Fountain Oil Announces Third Quarter Results.HOUSTON, Texas--(BUSINESS WIRE)--June 13, 1995--Fountain Oil Incorporated ("Fountain"), (NASDAQ/NMS:GUSH), announced today the result of operations for the quarter and nine months ended May 31, 1995. Revenue was US $77,835 and US $610,309, respectively. There was no revenue during the comparable 1994 periods. The net loss was US $1,299,540 and US $3,353,661, respectively, compared to US $436,996 and US $1,095,724 for the comparable 1994 periods. The increased losses in 1995 are largely attributable to the increase in general and administrative expense associated with the build-up build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. of organization and infrastructure in connection with the extension and expansion of the company's operations. The net loss for the three and nine month periods ended May 31, 1995 includes approximately US $441,000 and US $1,127,000 for certain outside services which to a large extent are of a non-recurring nature. Fountain Oil recently formed an Oil and Gas Division to engage in the acquisition and development of oil and gas properties. This division has acquired working interest in three prospects in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and has obtained exclusive rights to negotiate interests in major proven oil and gas fields in Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. . There was no revenue from the Oil and Gas Division during the 1995 periods. The revenue for the 1995 periods related to sales of the company's electrically enhanced oil recovery Enhanced Oil Recovery (EOR) is a generic term for techniques for increasing the amount of oil that can be extracted from an oil field. Using EOR, 30-60 %, or more, of the reservoir's original oil can be extracted [1] compared with 20-40% [2] equipment and ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. services. Petroleum development activities have commenced in the company's first gas project in Edwards County, Texas Edwards County is a county located in the U.S. state of Texas. In 2000, its population was 2,162. Edwards is named for Haden Edwards, an early settler of Nacogdoches, Texas. The seat of the county is Rocksprings6. Geography According to the U.S. . This project involves some 9,000 acres under lease and option. One well has been drilled and although the logs indicate the presence of gas reservoirs gas reservoir In geology, a naturally occurring storage area, characteristically a folded rock formation, that traps and holds natural gas. The reservoir rock must be permeable and porous to contain the gas, and it has to be capped by impervious rock in order to form an , attempts to achieve sustained production from the main producing zone, the Holman sands, have to-date been unsuccessful. No attempt has yet been made to produce from the other gas-bearing sands in this well. A second well is scheduled to be drilled before the fiscal year end, and the results from this well will help to determine the work program to attempt production from the first well. Fountain Oil has a 37.5 percent working interest, before payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. , in the Edwards County Edwards County is the name of several counties in the United States:
At May 31, 1995, Fountain Oil's stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. amounted to US $13,087,955, cash and cash equivalent were US $8,973,407 and oil and gas properties, utilizing the full cost method, were US $1,524,965. Fountain Oil Incorporated is actively acquiring and developing a portfolio of oil and gas properties. The company has also developed and is marketing a patented, electrically enhanced oil recovery technology used to increase the production of paraffinic oil and heavy oil. -0- FOUNTAIN OIL INCORPORATED AND SUBSIDIARIES Financial Statements Consolidated Condensed Balance Sheet
Unaudited
May 31, 1995
ASSETS
Current Assets:
Cash and cash equivalents $ 8,973,407
Accounts receivable 79,967
Inventory 75,219
Prepaid expenses and deferred costs 302,593
Total current assets 9,431,186
Intangible assets, net of accumulated
amortization of $6,917,858 2,003,555
Furniture, fixtures and equipment, net of
accumulated depreciation of $705,425 581,315
Oil and gas properties, utilizing the
full cost method 1,524,965
Total Assets $ 13,541,021
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 165,739
Accrued liabilities 76,076
Notes payable 37,187
Total current liabilities 279,002
Accrued Liabilities - related parties 174,064
Stockholders' Equity:
Preferred stock ---
Common stock 1,042,873
Capital in excess of par value 28,506,369
Accumulated deficit since October 31, 1988 (16,449,449)
13,099,793
Less: Accumulated currency translation (11,838) Total Stockholders' Equity 13,087,955 Total Liabilities and Stockholders' Equity $ 13,541,021
NOTE: See accompanying notes to unaudited consolidated
condensed financial statements.
Financial Statements Consolidated Condensed Statements of Operations
Unaudited Unaudited
Three Months Ended Nine Months Ended
May 31 July 31 May 31 July 31
1995 1994 1995 1994
Operating Revenues:
Power unit rentals $ 21,151 $ --- $ 35,861 $ ---
Equipment sales 49,476 --- 463,555 ---
Consulting income 7,208 --- 110,893 ---
77,835 --- 610,309 ---
Operating Expenses:
Cost of sales 31,342 3,244 359,294 30,980
Other direct project
cost 36,569 --- 79,086 ---
General and
administrative 1,211,658 79,160 2,733,802 230,725
Loss on sale of assets --- (2,000) --- 17,929
Depreciation, depletion
and amortization 234,684 260,924 865,290 781,892
Research and development --- --- 63,279 ---
1,514,253 341,328 4,100,751 1,061,526
Operating Loss 1,436,418 341,328 3,490,442 1,061,526 Other Income (Expense): Interest, net 95,800 (15,210) 90,407 (42,905) Other 41,076 7,542 46,374 8,707 Total other income (expense) 136,876 (7,668) 136,781 (34,198) Net Loss $1,299,542 $348,996 $3,353,661 $1,095,724 Weighted average number of common shares outstanding 10,146,189 3,929,188 7,544,666 3,870,649 Net Loss Per Common Shares $ (.13) $ (.09) $ (.44) $ (.28)
NOTE: See accompanying notes to unaudited consolidated
condensed financial statements.
-0- Financial Statements Notes to Unaudited Consolidated Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Financial Statements Nine Months Ended May 31, 1995 (Unaudited) (1) Basis of Preparation and Presentation The consolidated condensed financial statements included herein have been prepared by Fountain Oil Incorporated (the "Company"), without audit. Although certain information and footnote Text that appears at the bottom of a page that adds explanation. It is often used to give credit to the source of information. When accumulated and printed at the end of a document, they are called "endnotes." disclosures normally included in financial statements prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting have been condensed or omitted, the company believes that the disclosures included are adequate to make the information presented not misleading. In the opinion of management, the consolidated condensed financial statements include all adjustments necessary to present fairly the financial position and results of operations as at the dates and for the periods presented. It is suggested that these consolidated condensed financial statements be read in conjunction with the financial statements and the notes thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. included in the annual report on Form 10-KSB for the ten months ended August 31, 1994 filed by the company's predecessor, Electromagnetic electromagnetic /elec·tro·mag·net·ic/ (-mag-net´ik) involving both electricity and magnetism. electromagnetic pertaining to or emanating from electromagnetism. Oil Recovery, Inc. ("EORI EORI Expeditionary Operational Readiness Inspection "), with the Securities and Exchange Commission. See Note 5 regarding Reincorporation. (2) Change of Fiscal Year In September 1994, EORI changed its fiscal year end from October 31 to August 31. As the company's fiscal year will continue to be August 31, the quarters of the current fiscal year do not coincide with the previous fiscal year. In accordance with the rules and regulations of the Securities and Exchange Commission, the company is filing its quarterly reports for the quarters of the current fiscal year without recasting re·cast tr.v. re·cast, re·cast·ing, re·casts 1. To mold again: recast a bell. 2. data for the prior fiscal year because recasting is not practicable practicable adj. when something can be done or performed. and cannot be cost justified. The results of operations for the three and nine month periods ended July 31, 1994 have been furnished fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. as these periods are the most nearly comparable to the three and nine month periods ended May 31, 1995 of the newly adopted fiscal year. There are no seasonal or other factors that would affect the comparability of information or trends of the periods for the three and nine months ended May 31, 1995 when compared to the three and nine months ended July 31, 1994. The results of operations for the three and nine month periods ended May 31, 1995 are not necessarily indicative of the results to be expected for the full year. (3) Stockholders' Equity During February and March 1995, the company issued and sold an aggregate of 811 Units, each consisting of 4,000 shares of its Common Stock, par value $0.10 per share, and warrants expiring February 28, 1997 to purchase up to 4,000 shares of Common Stock at an exercise price of $6.00 per share. The company received gross proceeds of $11,354,000 and net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $10,321,000 from the sale of such Units. The company also issued warrants (the "Placement Warrants") expiring February 28, 1997 to purchase up to 1,139,800 shares of Common Stock at an exercise price of $5.10 per share to non-US persons who participated in the distribution of the Units. The Units and the Placement Warrants were offered and issued to non-US persons without registration under the Securities Act of 1993, as amended, and may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from the registration requirements contained therein. During the quarter ended May 31, 1995, the company issued 28,570 shares of its Common Stock, par value $0.10 per share, upon conversion of an aggregate of $50,000 principal amount of convertible notes payable to related parties and issued an aggregate of 329,731 shares upon exercise of stock purchase warrants for an aggregate consideration of $438,168. (4) Recoverability of Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. The recoverability of the net book value of the intangible assets is dependent upon operating revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. being generated from existing and new projects. The substantial equity raised by the company in February and March 1995 provides the resources for investment in existing and additional projects in the company's newly established Oil and Gas Division, as well as providing funds for further development and marketing of the company's electrically enhanced oil recovery technology. (5) Reincorporation On December 16, 1994, following approval by the shareholders of EORI, a plan of reorganization was implemented under which EORI merged with and into its newly organized and wholly owned Delaware subsidiary, Fountain Oil Incorporated (the "Reincorporation"). In the Reincorporation, Fountain Oil was the surviving corporation, and EORI ceased to exist as a separate entity. The principal results of the Reincorporation were (i) a change in the company's state of incorporation from Oklahoma to Delaware, (ii) the change in the company's name to Fountain Oil Incorporated, (iii) accomplishing, in effect, a 1-for-25 reverse stock split through the automatic conversion in the merger of each previously outstanding 25 shares of EORI Common Stock into 1 share of Fountain Oil Common Stock, and (iv) the authorization The right or permission to use a system resource; the process of granting access. See access control. of a class of Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . The authorized capital authorized capital n (COMM) → capital m autorizado or social authorized capital n (Comm) → capital social of Fountain Oil consists of 25,000,000 shares of Common Stock, $0.10 par value, of which approximately 5,974,000 shares were outstanding upon consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. of the Reincorporation and 10,428,731 shares were outstanding on May 31, 1995; and 5,000,000 shares of Preferred Stock, $0.10 par value, none of which was outstanding upon consummation of the Reincorporation or on May 31, 1995. The consolidated condensed financial statements have been retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin restated to give effect to the Reincorporation and reverse stock split. (6) Summary of Significant Accounting Policies The company follows the Full Cost Method in accounting for oil and gas operations. Under the Full Cost Method, all acquisition, exploration and development costs, including certain related employee costs (less any reimbursements for such costs) incurred for the purpose of acquiring and developing oil and gas reserves are capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. in a "full cost pool" as incurred. The company records depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able of its full cost pool using the Unit of Production Method and uses its internal estimates of proven quantities of oil and gas reserves for financial accounting matters. To the extent that such capitalized costs in the full cost pool (net of depreciation, depletion and amortization and related deferred taxes) exceed the present value (using a 10 percent discount rate) of estimated future net after tax cash flow from proven oil and gas reserves, such excess costs are charged to operations. Once made, a write-down of oil and gas properties is not reversible reversible, adj capable of going through a series of changes in either direction, forward or backward (e.g., reversible chemical reaction). reversible hydrocolloid, n See hydrocolloid, reversible. . In March 1995, the Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." As the company utilizes the full cost method of accounting for its exploration and development costs, it is currently required to calculate impairment losses using a cost center ceiling specified by the Securities and Exchange Commission regulations for full cost companies. Although the company is currently evaluating the impact of Statement of Financial Accounting Standards No. 121, management does not believe that this statement will have a material impact on its financial position or results of operations. (7) Commitments As at May 31, 1995, the company had outstanding obligations with respect to its oil and gas projects in the amount of approximately $1.1 million and 205,000 shares of its Common Stock. As these projects continue to be developed, significant additional obligations may be incurred. CONTACT: Fountain Oil Incorporated Arnfin Haavik, 918/582-7299 or Liviakis Financial Communications, Inc. John M. Liviakis, 916/448-6084 |
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