UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number 333-61714
ASSURE ENERGY, INC.
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 13-4125563
---------- ------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2750-140 4th Avenue S.W., Calgary, Alberta, Canada T2P 3N3
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(Address of principal executive offices) (Zip Code)
(403) 266-2787
------------------------------------------
(Issuer's telephone number, including area code)
840 7th Avenue, Suite 1600, Calgary, Alberta T2P 3G2, Canada
----------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed
since Last Report)
Check whether the issuer (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, and (2) has been subject to such filing requirements for the past 90
days. Yes |X| No | |
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 15,366,000 shares as at
November 14, 2002
Transitional Small Business Disclosure Format (check one). Yes ; No X
--- ---
ASSURE ENERGY, INC.
SEPTEMBER 30, 2002 QUARTERLY REPORT ON FORM 10-QSB
TABLE OF CONTENTS
Page Number
Special Note Regarding Forward Looking Statements ..............................................3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements ...........................................................................4
Item 2. Plan of Operation..............................................................................12
Item 3 Controls and Procedures........................................................................13
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds......................................................13
Item 5. Other Information..............................................................................14
Item 6. Exhibits and Reports on Form 8-K...............................................................14
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
To the extent that the information presented in this Quarterly Report on
Form 10-QSB for the quarter ended September 30, 2002, discusses financial
projections, information or expectations about our products or markets, or
otherwise makes statements about future events, such statements are
forward-looking. We are making these forward-looking statements in reliance on
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Although we believe that the expectations reflected in these
forward-looking statements are based on reasonable assumptions, there are a
number of risks and uncertainties that could cause actual results to differ
materially from such forward-looking statements. These risks and uncertainties
are described, among other places in this Quarterly Report, in "Plan of
Operation".
In addition, we disclaim any obligations to update any forward-looking
statements to reflect events or circumstances after the date of this Quarterly
Report. When considering such forward-looking statements, you should keep in
mind the risks referenced above and the other cautionary statements in this
Quarterly Report.
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet as at September 30, 2002......................................................5
Consolidated Statements of Operations for the three and nine month periods ended
September 30, 2002 and 2001........................................................................6
Consolidated Statements of Cash Flows for the three and nine month periods ended
September 30, 2002 ................................................................................7
Notes to Consolidated Financial Statements...............................................................9
4
ASSURE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
September 30,
2002
-------------
(Unaudited)
Current Assets:
Cash ............................................................................ $ 1,621,825
Accounts receivable and other current assets .................................... 704,451
-----------
Total current assets ......................................................... 2,326,276
Oil and gas property, net of accumulated
depletion of $310,673 ........................................................... 4,479,957
-----------
$ 6,806,233
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities ........................................ $ 94,346
Due to former shareholder of
business acquired .............................................................. 225,000
-----------
Total current liabilities
319,346
Obligation for site restoration ..................................................... 16,744
-----------
336,090
-----------
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $100 stated value; 5,000,000
shares authorized; 22,750 outstanding ......................................... 2,275,000
Common stock, $.001 par value; 100,000,000
shares authorized; 15,366,000 shares
issued and outstanding ........................................................ 15,366
Additional paid in capital ...................................................... 4,408,149
Accumulated deficit ............................................................. (80,862)
Accumulated other comprehensive
loss ............................................................................ (146,910)
Subscription receivable ......................................................... (600)
-----------
Total stockholders' equity .................................................... 6,470,143
-----------
$ 6,806,233
===========
See Notes to Unaudited Consolidated Financial Statements.
5
ASSURE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine-Months Ended Three-Months Ended
September 30, September 30,
------------------------------ -----------------------------
2002 2001 2002 2001
------------ ----------- ----------- --------
(Unaudited) (Unaudited)
Revenue
Oil and gas revenue .......... $ 685,967 $ -- $ 388,761 $ --
Other ........................ 16,524 1,026 9,132 216
------------ ------------ ------------ ------------
Total revenue ................. 702,491 1,026 397,893 216
------------ ------------ ------------ ------------
Expenses
Production expenses .......... 167,483 -- 85,156 --
Royalties .................... 107,070 -- 35,269 --
Depletion and site restoration 106,989 -- 18,340 --
Interest ..................... 25,060 -- 2,979 --
General and administrative ... 307,761 16,984 159,656 11,469
------------ ------------ ------------ ------------
Total Expenses ............... 714,363 16,984 301,400 11,469
------------ ------------ ------------ ------------
Net income (loss) ................ (11,872) (15,958) 96,493 (11,253)
Other comprehensive (loss), net of
tax on foreign exchange loss .... (146,910) -- (26,419) --
------------ ------------ ------------ ------------
Comprehensive income (loss) ...... $ (158,782) $ (15,958) $ 70,074 $ (11,253)
============ ============ ============ ============
Earnings per share
(Basic and diluted) .............. $ * $ (.001) $ .003 *
============ ============ ============ ============
Weighted average common shares
outstanding (Basic and diluted) . 32,156,989 31,207,482 29,021,217 30,535,698
============ ============ ============ ============
* Amount is less than $.001.
See Notes to Unaudited Consolidated Financial Statements.
6
ASSURE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine-Months Ended Three-Months Ended
September 30, September 30,
------------------- -------------------
2002 2001 2002 2001
------------- ------------ ------------ --------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income (loss) ..................... $ (11,872) $ (15,958) $ 96,493 $ (11,253)
Adjustments to reconcile net income
(loss) to net cash (used in)
provided by operating activities:
Depletion and site restoration ........ 224,686 -- 142,359 --
Change in operating assets and
liabilities:
Accounts receivable and other
current assets ..................... (237,393) -- (82,071) --
Accounts payable and accrued expenses (62,869) (19,043) 3,684 --
----------- ----------- ----------- -----------
Net cash (used in) provided
by operating activities .............. (87,448) (35,001) 160,465 (11,253)
----------- ----------- ----------- -----------
Cash flows from investing activities:
Purchases of oil and gas properties (568,371) -- (466,458) --
Acquisition of businesses, net .... (1,838,620) -- -- --
----------- ----------- ----------- -----------
Net cash (used in)
investing activities ................. (2,406,991) -- (466,458) --
----------- ----------- ----------- -----------
Cash flows from financing activities:
Net proceeds of preferred
stock offerings ................. 2,275,000 -- 525,000 --
Net proceeds of private placement . 1,768,033 72,357 -- --
Proceeds of notes payable ......... 97,505 -- -- --
Payments of notes payable ......... -- -- (100,000) --
----------- ----------- ----------- -----------
Net cash provided by
financing activities .................. 4,140,538 72,357 425,000 --
----------- ----------- ----------- -----------
Effect exchange rate changes on
cash and cash equivalents ............ (41,563) -- (26,419) --
----------- ----------- ----------- -----------
Increase (decrease) in cash ........... 1,604,536 37,356 92,588 (11,253)
Cash, beginning of period ............. 17,289 21,090 1,529,237 69,699
----------- ----------- ----------- -----------
Cash, end of period ................... $ 1,621,825 $ 58,446 $ 1,621,825 $ 58,446
=========== =========== =========== ===========
See Notes to Unaudited Consolidated Financial Statements.
7
ASSURE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine-Months Ended Three-Months Ended
September 30, September 30,
------------------- -------------------
2002 2001 2002 2001
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Supplemental disclosure of cash
flow information:
Cash paid during the period for
Interest ......................... $ 25,046 $ -- $ 25,046 $ --
================ =========== ============== =============
Supplemental disclosure of non-cash
financing activity:
Common stock issued for acquisition $ 2,400,000 $ -- $ -- $ --
================ =========== ============== =============
Common stock issued by subscription $ -- $ 600 $ -- $ --
================ =========== ============== =============
See Notes To Unaudited Consolidated Financial Statements.
8
ASSURE ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The accompanying financial statements include the accounts of
Inventoy.com, Inc., ("Inventoy") which changed its name on May 1, 2002
to Assure Energy, Inc. ("Energy") and its wholly owned subsidiaries
Inventoy.com International, Inc., Assure Oil & Gas Corp (f/k/a 1444232
Ontario, Inc.) ("Oil") and Westerra 2000 Inc. ("Westerra")
(collectively the "Company"). All significant intercompany balances
and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted
in the United States of America and with the requirements of Form
10-QSB and Regulation S-B as applicable to interim financial
information. Accordingly, the unaudited consolidated financial
statements do not include all of the information and footnotes
normally required by accounting principles generally accepted in the
United States of America for complete financial statements. The
preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses and to disclose
contingent assets and liabilities at the date of the financial
statements and their potential affect on the reporting period. In the
opinion of management, all normal and recurring adjustments and
accruals considered necessary for a fair presentation have been
included. Operating results for the nine and three-month periods ended
September 30, 2002 are not necessarily indicative of the results that
may be expected for the year ended December 31, 2002. For further
information, refer to the financial statements and footnotes thereto
included in the Company's annual shareholders' report incorporated by
reference in the Form 10-KSB for the year ended July 31, 2001 and to
the Company's filings on Form 8-K dated August 27, 2002 to report the
business acquisitions discussed in Note 2 below.
Note 2 - Acquisitions
On May 1, 2002 Inventoy.com, Inc. amended its Certificate of
Incorporation and changed its name to Assure Energy, Inc.
On March 14, 2002, the Inventoy signed an asset purchase agreement
with Inventoy.com International, Inc., through which Inventoy.com
International, Inc. assigned all of its rights, titles and exclusive
interests in its patents, trademarks, trade names, technical
processes, know-how and other intellectual property that was
associated with its business, including the twenty seven (27) toy
designs to Inventoy.com, in exchange for all of the outstanding shares
of Inventoy.com International, Inc., (100 shares, par value $.001).
With this reorganization and the following business acquisitions, the
Inventoy, and its subsidiaries intends to continue to develop oil and
gas properties.
9
ASSURE ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Acquisitions - continued
Effective April 1, 2002 Energy (formerly Inventoy) acquired all of the
issued and outstanding shares of common stock of Oil for 2,400,000
units, each unit consisting of one share of the Company's common
stock, one A warrant entitling the holder to acquire another share of
the Company's common stock at $.50 per share, for up to five years
from the date of issue and one B warrant entitling the holder to
acquire another share of the Company's stock at $1.00 per share, for
up to five years from the date of issue. At the time of this
acquisition, Ed Kaplan one of the Company's three directors, resigned
and was replaced by James I. Golla, a designee of Assure Oil & Gas
Corp.
Accordingly, the acquisition of Oil was accounted for as a purchase.
All the assets acquired and all the liabilities assumed of Oil have
been recorded at their fair values at the date of acquisition.
Accordingly, Oil's results of operations are included in the Company's
financial statements from the effective date of acquisition, April 1,
2002.
Following its acquisition of Oil, Energy, through its new subsidiary
Oil, entered into a Share Purchase Agreement with the three
shareholders of Westerra 2000 Inc., an Alberta corporation engaged in
the exploration, development and production of oil and gas properties
primarily located in Saskatchewan, Canada.
Accordingly, the acquisition of Westerra was accounted for as a
purchase. All the assets acquired and all the liabilities assumed of
Westerra have been recorded at their fair values at the date of
acquisition. Accordingly, Westerra's results of operations are
included in the Company's financial statements from the effective date
of acquisition, April 1, 2002.
Both Oil and Westerra are engaged in the exploration and production of
oil and natural gas and their primary assets are oil and natural gas
properties. Accordingly, the prices to purchase these companies have
primarily been attributed to such oil and gas properties, as supported
by petroleum and natural gas reserve valuations from reputable
geological and petroleum engineering consultants. The following
represents the allocation of the business purchase costs:
Recorded amount of oil and gas properties $2,587,351
Excess of the fair value of proven properties over
their recorded amounts 1,573,584
Other Net Assets Purchased 229,686
---------------------
Total Purchase Costs $4,390,621
=====================
10
ASSURE ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Acquisitions - continued
The following table represents unaudited consolidated pro forma
information as if Energy, Oil and Westerra had been combined as of the
beginning of the periods presented. The pro forma data is presented
for illustrative purposes only and is not necessarily indicative of
the combined results of operations of future periods or the results
that actually would have resulted had Energy, Oil, and Westerra been a
combined company during the specified periods.
Pro Forma Unaudited Combined
Nine months ended Three months ended
September 30, September 30,
-------------- -------------
2002 2001 2002 2001
---- ---- ---- ----
REVENUE
Oil and Gas revenue ..... $1,002,138 $ 36,727 $ 388,761 $ 16,659
Other ................... 17,341 18,797 9,132 12,932
---------- ---------- ---------- ----------
Total Revenue $1,019,479 $ 55,524 $ 397,893 $ 29,591
========== ========== ========== ==========
NET INCOME(LOSS) $ (85,642) $ (21,706) $ 66,493 $ (11,380)
========== ========== ========== ===========
NET INCOME (LOSS) PER
SHARE - BASIC (a) ... $ (.002) $ (.001) $ .003 $ (.0004)
(a)Reflects the effect
of cumulative preferred
stock dividends
WEIGHTED AVERAGE COMMON SHARES
USED IN CALCULATION
SHARE - BASIC 32,156,989 31,207,482 29,021,217 30,535,698
Note 3 - Notes Payable
On March 19, 2002 Energy borrowed $100,000 and executed a 5% unsecured
promissory note, with interest due from the date of the note. This
note was paid in full on September 3, 2002.
Note - 4 Shareholders' Equity
In April 2002 Energy signed a $1,250,000 six-month promissory note
with a foreign company. The note bore interest at the rate of 1% above
the prime rate as charged by Citicorp. All interest and principal due
on the note were payable on or before October 23, 2002. Subsequently,
Energy completed an equity financing on June 7, 2002 in which it
issued 17,500 shares of Series A Preferred Stock with a stated value
of $100 per share in exchange for $1,750,000 and repaid the $1,250,000
six-month promissory note. The Series A Preferred Stock has a 5%
dividend payable in cash or shares of Energy's common stock and is
cumulative from the date of issue.
11
ASSURE ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note - 4 Shareholders' Equity - continued
On May 8, 2002, Energy completed an equity financing with certain
accredited investors, exempt from the registration provisions of the
Securities Act of 1933, as amended by Rule 506 of Regulation D. In
that financing, the Energy received $1,750,000 in exchange for
1,400,000 units, each unit consisting of one share of the Company's
common stock and one common stock purchase warrant entitling the
holder to acquire another share of the Company's common stock at $1.50
per share, for a period of four years commencing one year from the
date of issuance.
On August 27, 2002 Energy entered into a Preferred Stock Purchase
Agreement to sell 5,250 shares of the Company's Convertible Series B
Preferred Stock ("Series B") at a price of $100 per share. The Series
B includes the right of the holder to receive a 5% cumulative
dividend, payable annually in cash or common stock of the Company, and
the right to convert Series B into units commencing on the second
anniversary of the issuance date. Each unit consists of one share of
the Company's common stock and one common stock purchase warrant
exercisable to purchase one share of the Company's common stock at a
price of $2.00 per share, at any time during the four year period
commencing one year from the date of issuance of the units. The
initial conversion price is $1.75 for each unit. The Company's rights
include redemption of Series B, at any time after the date of
issuance, upon 21 days prior written notice of redemption to the
holder, at a price of $105 per share plus all accrued and unpaid
dividends. The Company shall have the right of automatic redemption on
the fifth anniversary of the issuance date at $105 per share plus all
accrued and unpaid dividends.
On August 27, 2002 Energy entered into a Stock Exchange Agreement with
certain founders, then present shareholders and former officers and
directors of Energy to reacquire the assets of Inventoy
International.com in exchange for 100% of their common stock in
Energy, which consisted of 14,440,000 shares of common stock. After
the transaction Energy cancelled these shares and returned them to the
status of authorized but unissued shares of common stock.
The board of directors authorized a 3-for-2 common stock split with a
record date of September 30, 2002. All share and per share information
has been restated to reflect this stock split.
12
ITEM 2. PLAN OF OPERATION
The following discussion of our plan of operation for the next twelve
months should be read together with, and is qualified in its entirety by the
more detailed information, including the financial statements, appearing
elsewhere in this document.
We were incorporated on August 11, 1999 in the state of Delaware with the
objective to license toy designs to toy manufacturers and to act as a toy
inventor's agent in licensing toy designs developed by others. We expected to
market such toy designs by both direct meetings with toy manufacturers'
representatives and through a web site that could give manufacturers the
opportunity to review pictures and descriptions of new inventions at a single
source to decide whether a face-to-face meeting would be useful. Given the
effect of an overcrowded .com business environment, no operations in this area
were ever commenced. Accordingly we looked at other ventures of merit for
corporate participation as a means of enhancing shareholder value. This strategy
resulted in our April 23, 2002 Acquisition Agreement with Assure Oil & Gas Corp.
("Assure O&G").
Assure O&G is actively engaged in the exploration, development, acquisition
and production of petroleum and natural gas (P&NG) properties primarily located
in Western Canada. In October 2000 Assure O&G commenced its oil and gas
operations as part of an initiative to create cash flow by participating in a
Farmout Agreement to drill a prospective Elkton zone natural gas well. To date,
Assure O&G has acquired varying interests, through farmout participations, asset
purchases, crown land sales and corporate acquisitions, of both producing and
prospective P&NG properties in the Western Sedimentary Basin of Western Canada.
On May 30, 2002 Assure O&G entered into a Share Purchase Agreement with the
3 shareholders of Westerra 2000 Inc. ("Westerra"), wherein Assure O&G acquired
Westerra, an Alberta, Canada corporation engaged in the exploration, development
and production of oil and gas properties primarily located in Saskatchewan,
Canada.
We plan to continue to explore, develop and acquire P&NG properties over
the next twelve months to increase cash flow, and to build P&NG reserves. We
anticipate engaging in an exploration program that could include infill drilling
of current proved and producing properties, seismic interpretation of
prospective properties and exploratory drilling. Acquisitions could include
lands, licenses and leases, producing well bores and corporate acquisitions. We
also may from time to time acquire, or enter into strategic alliances with,
complementary businesses to achieve these objectives.
We anticipate that our presently available capital resources together with
expected oil and gas cash flow from our existing oil and gas production will be
sufficient to fund our current oil and gas operations during the next twelve
months. We intend to fund our acquisition strategy and new exploration programs
during the next twelve months from oil and gas cash flow, working capital, sales
of our securities and other available sources of financing. Our employee levels
are expected to increase during the next twelve months in direct proportion to
the anticipated expansion of our oil and gas exploration program and available
cash resources. We do not presently anticipate any purchases or sales of plant
or significant equipment other than the purchase of pump jacks which are used to
enhance oil production and equipment utilized to
13
transport gas to processing facilities. Alternatively, we may rent, lease or
subcontract for the use of such equipment. We do no expect to engage in any
material research and development activities during the next twelve months. The
exploration of and drilling for oil and gas reserves is risky, uncertain and
capital intensive. No assurance can be given that we will increase our oil and
gas operations to the extent we anticipate or that if increased, our new
acquisitions and exploration programs will prove to be successful.
ITEM 3. CONTROLS AND PROCEDURES
Our principal executive officer and principal financial officer evaluated
the effectiveness of our disclosure controls and procedures as of a date within
90 days prior to the filing of this report. Based on this evaluation, our
principal executive officer and principal financial officer have concluded that
our controls and procedures are effective in providing reasonable assurance that
the information required to be disclosed in this report is accurate and complete
and has been recorded, processed, summarized and reported within the time period
required for the filing of this report. Subsequent to the date of this
evaluation, there have not been any significant changes in our internal controls
or, to our knowledge, in other factors that could significantly affect our
internal controls.
PART II -- OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On August 27, 2002 we entered into a Stock Exchange Agreement (the
"Agreement") with Inventoy.com International, Inc. ("Inventoy"), Kaplan Design
Group, Douglas Kaplan, Ed Kaplan and Ron Beit-Halachmy. At the time of the
Agreement, Kaplan Design Group, Douglas Kaplan, Ed Kaplan and Ron Beit-Halachmy
(collectively the "Shareholders") owned an aggregate of 14,400,000 shares of our
common stock (the "Shares"). Pursuant to the Agreement, the Shareholders
exchanged the Shares for all of the issued and outstanding shares of Inventoy,
our inactive wholly-owned subsidiary. Inventoy owns patents, trademarks,
tradenames, technical processes, know-how and other intellectual property
intended to be utilized in a business involving the licensing of toy designs
developed by others (the "Inventoy Assets"). The Shareholders include certain
founders of ours that contributed (the "Contribution") the Inventoy Assets to us
upon our formation. The Shares had been received by the Shareholders in
consideration of the Contribution. The decision to sell Inventoy to the
Shareholders was based upon the determination that Inventoy did not fit into our
current operations. Pursuant to the Agreement, the Shares have been cancelled
and returned to the status of authorized but unissued shares.
Effective the close of business on September 17, 2002 we affected a 3:2
forward stock split (the "Stock Split"). The record date for the Stock Split was
September 10, 2002 (the Record Date"). Shareholders of record as of the close of
business on the Record Date were eligible to receive an additional share of
common stock for every two shares then owned by them. The payment date for the
Stock Split was following the close of business on September 17, 2002 (the
"Payment Date"). The shares were sent to our shareholders on the Payment Date or
as soon thereafter as was practicable. The shareholders were not required to
surrender their existing certificates to receive the shares pursuant to the
Stock Split. As adjustment was made to the price of our common stock as of the
commencement of trading on September 18, 2002 to
14
reflect the Stock Split. All persons that purchased shares of our common stock
subsequent to the Record Date but prior to September 18, 2002 that still owned
such shares on September 18, 2002 were entitled to the benefit of the Stock
Split through the due bills process.
As of August 27, 2002 we entered into a Preferred Stock Purchase Agreement
with one person pursuant to which we sold such person 5,250 shares of our
Convertible Series B Preferred Stock (the "Preferred Stock") at a price of $100
per share (the "Stated Value") or an aggregate of $525,000. The Series B
Preferred Stock was issued pursuant to Section 4(2) of the Securities Act of
1933, as amended. The Series B Preferred Stock is convertible by the holder
after 2 years, or if called for redemption by us, into units. The initial
conversion price for the conversion of the Series B Preferred Stock is $1.75 of
Stated Value. Each unit consists of one share of our common stock (the "Unit
Shares") and one common stock purchase warrant. Each warrant entitles the holder
thereof to purchase one share of our common stock (the "Warrant Shares") at a
price of $2.00 per share at any time during the four-year period commencing one
year after the date of issuance. Piggyback registration rights apply to the Unit
Shares and Warrant Shares issuable upon conversion of the Preferred Stock.
ITEM 5. OTHER INFORMATION
Effective September 12, 2002 James Golla resigned from his positions as our
president and chief executive officer. The vacant president and chief executive
officer positions were immediately filled by Suzanne West who entered into a
three year employment agreement with us dated as of September 12, 2002. On the
same date, Suzanne West and Harvey Lalach were appointed to our board of
directors. The West employment agreement provides for an annual base salary of
CDN$100,000 together with various performance based bonuses related to our
reaching certain oil and gas production bench marks. On November 8, 2002 Ms.
West advised us that she would be resigning effective not later than December
31, 2002 pursuant to the "Termination Without Good Reason" provision of the
employment agreement, to pursue other interests.
Effective September 23, 2002, Cameron Smigel was appointed as our vice
president-finance and chief financial officer, pursuant to a two year employment
agreement with us which became effective as of September 23, 2002. The Smigel
employment agreement provides for an annual base salary of CDN$86,000. On
November 13, 2002 Mr. Smigel advised us that he would be resigning effective not
later than December 31, 2002 pursuant to the "Termination Without Good Reason"
provision of the employment agreement.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10.1 Employment Agreement dated as of September 12, 2002 between
Registrant and Suzanne L. West
99.1 Certificate of Chief Executive Officer
99.2 Certificate of Chief Financial Officer
(b) Reports on Form 8-K.
15
On July 9, 2002 we filed an amended Current Report on Form 8K/A dated April
23, 2002. Item 7 thereof contained financial statements for 1444232 Ontario Inc.
(presently known as Assure Oil & Gas Corp.) as well as pro forma financial
statements.
On August 13, 2002 we filed an amended Current Report on Form 8K/A dated
May 30, 2002. Item 7 thereof contained financial statements for Westerra 2000
Inc. as well as pro forma financial statements.
On September 11, 2002 we filed a Current Report on Form 8K dated August 27,
2002. The Current Report contained disclosures with respect to Items 2
(Acquisition or Disposition of Assets), 5 (Other Events) and 7 (Financial
Statements, ProForma Financial Information and Exhibits).
16
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ASSURE ENERGY, INC.
Dated: November 18, 2002 By: SUZANNE WEST
---------------------------------------
Suzanne West
President and Chief Executive Officer
17
CERTIFICATIONS
I, Suzanne West, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Assure Energy,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have;
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made know to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: November 18, 2002 /S/SUZANNE WEST
--------------------------------------------
Name: Suzanne West
Title: Principal Executive Officer
18
CERTIFICATIONS
I, Cameron Smigel, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Assure Energy,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have;
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made know to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: November 18, 2002 /S/CAMERON SMIGEL
--------------------------------------------
Name: Cameron Smigel
Title: Principal Financial Officer
19
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 12th day of
September, 2002 (the "Commencement Date"), and is by and between ASSURE ENERGY,
INC., a Delaware corporation with an office at 1600, 840-7th Avenue S.W.,
Calgary, Alberta, T2P 3G2 (hereinafter "Company"), and SUZANNE L. WEST with an
address at 627 17th Ave N.W., Calgary, Alberta, T2M 0N6, (hereinafter the
"Executive").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Executive has been employed by the Company since August 26, 2002
in the capacity of Vice President of Engineering; and
WHEREAS, the Company wishes Executive to resign from her present position
and to retain the services of Executive to serve as President, Chief Executive
Officer and in such other capacities as the Company and Executive shall mutually
agree in accordance with the following terms, conditions and provisions; and
WHEREAS, Executive wishes to perform such services for and on behalf of
Company, in accordance with the terms, conditions and provisions of this
Agreement; and
WHEREAS, Executive is entitled to receive stock options from the Company
dated August 26, 2002, which she has agreed to incorporate into this Agreement
pursuant to Section 6.2 hereof.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained the parties hereto intending to be legally bound hereby agree
as follows:
1. EMPLOYMENT. Company hereby employs Executive and Executive accepts such
employment and shall perform her duties and the responsibilities provided for
herein in accordance with the terms and conditions of this Agreement.
2. EMPLOYMENT STATUS. Executive shall at all times be Company's employee
subject to the terms and conditions of this Agreement.
3. TERM. Unless earlier terminated pursuant to terms and provisions of this
Agreement, this Agreement shall have a term (the "Term") of three (3) years from
the Commencement Date. The Term shall automatically renew for successive
one-year terms thereafter unless either party delivers written notice of
termination to the other at least 60 days prior to the end of the initial
three-year Term or any succeeding one-year Term.
4. POSITION. During Executive's employment hereunder, Executive shall serve
as President and Chief Executive Officer of the Company and shall work
exclusively for the Company. In such position, Executive shall have the
customary powers, responsibilities and
20
authorities of such position in corporations of the size, type and nature of
Company including being generally responsible for the day-to-day operations of
Company's business. Executive shall perform such duties and exercise such powers
commensurate with her position and responsibilities as shall be determined from
time to time by the Board of Directors of Company (the "Board"). Neither
Executive's title nor any of her functions shall be changed, diminished or
adversely affected during the Term without written direction from the Board.
Executive shall be provided with an office, staff and other working facilities
at the executive offices of Company consistent with her position and as required
for the performance of her duties.
5. LOCATION. During Executive's employment hereunder, Executive shall be
based at the Company's offices in Calgary, Alberta. In the event that, as a
condition to continued employment by the Company, Executive shall be required to
relocate more than 100 miles from Calgary, Alberta, the Company will provide
Executive with a living allowance of US$1,000 per month if moved to the United
States or CDN$1,000 per month if moved within Canada and will be responsible for
Executive's reasonable expenses related to such move.
6. COMPENSATION. For the performance of all of Executive's services to be
rendered pursuant to the terms of this Agreement, Company will pay and Executive
will accept the following compensation:
6.1 . BASE SALARY. During the Term, Company shall pay Executive an
initial base yearly salary of CDN$100,000 (the "Base Salary") payable in
equal monthly installments. Such Base Salary shall not be decreased during
the Term. Executive's Base Salary, as in effect from time to time, is
hereinafter referred to as the "Executive's Base Salary." The Company shall
deduct and withhold from Executive's compensation all necessary or required
taxes, including but not limited to Executive's statutory income tax
withholding and employment insurance contributions, and any other
applicable amounts required by law or any taxing authority.
6.2 . STOCK OPTIONS. The Company hereby grants Executive stock options
to acquire an aggregate of 200,000 common shares of Company stock at a
price of US$2.75 per share. The stock options in the form annexed hereto as
Schedule 6.2 will be non-statutory, will be dated as of August 26, 2002,
and will be exercisable, upon vesting, at any time during the five year
period that commenced August 26, 2002. The stock options will contain
anti-dilution provisions which will provide for adjustments to the
exercisable price and amount of shares issuable upon exercise under certain
circumstances including the Company's recently announced 3:2 forward stock
split. The first 100,000 options vest on the earlier of August 26, 2003 or
the Company's achieving 1,000 barrels of oil per day or its natural gas
equivalent ("boe/d") based upon an industry ratio where 10 cubic feet of
gas is deemed the equivalent of 1 barrel of oil (the "Initial Vesting
Period"). The remaining 100,000 options vest on the first anniversary of
the Initial Vesting Period. The options are further subject to any
applicable regulatory requirements.
6.3. PERFORMANCE BONUS. In the event that the Company achieves oil and
gas production in the time frames as described in (a) to (f) below (the
"Production Benchmarks") and/or the Company acquires, merges or legally
combines with another corporation (the "Combined Company") and the Combined
Company meets or exceeds the Production
21
Benchmarks during Executive's active employment with the Company pursuant
to this Agreement, then the Company shall pay to Executive bonuses as
follows:
(a) If the Company's total daily production equals or exceeds 750
boe/d and the Company sustains such production for 100
consecutive days at any time during the first twelve months of
Executive's active employment with the Company pursuant to this
Agreement, the Company shall pay to Executive a bonus of
CDN$50,000 (the "First Bonus). The First Bonus shall be payable
at the Executive's option, either in cash, common stock of the
Company ("Common Stock") or a combination of both.
(b) If the Company's total daily production equals or exceeds 1,500
boe/d and the Company sustains such production for 100
consecutive days at any time during the first twenty-four months
of Executive's active employment with the Company pursuant to
this Agreement, the Company shall pay to Executive a bonus of
CDN$75,000 (the "Second Bonus"). The Second Bonus shall be
payable, at Executive's option, either in cash, Common Stock or a
combination of both.
(c) If the Company's total daily production equals or exceeds 2,250
boe/d and the Company sustains such production for 100
consecutive days at any time during the first twenty-four months
of Executive's active employment with the Company pursuant to
this Agreement, the Company shall pay to Executive a bonus of
CDN$100,000 (the "Third Bonus"). The Third Bonus shall be payable
at Executive's option, either in cash, Common Stock or a
combination of both.
(d) If the Company's total daily production equals or exceeds 3,000
boe/d and the Company sustains such production for 100
consecutive days at any time during the first twenty-four months
of Executive's active employment with the Company pursuant to
this Agreement, the Company shall pay to Executive a bonus of
CDN$150,000 (the "Fourth Bonus"). The Fourth Bonus shall be
payable, at Executive's option either in cash, Common Stock or a
combination of both.
(e) If the Company's total daily production equals or exceeds 3,750
boe/d and the Company sustains such production for 100
consecutive days at any time during the first thirty-six months
of Executive's active employment with the Company pursuant to
this Agreement, the Company shall pay to Executive a bonus of
CDN$150,000 (the "Fifth Bonus"). The Fifth Bonus shall be
payable, at Executive's option, either in cash, Common stock or a
combination of both.
(f) If the Company's total daily production equals or exceeds 4,500
boe/d and the Company sustains such production for 100
consecutive days at any time during the first thirty-six months
of Executive's active employment with the Company pursuant to
this Agreement, the Company shall pay to Executive a bonus of
CDN$150,000 (the "Sixth Bonus"). The Sixth Bonus shall be
payable, at Executive's option either in cash, Common Stock or a
combination of both.
22
(g) In connection with this Section 6.3 and for purposes of the
Company's business operations, Executive understands and agrees
that the Company reserves the right to shut in all wells that are
not producing at profitable levels.
7. EXECUTIVE BENEFITS.
7.1. Executive shall be entitled to receive three (3) weeks paid
vacation per year. If such vacation time is not taken by Executive in the
then current year, Executive at her option may accrue vacation or receive
compensation in lieu thereof at one-half the then current level of
Executive's Base Salary.
7.2. Reasonable travel, entertainment, continuing professional
education and other business expenses actually incurred by Executive in the
performance of her duties hereunder shall be reimbursed by Company in
accordance with Company policies as in effect from time to time.
8. TERMINATION.
8.1. TERMINATION BY COMPANY WITHOUT CAUSE. Subject to Section 8.6
hereof, the Company shall have the right to terminate Executive's
employment hereunder without cause by giving Executive written notice to
that effect. Any such termination of employment shall be effective on the
date specified in such notice.
8.2. TERMINATION BY COMPANY FOR CAUSE. Subject to Section 8.6 hereof,
the Company shall have the right to terminate this Agreement and
Executive's employment hereunder "for cause" by giving Executive written
notice to that effect. Any such termination of employment shall be
effective on the date specified in such notice. For the purpose of this
Agreement, "for cause" shall mean (i) commission of a willful act of
dishonesty in the course of Executive's duties hereunder, (ii) conviction
by a court of competent jurisdiction of a criminal offense or a crime
constituting a felony or conviction in respect of any act involving fraud,
dishonesty or moral turpitude resulting in Company's detriment or
reflecting upon Company's integrity (other than traffic infractions or
similar minor offenses), or (iii) a material breach by Executive of the
terms of this Agreement and failure to cure such breach within 30 days
after receipt of written notice from Company specifying the nature of such
breach or to pay compensation to Company deemed reasonable by Company if
the breach cannot be cured.
8.3. DEATH, INCAPACITATION OR DISABILITY.
(a) Subject to Section 8.6 hereof, if Executive dies during her
employment hereunder, this Agreement shall terminate upon
the date of Executive's death.
(b) Subject to Section 8.6 hereof, in the event Executive
suffers Total and Permanent Disability, Company may
terminate Executive's employment. "Total and Permanent
Disability" means any condition affecting Executive that
prevents the performance of the essential job functions and
which is expected to be of a long, continued and indefinite
duration which has caused Executive's absence from service,
after providing to Executive reasonable accommodation to
perform the requirements of the job if required by law, for
not less than 100 consecutive days during any 12 month
period or for such shorter periods aggregating
23
100 days during any 12 month period. In such instance, a
determination of the existence of Executive's disability and
of the duration of the disability may be made by written
agreement between Company and Executive, or Executive's
legally appointed guardian if Executive then is incompetent.
If the parties do not agree, such determination shall be
made, and certified in writing, by a licensed physician and
not an employee of Company, and such physician's
determination, after the proper medical examination, shall
be binding and conclusive upon the parties to this
Agreement. If Executive is found to be totally disabled,
Executive shall be deemed to remain disabled until found
otherwise by the examining physician. Should disability
commence within six months after termination of a prior
period of disability, and should the later disability be
related to the same sickness or injury which results from
any earlier disability, then the later period of disability
shall be considered to have consecutively followed the
earlier period of disability. Whether the later disability
is related to the same sickness or injury which resulted in
the earlier disability shall be determined in the same
manner provided above for determining disability.
8.4. TERMINATION BY EXECUTIVE FOR GOOD REASON.
(a) Subject to Section 8.6 hereof, Executive shall have the
right to terminate this Agreement and her employment
hereunder for "good reason" if (A) Executive shall have
given Company prior written notice of the reason therefor,
(B) such notice shall have been given to Company within
fifteen (15) days after Executive is notified or otherwise
first learns of the event constituting "good reason," and
(C) a period of fifteen (15) days following receipt by
Company of such notice shall have lapsed and the matters
which constitute or give rise to such "good reason" shall
not have been cured or eliminated by Company; PROVIDED,
HOWEVER, that if such matters are of a nature that same
cannot be cured or eliminated within such fifteen (15) day
period, such period shall be extended up to forty five (45)
days, provided that Company shall take and diligently pursue
during such period such action necessary to cure or
eliminate such matters. In the event Company shall not take
such action within such period, Executive may send another
notice to Company electing to terminate her employment
hereunder and, in such event, Executive's employment
hereunder shall terminate and the effective date of such
termination shall be the third business day after Company
shall have received such notice.
(b) For the purpose of this Agreement, "good reason" shall mean
the occurrence of any of the following without Executive `s
prior written consent:
(A) Requiring Executive to engage in (x) an illegal act or
(y) an act which is inconsistent with prior practices
of Company and which could reasonably be deemed to be
materially damaging or detrimental to Executive;
(B) A default by Company in the payment of any material sum
or the provision of any material benefit due to
Executive pursuant to this Agreement;
(C) The failure of Company to obtain the assumption of this
Agreement by any successor to substantially all of the
assets or business of Company; or
(D) Any material breach by Company of any provision of this
Agreement which is not corrected by Company or, if the
breach cannot be corrected, as to which Company fails
to pay to Executive reasonable compensation for such
breach,
24
within 60 days following receipt by Company of
written notice from Executive specifying the nature of
such breach.
8.5. TERMINATION BY EXECUTIVE WITHOUT GOOD REASON. Subject to
Section 8.6 hereof, Executive shall have the right to terminate this
Agreement and her employment hereunder without good reason by giving
Company 60 days prior written notice to that effect. The termination
of employment shall be effective on the date specified in such notice,
or earlier, at the determination of Company, in which event such
termination shall remain classified as a termination by Executive
without good reason.
8.6. CONSIDERATION.
(a) If Company terminates this Agreement "without cause" under
Section 8.1 or if Executive terminates this Agreement for
"good reason" under Section 8.4, then Executive shall be
entitled to receive, and Company shall pay to Executive:
(i) 75% of the total Base Salary remaining for the Term
without reduction for present valuation not later than
the next regularly scheduled payment date in accordance
with Section 6.1;
(ii) any business expenses to be reimbursed but not
reimbursed under Section 7 not later than the next
regularly scheduled payment date in accordance with
Section 7;
(iii)any amounts owing or which may subsequently be owed
under Section 6.3 not later than when payment would
otherwise be due in accordance with Section 6.3;
provided, however, that if payment is not made in a
timely manner under this Section 8.6(a) and it is fully
and finally determined in accordance with Section 12
that Executive was terminated without cause, then
Company shall pay to Executive, and the Arbitrator
shall award, Executive two (2) times the amount due to,
and not timely paid to, Executive under this Section
8.6(a); it being understood that such additional amount
is not a penalty but liquidated damages to Executive as
compensation for damage to reputation which such
damages would be difficult to quantify.
(b) If Company terminates this Agreement "with cause" under
Section 8.2, or if Executive terminates this Agreement for
other than "good reason" under Section 8.5, or if this
Agreement is terminated as a result of the death of
Executive under Section 8.3, then Executive shall be
entitled to receive, and Company shall pay to Executive, or,
in the case of death, Executive's administrator:
(i) 25% of the accrued but unpaid Base Salary through the
date of Termination or death not later than the next
regularly scheduled payment date in accordance with
Section 6.1;
25
(ii) any business expenses to be reimbursed but not
reimbursed under Section 6 not later than the next
regularly scheduled payment date in accordance with
Section 6;
(iii)any amounts owing under Section 6.3 through the date
of Termination not later than when payment would
otherwise be due in accordance with Section 6.3.
(c) If this Agreement is terminated as a result of the
disability of Executive under Section 8.3, then Executive
shall be entitled to receive, and Company shall pay to
Executive:
(i) the accrued but unpaid Base Salary through the date
three months after the date of Termination not later
than the next regularly scheduled payment date in
accordance with Section 6.1;
(ii) any business expenses to be reimbursed but not
reimbursed under Section 7 not later than the next
regularly scheduled payment date in accordance with
Section 7;
(iii)any amounts owing under Section 6.3 through the date
of Termination not later than when payment would
otherwise be due in accordance with Section 6.3, and
50% of any amounts which may be subsequently owed under
Section 6.3 not later than when payment would be
otherwise due in accordance with Section 6.3.
(d) If the Company terminates this Agreement "without cause"
under Section 8.1; if Executive terminates this Agreement
for "good reason" under Section 8.4; or if this Agreement is
terminated as a result of the disability of Executive under
Section 8.3, all options received by Executive under Section
6.2 will be deemed to have vested, and Executive may
thereafter have 90 days to exercise all such options
following which time all such non-exercised options shall
become void and of no further effect.
(e) If the Company terminates this Agreement "for cause" under
Section 8.2; if Executive terminates this Agreement "without
good reason" under Section 8.5; or if Executive dies during
her employment hereunder, all options received by Executive
under Section 6.2 shall become immediately void and of no
further effect.
9. INTELLECTUAL PROPERTY. During the term of this Agreement, Executive
shall disclose immediately to Company all ideas and inventions that she makes,
conceives, discovers or develops during the course of employment with Company,
including but not limited to any inventions, modifications, discoveries,
developments, improvements, trademarks, computer programs, processes, products
or procedures (collectively "Work Product") that: (i) relates to the business of
Company; or (ii) results from tasks assigned to Executive by Company; or (iii)
results from the use of the premises or property (whether tangible or
intangible) owned, leased or contracted for or by Company. Executive agrees that
any Work Product shall be the sole and exclusive property of Company without the
payment of any royalty or other consideration except for the compensation paid
to Executive hereunder. Executive agrees that during the term of this Agreement
and thereafter, upon the request of Company and at its expense, she shall
execute and deliver any and all applications, assignments and other instruments
which Company shall deem necessary or advisable to transfer to and vest in
Company Executive's entire right, title and interest in and to all such ideas,
inventions,
26
trademarks or other developments and to apply for and to obtain patents or
copyrights for any such patentable or copyrightable ideas, inventions,
trademarks and other developments.
10. NON-DISCLOSURE OF INFORMATION.
10.1.Executive acknowledges that by virtue of her position she will be
privy to Company's confidential information and trade secrets, as they
may exist from time to time, and that such confidential information
and trade secrets may constitute valuable, special, and unique assets
of Company (hereinafter collectively "Confidential Information").
Accordingly, Executive shall not, during the Term and for a period of
five (5) years thereafter, intentionally disclose all or any part of
the Confidential Information to any person, firm, corporation,
association or any other entity for any reason or purpose whatsoever,
nor shall Executive and any other person by, through or with
Executive, during the term and for a period of five (5) years
thereafter, intentionally make use of any of the Confidential
Information for any purpose or for the benefit of any other person or
entity, other than Company, under any circumstances.
10.2.Company and Executive agree that a violation of the foregoing
covenants will cause irreparable injury to Company, and that in the
event of a breach or threatened breach by Executive of the provisions
of this Section 10, Company shall be entitled to an injunction
restraining Executive from disclosing, in whole or in part, any
Confidential Information, or from rendering any services to any
person, firm, corporation, association or other entity to whom any
such information, in whole or in part, has been disclosed or is
threatened to be disclosed in violation of this Agreement. Nothing
herein stated shall be construed as prohibiting Company from pursuing
any other rights and remedies, at law or in equity, available to
Company for such breach or threatened breach, including the recovery
of damages from Executive.
10.3.Notwithstanding anything contained in this Section 10 to the
contrary, "Confidential Information" shall not include (i) information
in the public domain as of the date hereof, (ii) information which
enters the public domain hereafter through no fault of Executive,
(iii) information created, discovered or developed by Executive
independent of her association with Company, provided that such
information is supported by accompanying documentation of such
independent development. Nothing contained in this Section 10 shall be
deemed to preclude the proper use by Executive of Confidential
Information in the exercise of her duties hereunder or the disclosure
of Confidential Information required by law
11. RESTRICTIVE COVENANT.
11.1.COVENANT NOT TO COMPETE. During the Term and for a period of one (1)
year after the termination of this Agreement, Executive covenants and
agrees that she shall not own, manage, operate, control, be employed
by, participate in, or be connected in any manner with the ownership,
management, operation, or control, whether directly or indirectly, as
an individual on her own account, or as a partner, member, joint
venturer, officer, director or shareholder of a corporation or other
entity, of any business which competes directly with the business
conducted by Company at the time of the termination or expiration of
this Agreement. Notwithstanding the foregoing, (i) nothing in this
Section 11 shall prohibit Executive from owning up to 5% of the
outstanding voting capital stock of any corporation or other entity
which is a reporting company under Section 13 or 15(d) under the
Securities Exchange Act of 1934, as
27
amended, and (ii) in the event of a termination by Company, such
restriction shall apply only if Company has paid to Executive all
amounts required and is otherwise in compliance with Section 8 hereof.
The foregoing shall not preclude Executive or any affiliate thereof
from any consulting arrangement which may be entered into from time to
time with Company, or its affiliate.
11.2. ENFORCEABILITY. Executive acknowledges that the restrictions
contained in this Section 11 are reasonable. In that regard, it is the
intention of the parties to this Agreement that the provisions of this
Section 11 shall be enforced to the fullest extent permissible under the
law and public policy applied in each jurisdiction in which enforcement is
sought. Accordingly, if any portion of this Section 11 shall be adjudicated
or deemed to be invalid or unenforceable, the remaining portions shall
remain in full force and effect, and such invalid or unenforceable portion
shall be limited to the particular jurisdiction in which such adjudication
is made.
12. ARBITRATION. Other than with respect to a proceeding for injunctive
relief referred to herein, any controversy or claim arising out of or relating
to this Agreement, the performance thereof or its breach or threatened breach
shall be settled by arbitration in Calgary, Alberta or other mutually acceptable
place in accordance with the then governing rules of the Canadian Arbitration
Association. The finding of the arbitration panel or arbitrator shall be final
and binding upon the parties with the costs of arbitration to be equally borne
by the plaintiffs and the defendants, i.e. the costs borne by defendant side in
the arbitration, whether single or multiple, shall equal the costs borne by the
plaintiff side in the arbitration, whether single or multiple. Judgement upon
any arbitration award rendered may be entered and enforced in any court of
competent jurisdiction. In no event may the arbitration determination change
Executive's compensation, title, duties or responsibilities, the entity to whom
Executive reports or the principal place where Executive is to render her
services.
13. INDEMNIFICATION.
13.1.(a) INDEMNIFICATION OF EXPENSES. Except as provided in Section 13(b)
hereof, the Company shall indemnify to the fullest extent permitted by
law if Executive was or is or becomes a party to or witness or other
participant in, or is threatened to be made a party to or witness or
other participant in, any threatened, pending or completed action,
suit, proceeding or alternative dispute resolution mechanism, or any
hearing, inquiry or investigation that Executive in good faith
believes might lead to the institution of any such action, suit,
proceeding or alternative dispute resolution mechanism, whether civil,
criminal, administrative, investigative or other (hereinafter a
"Claim") by reason of (or arising in part out of) any event or
occurrence related to the fact that Executive is or was a director,
officer, employee, agent or fiduciary of Company, or any subsidiary of
Company, or is or was serving at the request of Company as a director,
officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, limited liability company, trust or other
enterprise, or by reason of any action or inaction on the part of
Executive while serving in such capacity (hereinafter an
"Indemnifiable Event") against any and all expenses (including
attorneys' fees and all other costs, expenses and obligations incurred
in connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing to defend, be a
witness in or participate in, any such action, suit, proceeding,
alternative dispute resolution mechanism, hearing, inquiry or
investigation), judgments, fines, penalties and amounts paid in
settlement (if such settlement is approved in
28
advance by Company, which approval shall not be unreasonably withheld)
of such Claim and any federal, state, local or foreign taxes imposed
on Executive as a result of the actual or deemed receipt of any
payments under this Agreement (collectively, hereinafter "Expenses"),
including all interest, assessments and other charges paid or payable
in connection with or in respect of such Expenses. Such payment of
Expenses shall be made by Company as soon as practicable but in any
event no later than twenty days after Executive presents written
demand therefor to Company.
(b) LIMITATION ON INDEMNIFICATION. The Company's obligation to
indemnify Executive pursuant to this Agreement shall not extend
to acts of Executive constituting gross negligence or other acts
of malfeasance.
13.2. EXPENSES; INDEMNIFICATION PROCEDURE.
(a) Subject to the other terms and conditions of this Agreement,
Company shall advance all Expenses incurred by Executive. The
advances to be made hereunder shall be paid by Company to
Executive as soon as practicable but in any event no later than
twenty days after written demand by Executive therefor to
Company.
(b) Executive shall, as a condition precedent to Executive's right to
be indemnified under this Agreement, give Company notice in
writing as soon as practicable of any Claim made against
Executive for which indemnification will or could be sought under
this Agreement. Notice to Company shall be directed to the Board
of Directors of Company at the address shown on the signature
page of this Agreement and to the address of each Director (or
such other address as Company shall designate in writing to
Executive). In addition, Executive shall give Company such
information and cooperation as it may reasonably require and as
shall be within Executive's power.
(c) For purposes of this Agreement, the determination of any Claim by
judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that Executive did
not meet any particular standard of conduct or have any
particular belief or that a court has determined that
indemnification is not permitted by applicable law.
(d) If, at the time of the receipt by Company of a notice of a Claim
pursuant to Section 13.2(b) hereof, Company has liability
insurance in effect which may cover such Claim, Company shall
give prompt notice of the commencement of such Claim to the
insurers in accordance with the procedures set forth in the
respective policies. Company shall thereafter take all necessary
or desirable action to cause such insurers to pay, on behalf of
Executive, all amounts payable as a result of such action, suit,
proceeding, inquiry or investigation in accordance with the terms
of such policies.
(e) In the event Company shall be obligated hereunder to pay the
Expenses of any Claim, Company shall be entitled to assume the
defense of such Claim with counsel approved by Executive, which
approval shall not be unreasonably withheld, upon the delivery to
Executive of written notice of its election so to do. After
delivery of such notice, approval of such counsel by Executive
and the retention of such counsel by Company, Company will not be
liable to Executive under this Agreement for any fees of counsel
subsequently
29
incurred by Executive with respect to the same Claim; provided
that, (i) Executive shall have the right to employ Executive's
counsel in any such Claim at Executive's expense and (ii) if (A)
the employment of counsel by Executive has been previously
authorized by Company, (B) Executive shall have reasonably
concluded that there is a conflict of interest between Company
and Executive in the conduct of any such defense, or (C) Company
shall not continue to retain such counsel to defend such Claim,
then the fees and expenses of Executive's counsel shall be at the
expense of Company. Company shall have the right to conduct such
defense as it sees fit in its sole discretion, including the
right to settle any claim against Executive without the consent
of Executive so long as in the case of the settlement (i) Company
has the financial ability to satisfy any monetary obligation
involving Executive under such settlement and (ii) the settlement
does not impose injunctive type relief on the activities of
Executive. In all events, Executive will not unreasonably
withhold its consent to any settlement.
13.3. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
(a) Except as provided in Section 13(b) hereof, the Company hereby
agrees to indemnify Executive to the fullest extent permitted by
law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this
Agreement, Company's Certificate of Incorporation, Company's
Bylaws or by statute. In the event of any change after the date
of this Agreement in any applicable law, statute or rule which
expands the right of a Delaware corporation to indemnify a member
of its Board of Directors or an officer, employee, agent or
fiduciary, it is the intent and agreement of the parties hereto
that Executive shall enjoy by this Agreement the greater benefits
afforded by such change. In the event of any change in any
applicable law, statute or rule which narrows the right of a
Delaware corporation to indemnify a member of its Board of
Directors or an officer, employee, agent or fiduciary, such
change, to the extent not otherwise required by such law, statute
or rule to be applied to this Agreement, shall have no effect on
this Agreement or the parties' rights and obligations hereunder.
(b) The indemnification provided by this Agreement shall be in
addition to any rights to which Executive may be entitled under
Company's Certificate of Incorporation, its Bylaws, any
agreement, any vote of stockholders or disinterested directors,
the Delaware General Corporation Law, or otherwise. The
indemnification provided under this Agreement shall continue as
to Executive for any action Executive took or did not take while
serving in an indemnified capacity even though Executive may have
ceased to serve in such capacity.
(c) Company shall not be liable under this Agreement to make any
payment in connection with any Claim made against Executive to
the extent Executive has otherwise actually received payment
(under any insurance policy, Certificate of Incorporation, Bylaw
or otherwise) of the amounts otherwise indemnifiable hereunder.
(d) If Executive is entitled under any provision of this Agreement to
indemnification by Company for some or a portion of Expenses
incurred in connection with any Claim, but not, however, for all
of the total amount thereof, Company shall nevertheless indemnify
Executive for the portion of such Expenses to which Executive is
entitled.
30
14. NOTICES. Any notice required, permitted or desired to be given under
this Agreement shall be sufficient if it is in writing and (a) personally
delivered to Executive or an authorized member of Company, (b) sent by overnight
delivery or (c) sent by registered or certified mail, return receipt requested,
to Company's or Executive's address as provided in this Agreement or to a
different address designated in writing by either party. Notice is deemed given
on the day it is delivered personally or by overnight delivery, or five (5)
business days after it is sent by registered or certified mail.
15. ASSIGNMENT. Executive acknowledges that her services are unique and
personal. Accordingly, Executive may not assign her rights or delegate her
duties or obligations under this Agreement. Company's rights and obligations
under this Agreement shall inure to the benefit of and shall be binding upon
Company's successors and assigns.
16. WAIVER OF BREACH. Any waiver of a breach of a provision of this
Agreement, or any delay or failure to exercise a right under a provision of this
Agreement, by either party, shall not operate or be construed as a waiver of
that or any other subsequent breach or right.
17. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties. It may not be changed orally but only by an agreement in writing which
is signed by the parties. The parties hereto agree that any existing employment
agreement between them shall terminate as of the date of this Agreement.
18. GOVERNING LAW; VENUE. This Agreement shall be construed in accordance
with and governed by the laws of the Province of Alberta, Canada as applied to
agreements entered into and to be performed entirely in Alberta. Any dispute or
controversy concerning or relating to this Agreement shall be exclusively
resolved in the courts located in the City, of Calgary and the Province of
Alberta.
19. SEVERABILITY. The invalidity or non-enforceability of any provision of
this Agreement or application thereof shall not affect the remaining valid and
enforceable provisions of this Agreement or application thereof.
20. CAPTIONS. Captions in this Agreement are inserted only as a matter of
convenience and reference and shall not be used to interpret or construe any
provisions of this Agreement.
21. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement. Delivery of signed
counterparts via facsimile transmission shall be effective as manual delivery
thereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties hereto has executed their
Agreement as of the date first herein above written.
COMPANY:
ASSURE ENERGY INC.
By: /S/JAMES L. GOLLA
--------------------------------------
Name: James L. Golla
Title: President
EXECUTIVE:
/S/SUZANNE L. WEST
--------------------------------------------
SUZANNE L. WEST
32
EXHIBIT 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the
Quarterly Report of Assure Energy, Inc. (the "Company") on Form 10-QSB for the
quarter ended September 30, 2002 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Suzanne West, Chief Executive
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that;
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
/S/SUZANNE WEST
---------------
Name: Suzanne West
Title: Chief Executive Officer
Date: November 18, 2002
33
EXHIBIT 99.2
CERTIFICATE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Assure Energy, Inc. (the
"Company") on Form 10-QSB for the quarter ended September 30, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Cameron Smigel, Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respect, the financial condition and result of operations of
the Company.
/S/CAMERON SMIGEL
-----------------
Name: Cameron Smigel
Title: Chief Financial Officer
Date: November 18, 2002
34