GLADSTONE RESOURCES, INC.
3500 Oak Lawn, Suite 590
Dallas, Texas 75219
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES EXCHANGE ACT OF 1934 AND
RULE 14f-1 THEREUNDER
Gladstone Resources, Inc. (the "Company") is mailing this
Information Statement on or about March 5, 1999 to you as a holder of
record of its shares of common stock (the "Shares"). This Information
Statement describes the appointment of persons designated by the
Purchasers (as defined below) to a majority of the seats on the board
of directors of the Company (the "Board of Directors" or the
"Board").
On January 19, 1999, Mr. Wayne Gifford, Mr. Charles B. Humphrey,
Mr. Johnathan Hill, Mr. Fred Oliver, Ms. Sheila Irons (individually
and as trustee of the Humphrey Childrens Trust), Mr. Katherine
Murphy, Mr. David Tyrrell (individually and as trustee of the
Katherine Desporte Tyrrell Trust) and Mr. Clay Moore (collectively,
the "Purchasers") purchased in two simultaneous transactions (the
"Purchases") an aggregate of 3,134,325 Shares representing
approximately 73.85% of the issued and outstanding Shares. The
Purchases were made pursuant to the terms of (i) a Stock Purchase
Agreement dated January 19, 1999 among the Purchasers and Edward B.
Brooks, Jr., Charles V.W. Brooks, Carol Brady, Rebecca Feldt and
Debra Brooks Garrett (collectively, the "Brooks Sellers") and (ii) a
Stock Purchase Agreement dated January 19, 1999 among the Purchasers
and C. J. Cloarec, M.D. and Camrose Optical Co. (collectively, the
"Cloarec Sellers"). In connection with the Brooks Purchase, the
Brooks Sellers agreed to take or cause to be taken all such action as
is necessary to cause Mr. Hill, Mr. Humphrey, Mr. Gifford, Mr. Oliver
and Ms. Murphy (the "Purchaser Board Designees") to be appointed as
the sole members of the Board of Directors. To accomplish this, the
Company expects that the existing members of the Board, Mr. Edward B.
Brooks, Jr. and Mr. Roy J. Keene, will by unanimous written consent
increase the size of the Board from three members to five members.
Mr. Edward B. Brooks, Jr. and Mr. Roy J. Keene will then appoint
three of the Purchaser Board Designees to the three vacancies on the
Board then existing, the two vacancies created by expanding the size
of the Board from three members to five members and the vacancy that
currently exists. Following the appointment of these three Purchaser
Board Designees, Mr. Edward B. Brooks, Jr. and Mr. Roy J. Keene will
resign from the Board and the remaining Board members will by
unanimous written consent appoint the other two Purchaser Board
Designees, to fill the vacancies created by the resignations of
Mr. Edward B. Brooks, Jr. and Mr. Roy J. Keene.
Because a majority of the Company's directors is being changed
otherwise than at a meeting of the shareholders, the Company is
required pursuant to the Securities and Exchange Commission's
Rule 14f-1 to provide its shareholders with the information contained
in this Information Statement not less than ten days prior to the
date on which the change will take place.
YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE
NOT, HOWEVER, REQUIRED TO TAKE ANY ACTION AT THIS TIME.
The Purchasers have furnished to the Company the information
contained in this Information Statement concerning the Purchasers and
the Purchaser Board Designees. The Company assumes no responsibility
for the accuracy or completeness of such information.
INFORMATION WITH RESPECT TO THE COMMON STOCK
The Shares are the only class of voting securities of the
Company currently outstanding. As of the close of business on
January 19, 1999, there were 4,244,060 Shares outstanding, each of
which is entitled to one vote on each matter to be considered at a
meeting of shareholders. Under Washington law, shareholders entitled
to vote upon election of directors are entitled to cumulate votes in
the election of directors.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
GENERAL
Under the Company's Certificate of Incorporation, the Board of
Directors is composed of not less than three nor more than nine
members. There are currently two directors of the Company and,
accordingly, one vacancy on the Board.
PURCHASER BOARD DESIGNEES TO BE APPOINTED TO THE COMPANY'S BOARD OF
DIRECTORS
The following table sets forth the name, age, present principal
occupation and employment and five year employment history of each of
the Purchaser Board Designees. Each person named below has consented
to act as a director of the Company.
Name Age Occupation
- ---- --- ----------
H. Wayne Gifford 61 Mr. Gifford has been the President
and a Director of Gifford Operating
Company, an oil and gas operating
company based in Dallas, Texas,
since 1987. Mr. Gifford has also
been active as an independent
geological consultant since 1980.
Charles B. Humphrey 43 Mr. Humphrey has been the President,
Treasurer, and Sole Director of
Humphrey Oil Corporation, an oil and
gas exploration company based in
Dallas, Texas, and the President and
a Director of Lindenshire, Inc., a
real estate development company
based in Dallas, Texas, since 1984.
Mr. Humphrey also has been engaged
in real estate development and
investment individually and through
numerous other partnerships, joint
ventures and corporations since
1984.
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Johnathan M. Hill 49 Mr. Hill has been the President of
Hill & Hill Production Company, an
oil and gas production company, the
Secretary and Treasurer of Hill
Energy Company, an oil and gas
investment company, and the Vice
President of HPC Operating Company,
an oil and gas operating company,
all based in Dallas, Texas, since
1985.
Fred Oliver 74 Mr. Oliver has been the President of
Petroleum Ventures of Texas, Inc.,
an oil and gas investment company
based in Dallas, Texas, since 1975.
Mr. Oliver also has been engaged in
geological and engineering
consulting since 1953.
Katherine M. Murphy 42 Ms. Murphy has been the Vice
President and Assistant Secretary of
Humphrey Oil Corporation since 1989.
The Purchaser Board Designees have informed the Company that
none of the Purchaser Board Designees has a family relationship with
any director or executive officer of the Company or its subsidiary or
any Purchaser Board Designee.
CURRENT DIRECTORS OF THE COMPANY
Set forth below is certain information regarding the directors
of the Company as of the date of this Information Statement.
Edward B. Brooks, Jr.
Age 66
Director since 1973
Mr. Edward B. Brooks, Jr. has served as President of the Company
since 1976. Mr. Brooks also has been an independent oil interests
owner and operator based in Dallas, Texas since 1967.
Mr. Roy J. Keene
Age 69
Director since 1976
Mr. Keene is an independent petroleum engineer and has been
engaged as an independent oil operator and consultant based in
Dallas, Texas during the last twelve years.
The existing directors of the Company have informed the Company
that none of the directors has a family relationship with any
director or executive officer of the Company or its subsidiary or any
Purchaser Board Designee.
Information as to the Purchaser Board Designees and directors'
beneficial ownership of Shares is set forth below, at "Security
Ownership of Certain Beneficial Owners and Management."
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COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of
the Board. There is no separate audit, nominating or compensation
committee or other committee performing similar functions.
ATTENDANCE AT MEETINGS
The Board of Directors of the Company acted by unanimous written
consent on one occasion during 1998.
DIRECTOR COMPENSATION
No compensation was paid to any director in fiscal 1998 in his
capacity as a director.
CURRENT EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
Name Age Position
- ---- --- --------
Edward B. Brooks, Jr. 66 President and Chairman of the Board
Emma Kate Speck 73 Secretary and Treasurer
Mr. Edward B. Brooks, Jr. has served as President of the Company
since 1976. Mr. Brooks also has been an independent oil interests
owner and operator based in Dallas, Texas since 1967.
Ms. Speck has served as Secretary and Treasurer of the Company
since 1976. Ms. Speck has been engaged in providing bookkeeping
services in Dallas, Texas for the past 29 years.
Upon consummation of the appointment of the Purchase Board
Designees, the Purchaser Board Designees will seek the resignations
of Mr. Brooks and Ms. Speck from the offices with the Company that
they currently hold and appoint Mr. Hill the President of the
Company, Ms. Irons the Vice President and Secretary of the Company
and Ms. Murphy the Treasurer and Assistant Secretary of the Company.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Beneficial Ownership of Five Percent or Greater Shareholders
The following table sets forth beneficial owners of five percent or more of
the Company's outstanding Shares known to the Company as of the date of this
Information Statement. All shares shown in the table reflect sole voting and
investment power unless otherwise indicated.
Number of
Shares Percent
Name and Address Beneficailly of Total
of beneficial owner Owned(1) Shares
- -------------------- ------------ ---------
Charles B. Humphrey 1,080,819 25.47%
3500 Oak Lawn, Suite 590, LB 49, Dallas, TX 75219
Johnathan M. Hill 1,080,819 25.47
3500 Oak Lawn, Suite 590, LB 49, Dallas, TX 75219
Sheila Irons, Individually and as Trustee of 302,603(2) 7.13
Humphrey Children's Trust
3500 Oak Lawn, Suite 590, LB 49, Dallas, TX 75219
Fred Oliver 259,397 6.11
4625 Greenville Ave., Suite 205, Dallas, TX 75206
David Tyrrell, individually and as Trustee of 216,164(3) 5.09
the Katherine Desporte Tyrrell Trust
4625 Greenville Ave., Suite 205, Dallas, TX 75206
____________________
(1) Based upon the joint Schedule 13D filed January 29, 1999 by Purchasers as a
group and certain of the Purchasers individually. Each Purchaser disclaims
beneficial ownership of the Shares held by the group or any other member of
the group.
(2) Includes 216,164 Shares held by Humphrey Children's Trust. Ms. Irons
disclaims beneficial ownership of the Shares held by the Humphrey
Children's Trust.
(3) Includes 108,082 shares held by Katherine Desporte Tyrrell Trust. Mr.
Tyrrell disclaims beneficial ownership of the Shares held by the Katherine
Desporte Tyrrell Trust.
BENEFICIAL OWNERSHIP OF DIRECTORS, PURCHASER BOARD DESIGNEES
AND EXECUTIVE OFFICERS
The following table sets forth the number of Shares beneficially
owned by each director of the Company, each Purchaser Designee, each
executive officer of the Company and all directors and executive
officers as a group as of the date of this Information Statement.
All Shares shown in the table reflect sole voting and investment
power unless otherwise indicated.
Number of
Shares Percent
Name and address of Beneficially of Total
beneficial owner Owned Shares
- -------------------- ------------- ---------
PURCHASER BOARD DESIGNEES (1)
Charles B. Humphrey 1,080,819 25.47%
3500 Oak Lawn, Suite 590, LB 49, Dallas, TX 75219
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Jonathan M. Hill 1,080,819 25.47
3500 Oak Lawn, Suite 590, LB 49, Dallas, TX 75219
Fred Oliver 259,397 6.11
4625 Greenville Ave., Suite 205, Dallas, TX 75206
H. Wayne Gifford 172,931 4.07
4625 Greenville Ave., Suite 205, Dallas, TX 75206
Katherine Murphy 86,466 2.04
3500 Oak Lawn, Suite 590, LB 49, Dallas, TX 75219
DIRECTOR AND EXECUTIVE OFFICERS
Edward B. Brooks, Jr. -0-
210 Meadows Building, Dallas, Texas 75206
Roy J. Keene -0-
210 Meadows Building, Dallas, Texas 75206
Emma Kate Speck 100 *
210 Meadows Building, Dallas, Texas 75206
Directors and Executive Officers as a Group 100 *
__________________
(1) Based upon the joint Schedule 13D filed January 29, 1999 by Purchasers as a
group and certain of the Purchasers individually. Each Purchaser disclaims
beneficial ownership of the Shares held by the group or any other member
thereof.
CHANGE IN CONTROL
As described at the beginning of this Information Statement, on January 19,
1999, Purchasers purchased in the Purchases an aggregate of 3,134,325 Shares
representing approximately 73.85% of the Shares.
The Purchasers purchased 2,973,000 shares, or approximately 70.05%, of the
Common Stock from the Brooks Sellers and paid the Brooks Sellers an aggregate of
approximately $315,229.83 in cash. Each Purchaser, except Mr. Hill, used
personal funds (or trust funds in the case of the trusts) to purchase the shares
of Common Stock from the Brooks Sellers. Mr. Hill borrowed the funds he used to
purchase the shares of Common Stock that he acquired in the Brooks Purchase from
Mr. Humphrey on January 19, 1999, under a promissory note (the "Promissory
Note") and stock pledge agreement (the "Stock Pledge Agreement"). The Promissory
Note provides for interest upon any outstanding balance at 10% and is payable,
as extended, on March 31, 1999. The loan is secured under the Stock Pledge
Agreement with Mr. Hill's 1,080,819 shares of Common Stock. In connection with
the Brooks Purchase, the Brooks Sellers agreed to take or cause to be taken all
such action as is necessary to cause Mr. Hill, Mr. Humphrey, Mr. Gifford, Mr.
Oliver and Ms. Murphy to be appointed to and to constitute all the members of
the Board of Directors of Gladstone. The appointment of such persons will
require that the size of the Board of Directors increase from three members to
five members. None of Mr. Hill, Mr. Humphrey, Mr. Gifford, Mr. Oliver or Ms.
Murphy is currently a member of the Board of Directors. The Purchaser Board
Designees plan to elect Mr. Hill as President of the Company, Ms. Irons as Vice
President and Secretary of the Company and Ms. Murphy as Treasurer and Assistant
Secretary of the Company. The Brooks Sellers include Mr. Edward B. Brooks, Jr.
who is a director and officer of the Company. The consideration paid by the
Purchasers in connection with the Brooks Purchase was determined by arms length
negotiations between the Purchasers and the Brooks Sellers.
Simultaneously with the Purchase from the Brooks Sellers, the Purchasers
purchased 161,325 shares of Common Stock, or approximately 3.8% of the Common
Stock, and paid the Cloarec Sellers an aggregate of $16,182.50 in cash. Each
Purchaser except Mr. Hill used personal funds (or trust funds in the case of the
trusts) to purchase the shares of Common Stock subject to the Cloarec Purchase.
Mr. Hill borrowed the funds he used to purchase the shares of Common Stock that
he acquired in the Cloarec Purchase from Mr. Humphrey under the Promissory Note
and the Stock Pledge Agreement. The consideration paid by the Purchasers in
connection with the Cloarec Purchase was determined by arms length negotiations
between Purchasers and the Cloarec Sellers.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to certain operating agreements by and between the Company and
Edward B. Brooks, Jr., Mr. Brooks serves as the operator of certain of the
Company's oil and gas interests. Pursuant to such operating agreements, the
Company paid the following described amounts to Mr. Brooks in 1997 and 1998 and
Mr. Brooks paid the following described amounts to the Company in 1997 and 1998.
Mr. Brooks paid the Company $90,802 and $72,602, respectively, in 1997 and
1998 as the Company's share of gas sales from properties in Schleicher County.
The Company paid Mr. Brooks $68,881 and $52,306.19, respectively, in 1997 and
1998 for the Company's share of operating costs on properties in Kent County and
Schleicher County. In 1998, the Company also paid Mr. Brooks $4,733.94 for the
Company's share of operating expenses on the Schleicher and Kent County
properties that were paid by Mr. Brooks in 1997.
In 1997, the Company paid Mr. Brooks $228,472 for the Company's share of
the cost of a seismic study on properties in Stonewall County and the cost of
drilling two wells in other counties in Texas which turned out to be non-
productive. In 1998, the Company paid Mr. Brooks $18,915.16 for the Company's
share of the seismic study on properties in Stonewall County and $37,591.05 for
the Company's share of the cost of drilling a well in Stonewall County that was
nonproductive. In 1998, the Company paid $24,334.51 to Mr. Brooks for the
Company's share of lease costs of properties in Stonewall County.
In 1997 and 1998, the Company reimbursed Mr. Brooks $1,768.90 and
$1,159.29, respectively, for expenses incurred by him in operating a Company
owned vehicle that was provided to him for Company business.
None of the Purchaser Board Designees has been involved in any transactions
with the Company during the last two years.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and greater than ten percent stockholders to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission, and to furnish the Company with copies of all such filings. Based
solely on its review of copies of these reports furnished to the Company and,
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where applicable, any written representation that no reports were required, the
Company believes during fiscal 1998 all Section 16(a) filing requirements were
met.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation during
each of the Company's last three fiscal years for the Company's President and
Chief Executive Officer. No other executive officer of the Company was paid an
annual salary and bonus in excess of $100,000 during fiscal 1998.
Long-Term
Compensation
Annual Compensation Awards
_______________________ -----------
Other Annual Securities All Other
Name and Principal Compensation Underlying Compensation
position Year Salary Bonus ($) Options(#) ($)
- ------------------ ---- ------ ------ ------------ ----------- ------------
Edward B. Brooks, Jr. 1998 0 --- (1) --- ---
President and CEO 1997 0 --- (1) --- ---
1996 0 --- (1) --- ---
________________
(1) The Company provides Mr. Brooks a vehicle for Company business. The
Company's depreciation expense for 1996, 1997 and 1998 for the vehicle was
$3,060.00, $4,900.00 and $2,664.00, respectively. The Company also reimbursed
Mr. Brooks $1,768.90 and $1,159.29 in 1997 and 1998, respectively, for costs
incurred by Mr. Brooks in connection with the operation of such vehicle.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No stock options or stock appreciation rights were granted to the President
by the Company during fiscal 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
No stock options or stock appreciation rights were exercised by the
President in fiscal 1998 and no stock options or stock appreciation rights were
outstanding at the end of fiscal 1998.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
The Company did not have any long-term incentive plans in effect during
fiscal 1998.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company does not have any employment agreements with any of its
officers. On January 19, 1999, Mr. Hill and Mr. Humphrey entered into a letter
agreement that provides Mr. Humphrey will purchase the 1,080,819 Shares owned of
record by Mr. Hill for $.1056 per share
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within five business days after receipt of notice from Mr. Hill and from the
Bank of Oklahoma. The letter agreement states that Mr. Humphrey's agreement to
purchase such shares expires on March 15, 1999.
DATED: March 5, 1999
GLADSTONE RESOURCES, INC.
By: /s/ E.B. BROOKS, JR.
----------------------------------
E.B. Brooks, Jr., President