SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 7, 2001 (June 20, 2000)
Empire Energy Corporation
-------------------------
(Exact Name of Registrant as specified in its charter)
Utah 1-10077 87-0401761
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(State or other jurisdiction) (Commission file number) (IRS Employer ID No.)
7500 College Boulevard, Suite 1215
Overland Park, Kansas 66210
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(address of principal executive offices) (zip code)
(913) 469-5615
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(Registrant's telephone number,
including area code)
Item 2. Acquisition or Disposition of Assets
On June 20, 2000, Empire acquired 71.43% of the outstanding common stock of One
E Group, Inc. in exchange for 846,675 shares of newly issued Empire common stock
and warrants to purchase eleven million shares of the Company's common stock at
a price of $3.00 per share. The market value of the common stock issued by
Empire was determined to be $2,116,688 based on the market closing price of
$2.50 per share on the date of the acquisition. The fair value of the warrants
was determined to be $11,500,000 according to the Black-Scholes Option Pricing
Model, assuming a weighted average risk=free interest rate of 8.5%, expected
future volatility of 118.46% and no expected dividend yield. The warrants expire
June 30, 2001 and are callable at $.001 per share if not exercised within sixty
days after the Company's common stock trades at $5.55 for 30 consecutive days.
Fair values of the operating assets and assumed liabilities were determined to
be similar to their book values. This acquisition will be accounted for as a
purchase. It is a step to broaden the Company's businesses from its dependency
on the natural resources industry.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements
Financial statements of One E Group, Inc. were previously filed.
(b) Pro forma Financial Statements
Pro forma financial information of Registrant and One E Group, Inc. are filed
herewith.
(c) Exhibits
2.04 Asset acquisition agreement previously filed.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, as
amended, the Registrant has caused this report to be signed on its behalf by the
undersigned duly authorized officer.
Empire Energy Corporation
(Registrant)
Dated: May 7, 2001 By: /s/ Norman L. Peterson
- --------------------- --------------------------
Norman L. Peterson, Chairman
EMPIRE ENERGY CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Attached are the historical audited financial statements of One E Group, Inc.
(OEG) for the acquisition of 71.43% of the outstanding common stock of OEG by
Empire Energy Corporation ("Empire") (a development stage company). The
unaudited pro forma consolidated condensed financial statements have been
prepared utilizing the historical financial statements of Empire. The unaudited
pro forma consolidated condensed financial statements should be read in
conjunction with the historical financial statements of Empire on Form 10-KSB/A
and the previously filed historical financial statements of OEG.
The following unaudited pro forma consolidated condensed statements of
operations for the year ended December 31, 1999 and for the three months ended
March 31, 2000 and the unaudited pro forma consolidated condensed balance sheet
as of March 31, 2000 give effect to the acquisition of the majority of the stock
of OEG, including the related pro forma adjustments described in the notes
thereto. The unaudited pro forma consolidated condensed statements of operations
for the year ended December 31, 1999 and the three months ended March 31, 2000
give effect to the acquisition by Empire as if the acquisition, accounted for as
a purchase, had occurred on January 1, 1999 for the year ended December 31, 1999
and January 1, 2000 for the three months ended March 31, 2000. The unaudited pro
forma consolidated condensed balance sheet as of March 31, 2000 gives effect to
the acquisition as if it had occurred on March 31, 2000. The pro forma
financial statements reflect the preliminary allocation of the purchase price.
The purchase price will be finalized upon the completion of management's review
and resolution of the purchase contingencies.
The unaudited pro forma consolidated condensed financial statements may not be
indicative of the results that actually would have occurred if the acquisition
had been effective on the date indicated or which may be obtained in the
future.
F-1
EMPIRE ENERGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
- ------------------------------------------------------------------------------------------------
ASSETS
------
Unaudited
Historical March 31, 2000 One E Group Pro Forma
-------------------------- Pro Forma March 31,
Empire One E Group Adjustments 2000
----------- ----------- ----------- -----------
CURRENT ASSETS
Cash $ 126,723 $ 164,160 $ -- $ 290,883
Accounts receivable, net 57,773 39,085 -- 96,858
Prepaids and deposits 18,500 47,396 -- 65,896
----------- ----------- ----------- -----------
TOTAL CURRENT ASSETS 202,996 250,641 -- 453,637
PROPERTY AND EQUIPMENT, NET 8,462 95,146 -- 103,608
OIL AND GAS PROPERTIES, NET -- -- -- --
OTHER ASSETS:
Marketable securities -- -- -- --
Goodwill -- -- (b) 13,203,833 13,203,833
Receivables - related party 101,675 327,717 -- 429,392
----------- ----------- ----------- -----------
TOTAL ASSETS $ 313,133 $ 673,504 $13,203,833 $14,190,470
=========== =========== =========== ===========
LIABILITIES
-----------
CURRENT LIABILITIES
Accounts payable and accrued
expenses $ 17,745 $ 25,712 $ -- $ 43,457
Capital leases -- 29,807 -- 29,807
Notes payable - related parties 8,500 40,000 -- 48,500
Convertible debentures 25,000 -- -- 25,000
----------- ----------- ----------- -----------
TOTAL CURRENT LIABILITIES 51,245 95,519 -- 146,764
----------- ----------- ----------- -----------
MINORITY INTERESTS -- -- (b) 165,130 165,130
STOCKHOLDERS' EQUITY
--------------------
STOCKHOLDERS' EQUITY
Common stock 12,140 1,050 (a) (1,050) 12,987
(b) 847
Additional paid-in-capital 4,473,426 909,900 (a) (909,900) 18,089,267
(b) 13,615,841
Previous accumulated deficit (1,867,999) -- -- (1,867,999)
Accumulated deficit (2,355,679) (332,965)(a) 332,965 (2,355,679)
----------- ----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY 261,888 577,985 13,038,703 13,878,576
----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 313,133 $ 673,504 $13,203,833 $ 14,190,470
=========== =========== =========== ===========
See notes to unaudited pro forma consolidated condensed financial statements.
F-2
EMPIRE ENERGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------
For the Year Ended December 31, 1999
---------------------------------------------------------------
One E Group
Pro Forma Unaudited
Empire One E Group Adjustments Pro Forma
------------ ------------ ------------ ------------
OIL AND GAS SALES $ 69,401 $ -- $ 69,401
EXPENSES
Lease operating 1,100 -- -- 1,100
Depreciation, depletion, amortization
and impairment 90,802 4,396 (c) 2,640,767 2,735,965
Interest, net 76,750 (10,249) -- 66,501
General and administrative 744,431 183,512 -- 927,943
------------ ------------ ------------ ------------
TOTAL EXPENSES 913,083 177,659 2,640,767 3,731,509
------------ ------------ ------------ ------------
OPERATING LOSS (843,682) (177,659) (2,640,767) (3,662,108)
Provision for income taxes -- -- -- --
------------ ------------ ------------ ------------
Net Loss $ (843,682) $ (177,659) $ (2,640,767) $ (3,662,108)
============ ============ ============ ============
Net loss per common share $ (0.31)
============
Weighted Average Shares Outstanding 11,729,460
============
See notes to unaudited pro forma consolidated condensed financial statements.
F-3
EMPIRE ENERGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------
For the Three Months Ended March 31, 2000
---------------------------------------------------------------
One E Group
Pro Forma Unaudited
Empire One E Group Adjustments Pro Forma
------------ ------------ ------------ ------------
OIL AND GAS SALES $ 122,053 $ -- $ -- $ 122,053
COMPUTER SERVICES REVENUE -- 44,770 -- 44,770
EXPENSES
Lease operating 2,032 -- -- 2,032
Cost of sales -- 6,751 -- 6,751
Depreciation, depletion, amortization
and impairment 1,682,822 3,324 (c) 660,192 2,346,338
Interest, net 6,700 (9,516) -- (2,816)
General and administrative 134,529 199,516 -- 334,045
------------ ------------ ------------ ------------
TOTAL EXPENSES 1,826,083 200,075 660,192 2,686,350
------------ ------------ ------------ ------------
OPERATING LOSS (1,704,030) (155,305) (660,192) (2,519,527)
Provision for income taxes -- -- -- --
------------ ------------ ------------ ------------
Net Loss $ (1,704,030) $ (155,305) $ (660,192) $ (2,519,527)
============ ============ ============ ============
Loss Per Share:
Net loss per common share $ (0.20)
============
Weighted Average Shares Outstanding 12,331,733
============
See notes to unaudited pro forma consolidated condensed financial statements.
F-4
EMPIRE ENERGY CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Acquisition of Investment in One E Group
On June 20, 2000, Empire acquired 71.43% of the outstanding common stock of One
E Group, Inc. in exchange for 846,675 shares of newly issued Empire common stock
and warrants to purchase 11,000,000 shares of the Company's common stock at
$3.00 per share.
The market value of the common stock issued by Empire was determined to be
$2,116,688 based on the closing price of $2.50 per share on the date of the
acquisition. The fair value of the warrants was determined to be $11,500,000
according to the Black-Scholes Option Pricing Model, assuming a weighted average
risk-free interest rate of 8.5%, expected future volatility of 118.46% and no
expected dividend yield.The warrants expire June 30, 2001 and are
callable at $.001 per share if not exercised within sixty days after the
Company's common stock trades at $5.55 for 30 consecutive days. Fair values of
the operating assets and assumed liabilities were determined to be similar to
their book values so the excess of the combined fair value of the common stock
and warrants issued over the net fair value of the assets acquired was recorded
as goodwill and will be amortized over five years.
Subsequent to completing this acquisition, management was required to
reevaluate the goodwill recorded in the transaction with the company lost the
services of key personnel and lost key contracts and decided to discontinue
operations. As a result of this reevaluation, the goodwill was determined to be
impaired and the unamortized balance was charged to operations. This charge is
not included in the pro forma condensed income statements because the
impairment of the goodwill is a non-recurring charge that is unrelated to the
purchase acquisition and is not reflective of expected future operations.
In connection with the acquisition of One E Group, the Company received a note
receivable of $252,702 which was due from Talisman Marketing, Inc., and was
assumed by a subsidiary of Empire when assets of Talisman were acquired on April
11, 2000. Therefore, in the future, the note receivable and payable will
eliminate upon consolidation.
The unaudited pro forma adjustments are as follows:
a. To eliminate the equity of One E Group upon purchase.
b. To record the issuance of common stock and warrants to purchase 71.43%
of the outstanding common stock of OEG under the purchase method:
Net assets acquired at fair value:
Current assets $ 250,641
Property and equipment 95,146
Other assets 327,717
Goodwill 13,203,833
Minority interests (165,130)
Liabilities (95,519)
-----------
$13,616,688
===========
Consideration comprised of 846,675 common shares
of Empire at $2.50 per share $ 2,116,688
Fair value of warrants 11,500,000
-----------
$13,616,688
===========
c. To record and charge against operations the amortization of the excess
of the fair value of the common stock issued over the fair value of
the net assets acquired using an expected life of five years.
F-5
EMPIRE ENERGY CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Earnings per share:
The following is a reconciliation of historical to pro forma weighted average
shares outstanding:
Year Ended Three Months Ended
December 31, 1999 March 31, 2000
----------------- --------------
Historical 10,882,785 11,485,058
Shares issued to acquire
One E Group (assumed to
be at beginning of period) 846,675 846,675
---------- ----------
Pro forma 11,729,460 12,331,733
========== ==========
Basic earnings per share of common stock was computed by dividing loss
applicable to common stockholders, by the weighted average number of common
shares outstanding for the year. Diluted loss per share is not presented because
all potential common shares are anti-dilutive.
F-6