U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amended April 30, 2002 to Add Part III,Items 10, 11, 12 and 13
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal Year Ended December 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number: 0-26321
GASCO ENERGY, INC.
(Exact name of registrant as specified in its charter)
NEVADA 98-0204105
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14 Inverness Drive East, Building H, Suite 236, Englewood, CO 80112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 483-0044
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $0.0001 PAR VALUE
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the common shares held by non-affiliates of the
registrant as of March 15, 2002 was approximately $ 40,185,376.
Number of shares outstanding of Common Stock, $0.0001 par value, as of March 15,
2002: 31,928,800 shares
Documents incorporated by reference:
None
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Age as
of
Name Principal Occupation and Directorships 3/30/02
Marc Bruner.....................Director of Gasco since 2001; Chairman of the Board of 52
Directors and Strategic Consultant for the Company
Mark A. Erickson................Director of Gasco since 2001; Chief Executive Officer and 42
President
Michael K. Decker...............Director of Gasco since 2001; Executive Vice President and 47
Chief Operating Officer
W. King Grant...................Director of Gasco since 2001; Chief Financial Officer 38
Gregory Pek.....................Director of Gasco since 2001; President and Chief Executive 46
Officer of Brek Energy Corporation
Carmen Lotito...................Director of Gasco since 2001; Vice President, Chief Financial 58
Officer and Director of Coriko Corporation; Member of Equistar
Capital LLC
Carl Stadelhofer................Director of Gasco since 2001; Partner of the law firm of 48
Rinderknecht Klein & Stadelhofer
Howard O. Sharpe................Vice President and Secretary 58
Our Board of Directors has seven members who are elected annually. The following
sets forth certain biographical information concerning each of the Company's
directors and executive officers.
Marc Bruner - Mr. Bruner has served as the Chairman of the Board of Directors of
Gasco and as a member of Gasco's Executive Committee since February 2001. From
January 1996 to January 1999, Mr. Bruner was founding Chairman of the Board of
Ultra Petroleum, a Toronto Stock Exchange and American Stock Exchage listed
natural gas company. Ultra's business is focused on tight sand development in
the Green River Basin of Wyoming. In late 1997, Mr. Bruner co-founded Pennaco
Energy, Inc., a coal bed methane company. In 1996, Mr. Bruner co-founded RIS
Resources International, a natural gas company, and served as a Director until
late 1997.
Mark A. Erickson - Mr. Erickson has served as a Director, Chief Executive
Officer and President of Gasco since February 2001. Mr. Erickson served as
President of Pannonian Energy Inc. from mid-1999 until our merger with Pannonian
Energy in February 2001. In late 1997, Mr. Erickson co-founded Pennaco Energy,
Inc., an AMEX listed oil and gas company with properties in the Powder River
basin of Wyoming. He served as an officer and Director of Pennaco from its
inception until mid-1999. Mr. Erickson served as President of RIS Resources
(USA), a natural gas company from late 1997 to the end of 1998. Mr. Erickson is
a Registered Petroleum Engineer with 18 years of experience in business
development, finance, strategic planning, marketing, project management and
petroleum engineering. He holds a MS in Mineral Economics from the Colorado
School of Mines.
Michael K. Decker - Mr. Decker has served as Director, Executive Vice President
and Chief Operating Officer of Gasco since July 2001. From August 1999 until
July 2001, Mr. Decker founded and served as the President of Black Diamond
Energy, LLC. From 1990 to August 1999 Mr. Decker served as the Vice President of
Exploitation of Prima Energy Corporation, a Nasdaq traded oil and gas company.
Prima was recognized by the Denver Business Journal as the "top performing
Colorado based company of the 1990's," with a market return of 1857%. From 1988
to 1990, Mr. Decker was employed by Bonneville Fuels Corporation as a Senior
Geologist. From 1977 to 1988, Mr. Decker was employed by Tenneco Exploration and
Production Company as a Senior Project Geological Engineer. Mr. Decker has
twenty-four years of oil and gas prospecting, development, operations and
mergers and acquisitions experience. He holds a BS degree in Geological
Engineering from the Colorado School of Mines and is the Chairman of the
Potential Gas Committee, an independent natural gas resource assessment
organization.
W. King Grant - Mr. Grant has served as Director and Chief Financial Officer of
Gasco since July 2001. From November 1999, to May 2001, Mr. Grant served as
Executive Vice President and Chief Financial Officer for KEH.com, a
catalog/internet retailer of new and used camera equipment. From February 1997
to March 1999, Mr. Grant was a Senior Vice President in the Natural Resources
Group of ING Baring, LLC where he was responsible for providing financing and
advisory services to mid-cap and smaller energy companies. For the previous
eleven years, Mr. Grant held several positions at Chase Manhattan Bank and its
affiliates, most recently as a Vice President in the Oil & Gas group. Mr. Grant
holds a BSE in Chemical Engineering from Princeton University and an MBA from
the Wharton School at the University of Pennsylvania.
Gregory Pek - Mr. Pek has served as a Director of Gasco and as a member of
Gasco's Executive Committee since July 2001. Mr. Pek was nominated as a director
by Brek Energy Corporation pursuant to the terms of Stock Purchase Agreement
Between Gasco Energy, Inc. and First Ecom. com, Inc. Mr. Pek co-founded Brek
Energy Corporation and has served on Brek Energy's Board of Directors since
March 1999. He was appointed Chairman of the Board of Brek Energy in June 2000,
relinquishing the role of CEO and President, which positions he held since March
1999. He resumed the position of President and CEO in October 2000, and resigned
as Chairman in November 2000. From March 1994 to February 1999, Mr. Pek was an
Executive Director of David Resources Company Limited and Kong Tai International
Holdings Company Limited, and from 1998 to February 1999 he was a director of
Singapore Hong Kong Properties Investment Limited. Prior to taking residence in
Hong Kong, Mr. Pek was a director and officer of a number of public companies in
Canada. Mr. Pek has broad business experience in manufacturing, marketing,
finance, regulatory issues (in the United States, Canada and Hong Kong) and
acquisitions.
Carmen (Tony) Lotito - Mr. Lotito has served as a Director of Gasco and as the
Chairman of Gasco's Audit and Compensation Committee since April 2001. Mr.
Lotito has served as Vice President, Chief Financial Officer and a Director of
Coriko Corporation, a private business development company since November 2000.
Mr. Lotito has been a member of Equistar Capital LLC, an investment banking firm
since December 1999. From March 2000 to the present, Mr. Lotito serves as a
Director for Impact Web Development. Prior to joining Coriko from Utah Clay
Technology, Inc., Mr. Lotito was self employed as a financial consultant. In
1988, Mr. Lotito joined ConAgra, Inc., in San Antonio, Texas as a brand manager,
where he developed product lines, which grossed $50 million over a period of two
years. In 1966, Mr. Lotito joined the firm of Pannell, Kerr Forester & Co. as a
senior accountant in management and audit services for the company's Los Angeles
and San Diego, California offices. Mr. Lotito holds a BS degree in Accounting
from the University of Southern California.
Carl Stadelhofer - Mr. Stadelhofer has served as a Director since February 2001
and a member of the Audit Committee and the Compensation Committee of Gasco
since April 2001. Mr. Stadelhofer is a partner with the law firm of Rinderknecht
Klein & Stadelhofer in Zurich, Switzerland, where he has practiced law for over
twenty years. He was admitted to the practice of law in Switzerland in 1982. He
took his law degree in 1979 in Switzerland, and studied law in the United States
at Harvard Law School and at Georgetown University Law School. His practice
specializes in banking and financing, mergers and acquisitions, investment
funds, and international securities transactions.
Howard O. Sharpe - Mr. Sharpe has served as Vice President and Secretary of
Gasco since February 2001. From January 1993 to February 2001, served as
Executive Vice President of Alpine Gas Company in Denver, Colorado, where he
gained hands-on experience in the development of tight natural gas sands,
basin-centered natural gas exploration and production in Wyoming. Mr. Sharpe has
significant management experience in oil and gas development in the United
States. Mr. Sharpe served as a fighter pilot in the U.S. Air Force, retiring as
a full Colonel, where he developed extensive logistic and organizational skills.
Mr. Sharpe holds a MBA from Central Michigan University.
Committees
The Board of Directors of Gasco has formed an Executive Committee and an Audit
and Compensation Committee. The Executive Committee currently consists of
Messrs. Bruner, Erickson and Pek. The Audit and Compensation Committee currently
consists of Messrs. Lotito and Stadelhofer. The report of the Audit and
Compensation Committee with regard to compensation matters is set forth under
Item 11.
Section 16 (A) Beneficial Ownership Reporting Requirements
Section 16 (a) of the Securities Exchange Act of 1934 requires the officers,
directors and persons who own more than ten percent of the Company's stock, to
file reports of ownership and changes in ownership with the Securities Exchange
Commission ("SEC"). Officers, directors and greater than ten percent owners are
required by SEC regulations to furnish the Company with copies of all Section 16
(a) forms they file.
Based solely on its review of the copies of such forms received by it, the
Company believes that each of its officers, directors and greater than ten
percent owners complied with all Section 16 (a) filing requirements applicable
to them during the year ended December 31, 2001.
ITEM 11 - EXECUTIVE COMPENSATION
The following table sets for the compensation paid to our President and Chief
Executive Officer and each of our next highly compensated officers for services
rendered during the years ended December 31, 2001 and 2000. The compensation for
our other officers are not included as their salary and bonus for the fiscal
year 2001 did not exceed $100,000.
Long Term
Annual Compensation Compensation
Securities
Underlying
Options/ All Other
Name & Principal Position Year Salary Bonus SARs (#) Compensation (1)
- ------------------------- ---- ------ ----- --------- ------------
Mark A. Erickson (2) 2001 $220,000 2,160,000 $1,080
President 2000 $125,000 (2)
Chief Executive Officer
W. King Grant 2001 $155,780 437,000 $2,220
Executive Vice President
Chief Financial Officer
- ----------------------
<FN>
(1) Amount represents the employer contribution to the 401(k) plan of the
individual.
(2) Includes amounts paid to the individual by Pannonian Energy Corporation
prior to the merger of Pannonian into a subsidiary of Gasco.
</FN>
The following table sets forth information with respect to all stock options
granted during the year ended December 31, 2001 to the named Executive Officers.
Option/SAR Grants in Last Fiscal Year
Potential Realized Value
at Assumed Annual Rates of
Stock Price Appreciation
for Option Term (1) Grant Date
------------ Value
Individual Grants ------
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to or Base Grant Date
Options/SARs Employees in Price Expiration 5% 10% Present
Name Granted Fiscal Year ($/Share) Date Share Price Share Price Value (2)
- ---- -------- ----------- --------- ---- ----------- ----------- ------
Mark A. Erickson 1,000,000 28 1.00 1/2/11 $630,000 $1,590,000 $ 269,094
910,000 25 2.00 12/31/11 1,146,000 2,902,900
250,000 7 3.00 8/8/11- 533,750 1,395,000
2/8/13 (3)
W. King Grant 200,000 6 3.00 6/22/06-6/22/07(4) 175,500 390,000
137,000 4 2.00 12/31/11 172,620 437,030
100,000 3 3.15 9/22/07-6/22/08(5) 107,500 257,500
<FN>
(1) Securities and Exchange Commission Rules require calculation of potential
realizable value assuming that the market price of the Common Stock
appreciates in value at 5% and 10% annualized rates from the date of grant
to the expiration date of the option. No gain to an executive officer is
possible without an appreciation in Common Stock value, which will benefit
all holders of Common Stock. The actual value an executive officer may
receive depends on market prices for the Common Stock, and there can be no
assurance that the amounts reflected will actually be realized.
(2) As of the date of grant, the exercise price for these options was below the
fair market value of our Common Stock. The fair market value of the options
as of the date of grant was determined using the Black-Scholes pricing
model. The assumptions used in this calculation were as follows:
Expected dividend yield --
Expected price volatility 50%
Risk-free interest rate 5.5%
Expected life of options 10 years
(3) Mr. Erickson's options expire at the rate of 62,500 options each six months
during the period from August 8, 2011 until February 8, 2013.
(4) One hundred thousand of Mr. Grant's options expire on June 22, 2006 and the
remaining 100,000 options expire at the rate of 25,000 options each quarter
during the period from September 22, 2006 until June 22, 2007.
(5) Mr. Grant's options expire at the rate of 62,500 options each quarter
during the period from September 22, 2007 until June 22, 2008.
</FN>
No options were exercised by executive officers during 2001. The following table
sets forth the value of options held by the executive officers at December 31,
2001.
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Number of Securities Underlying Value of Unexercised
Unexercised Options/SARs at In-the-Money Options/SARs at
FY-End (#) FY-End ($)
Name Exercisable/Unexercisable Exercisable/Unexercisable (1)
- ---- -------------------------- ----------------------------
Mark A. Erickson 1,972,500/187,500 750,000/0
W. King Grant 287,000/150,000 0/0
<FN>
(1) The value of in-the-money options is equal to the fair market value of a
share of Common Stock on December 31, 2001 of $1.75, less the exercise
price.
</FN>
Compensation of Directors
During 2001, each director of the Company who was not a full-time employee was
paid a monthly director's fee of $2,500. In addition, each director was
reimbursed for reasonable travel expenses incurred in connection with such
director's attendance at Board of Directors and Committee meetings. For 2002,
each director of the Company who is not a full-time employee will receive a
monthly director's fee of $2,500.
Employment Agreements
Michael K. Decker Employment Agreement Mr. Decker's 2001 compensation was
determined under the terms of an employment agreement, effective July 1, 2001,
between Gasco and Mr. Decker that expires on June 30, 2004. Mr. Decker serves as
Chief Operating Officer and Executive Vice President of Gasco. Mr. Decker's
employment agreement entitles him to an annual salary of $200,000, subject to
increase at the discretion of the Board of Directors, and an annual bonus equal
to 0.75% of Gasco's cash flow from undrilled properties of the Company. The
employment agreement provides for the award to Mr. Decker of options to purchase
300,000 shares of common stock of the Company pursuant to the terms of the
Company's Stock and Option and Incentive Award Plan at an exercise price of
$3.15 per share. Options to purchase 100,000 shares vested upon the execution of
the agreement and the remaining options vest in equal amounts over the following
eight fiscal quarters. The employment agreement also contains non-compete
provisions in the event of Mr. Decker's termination of employment.
Mr. Decker's employment agreement also includes provisions governing the payment
of severance benefits if his employment is terminated for any other reason other
than his voluntary resignation, death, disability or discharge for cause. In the
event that Mr. Decker's employment is terminated by the Company without cause or
due to certain change of control events, Mr. Decker is entitled to receive an
amount equal to three times the value of his annual salary, bonus, royalty trust
payments and benefits, if terminated prior to the first anniversary of
employment, or an amount equal to five times the value of his annual salary,
bonus, royalty trust payments and benefits, if terminated after the first
anniversary of employment.
Mark A. Erickson Employment Agreement Mr. Erickson's 2001 compensation was
determined under the terms of an employment agreement, effective February 1,
2001, between Gasco and Mr. Erickson that expires on January 31, 2006. Mr.
Erickson serves as Chief Executive Officer and President of Gasco. Mr.
Erickson's employment agreement entitles him to an annual salary of $240,000,
subject to increase at the discretion of the Board of Directors, and an annual
bonus equal to 0.875% of Gasco's cash flow from undrilled properties of the
Company. The employment agreement provides for the award to Mr. Erickson of
options to purchase 1,000,000 shares of common stock of the Company pursuant to
the terms of the Company's Stock and Option and Incentive Award Plan at an
exercise price of $1.00 per share and options to purchase 250,000 shares of
common stock of the Company pursuant to such plan at an exercise price of $2.50
per share. Options to purchase 1,000,000 shares have vested and the remaining
options vest in equal amounts over the eight fiscal quarters following the
effective date of the agreement. The employment agreement also contains
non-compete provisions in the event of Mr. Erickson's termination of employment.
Mr. Erickson's employment agreement also includes provisions governing the
payment of severance benefits if his employment is terminated for any other
reason other than his voluntary resignation, death, disability or discharge for
cause. In the event that Mr. Erickson's employment is terminated by the Company
without cause or due to certain change of control events, Mr. Erickson is
entitled to receive a cash payment of $1,000,000, if terminated prior to the
first anniversary of employment, or a cash payment of $2,500,000, if terminated
after the first anniversary of employment.
W. King Grant III Employment Agreement Mr. Grant's 2001 compensation was
determined under the terms of an employment agreement, effective June 1, 2001,
between Gasco and Mr. Grant that expires on May 31, 2004. Mr. Grant serves as
Chief Financial Officer and Executive Vice President of Gasco. Mr. Grant's
employment agreement entitles him to an annual salary of $120,000, subject to
increase at the discretion of the Board of Directors, and an annual bonus equal
to 0.5% of Gasco's cash flow from undrilled properties of the Company. The
employment agreement provides for the award to Mr. Grant of options to purchase
200,000 shares of common stock of the Company pursuant to the terms of the
Company's Stock and Option and Incentive Award Plan at an exercise price of
$3.00 per share and options to purchase 100,000 shares of common stock of the
Company pursuant to such plan at an exercise price of $3.15. Options to purchase
100,000 shares at an exercise price of $3.00 per share vested upon the execution
of the agreement and the remaining options vest in equal amounts over the
following eight fiscal quarters. The employment agreement also contains
non-compete provisions in the event of Mr. Grant's termination of employment.
Mr. Grant's employment agreement also includes provisions governing the payment
of severance benefits if his employment is terminated for any other reason other
than his voluntary resignation, death, disability or discharge for cause. In the
event that Mr. Grant's employment is terminated by the Company without cause or
due to certain change of control events, Mr. Grant is entitled to receive an
amount equal to the greater of one year of annual salary and his annual salary
for the period from the termination of the agreement through the remaining term
of the agreement.
Compensation Committee Interlocks and Insider Participation
During 2001, the Compensation Committee of the Board was comprised of two
directors, Mr. Lotito and Mr. Stadelhofer. Neither of these directors is or was
an officer of the Company or any of its subsidiaries at any time now or in the
past.
Report of the Compensation Committee of the Company
The Compensation Committee ("Committee") of the Board of Directors is
responsible for setting and administering the policies that govern the annual
compensation and the long-term compensation for the Company's executive
officers. The Committee is currently composed of Mr. Lotito and Mr. Stadelhofer,
neither of whom is employed by the Company or any of its subsidiaries. The
Committee makes all decisions concerning the compensation of executive officers
who receive annual compensation in excess of $100,000, determines the total
amount of bonuses, if any, to be paid and grants all awards of stock options.
The Committee's compensation practices are designed to attract, motivate and
retain key personnel by recognizing individual contributions, as well as the
overall performance of the Company.
The current executive compensation consists of base salary, potential cash bonus
awards and long-term incentive opportunities in the form of stock options.
Although the Committee has not adopted a formal compensation plan, executive
compensation is reviewed by the Committee and is set for individual executive
officers based on subjective evaluations of each individual's performance, the
Company's performance, and a comparison to salary ranges for similar positions
in other companies within the oil and gas industry. The goal of the Committee is
to ensure that the Company retains qualified executives and whose financial
interests are aligned with those of the shareholders.
Base Salaries: The base salary for each executive officer is determined based on
the individual's performance, industry experience and the compensation levels of
industry competitors. The Committee reviews various surveys and publicly filed
documents to determine comparable salary levels within the industry.
Potential Cash Bonus Awards: The Committee does not currently have a formal cash
bonus plan. Cash bonuses may be awarded from time to time for exceptional effort
and performance. The Committee considers the achievements of the Company to
determine the level of the cash bonus, if any, to be awarded. The Committee
focuses the earnings of the Company, the return on stockholders' equity, the
growth in proved oil and gas reserves and the successful completion of specific
projects of the Company to determine the level of bonus awards, if any.
Stock Options: The Committee utilizes stock option awards as a method of
aligning the executives' interests with those of the stockholders by giving the
key employees a direct stake in the performance of the Company. The Committee
uses the same criteria described above to determine the level of stock option
awards. During 2001, 3,011,000 common stock options were granted to the
Company's executive officers.
Compensation of the Chief Executive Officer: During the year ended December 31,
2001, Mark Erickson, President and Chief Executive Officer received total
compensation of $221,080 which is comprised of an annual salary of $220,000,
which Mr. Erickson is entitled to under his employment agreement, and deferred
compensation pursuant to the Company's 401(k) plan of $1,080. Additionally,
2,160,000 common stock options were granted to Mr. Erickson during 2001. The
Committee considered the factors described above to determine that the
compensation paid and the stock options awarded to Mr. Erickson during 2001 were
appropriate.
The foregoing report is made by the Compensation Committee of the Company's
Board of Directors. The members of the Committee during 2001 were Mr. Lotito and
Mr. Stadelhofer.
Performance Chart
The following graph shows the changes in the value of $100, over the period of
January, 2001, when the Company began trading, until December 31, 2001, invested
in: (1) Gasco Energy, Inc.; (2) the NASDAQ Market Index; and (3) a peer group
consisting of all the publicly-held companies within SIC code 1311, Crude
Petroleum and Natural Gas, consisting of approximately 190 companies. The
year-end value of each investment is based on share price appreciation and
assumes that $100 was invested on January 1, 2000 and that all dividends were
reinvested. Calculations exclude trading commissions and taxes. The comparison
of past performance in the graph is required by the SEC and is not intended to
forecast or be indicative of possible future performance of the Company's Common
Stock.
As of January 1,
----------------------------
------------- --------------
2001 2002
---- ----
Gasco Energy, Inc. $100.00 $50.00
Peer Group Index 100.00 91.75
NASDAQ Market Index 100.00 80.00
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table show information, as of April 15, 2002, about any
individual, partnership or corporation that is known to the Company, solely by
reason of its examination of Schedule 13D and 13G filings made with the SEC, to
be the beneficial owner of more than 5% of each class of shares issued and
outstanding and each executive officer, director and all executives, officers
and directors as a group. If a person or entity listed in the following table is
the beneficial owner of less than one percent of the Company's common or
preferred stock outstanding, this fact is indicated by an asterisk in the table.
Unless otherwise noted, each person listed has sole voting and dispositive power
over the shares indicated, and the address of each shareholder is the same as
our address.
Title of Number of Shares
Name Class Beneficially Owned Percent of Class
5% or Greater Holders
Brek Energy Corporation (1)
19/F, 80 Glouster Road Common 16,500,000 45.0%
Wan Chai, Hong Kong Preferred 500 100%
Directors and Executive Officers
Marc Bruner (2) (3) Common 5,104,084 15.0%
Mark A. Erickson (2) (4) Common 4,337,108 12.8%
Michael K. Decker (2) Common 301,000 *
W. King Grant (2) Common 512,000 1.6%
Gregory Pek (2) Common 16,550,000 45.1%
Carmen (Tony) Lotito (2) Common 618,750 1.9%
Carl Stadelhofer (2) Common 50,000 *
*
Howard O. Sharpe (2) Common 299,140 *
All Directors and Executive Officers as a Group Common 27,772,082 66.7%
(8 persons) (2) (3) (4)
- ---------------
<FN>
(1) The Company's preferred stock is entitled to vote along with the common
stock and, for so long as at least half of the preferred stock remains
outstanding, is entitled to 26% of the combined voting power of all of the
common and preferred stock. Brek Energy Corporation has stated in its
Schedule 13D filing that it has the right to acquire 4,750,000 common
shares upon the conversion of its 500 preferred shares and 7,000,000 common
shares from certain other stockholders of the Company in exchange for
shares of Brek Energy Corporation, which shares are included in the table.
(2) The following number of shares of common stock issuable upon the exercise
of currently exercisable options are included in the amounts shown: Mr.
Bruner, 2,056,250 shares; Mr. Erickson, 2,035,000 shares; Mr. Decker,
289,000 shares; Mr. Grant, 312,000 shares; Mr. Pek, 50,000 shares; Mr.
Lotito, 68,750 shares; Mr. Stadelhofer, 50,000 shares; and Mr. Sharpe,
125,000 shares. Mr. Pek's total includes 16,500,000 shares beneficially
owned by Brek Energy Corporation, over which he shares voting and
investment power. Mr. Lotito shares voting and investment power with
respect to 250,000 of the common shares listed as held by him with Equistar
Capital, a company in which he is a member.
(3) The common stock held by Mr. Bruner includes 8,707 shares of common stock
that is held by Resource Venture Management, which is a company owned by
Mr. Bruner.
(4) The common stock held by Mr. Erickson includes 56,084 shares of common
stock owned by his wife as custodian for their children.
</FN>
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Marc A. Bruner Strategic Consulting Agreement The Company has entered into
a Strategic Consulting Agreement with Mr. Bruner, effective February 1, 2001,
that expires on January 31, 2006. The agreement entitles Mr. Bruner to an annual
fee of $240,000, subject to increase at the discretion of the Board of
Directors, and an annual bonus payment equal to 0.875% of Gasco's cash flow from
undrilled properties of the Company. The agreement provides for the award to Mr.
Bruner of options to purchase 200,000 shares of common stock of the Company
pursuant to the terms of the Company's Stock and Option and Incentive Award Plan
at an exercise price of $2.50 per share. Options to purchase 50,000 shares
vested upon the execution of the agreement and the remaining options vest in
equal amounts over the following eight fiscal quarters. The employment agreement
also contains non-compete provisions in the event of the termination of the
agreement.
Mr. Bruner's agreement also provides for certain payments in the event that the
agreement is terminated for any reason other than his voluntary termination,
death, disability or termination for cause. In the event that Mr. Bruner's
agreement is terminated by the Company without cause or due to certain change of
control events, Mr. Bruner is entitled to receive a cash payment of $1,000,000,
if terminated prior to the first anniversary of the effective date, or a cash
payment of $2,500,000, if terminated after the first anniversary of the
effective date.
Other Transactions
Mr. Lotito earned consulting fees of $52,000 and $50,000 from the Company during
the years ended December 31, 2001 and 2000, respectively. During 2001, the
Company paid $240,000 in consulting fees to a company owned by Mr. Bruner. The
fees paid to Mr. Bruner's company are committed through January 31, 2006, under
the consulting agreement described above.
Mr. Decker earned a $28,000 fee and 12,500 shares of Gasco's common stock for
consulting services provided in connection with a property acquisition in 2001.
Mr. Decker was also paid $22,879 in other consulting fees prior to his
appointment as an officer of the Company. As part of Mr. Decker's offer of
employment, the Company has committed to purchase a consulting business owned by
Mr. Decker for 250,000 shares of common stock. The transaction is expected to be
completed within the next year.
Recent Developments.
Gasco intends to pay a bonus to Howard O. Sharpe in connection with Mr. Sharpe's
contributions in securing the Company's agreement with Shama Zoe Limited
Partnership, dated April 24, 2002, to acquire interests in oil and gas
properties in Wyoming in exchange for 9,500,000 shares of Gasco common stock.
Subject to the approval of Gasco's Board of Directors, Mr. Sharpe will receive a
cash payment of $250,000 and options to purchase 250,000 shares of Gasco common
stock at an exercise price equal to the fair market value of our common stock on
the date of grant.
The Company's management believes that the above transactions and services were
provided in the normal course of business with terms that could be obtained from
non-related sources.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GASCO ENERGY, INC. Dated: April 30, 2002
By /s/ Mark Erickson
Mark Erickson, President and CEO
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature Title Date
/s/ Mark Erickson Director, President and April 30, 2002
- ------------------
Mark Erickson Chief Executive Officer
/s/ Marc Bruner Director April 30, 2002
- ------------------
Marc Bruner
- --------------------- Director April 30, 2002
Gregory Pek
/s/ Carl Stadelhofer Director April 30, 2002
- --------------------
Carl Stadelhofer
/s/ Carmen Lotito Director April 30, 2002
- -----------------
Carmen Lotito
/s/ Michael Decker Director, Executive Vice April 30, 2002
- ------------------ President and Chief
Michael Decker Operating Officer
/s/ W. King Grant Director, Executive Vice April 30, 2002
- ----------------- President and Principle
W. King Grant Financial and Accounting
Officer