SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Earliest Event Reported
March 23, 2002
Expressions Graphics, Inc.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA
- -------------------------------------------------------------------------------
(State or other jurisdiction of incorporation of organization)
000-33439 88-0448389
- -------------------------------- --------------------------------------
(Commission File Number) (IRS Employer Identification Number)
GSB Building, Suite 417
Bala Cynwyd, Pennsylvania 19004
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 660-5906
Item 2. Acquisition or Disposition of Assets
Acquisition of Limited Partnership Interests in Knox Miss. Partners, L.P.
- -------------------------------------------------------------------------
On March 23, 2002, Expressions Graphics, Inc. (the "Company") acquired
the sole limited partnership interest in Knox Miss. Partners, L.P., a Delaware
limited partnership, for a capital contribution of $2,740,000. Knox Miss.
Partners, L.P. was formed to acquire interests in gas, oil and mineral leases of
properties located in Mississippi. Knox Miss. LLC, the general partner of Knox
Miss. Partners, L.P., is managed by Mark Bush. Mr. Bush is the Chief Executive
Officer of Touchstone Resources USA, Inc. On a fully diluted basis, the Company
currently owns approximately 10% of the capital stock of Touchstone Resources,
Ltd., the parent company of Touchstone Resources USA, Inc. The Company also
acquired controlling voting membership interests in Knox Miss. LLC which entitle
the Company to appoint the managers of Knox Miss. LLC. Pursuant to the terms of
the Partnership agreement of Knox Miss. Partners, L.P., the limited partners are
entitled to receive 99% of all cash generated by Knox Miss. Partners, L.P. from
its operations or received from the disposition of its assets until such time as
the limited partners have recovered their capital contributions. Subsequent to
that date, the limited partners are entitled to receive 75% of all cash
generated by Knox Miss. Partners, L.P. from its operations or received from the
disposition of its assets.
The Company obtained the funds used to purchase these assets from two
private placements of its debt and equity securities in February and March 2002.
These offerings generated aggregate gross proceeds of $14,150,000.
On March 23, 2002, Knox Miss. Partners, L.P. entered into two
Exploration Agreements, as follows:
Exploration Agreement Covering Livingston Transform Area
--------------------------------------------------------
On March 23, 2002, Knox Miss. Partners, L.P. entered into an
Exploration Agreement with SK Exploration, Inc. to jointly cooperate and
participate in the exploration and development of oil, gas and mineral leases
located in Webster, Clay, Chickasaw, Calhoun and Grenada Counties, Mississippi
(the "Livingston Transform Area"). In exchange for a total purchase price of
$2,230,000, $1,805,000 of which was paid at closing and $425,000 of which is due
on or before January 1, 2003, SK Exploration, Inc. assigned to Knox Miss.
Partners, L.P. an undivided 50% interest in Oil, Gas and Mineral Leases owned
and held by SK Exploration, Inc. consisting of 14,000 net mineral acres within
the Livingston Transform Area.
As part of the ongoing exploration and development of the Livingston
Transform Area, SK Exploration, Inc. anticipates acquiring approximately an
additional 10,000 net mineral acres located within the Clarkston and Lewisville
Prospects. Within 30 days of any such acquisition, SK Exploration, Inc. is
obligated to assign an undivided 50% interest in these additional acres to Knox
Miss. Partners, L.P.
Upon any joint sale by the parties of any of their ownership interests
in the Livingston Transform Area, Knox Miss. Partners, L.P. is entitled to
receive the first $850,000 of the proceeds, provided that, if the sale occurs
prior to the date that the second installment of the purchase price is due from
Knox Miss. Partners, L.P., then Knox Miss. Partners, L.P. is entitled to receive
the first $425,000 of the proceeds and will be relieved of its obligation to
fund the second installment of the purchase price.
2
Exploration Agreement Covering Longview and Osborn Prospects
------------------------------------------------------------
On March 23, 2002, Knox Miss. Partners, L.P. entered into an
Exploration Agreement with SKH Energy Partners II, L.P. to jointly cooperate and
participate in the exploration and development of oil, gas and mineral leases
located in Oktibbeha County, Mississippi (the "Longview and Osborn Prospects").
In exchange for a purchase price of $475,000, SKH Energy Partners II, L.P.
assigned to Knox Miss. Partners, L.P. an undivided 50% interest in Oil, Gas and
Mineral Leases owned and held by SKH Energy Partners II, L.P. consisting of
9,000 net mineral acres within the Longview and Osborn Prospects.
As part of the ongoing exploration and development of the Longview and
Osborn Prospects, SKH Energy Partners II, L.P. anticipates acquiring
approximately an additional 3,000 net mineral acres located within the Clarkston
and Lewisville Prospects. Within 30 days of any such acquisition, SK
Exploration, Inc. is obligated to assign an undivided 50% interest in these
additional acres to Knox Miss. Partners, L.P.
All operations in both the Livingston Transform Area and the Clarkston
and Lewisville Prospects will be conducted in accordance with the provisions of
Joint Operating Agreements between the parties. These Joint Operating Agreements
shall be in a standard industry form with minor modifications as agreed to by
the parties. Knox Miss. Partners, L.P. shall be named as the operator in each of
the Joint Operating Agreements. Subsequent to one year after the date of the
Exploration Agreements, if either party to the relevant Exploration Agreement
elects to drill an Initial Prospect Exploratory Well, then, depending on the
results of the drilling activities, if the other party to the Exploration
Agreement elects not to participate in the drilling activities, it may be
obligated to relinquish to the participating party:
o its interest or right to earn or acquire an interest in the
producing unit established for the Initial Prospect Exploratory
Well, and
o a portion of its interest or right to earn or acquire an interest in
the remainder of the Prospect Area depending on the results of the
drilling activities.
3
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
10.1 Exploration Agreement dated March 23, 2002 by and between
SK Exploration, Inc. and Knox Miss. Partners, L.P.
10.2 Exploration Agreement dated March 23, 2002 by and between
SKH Energy Partners II, L.P. and Knox Miss. Partners, L.P.
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EXPRESSIONS GRAPHICS, INC.
Registrant
By: /s/ Stephen P. Harrington
--------------------------------
President
Date: April 8, 2002