the report to the Board of Directors, that there
are serious doubts as to the ability of Ramex 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, Williams & Webster P.S. states in the report to the
Board of Directors that these conditions raise substantial doubt about the
Company's ability to continue in business.
Document page 12 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
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:
<TABLE>
Name Age Position
- ------ --- -------------------------
<C> <S> <S>
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
</TABLE>
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,
was elected 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 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, has been 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. 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.
Document page 13 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
George Shutt, age 77, has been 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, has been a Director since October, 1988. He held
the offices of 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, has been 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. During more than four years he was ssistant Resident Manager for J.A.
Jones Construction Co. at Hanford, Washington. He has been responsible for
direction of 1,500 employees plus subcontractors, on new and maintenance
construction of nuclear and nuclear waste facilities and involved with the
construction of a total of twenty-six multi-million dollar projects.
The terms of such Directors and Officers are for a period of one year or
until their successors are duly elected and qualified.
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 in excess of $20,000.00
Directors:
The Directors of the Company received no compensation for services rendered
to the Registrant during the fiscal year ended January 31, 1998 in excess of
$20,000.00.
Document page 14 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
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.
Document page 15 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
<TABLE>
Security Ownership
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class (2)
- --------------------- ------------------------ ------------
<C> <S> <S>
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/A
</TABLE>
(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.
Document page 16 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
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.
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/A:
<TABLE>
Sequential
Page
----
<C> <S>
Consent of Auditor 19
Report of Independent Auditor 21
Statement of Financial Position at
January 31, 1998, 1997 and 1996. 22
Statement of Operations for the Years ended
January 31, 1998, 1997 and 1996. 23
Statement of Changes in Stockholders' Equity
for the years ended January 31, 1998, 1997 and 1996. 24
Statement of Cash Flows for the Years Ended January 31, 1998, 1997
and 1996. 25
Notes to Financial Statements at January 31, 1998, 1997
and 1996. 26
</TABLE>
(a) (2) Financial Statement Schedules are not filed with this Annual Report
on Form 10-K/A 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. However a Form 8-K reporting a change of auditors
was filed January 15, 1999 and is considered to be included herein by
reference
Document page 17 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FORM 10-K/A
January 31, 1998
*******************************************************************************
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: January 21, 1999 By: /s/ 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: January 21, 1999 /s/ Maynard M. Moe
--------------------
Maynard M. Moe
President, Director and
Chief Executive Officer
Dated: January 21, 1999 /s/ Kerry L. Weger
--------------------
Kerry L. Weger, Secretary-Treasurer
and Director
Dated: January 21, 1999 /s/ George E. Shutt
--------------------
George E. Shutt
Director
Dated: January 21, 1999 /s/ John F. Mayer
--------------------
John F. Mayer
Director
Document page 18 of 28
<PAGE>
Letterhead of:
Williams & Webster, P.S.
601 W. Riverside, Suite 1970
Spokane, WA 99201
To The Board of Directors of
Ramex Synfuels International, Inc.
We hereby consent to the use of our name in regard to the audited financial
statements of Ramex Synfuels International, Inc., in the 10-K/A report for
the year ended January 31, 1998.
/s/ Williams & Webster, P.S.
Spokane, WA
December 10, 1998
Document page 19 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
FINANCIAL STATEMENTS
<TABLE>
Table of Contents
January 31, 1998
<C> <S>
Independent Auditor's Report 1
Statement of Financial Position 2
Statement of Operations 3
Statement of Changes in Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6
</TABLE>
Document page 20 of 28
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Ramex Synfuels International, Inc.
We have audited the statement of financial position of Ramex Synfuels
International, Inc. as of January 31, 1998 and the related statements of
operations, changes in stockholders' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. As discussed in Note 3, the Company has
restated its prior years' financial statements to reflect the forgiveness of
a shareholder payable of $17,692 in 1995 as additional paid-in capital in
accordance with generally accepted accounting principles. This transaction
was originally recorded as other income. The financial statements of Ramex
Synfuels International, Inc. as of January 31, 1997 and 1996 were audited by
other auditors whose report dated April 8, 1998, expressed an unqualified
opinion on those statements before the restatement.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we 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. We believe that our audit provides a
reasonable basis for our opinion.
In our 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 the results of operations,
changes in stockholders' equity and cash flows for the year ended January 31,
1998 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 discussed in Note 8 to the
Financial statements, the Company has suffered recurring losses from
operations, has generated no revenues in the last three years, has a working
capital deficit and substantial liabilities. These conditions raise
substantial doubt about the Company's ability to continue in business.
Management's plans in regard to these matters are also described in Note 8.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Williams & Webster, P.S.
Spokane, Washington
November 6, 1998
1
Document page 21 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
Statement of Financial Position
<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 $ 64,295 $ 62,782
Due to officers and directors 105,654 93,221
----------- -----------
Total Current Liabilities 169,949 156,003
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock $.01 par value;
125,000,000 shares authorized,
14,323,465 and 13,823,465 shares
issued and outstanding as of January 31,
1998 and 1997 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 (Deficit) (168,668) (153,794)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 1,281 $ 2,209
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
Document page 22 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
Statements of Operations
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
January 31, January 31, January 31,
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
REVENUE $ - $ - $ -
-------- -------- --------
GENERAL AND ADMINISTRATIVE EXPENSES 19,901 19,168 21,080
-------- -------- --------
(LOSS) FROM OPERATIONS (19,901) (19,168) (21,080)
OTHER INCOME
Interest 27 18 -
-------- -------- -------
Total other income 27 18 -
-------- -------- --------
NET (LOSS) $(19,874) $(19,150) $(21,080)
======== ======== ========
NET (LOSS) PER SHARE (NIL) (NIL) (NIL)
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
Document page 23 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
Statement of Changes in Stockholders' Equity
<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
Payment of debt
by stockholder - - 17,692 - 17,692
Net (loss) - - - (21,080) (21,080)
----------- ----------- ----------- ----------- -----------
Balances as of
January 31, 1996 13,853,465 138,534 4,594,629 (4,867,807) (134,644)
Cancellation of
30,000 shares of
common stock (30,000) (300) 300 - -
Net (loss) - - - (19,150) (19,150)
------------ ----------- ----------- ----------- -----------
Balances as of
January 31, 1997 13,823,465 138,234 4,594,929 (4,886,957) (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 $ 4,594,929 $(4,906,831) $ (168,668)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
Document page 24 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
Statements of Cash Flows For the Years
<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) $(21,080)
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) (19,535)
-------- -------- --------
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from sale of common stock 5,000 - 11,000
Additional paid-in capital - - 17,692
-------- -------- --------
Net cash from financing activities 5,000 - 28,692
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
======== ======== ========
SUPPLEMENTAL INFORMATION
Interest expense paid $ - $ - $ -
Taxes paid $ - $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
Document page 25 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1998
*******************************************************************************
NOTE 1 - 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, 1980, 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.
Common Stock
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.
Earnings Per Share
Earnings (losses) per share are computed on the basis of the weighted average
number of common outstanding shares during the year.
Estimates
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.
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:
<TABLE>
<C> <S>
January 31, Amount
1997 $39,257
1997 $40,770
</TABLE>
NOTE 3 - RESTATEMENT OF PRIOR YEAR FINANCIAL STATEMENTS
A former president of the Company paid a liability of $17,692 during the
fiscal year ended January 31, 1996, for which no repayment from the Company is
expected. This forgiveness of debt, which was originally recorded by the
Company as other income, has been restated in the accompanying financial
statements as contributed capital.
6
Document page 26 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1998
*******************************************************************************
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 advances, 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 - CANCELLATION OF COMMON STOCK
In 1990, the Company authorized a certificate for 300,000 shares of its
common stock in expectation of drilling services to be performed. As time
passed, the drilling services were never performed and for that reason the
stock certificate was never issued or released. In February 1996, the
Company's stock transfer agent, authorized by the Company's board of
directors, physically cancelled the aforementioned stock certificate which
(after giving effect for a prior year 10:for:1 reverse stock split) then
represented 30,000 shares. No gain or loss was recognized on this transaction.
NOTE 6 - STOCK OPTION AND COMPENSATION BONUS PLAN
In 1989, the Company established a nonqualified stock option plan for its
directors, employees, and outside consultants. Under the plan, options to
purchase shares of the Company's common stock may be granted at 76% of the
fair market value of the common stock at the date of grant. Options may be
partially exercised within six months of the grant and are fully
exercisable within twenty-seven months of the grant date.
The Company originally provided for a maximum of 3,000,000 shares to be issued
under the stock option plan. In 1989 and 1990, the Company issued 1,366,667
shares under the plan and has issued no additional shares since this original
issuance. The remaining shares issuable under the plan has been reduced to
only 163,333 because of the Company's reverse stock split in 1994.
NOTE 7 - INCOME TAXES
The Company has a net operating loss carryover of $4,889,139 to the year ended
January 31, 1999. Tax 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.
NOTE 8 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of
the Company as a going concern. However, the Company has sustained substantial
operating losses in recent years without generating any revenues. In addition,
the Company has substantial liabilities and a working capital deficit. These
conditions raise substantial doubt about the Company's ability to continue.
7
Document page 27 of 28
<PAGE>
RAMEX SYNFUELS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1998
*******************************************************************************
NOTE 8 - GOING CONCERN (continued)
Management's plans for the Company include keeping the Company alive with
occasional cash advances from officers and directors, minimizing the Company's
cash expenditures, and searching for a financially stronger partner, already
operating in an energy-related environment, with which to form a strategic
alliance or joint venture. Management believes that these plans are realistic
and workable. Management further believes that the liquidation basis of
accounting is not appropriate in view of management's plans.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
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., provided
the funding for this testing. The first phase testing was completed in 1995 at
which time the contract with Southwest expired without further commitment from
either party. At this time, the Company does not have adequate funds in order
to pursue the second and third phases of
8
Document page 28 of 28
<PAGE>
<TABLE> <S> <C>
<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> 0
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
<PAGE>
</TABLE>
