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.
LIQUIDITY AND CAPITAL RESOURCES
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 June, 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 June 30, 2000 the Company had assets of $3,871,340. The foregoing funds will
be and have been mainly used by the company to develop, exploit and market oil
and gas projects. The Company has received $3,385,000 cash in advances 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.
PRIVATE PLACEMENT
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 all 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
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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.
EMPLOYEES
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.
INVESTMENT CONSIDERATIONS
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.
12
AN INVESTMENT IN OUR COMMON STOCK INVOLVES SUBSTANTIAL RISKS AND
UNCERTAINTIES AND PEOPLE CONSIDERING SUCH AN INVESTMENT SHOULD NOT COMMIT MORE
THAN THEY CAN AFFORD TO LOSE. PLEASE REFER TO OUR ANNUAL REPORT ON FORM 10-KSB
AS FILED WITH THE SEC ON July 14, 2000 FOR A LIST OF ADDITIONAL RISK FACTORS AND
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.
PART II--OTHER INFORMATION
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.
Exhibit No. Description
13
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.
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SIGNATURES
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.
(Registrant)
Dated: September 26, 2001 By: /s/ DONALD A. SHARPE
-----------------------------------
Donald A. Sharpe,
President and Chief Executive
Officer, Director
(Principal Executive Officer)
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