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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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NATION ENERGY, INC.
Suite 1100 - 609 West Hastings Street
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Securities registered under Section 12(b) of the Exchange Act:
None
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
APPLICABLE ONLY TO CORPORATE REGISTRANTS:
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of September 30, 2000, the Registrant had 7,170,000 shares of
Common Stock outstanding.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (check one):
Yes [ ] No [X]
NATION ENERGY, INC.
Attached hereto and made a part of this filing is the unaudited
consolidated balance sheet at September 30, 2000, consolidated statement of operations
for the six months ended September 30, 1999 and 2000, consolidated statement of
cash flows for the six months ended September 30, 1999 and 2000, and notes to the
consolidated financial statement.
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. They do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, considered necessary for a
fair presentation, have been included in the accompanying unaudited financial
statements. Operating results for the periods presented are not necessarily
indicative of the results that may be expected for the full year. For further
information, refer to the financial statements and notes therto, included in
the Company's Form 10-KSB for the year ended March 31, 2000.
Statements contained herein that are not based on historical fact, including
without limitation statements containing the words "believes," "may," "will,"
"estimate," "continue," "anticipates," "intends," "expects" and words of similar
import, constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, events or developments to be materially different
from any future results, events or developments expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions, both nationally and in the regions in
which the Company operates; technology changes; competition; changes in business
strategy or development plans; the ability to attract and retain qualified
personnel; liability and other claims asserted against the Company; and other
factors referenced in the Company's filings with the Securities and Exchange
Commission. Given these uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements. The Company disclaims any
obligation to update any such factors or to publicly announce the result of any
revisions to any of the forward-looking statements contained herein to reflect
future results, events or developments.
The Company believes that at least ten wells will need to be
drilled and tested for gas production before the Greater Trona
Project can be properly evaluated. On June 2, 2000 the Company
and it's partner in the Greater Trona Project, Saurus Resources,
Inc., commenced drilling the first well of a scheduled ten well
drilling program in the Trona Project. The Company has drilled
and reviewed the results of all ten wells in the initial ten-well
program and has elected to proceed with a completion and testing
program to test the long-term producibility of these wells. For
strategic reasons and in order to maintain its full working
interest in the Trona project, the Company has elected to
participate in the drilling of additional wells in the area as
proposed by the joint venture partner. As of September 30, 2000
an additional 3 wells had been drilled and were being tested.
The Company has reviewed its potential participation in
several oil and gas projects in the Rocky Mountain region and has
entered into one agreement as of this date with Saurus Resources
Inc., described below in "--Initial Focus," for the exploration
of properties and has purchased various leases totaling 11,404
acres in the Greater Trona Area, Wyoming, under this agreement.
During the next twelve months the Company plans to focus its
resources on exploring this region and evaluating additional
opportunities for developing oil and gas projects.
During the next twelve months the Company's proposed plans
call for it analyze additional regions for acquisition of oil and
gas leases based on several factors. The Company considers those
regions in which it's industry contacts have the most experience
in order to benefit from such experience. The Company will
determine which leases it is interested in exploring based upon
the analysis of technical and production data, financial analysis
based on such production analysis, on site verification of well
equipment and production capability, and verification of
ownership of leasehold rights.
The principal activity for the Company in the next twelve
months and beyond will be the securing of oil and gas exploration
contracts and joint ventures in the Greater Trona Area, Wyoming.
On August 11, 1999, the Company signed a letter of intent with
Saurus Resources Inc., giving the Company the option to enter
into a joint venture with Saurus under which the Company may
acquire up to 50% of the profits resulting from oil and gas
development by the venture in the Greater Trona Area prospect,
located in southwest Wyoming. Saurus currently has an interest
in approximately 50,000 acres in the Greater Trona Area prospect.
Under the terms of the letter, the Company paid for a study
reporting on the economic and geologic merits of the Trona
venture and had until September 15, 1999, to enter into a joint
venture with Saurus. On October 1, 1999, the Company elected to
proceed with the joint venture, and has advanced the initial
payment of $202,131 U.S.
Under the arrangement with Saurus, Saurus and the Company
will each pay 50% of the costs of obtaining the necessary rights
and drilling exploratory wells in the Greater Trona prospect.
The Company has spent $525,000 US on drilling and completing
wells in the Trona area and has earned its 50% interest in the
Greater Trona Area joint venture
If additional lands become available for purchase and the
Company is successful in leasing such additional lands, Saurus
shall have the option to defer its 50% share of the cost of the
first 100,000 acres of such additional land that the Company may
purchase. Saurus will have this optionuntil February 1, 2001. At
this time the Company has purchased leases covering a total of
11,404 acres in which Saurus may elect to participate.
To date, the Company has purchased various leases totaling
11,404 acres. The leases have terms of between five and ten years
and have royalties of between one eighth and one sixth.
The Company does not foresee hiring any additional employees
in the next twelve months but may employ consultants as
necessary.
Capital acquisitions over the next twelve months are
expected to total $200,000. These capital acquisitions will
consist of wellhead, tie-in and compression equipment needed to
produce gas in the event the Company's exploration wells are
successful. The Company has enough cash to meet its obligations
in the Greater Trona joint venture.
The Company may, within the next twelve months or
thereafter, employ detailed geological interpretation combined
with advanced seismic exploration techniques to identify
potential ventures. Geological interpretation is based upon data
recovered from existing oil and gas wells in an area and other
sources. Such information is either purchased from the company
that drilled the wells or becomes public knowledge through state
agencies after a period of years. Through analysis of rock
types, fossils and the electrical and chemical characteristics of
rocks from existing wells, the Company can construct a picture of
rock layers in the area. Further, the Company will have access
to the logs from the existing operating wells which will allow
the Company to extrapolate a decline curve and make an estimation
of the number of recoverable barrels of oil or cubic feet of gas
existing beneath a particular lease. The Company has not
purchased, leased, or entered into any agreements to purchase or
lease any of the equipment necessary to conduct the geological or
geophysical testing referred to herein and will only to do so
should the Board of Directors find that the information otherwise
available to the Company is insufficient to identify potentially
profitable oil and gas properties.
Management is of the opinion that one of the ways to enhance
the Company's position in the development of oil and gas may be
the purchase and operation of drilling rigs. Though no
assurances can be given that the Company will purchase drilling
rigs and enter into the drilling business nor that the Company
will be successful in such an enterprise, the Company is
currently investigating the purchase of used drilling rigs and
could possibly apply the proceeds of this Offering to obtain one
or more drilling rigs.
The Company would have the option to enter into different
types of drilling contracts with operators, each with varying
degrees of risk and reward. There are three basic types of
contract used in the oil and gas industry: daywork, footage, and
turnkey. Pursuant to a daywork contract the rig and necessary
personnel are contracted out at a fixed day rate. Most risks and
delays to drilling are born by the entity hiring the rig. In
footage contracts wells are drilled on a dollars per foot basis
to a designated depth. These contracts are more expensive
because part of the burdens for delays and the risk of drilling
are born by the drilling contractor and part by the entity hiring
the rig. A turnkey contract is a well drilled by the contractor
for a fixed price. This type of contract bears the greatest risk
for the drilling contractor, but this risk is usually reflected
in the contract with a substantial increase in service costs or
through a substantial participation by the drilling contractor in
the well if it is successful. If and when the Company purchases
drilling rigs, Management will decide on a deal by deal basis
after evaluation of the particular risks and circumstances which
type of drilling contract, in its sole discretion, will best
serve the interests of the Company.
The Company has no operating history. The Company does not
expect to generate sufficient revenues within the foreseeable
future to support the expenses of its development and marketing
activities and therefore will need to rely upon significant
additional funding to implement its development plans. It is
anticipated that this funding will be accomplished through the
sale of the Company's equity securities or through borrowing.
Prior to September, 2000, the Company has sold 7,170,000 shares
of its Common Stock for approximately $728,400 prior to deduction
of offering expenses. The Company intends to raise future
requisite funds by subsequent offerings of its Common Stock and
will not be able to institute its full plan of operation without
significant additional funding. The Company has had pending a
private placement of its Common Stock the gross proceeds of
which, should it proceed and all of the shares offered are sold,
will amount to $4,500,000 assuming that all of the shares offered
for sale are sold. See "--Private Placement," below. As of its
unaudited financial statements of September 30, 2000 the Company
had assets of $4,125,007. The foregoing funds will be and have
been mainly used by the company to develop, exploit and market
oil and gas projects. $3,385,000 of such funds are cash advanced
for subscriptions for common stock in the private placement that
have not yet closed. If the private placement does not close,
such funds will be returned to the subscribers. The Company
currently anticipates that, assuming that all of the shares
offered for sale are sold, this private placement will satisfy
the cash requirements of the Company for the next twelve months.
If the Company does not proceed with this private placement, the
Company will need to obtain alternative financing to pursue its
plan of operations.
The Company has pending a private offering of up to
4,500,000 shares of its Common Stock at an offering price of
$1.00 per share. This offering has been pending for several
months and it is unclear whether or not it will ultimately close.
Net proceeds from this offering, should it proceed (after
deducting expenses of the offering estimated to be $10,000) is
expected to be $4,490,000 if all of the Shares are sold. The
Company intends to use al1 of the foregoing amounts for working
capital. Funds will be used as general working capital including
but not limited to, obtaining oil and/or gas leases, hiring
executive and support personnel, and obtaining facilities to
conduct operations, and inventory equipment. At present the
Company is negotiating regarding several projects and has entered
into a joint operating agreement with Saurus Resources, Inc. for
an option on a 50% interest in a project in the Greater Trona
Prospect, located in southwest Wyoming. The Company has also
purchased two oil and gas leases totaling 560 acres. No assurance
can be given that the Company will be able to obtain such
additional arrangements as will be necessary to develop and
implement its plan in a timely manner or if implemented that said
enterprise will be profitable. No assurance can be given that
significant revenues will be derived from the development and
operation of it's the Company's development plans. Until
required for specific purposes, the net proceeds of the offering
may be invested temporarily in short-term obligations such as
short-term government obligations.
The Company has received advances for subscriptions totaling
$3,385,000. These subscriptions have not yet been accepted by
the Company and are being held subject to such acceptance and the
final closing of the private placement. Of the 3,385,000 shares
currently subscribed for, 3,000,000 have been subscribed for by
Cubix Investments, Inc., a British Columbia, Canada, corporation
whose Common Stock is traded on the Canadian Venture Exchange.
John R. Hislop, the Company's chairman of the Board, Secretary
and Vice President and Chief Financial Officer, is the President
and a director of Cubix Investments, Inc. See "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTION."
The Company can only estimate the future use of proceeds
based on the current status of the Company's operations, its
current plans and current economic condition. Due to the
uncertainties of fund raising and negotiations, the Company is
unable to predict precisely what amount will be used for any
particular purpose. The Company will apply the proceeds of this
offering in such manner as it deems appropriate under the then
existing circumstances. The Company reserves the right to amend
the use of proceeds by vote of a majority of the Board of
Directors.
Should the offering not proceed under its current terms, the
Company will be required to pursue alternative sources of
capital. Without additional capital, the Company's ability to
pursue its plan of operations will be severely curtailed.
The Company currently has no employees other than its Officers
and Directors. Management of the Company expects to hire
additional employees as needed. Management currently estimates
that the Company will not hire any employees in the next twelve
months.
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS. ACTUAL EVENTS OR RESULTS COULD
DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS AS A
RESULT OF VARIOUS FACTORS INCLUDING, WITHOUT LIMITATION, THE RISK FACTORS SET
FORTH BELOW AND ELSEWHERE IN THIS REPORT. AN INVESTMENT IN THE SECURITIES OF THE
COMPANY INVOLVES A HIGH DEGREE OF RISK. THE FOLLOWING DOES NOT PURPORT TO BE A
COMPREHENSIVE SUMMARY OF ALL THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE
COMPANY. RATHER, THE FOLLOWING ARE ONLY CERTAIN PARTICULAR RISKS TO WHICH THE
COMPANY IS SUBJECT THAT THE COMPANY WISHES TO ENCOURAGE PROSPECTIVE INVESTORS TO
DISCUSS IN DETAIL WITH THEIR PROFESSIONAL ADVISORS. PROSPECTIVE INVESTORS,
PRIOR TO MAKING AN INVESTMENT IN THE COMPANY, SHOULD CAREFULLY CONSIDER, AMONG
OTHERS, THE FOLLOWING RISK FACTORS.
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
(Mark One)
[X] Quarterly report pursuant section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended
September 30, 2000
[ ] Transition report pursuant section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____________ to
_____________
(Exact name of small business issuer as
specified in its charter)
Commission file number:
0-30193
DELAWARE
(State or other jurisdiction of incorporation
or organization)
59-2887569
(IRS Employer Identification No.)
Vancouver BC Canada V6B 4W4
(Address of principal executive offices)
(800) 400 - 3969
(Issuer's telephone number)
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value
DURING THE PRECEDING FIVE YEARS:
Not applicable
FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 2000
Index
Page Number
PART I FINANCIAL INFORMATION
Item 1.
Balance Sheet
4
Statement of Operations
5
Statements of Cash Flows
6
Notes to Financial Statements
7
Item 2.
Management's Discussion and Analysis of Financial
Conditions and Results of Operations
8
PART II OTHER INFORMATION
Item 1.
Legal Proceedings
13
Item 2.
Changes in Securities
13
Item 3.
Defaults Upon Senior Securities
13
Item 4.
Submission of Matters to a Vote of Security Holders
13
Item 5.
Other Information
13
Item 6.
Exhibits and Reports on Form 8-K
13
SIGNATURES
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
NATION ENERGY, INC.
(A Development Stage Company)
BALANCE SHEET
September 30, 2000
(Unaudited)
ASSETS
Current assets:
Cash $ 2,554,236
-------------
Oil and gas properties - full cost method 1,570,771
-------------
Total assets $ 4,125,007
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 86,479
-------------
Stockholders' equity:
Common stock, $.001 par value; 50,000,000
shares authorized; 7,170,000 shares issued
and outstanding 7,170
Additional paid-in capital 742,230
Common stock subscriptions 3,385,000
Deficit accumulated during the
development stage (95,872)
-------------
Total stockholders' equity 4,038,528
-------------
Total liabilities and stockholders' equity $ 4,125,007
=============
NATION ENERGY, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Period
For the Three For the Three For the Six For the Six April 19, 1988
Months Ended Months Ended Months Ended Months Ended (inception) to
September 30, 1999 September 30, 2000 September 30, 1999 September 30, 2000 September 30, 2000
-------------------- ------------------- -------------------- ------------------- -------------------
Revenue: $ - $ - $ - $ - $ -
-------------------- ------------------- -------------------- ------------------- -------------------
Costs and expenses:
General, selling and administrative 4,585 14,214 6,762 23,128 95,872
-------------------- ------------------- -------------------- ------------------- -------------------
Total costs and expenses 4,585 14,214 6,762 23,128 95,872
-------------------- ------------------- -------------------- ------------------- -------------------
Net (loss) $ (4,585) $ (14,214) $ (6,762) $ (23,128) $ (95,872
==================== =================== ==================== =================== ===================
Per share information:
Weighted average number of common
shares outstanding - basic and diluted 7,170,000 7,170,000 7,145,824 7,170,000 968,942
==================== =================== ==================== =================== ===================
Net (loss) per common share - basic and diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.10
==================== =================== ==================== =================== ===================
NATION ENERGY, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Period
For the Six For the Six April 19, 1988
Months Ended Months Ended (inception) to
September 30, 1999 September 30, 2000 September 30, 2000
------------------ ------------------ -----------------
Cash flows from operating activities:
Net (loss) $ (6,762) $ (23,128) $ (95,872)
Adjustments to reconcile net (loss) to net cash
provided by operating activities:
Common stock issued for services 20,000 - 20,000
(Increase) decrease in prepaid expenses (7,517) 100,632 -
Increase (decrease) in accounts payable (20,741) 77,276 86,479
------------------ ------------------ -----------------
Net cash provided by operating activities (15,020) 154,780 10,607
------------------ ------------------ -----------------
Cash flows from investing activities:
Purchase of oil and gas properties - (1,379,893) (1,570,771)
------------------ ------------------ -----------------
Net cash (used in) investing activities - (1,379,893) (1,570,771)
Cash flows from financing activities:
Payments for withdrawn subscriptions - (500,000) (500,000)
Proceeds from common stock issued and subscribed - 385,000 4,614,400
------------------ ------------------ -----------------
Net cash provided by (used in) financing activities - (115,000) 4,114,400
------------------ ------------------ -----------------
Net increase (decrease) in cash (15,020) (1,340,113) 2,554,236
Beginning cash 728,205 3,894,349 -
------------------ ------------------ -----------------
Ending cash $ 713,185 $ 2,554,236 $ 2,554,236
================== ================== =================
Supplemental cash flow information:
Cash paid for interest $ - $ - $ -
Cash paid for income taxes $ - $ - $ -
NATION ENERGY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. BASIS OF PRESENTATION
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operation
NATION ENERGY, INC.
Statement of Forward-Looking Information
Results of Operations
Plan of Operation
Initial Focus
Geological and Geophysical Techniques
Possible Drill Rig Operation
Liquidity and Capital Resources
Private Placement
Employees
INVESTMENT CONSIDERATIONS
FOR ALL OF THE AFORESAID REASONS AND OTHERS SET FORTH HEREIN, AS WELL AS OTHER FACTORS NOT SET FORTH HEREIN, THE PURCHASE OF THE SHARES OF THE COMPANY INVOLVES A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING AN INVESTMENT IN THE SHARES OF THE COMPANY SHOULD BE AWARE OF THESE AND OTHER FACTORS SET FORTH IN THIS REPORT AND OUR OTHER SEC FILINGS. THE SHARES OF COMMON STOCK SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO ABSORB A TOTAL LOSS OF THEIR INVESTMENT IN THE COMPANY AND HAVE NO NEED FOR A RETURN ON THEIR INVESTMENT.
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
The following exhibits are attached to this report and are incorporated herein by reference:
Exhibit No. | Exhibit Name |
3.1 | Certificate of Incorporation of Company, filed December 16, 1999* |
3.2 | Certificate of Amendment of Certificate of Incorporation of Company, filed February 15, 2000* |
3.3 | Bylaws of the Company* |
10.1 | Joint Operating Agreement with Saurus Resources, Inc. dated December 1, 1999* |
27.1 | Financial Data Schedule |
99.1 | 1999 Stock Option and Incentive Plan* |
* Incorporated by reference from the Company's Form 10-SB filed with the Securities and Exchange Commission March 31, 2000
(b) Reports on Form 8-K
None.
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NATION ENERGY, INC.
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Dated: November 14, 2000 |
By: /S/ "Donald A. Sharpe" Donald A. Sharpe,
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