SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) MAY 30, 2002
ASSURE ENERGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 333-61714 13-4125563
(State or other (Commission File Number) (IRS Employer
jurisdiction Identification No.)
of incorporation or
organization)
840 7TH AVENUE, SUITE 1600, CALGARY, ALBERTA T2P 3G2
(Address of principal executive offices)(Zip Code)
(403) 231-1230
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Address, If Changed since Last Report.)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Westerra 2000 Inc.
(b) Pro Forma Financial Information.
(c) Exhibits:
2.1 Share Purchase Agreement dated May 30, 2002 by and among
Assure Oil & Gas Corp., and Gary Freitag, Garth R. Keyte and
Evan Stephens.(1)
--------------------
(1) Previously filed with Registrant's Form 8-K dated May 30, 2002 as filed
with the Securities and Exchange Commission on June 14, 2002.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
ASSURE ENERGY, INC.
Dated: August 13, 2002 By: /s/ James I. Golla
--------------------
James I. Golla
President
2
ITEM 7(a) FINANCIAL STATEMENTS OF WESTERRA 2000 INC.
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Independent Auditor's Report - Daunheimer & Dow LLP.......................................... 4
Balance Sheets as at March 31, 2002 and 2001................................................. 5
Statement of Operations and Retained Earnings for the years ended
March 31, 2002 and 2001............................................................... 6
Statement of Cash Flows for the years ended March 31, 2002 and 2001.......................... 7
Notes to Financial Statements................................................................ 8
3
[DAUNHEIMER & DOW LLP LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Westerra 2000 Inc.
We have audited the balance sheet of Westerra 2000 Inc. at March 31, 2002 and
2001 and the statements of loss and deficit and cash flows for the year then
ended. These financial statements are the responsibility of the company's
management. Our responsibility is to express an option on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Westerra 2000 Inc. at March 31,
2002 and 2001 and the results of its operations and its cash flows for the year
then ended in conformity with accounting principles generally accepted in the
United States of America.
/s/ DAUNHEIMER & DOW LLP
Calgary, Alberta, Canada -------------------------
April 17, 2002 Chartered Accountants
4
WESTERRA 2000 INC.
BALANCE SHEET
MARCH 31, 2002
(EXPRESSED IN UNITED STATES DOLLARS)
2002 2001
----------- -----
ASSETS
CURRENT
Cash $ 9,064 $ 12
Accounts receivable 18,072
Goods and services tax recoverable 26,268
Prepaid expenses 1,041
----------- -----
54,445 12
Proven producing gas properties (Note 3) 1,516,767 --
Proven non-producing gas properties (Note 3) 175,631 --
----------- -----
$ 1,746,843 $ 12
----------- -----
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 36,551 $ 869
Acquisition loan payable (Note 4) 1,689,260 --
----------- -----
1,725,811 869
PROVISION FOR SITE RESTORATION 9,194 --
----------- -----
1,735,005 869
----------- -----
SHAREHOLDERS' EQUITY
Share capital (Note 5) 14 14
Retained earnings, (Deficit) 11,824 (871)
----------- -----
11,838 (857)
----------- -----
$ 1,746,843 $ 12
----------- -----
SEE ACCOMPANYING NOTES
Daunheimer & Dow LLP 5 [DAUNHEIMER & DOW LLP LOGO]
Chartered Accountants
WESTERRA 2000 INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
YEAR ENDED MARCH 31, 2002
(EXPRESSED IN UNITED STATES DOLLARS)
2002 2001
--------- -------
REVENUE
Gas revenue $ 600,227 $ --
--------- ---------
ROYALTIES
Crown royalties 108,955 --
Freehold royalties 49,970 --
--------- ---------
158,925
NET OIL AND GAS REVENUE 441,302
--------- ---------
EXPENSES
Production expenses 199,150 --
Depletion and site restoration 140,588 --
Interest 121,664 --
General and administrative 38,130 871
--------- ---------
499,532 871
--------- ---------
NET LOSS BEFORE THE FOLLOWING (58,230) (871)
Foreign exchange gain 70,925 --
--------- ---------
NET INCOME 12,695
DEFICIT - Beginning of year (871) --
--------- ---------
RETAINED EARNINGS, (DEFICIT) - End of year $ 11,824 $ (871)
--------- ---------
SEE ACCOMPANYING NOTES
Daunheimer & Dow LLP 6 [DAUNHEIMER & DOW LLP LOGO]
Chartered Accountants
WESTERRA 2000 INC.
STATEMENT OF CASH FLOWS
YEAR ENDED MARCH 31, 2002
IN UNITED STATES DOLLARS
2002 2001
----------- -----
OPERATING ACTIVITIES
Net income (loss) $ 12,695 $(871)
Items not affecting cash:
Depletion and site restoration 140,588 --
Unrealized foreign exchange gain (64,211) --
----------- -----
89,072 (871)
----------- -----
Changes in non-cash working capital:
Accounts receivable (18,072) --
Prepaid expenses (1,041) --
Accounts payable and accrued liabilities 35,693 869
Goods and services tax refundable (26,268) --
----------- -----
(9,688) 869
----------- -----
Cash flow from (used by) operating activities 79,384 (2)
----------- -----
INVESTING ACTIVITIES
Additions to capital assets (1,823,417) --
----------- -----
FINANCING ACTIVITIES
Acquisition loan payable 1,632,567 --
Interest payable 120,518 --
Issue of share capital -- 14
----------- -----
Cash flow from financing activities 1,753,085 14
----------- -----
INCREASE IN CASH FLOW 9,052 12
CASH - Beginning of year 12 --
----------- -----
CASH - End of year $ 9,064 $ 12
----------- -----
Interest paid during the year $ 1,146 $ --
----------- -----
SEE ACCOMPANYING NOTES
Daunheimer & Dow LLP 7 [DAUNHEIMER & DOW LLP LOGO]
Chartered Accountants
WESTERRA 2000 INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 2002
1. DESCRIPTION OF OPERATIONS
Westerra 2000 Inc. (the "Company") is a private company extra-provincially
incorporated in Canada under the Alberta and Saskatchewan Business
Corporations Acts, and is engaged in production, development and
exploration of oil and natural gas in Alberta and Saskatchewan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared by management in
accordance with accounting principles generally accepted in the United
States.
Use of Estimates in the Presentation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
The financial statements have, in management's opinion, been properly
prepared using careful judgement with reasonable limits of materiality and
within the framework of the significant accounting polices summarized
below.
Property, Plant and Equipment
The Company follows the successful efforts method of accounting for its oil
and gas producing activities. The costs of inquiring interests in oil and
gas properties are capitalized. Should a property be subsequently
abandoned, its costs are written off to operations in the year of
abandonment. The costs of drilling and equipping wells, both exploratory
and development are capitalized as incurred. Should a well be determined to
be unsuccessful (a dry hole or not capable of commercial production), its
costs are written off in the year so determined. All other exploration
costs, including geological and geophysical costs are expensed as incurred.
Unproven properties that are individually significant are periodically
assessed for impairment of value, and a loss is recognized at the time of
the impairment.
Capitalized costs of producing oil and gas properties, after allowing for
estimated abandonment cost and salvage values are depleted on the
unit-of-production method based on estimated recoverable proven oil and gas
reserves. Support equipment and other property plant and equipment are
depreciated over their estimated useful lives.
On the sale or retirement of a complete interest of a proved property, the
cost and related accumulated depletion and depreciation are eliminated from
the property accounts, and the resultant gain or loss is recognized. On the
retirement or sale of a partial interest of proved property, the cost is
charged to accumulated depletion and depreciation with the resulting gain
or loss recognized in income.
On the sale of a complete interest of an unproved property, for cash or
cash equivalents, gain or loss is recognized, taking into consideration the
amount of any recorded impairment if the property had been assessed
individually. If a partial interest in an unproved property is sold, the
amount received is treated as a reduction of the cost of the interest
retained.
Daunheimer & Dow LLP
Chartered Accountants 8 [DAUNHEIMER & DOW LLP LOGO]
Calgary, AB
WESTERRA 2000 INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 2002
Site Restoration
Site restoration costs are accrued based on management's best estimate of
these future costs calculated on the unit-of-production basis, utilizing
proved producing reserves.
Joint Venture Accounting
Substantially all of the Company's operations are carried out through joint
ventures. These financial statements reflect only the Company's
proportionate interest in such activities.
Financial Instruments
The Company carries a number of financial instruments as detailed on the
balance sheet. It is management's opinion that the Company is not exposed
to significant interest, currency or credit risks arising from these
financial instruments. The fair values of these financial instruments
approximate their carrying values, unless otherwise noted.
Measurement Uncertainty
The amounts recorded for depletion of petroleum and natural gas properties
and equipment and the provision for future site restoration and reclamation
are based on estimates. The ceiling test is based on estimates of proved
reserves, production rates, oil and gas prices, future costs and other
relevant assumptions. By their nature, these estimates are subject to
measurement uncertainty and the effect on the financial statements of
changes and estimates in future periods could be significant.
The financial statements include accruals based on the terms of existing
joint venture agreements. Due to varying interpretations of the definition
of terms in these agreements the accruals made by management in this regard
may be significantly different from those determined by the Company's joint
venture partners. The effect on the financial statements resulting from
such adjustments, if any, will be reflected prospectively.
Future Income Taxes
The liability method of tax allocation is used in accounting for income
taxes. Under this method, future tax assets and liabilities are determined
based on differences between the financial reporting and tax bases of
assets and liabilities and measured using the substantially enacted tax
rates and laws that will be in effect when the differences are expected to
reverse. Future tax expense was based on items of income and expense that
were reported in different years in the financial statements and tax
returns and measured at the tax rate in effect in the year the difference
originated. Future income tax assets are evaluated and if realization is
considered "more likely than not" a valuation is provided.
Foreign Currency Conversion
All current assets and liabilities of operations denominated in currencies
other than United States dollars have been translated into United States
dollars at the rate of exchange in effect at the balance sheet date.
Property, plant and equipment have been translated using the historical
rate at the time of acquisition.
Revenue and expense accounts are translated at the average rates of
exchange prevailing during the period except for depletion, which is
translated at the historical rate for the period in which the asset was
acquired. Gains and losses resulting from the translation of assets and
liabilities are reflected in net income.
Daunheimer & Dow LLP [DAUNHEIMER & DOW LLP LOGO]
Chartered Accountants 9
Calgary, AB
WESTERRA 2000 INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 2002
3. OIL AND GAS PROPERTIES
The Company holds a 60% working intent in various developed and undeveloped
properties in Alberta and Saskatchewan. Income from these wells is subject
to crown and overriding royalties.
Producing 2001 2000
---- ----
Balance at the beginning of the year $ $--
Acquisition 1,161,558 --
Development 486,228 --
Depletion (131,019) --
----------- ---
Balance at the end of the year $ 1,516,767
===========
Non-Producing
Balance at the beginning of the year $ -- $--
Acquisition 175,631 --
----------- ---
Balance at the end of the year $ 175,631 --
=========== ===
4. INTEREST AND ACQUISITION LOAN PAYABLE
2002 2001
---------- ---
Interest payable $ 120,518 $--
Acquisition loan payable - bridge loan 1,445,114 --
Acquisition loan payable - working capital loan 123,628 --
---------- ---
$1,689,260 $
========== ===
The Company entered into a loan agreement with a joint venture operator to
finance the Company's purchase of its oil and gas properties. The loan is
comprised of two parts:
- Bridge loan, bearing interest at the bank prime rate plus 4.0%,
compounded daily. Interest only is payable on the first business day
following every month. The principal and any accrued interest are due
and payable on June 28, 2002.
- Working capital loan, including a commitment fee payable of
$Cdn.125,000 ($U.S. 78,000) and unpaid interest charges, not to exceed
$Cdn.450,000 ($U.S.280,000), bearing interest at the bank prime rate
plus 4.0%, compounded daily. Interest is payable on the first business
day following every month. The principal is repayable in six monthly
payments commencing January 31, 2002 and any unpaid amounts are due and
payable on June 28, 2002.
These loans are secured by a general security agreement.
Daunheimer & Dow LLP [DAUNHEIMER & DOW LLP LOGO]
Chartered Accountants 10
Calgary, AB
WESTERRA 2000 INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 2002
5. SHARE CAPITAL
2002 2001
Authorized:
Unlimited number of Class A voting common shares
Unlimited number of Class B voting common shares
Unlimited number of Class C voting common shares
Unlimited number of Class D non-voting common shares
Unlimited number of Class E non-voting common shares
Unlimited number of Class F non-voting preferred shares
Unlimited number of Class G non-voting preferred shares
Issued:
125 Class A common shares $ 9 $ 9
60 Class B common shares 4 4
15 Class C common shares 1 1
-----------------------------------
$ 14 $ 14
-----------------------------------
6. INCOME TAXES
At March 31, 2002, the Company had approximately $77,600 of loss carryover
balances that will expire in 2009. In addition, the Company has capital
cost pools, resource pools and deferred financing cost pools approximating
$1,550,000 to deduct against future taxable income. These balances may be
used to reduce or eliminate the Company's Canadian and provincial corporate
income taxes.
7. RELATED PARTY TRANSACTIONS
During the year, the Company entered into the following transactions
with related parties:
The Company incurred consulting fees of $14,200 to a company owned by a
shareholder.
Included in accounts receivable is $16,293 due from a company owned by a
shareholder, pertaining to certain joint venture operations.
Included in accounts payable is $28,000 due to shareholders or to companies
and entities owned by shareholders pertaining to joint venture operations,
expenses paid on behalf of the Company and consulting fees incurred.
Revenue and expense transactions were conducted at fair market value and in
the normal course of business.
Daunheimer & Dow LLP [DAUNHEIMER & DOW LLP LOGO]
Chartered Accountants 11
Calgary, AB
WESTERRA 2000 INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 2002
8. SUBSEQUENT EVENT
Subsequent to the year-end, the Company shareholders entered into a
purchase and sale agreement to sell all the outstanding shares at March 31,
2002, to an arms length party for approximately $2,250,000 effective April
1, 2002.
9. COMPARATIVE FIGURES
Some of the comparative figures have been reclassified to conform to the
current year's presentation. The prior year's figures were reported on a
Notice to Reader basis.
Daunheimer & Dow LLP [DAUNHEIMER & DOW LLP LOGO]
Chartered Accountants 12
Calgary, AB
WESTERRA 2000 INC.
SUPPLEMENTAL INFORMATION
YEAR ENDED MARCH 31, 2002
(UNAUDITED)
Capitalized Costs Relating to Oil and
Gas Producing Activities at March 31, 2002
Proved gas properties $ 1,381,551 $ -
Support equipment and facilities 441,867 -
------------------ --------------
1,823,418 -
Less accumulated depreciation and depletion (131,020) -
------------------ --------------
Net capitalized costs $ 1,692,398 $
================== ==============
Costs Incurred in Oil and Gas
Producing Activities for the Year Ended
March 31, 2002
Property acquisition costs
Proved $ 1,337,189 $ -
Development Costs $ 486,229 -
The following estimates of proved and proved developed reserve quantities and
related standardized measure of discounted net cash flow are estimates only, and
do not purport to reflect realizable values or fair market values of the
Company's reserves. The Company emphasizes that reserve estimates are inherently
imprecise and that estimates of new discoveries are more imprecise than those of
producing oil and gas properties. Accordingly, these estimates are expected to
change as future information becomes available. All of the Company's reserves
are located in the United States.
Proved reserves are estimated reserves of crude oil (including condensate and
natural gas liquids) and natural gas that geological and engineering data
demonstrate with reasonable certainty to be recoverable in future years from
known reservoirs under existing economic and operating conditions. Proved
developed reserves are those expected to be recovered through existing wells,
equipment, and operating methods.
The standardized measure of discounted future net cash flows is computed by
applying year-end prices of oil and gas (with consideration of price changes
only to the extent provided by contractual arrangements) to the estimated future
production of proved oil and gas reserves, less estimated future expenditures
(based on year-end costs) to be incurred in developing and producing the proved
reserves, future tax rates already legislated) to be incurred on pretax net cash
flows less tax basis of the properties and available credits, and assuming
continuation of existing economic conditions. The estimated future net cash
flows are then discounted using a rate of 10 percent a year to reflect the
estimated timing of the future cash flows.
Daunheimer & Dow LLP
Chartered Accountants 13 [DAUNHEIMER & DOW LLP LOGO]
Calgary, AB
WESTERRA 2000 INC.
SUPPLEMENTAL INFORMATION
YEAR ENDED MARCH 31, 2002
(UNAUDITED)
Gas (Mcf)
---------
Proved developed and undeveloped
Reserves
Beginning of year --
Purchases of gas properties in place 4,652,700
Sales of minerals in place (318,000)
----------
End of year 4,332,900
==========
Proved developed reserves
Beginning of year --
End of year 4,332,900
==========
Standardized measure of discounted future
net cash flows at March 31, 2000 ($000)
Future cash inflows $ 8,548
Future Crown royalties 1,742
Future production costs 2,467
Future development costs 46
Future income tax expenses 1,335
----------
Future net cash flows 2,958
8% annual discount for
estimated timing of cash flows 788
----------
Standardized measures of discounted
future net cash flows relating to proved
oil and gas reserves $ 2,170
==========
Daunheimer & Dow LLP
Chartered Accountants 14 [DAUNHEIMER & DOW LLP LOGO]
Calgary, AB
ITEM 7(b) PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
ASSURE ENERGY, INC. (FORMERLY KNOWN AS Inventoy.com, Inc.)
PAGE
----
Introduction......................................................................... 16
Consolidated Balance Sheets as at March 31, 2002..................................... 18
Consolidated Statement of Operations for the three month period
ended March 31, 2002............................................................ 19
Consolidated Statement of Operations for the year ended
December 31, 2002............................................................... 20
Notes to Financial Statements........................................................ 21
15
Assure Energy, Inc. and Subsidiaries
F/K/A Inventoy.com, Inc.
Unaudited Pro Forma Condensed Consolidated Financial Statements
Introduction
Following its April 23, 2002 acquisition all of the issued and outstanding
shares of common stock of Assure Oil and Gas Corp (f/k/a 1444232 Ontario Inc.)
Assure Energy, Inc (f/k/a Inventoy.com, Inc.) through its new subsidiary Assure
Oil and Gas Corp ("Assure Oil") entered into a Share Purchase Agreement with the
three shareholders (the "Westerra Shareholders") of Westerra 2000 Inc.
("Westerra"), an Alberta corporation engaged in the exploration, development and
production of oil and gas properties primarily located in Alberta and
Saskatchewan, Canada.
On May 8, 2002, Assure Energy, Inc. and its new subsidiary, Assure Oil
(collectively the "Company") completed an equity financing with three investors,
exempt from the registration provisions of the Securities Act of 1933, as
amended by Rule 506 of Regulation D. In that financing, the Company received
US$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.
In addition, the Company 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 US$1,750,000. The Series A Preferred Stock has a 5%
dividend payable in cash or shares of the Company's common stock and is
cumulative from the date of issue.
The acquisition of Westerra is accounted for as a purchase. Westerra's assets
acquired and Westerra's liabilities assumed are recorded at their fair values at
the date of the acquisition.
The accompanying condensed consolidated financial statements illustrate the pro
forma effects of the Westerra acquisition on the Company's financial position
and results of operations. The Unaudited Condensed Consolidated Balance Sheet as
of March 31, 2002, is based on the historical balance sheets of the Company and
Westerra as of that date and assumes the acquisition took place on that date.
The Unaudited Condensed Consolidated Statements of Operations for the three
months ended March 31, 2002 and the year ended December 31, 2001 are based on
the historical operating statements of the Company and Westerra. For those
periods the Pro forma Condensed Consolidated Statements of Operations assume
that the acquisition of Westerra took place on January 1, 2001.
16
Assure Energy, Inc. and Subsidiaries
F/K/A Inventoy.com, Inc.
Introduction (cont'd)
The Pro Forma Condensed Consolidated Financial Statements may not be indicative
of the actual results of the combined companies.
The accompanying Pro Forma Condensed Consolidated Financial Statements should be
read in connection with the historical financial statements of the Company and
Westerra.
Assure Energy, Inc. and its subsidiaries intend to continue to develop oil and
gas properties.
17
Assure Energy, Inc. and Subsidiaries
F/K/A Inventoy.com, Inc.
ASSURE ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2002
(In United States Dollars)
ASSURE
ENERGY, INC.
AND WESTERRA
SUBSIDIARIES 2000 INC. ADJUSTMENTS TOTAL
---------- ----------- ----------- ----------
ASSETS
CURRENT
Cash $ 122,543 $ 9,064 $ 1,431,300 $1,562,907
Advances receivable 268,988 -- 268,988
Accounts receivable -- 18,072 18,072
Prepaid expenses and other current assets 8,664 27,309 35,973
---------- ----------- ----------- ----------
400,195 54,445 1,431,300 1,885,940
---------- ----------- ----------- ----------
FIXED ASSETS
Oil & Gas Properties 1,887,435 1,692,398 581,102 4,160,935
---------- ----------- ----------- ----------
TOTAL ASSETS $2,287,630 $ 1,746,843 $ 2,012,402 $6,046,875
========== =========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 152,356 $ 36,551 $ 188,907
Advances payable 18,776 -- 18,776
Business purchase payable 225,000 225,000
Loans payable 2,432 -- 2,432
Note payable 100,000 -- 100,000
Property acquisition loan payable -- 1,689,260 (1,689,260) --
---------- ----------- ----------- ----------
273,564 1,725,811 (1,464,260) 535,115
---------- ----------- ----------- ----------
PROVISION FOR SITE RESTORATION -- 9,194 9,194
---------- ----------- ----------- ----------
TOTAL LIABILITIES 273,564 1,735,005 (1,464,260) 544,309
---------- ----------- ----------- ----------
SHAREHOLDERS' EQUITY (1) 2,014,066 11,838 3,476,662 5,502,566
---------- ----------- ----------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,287,630 $ 1,746,843 $ 2,012,402 $6,046,875
========== =========== =========== ==========
(1) Includes the effect of Other Comprehensive Income items in the form of
foreign exchange gains of $7,192 and $63,733, for the Three Months Ended March
31, 2002 and the Year Ended December 31, 2001, respectively. See notes to
unaudited pro forma condensed consolidated financial statements.
18
Assure Energy, Inc. and Subsidiaries
F/K/A Inventoy.com, Inc.
ASSURE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited Pro Forma For the Three Months Ended March 31, 2002
(In United States Dollars)
ASSURE
ENERGY, INC.
AND WESTERRA
SUBSIDIARIES (2) 2000 INC. ADJUSTMENTS TOTAL
---------------- -------- ----------- ----------
REVENUE
Oil and Gas revenue $75,499 $242,231 $317,730
Other 107 - 107
--------- -------- ----------
Total Revenue 75,606 242,231 317,837
--------- -------- ----------
EXPENSES
Production expenses 33,921 93,017 126,938
Royalties 9,056 60,688 69,744
Depreciation, Depletion and
site restoration 23,991 35,972 17,057 77,020
Interest - 76,953 76,953
General, administrative and
other 110,909 21,397 132,306
--------- -------- --------- ----------
177,877 288,027 17,057 482,961
--------- -------- --------- ----------
--------- -------- --------- ----------
NET LOSS ($102,271) ($45,796) ($17,057) ($165,124)
--------- -------- --------- ----------
NET LOSS PER SHARE - BASIC ($0.007)(3)
==========
WEIGHTED AVERAGE COMMON SHARES USED IN THE
CALCULATION OF NET LOSS PER SHARE - BASIC 24,523,962
==========
(2) Includes Assure Energy, Inc. (f/k/a Inventoy.com and Assure Oil & Gas (f/k/a
1444232 Ontario Inc.)
(3) Based on Net Loss reduced further by cumulative preferred stock dividends of
$14,438. See notes to unaudited pro forma condensed consolidated financial
statements.
19
Assure Energy, Inc. and Subsidiaries
F/K/A Inventoy.com, Inc.
ASSURE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited Pro Forma For the Year Ended December 31, 2001
(In United States Dollars)
ASSURE
ENERGY, INC.
AND WESTERRA
SUBSIDIARIES (2) 2000 INC. ADJUSTMENTS TOTAL
---------------- --------- ------------ ---------
REVENUE
Oil and Gas revenue $ 38,837 $ 357,996 $ - $ 396,833
Other 1,158 -- 1,158
--------- --------- -------- ---------
Total Revenue 39,995 357,996 -- 397,991
--------- --------- -------- ---------
EXPENSES
Production expenses 35,286 106,133 141,419
Royalties -- 81,972 81,972
Revaluation of oil and gas properties 89,527 --
Depreciation, Depletion and site
restoration 50,701 79,900 26,704 157,305
Interest -- 85,692 85,692
General, administrative and other 64,412 16,733 6,500 87,645
--------- --------- -------- ---------
239,926 370,430 33,204 643,560
--------- --------- -------- ---------
--------- --------- -------- ---------
NET LOSS ($199,931) ($ 12,434) ($ 33,204) ($245,569)
--------- --------- -------- ---------
NET LOSS PER SHARE - BASIC ($0.011)(3)
==========
WEIGHTED AVERAGE COMMON SHARES USED IN THE
CALCULATION OF NET LOSS PER SHARE - BASIC 24,513,841
==========
(2) Includes Assure Energy, Inc. (f/k/a Inventoy.com and Assure Oil & Gas (f/k/a
1444232 Ontario Inc.)
(3) Based on Net Loss reduced further by cumulative preferred stock dividends of
$14,438. See notes to unaudited pro forma condensed consolidated financial
statements.
20
Assure Energy, Inc. and Subsidiaries
F/K/A Inventoy.com, Inc.
Notes to Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
Note A
As of April 1, 2002, Assure Energy, Inc. and its subsidiary Assure Oil and Gas
Corp (collectively the "Company") acquired all of the outstanding shares of
Westerra 2000 Inc. ("Westerra") for $3,450,000 Canadian dollars (approximately
US$2,250,000) in cash of which all has been paid except for approximately
US$225,000 which is payable upon transfer of certain property titles to
Westerra. Direct costs and indirect related to the acquisition amounted to
approximately $32,200 and $6,500, respectively.
The acquisition is accounted for as a purchase. Westerra's assets acquired and
Westerra's liabilities assumed are recorded at their fair values at the date of
the acquisition.
Note B
As a result of applying the purchase method of accounting, the excess of the
purchase price, plus the direct costs of the acquisition, over the recorded
amounts of these assets has been attributed to the cost of oil and gas
properties, as supported by a current valuation received from a firm of
geological and petroleum engineering consultants. Much of the proceeds from the
two recent equity financings were used for the purchase. The pro forma
adjustments therefore reflect the recognition of the purchase as follows:
Proceeds from the sale of 1,400,000 units, each unit consisting of one share of
the Company's common stock and one common stock purchase warrant $1,750,000
Proceeds from the sale of Series A Preferred Stock 1,750,000
Less: Costs of the Financings (5,000)
----------
Net Cash from the Financings 3,495,000
Plus: Remaining Purchase Cost Payable 225,000
Less: Indirect Acquisition Costs (6,500)
Less: Cash Remaining (1,431,300)
----------
Total Purchase Cost $2,282,200
==========
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Assure Energy, Inc. and Subsidiaries
F/K/A Inventoy.com, Inc.
Note B (cont'd)
Westerra's recorded amount of oil and gas properties $1,692,398
Excess of the fair value of proven properties over their recorded amounts 581,102
Westerra's Other Net Assets Purchased 8,700
----------
Total Purchase Cost $2,282,200
==========
The pro forma adjustments to the pro forma condensed consolidated statements of
operations also reflect additional depletion of oil and gas properties totaling
$43,761, including $26,704 attributable to the year ended December 31, 2001 and
$17,057 attributable to the three months ended March 31, 2001, because of the
additional $581,102 recorded amount to the properties to reflect the fair value
of those properties. The pro forma adjustments are made to reflect the purchase
as if it had occurred on January 1, 2001. In addition, $32,200 of direct costs
of the business purchase has been accounted for as a part of the cost of the
acquisition. Indirect costs of $6,500 have been reflected as a pro forma
adjustment to expenses for the year ended December 31, 2001 to reflect the
effect of the purchase as if it had occurred on January 1, 2001. The $5,000 cost
of the financings has been reflected as a pro forma adjustment to additional
paid-in capital.
Note C
Pro forma basic loss per share reflects all stock splits since January 1, 2001
and assume that the acquisition of Westerra 2000 Inc. by the Company took place
on that date. Basic loss per share also reflects assumed dividends on the
cumulative Series A Preferred Stock. Diluted loss per share is not presented
because the effect of the issuance of the warrants that became outstanding with
the acquisition of Assure Oil and Gas Corp. and the effect of the issuance of
the warrants that became outstanding with this acquisition (of Westerra) is
anti-dilutive.
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