SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event) February 6, 2001
Ranger Industries, Inc.
----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Connecticut 000-18669 060768904
----------- ---------- ---------
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
Incorporation) No.)
3400 82nd Way North, St. Petersburg, FL 33710
-------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(727) 381-4904
--------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
One Regency Drive, Bloomfield, CT 06002
------------------------------------------------------------
(Former Name or Former Address, If Changed Since Last Report.)
Ranger Industries, Inc. Page 1
Form 8-K/A-1; February 6, 2001
Item 1. Changes in Control of Registrant
----------------------------------------
On February 6, 2001, pursuant to the terms and conditions of the Agreement
and Plan of Merger and Reorganization, dated as of December 29, 2000, by and
among Bumgarner Enterprises, Inc., a Florida corporation ("Bumgarner"), Ranger
Industries, Inc. ("Ranger") and BEI acquisition Corporation, a Florida
corporation and wholly-owned subsidiary of Ranger ("BEI"), as amended by the
Amendment to the Agreement and Plan of Merger and Reorganization, dated as of
January 23, 2001, by and among Bumgarner, Ranger and BEI (the "Merger
Agreement," (i) Bumgarner merged with and into BEI, with Bumgarner continuing as
the surviving entity (the "Merger"), (ii) each share of Bumgarner common stock,
par value $.001, was converted into one share of common stock, par value $.01
per share ("Common Stock") of the Registrant. A copy of the Merger Agreement was
filed herewith as Exhibit 3 to this Form 8- K as originally filed. As a result
of, and following the completion of the Merger:
o Charles G. Masters, the principal shareholder of Bumgarner, acquired
11,401,000 shares of Ranger common stock (including 400,000 shares
held through a trust of which he is the trustee); and
o The former directors of Ranger resigned and appointed Mr. Masters,
Robert Sherman Jent, and Henry C. Shults, Jr., to the Ranger board of
directors.
The former directors (and principal shareholders) of Ranger from whom control
had been assumed were Morton E. Handel, formerly president and chief executive
officer of Ranger (and owner of 500,000 shares of Ranger common stock) and Isaac
Perlmutter (owner of 1,136,137 shares of Ranger common stock). Raymond Minella,
also a director of Ranger immediately prior to the Merger, did not own any
shares of Ranger common stock. Ranger had previously advised all of its
shareholders of this pending change of control and appointment of directors with
a notification sent pursuant to SEC Rule 14f-1.
Other information regarding the change of control is set forth in the
original filing of this Current Report on Form 8-K and in the annual report on
Form 10-KSB for the year ended December 31, 2001, Ranger filed which is hereby
incorporated by reference.
Item 2. Acquisition or Disposition of Assets
--------------------------------------------
As a result of Ranger acquiring Bumgarner in the Merger described in Item
1, above, Ranger made a significant acquisition of assets in the oil and gas
industry. These were described more fully in the original report on Form 8-K and
in Ranger's annual report on Form 10-KSB for the year ended December 31, 2001,
Ranger filed which is hereby incorporated by reference.
Ranger Industries, Inc. Page 2
Form 8-K/A-1; February 6, 2001
Item 6. Resignation of Registrant's Directors
---------------------------------------------
Not applicable. Although the Registrant's directors resigned, as disclosed
in Item 1, above, in no case did a resigning director express any disagreement
with the registrant on any matter relating to the registrant's operations,
policies, or practices.
Item 7. Financial Statements and Exhibits
Financial Statements of Businesses Acquired.
See Exhibit 1.
Pro Forma Financial Information
See Exhibit 2.
Exhibits
Exhibit 1.* Financial Statements of Bumgarner Enterprises, Inc. (audited
financial statements being filed herewith pursuant to Item
7(a)(4) of Form 8-K)
Exhibit 2.* Pro forma financial statements
Exhibit 3.+ Agreement and Plan of Merger and Reorganization, dated as of
December 29, 2000, by and among Bumgarner Enterprises, Inc,
Ranger Industries, Inc. and BEI Acquisition Corporation, as
amended by the Amendment to the Agreement and Plan of Merger
and Reorganization, dated as of January 23, 2001, by and
among Bumgarner Enterprises, Inc., Ranger Industries, Inc.,
and BEI Acquisition Corporation
Exhibit 4.^ Firm commitment letter dated January 19, 2001, from Guaranty
Bank and Trust Company, incorporated by reference from
Exhibit 99(b)(1) to the Schedule TO/A and amendments thereto
filed by Bumgarner Enterprises, Inc. (005-18370)
Exhibit 5.^ Letter dated Janaury 26, 2001, from Guaranty Bank and Trust
Company, incorporated by reference from Exhibit 99(b)(2) to
the Schedule TO/A and amendments thereto filed by Bumgarner
Enterprises, Inc. (005-18370)
Exhibit 6.^ Letter Agreement dated January 26, 2001, from Guaranty Bank
and Trust Company, incorporated by reference from Exhibit
99(b)(3) to the Schedule TO/A and amendments thereto filed
by Bumgarner Enterprises, Inc. (005-18370)
Ranger Industries, Inc. Page 3
Form 8-K/A-1; February 6, 2001
Exhibit 7.^ Commercial/Agricultural Revolving or Draw Note-FixedRate,
dated January 29, 2001, executed by Bumgarner as borrower
with Guaranty Bank and Trust Company as lender, incorporated
by reference from Exhibit 99(b)(4) to the Schedule TO/A and
amendments thereto filed by Bumgarner Enterprises, Inc.
(005-18370)
Exhibit 8.^ Commercial Security Agreement dated January 29, 2001,
between Bumgarner Enterprises, Inc., as debtor and Guaranty
Bank and Trust Company as secured party, incorporated by
reference from Exhibit 99(b)(5) to the Schedule TO/A and
amendments thereto filed by Bumgarner Enterprises, Inc.
(005-18370)
Exhibit 9.^ Commercial Assignment of MMDA Account, dated January 29,
2001, incorporated by reference from Exhibit 99(b)(6) to the
Schedule TO/A and amendments thereto filed by Bumgarner
Enterprises, Inc. (005-18370)
Exhibit 10.^ Guaranty dated January 29, 2001, by Charles G. Masters as
guarantor, incorporated by reference from Exhibit 99(b)(8)
to the Schedule TO/A and amendments thereto filed by
Bumgarner Enterprises, Inc. (005- 18370)
* Included herewith
+ Included with the original filing of this Form 8-K
^ Incorporated by reference from Schedule TO/A and amendments
thereto filed by Bumgarner Enterprises, Inc. (005-18370)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RANGER INDUSTRIES, INC. (Registrant)
Date: April 13, 2001 By: /s/ Charles G. Masters
---------------------------------------
Charles G. Masters, President
and Chief Executive Officer
Ranger Industries, Inc. Page 4
Form 8-K/A-1; February 6, 2001
Independent Auditors' Report
----------------------------
Board of Directors
Bumgarner Enterprises, Inc. and Subsidiary
St. Petersburg, Florida
We have audited the accompanying consolidated balance sheet of Bumgarner
Enterprises, Inc. and Subsidiary (the "Company"), as of December 31, 2000, and
the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for the years ended December 31, 2000 and 1999 and for
the period from inception (March 18, 1998) through December 31, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about 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 audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly in all material respects, the consolidated financial position of
Bumgarner Enterprises, Inc. and Subsidiary at December 31, 2000 and the
consolidated results of their operations and their cash flows for the years
ended December 31, 2000 and 1999 and the period from inception (March 18, 1998)
through December 31, 2000 in conformity with generally accepted accounting
principles.
/s/ Aidman, Piser & Company, P.A.
April 12, 2001
Tampa, Florida
F-1
BUMGARNER ENTERPRISES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2000
ASSETS
Current assets:
Cash $ 85
Prepaid expenses 2,000
---------
Total current assets 2,085
---------
Oil and gas properties, using successful efforts method 161,316
---------
$ 163,401
---------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accrued compensation $ 50,000
Accrued expenses 1,618
Syndication fees payable 149,316
Due to officer 2,100
---------
Total current liabilities 203,034
---------
Minority interest in joint venture 12,000
---------
Stockholders' deficit:
Common stock, $.001 par, authorized 20,000,000 shares;
issued and outstanding, 14,720,000 shares 14,720
Preferred stock, $.01 par, authorized 10,000,000 shares,
no shares issued or outstanding --
Deficit accumulated during the development stage (66,353)
---------
Total stockholders' deficit (51,633)
---------
$ 163,401
=========
See notes to consolidated financial statements.
F-2
BUMGARNER ENTERPRISES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
From Inception
(March 18, 1998)
through
Year ended December 31, December 31,
2000 1999 2000
-------- ---------- --------
Revenue $ -- $ -- $ --
-------- ---------- --------
Operating expenses:
Stock based compensation 14,719 -- 14,719
Salaries and wages 50,000 -- 50,000
Other 1,634 -- 1,634
-------- ---------- --------
Total operating expenses 66,353 -- 66,353
-------- ---------- --------
Income tax expense -- -- --
-------- ---------- --------
Net loss ($66,353) $ -- ($66,353)
======== ========== ========
See notes to consolidated financial statements.
F-3
BUMGARNER ENTERPRISES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM INCEPTION (MARCH 18, 1998)
THROUGH DECEMBER 31, 2000
Common Stock Deficit Accumulated
------------------------------- During Development
Shares Amount Stage Total
---------- ---------- ---------- ----------
Issuance of stock
March 18, 1998 1,000 $ 1 $ -- $ 1
---------- ---------- ---------- ----------
Balances, December 31,
1998 and 1999 1,000 1 -- 1
Issuance of stock for
services 14,719,000 14,719 -- 14,719
Net loss for the period
from August 1, 2000
(commencement of
operations) through
December 31, 2000 -- -- (66,353) (66,353)
---------- ---------- ---------- ----------
Balances, December 31,
2000 14,720,000 $ 14,720 ($ 66,353) ($ 51,633)
========== ========== ========== ==========
See notes to consolidated financial statements.
F-4
BUMGARNER ENTERPRISES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
From Inception
(March 18, 1998)
Year ended December 31, through
------------------------------ December 31,
2000 1999 2000
--------- --------- --------
Cash flows from operating activities:
Net loss ($66,353) $ -- ($66,353)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation 14,719 -- 14,719
Change in operating assets and
liabilities:
Increase in prepaid expenses (2,000) -- (2,000)
Increase in accrued expenses 51,618 -- 51,618
-------- -------- --------
Net cash used in operating activities (2,016) -- (2,016)
-------- -------- --------
Cash flows from financing activities:
Advances from officer 2,100 -- 2,100
Cash paid for common stock -- -- 1
-------- -------- --------
Net cash provided by financing activities 2,100 -- 2,101
-------- -------- --------
Net increase in cash 84 -- 85
Cash, beginning of period 1 1 --
-------- -------- --------
Cash, end of period $ 85 $ 1 $ 85
======== ======== ========
See notes to consolidated financial statements.
F-5
BUMGARNER ENTERPRISES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (MARCH 18, 1998)
THROUGH DECEMBER 31, 2000
1. Summary of significant accounting policies and basis of presentation:
Nature of business:
Bumgarner Enterprises, Inc. (the "Company") was incorporated under the laws
of the State of Florida in March 1998. There has been no significant
business activity since inception and no activity whatsoever prior to
January 1, 2000. The Company intends to operate in the oil and gas
industry, acquiring interests in non-producing or producing oil and gas
properties and participating in drilling operations. In October 2000, the
Company acquired a 74.415% working interest in Joint Venture - Henryetta,
("Henryetta" or "Joint Venture") which was formed as a general partnership
under Oklahoma law and owns four leasehold interests in Okfuskee and Coal
counties, Oklahoma (See Note 2). The properties at present have no
producing oil or gas wells, although initial plans are to drill and develop
four wells at a total cost of approximately $2,200,000. The Joint Venture
automatically terminates, unless renewed, in 2010.
Management's plans regarding operations:
In March 2001, the Company completed a merger with an independent third
party (See Note 7) and has obtained $8,500,000 in bank loan financing.
After completion of the merger and payment of expenses associated
therewith, the Company had approximately $650,000 in unrestricted cash to
use for working capital purposes. The Company intends to further identify
undeveloped or developed prospects or production to acquire and seek other
industry investors or other interested parties who may be willing to
participate in these activities. The Company would retain a promotional
interest in any prospects, but may have to finance a portion of acquisition
and drilling costs.
Principles of consolidation:
The accompanying consolidated financial statements include the accounts of
the Company and its 74.415% joint venture interest in Henryetta. All
intercompany accounts and transactions have been eliminated in
consolidation.
F-6
BUMGARNER ENTERPRISES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (MARCH 18, 1998)
THROUGH DECEMBER 31, 2000
1. Summary of significant accounting policies and basis of presentation
(continued):
Oil and gas properties:
The Company uses the successful efforts method of accounting for oil and
gas producing activities. Costs to acquire mineral interests in oil and gas
properties, to drill and equip exploratory wells that find proved reserves
and to drill and equip development wells are capitalized. Costs to drill
exploratory wells that do not find proved reserves, geological and
geophysical costs, and costs of carrying and retaining unproved properties
will be expensed.
Unproved oil and gas properties that are individually significant are
periodically assessed for impairment of value, and a loss, if any, will be
recognized at the time of impairment by providing an impairment allowance.
Other unproved properties will be amortized based on the Company's
experience of successful drilling and average holding period. Capitalized
costs of producing oil and gas properties, after considering estimated
dismantlement and abandonment costs and estimated salvage values, will be
depreciated and depleted by the unit-of-production method. Support
equipment and other property and equipment will be depreciated over their
estimated useful lives.
The carrying values of the oil and gas properties as reflected in the
accompanying balance sheet do not reflect the underlying fair values of
such properties.
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
Stock-based compensation:
The Company accounts for compensation costs associated with stock options
issued to employees under the provisions of Accounting Principles Board
Opinion No. 25 ("APB 25") whereby compensation is recognized to the extent
the market price of the underlying stock at the date of grant exceeds the
exercise price of the option granted. Stock-based compensation to
non-employees is accounted for using the fair-value based method prescribed
by Financial Accounting Standard No. 123 ("FAS 123"). The Company accounts
for unregistered common stock issued for services or asset acquisitions at
the estimated fair value of the stock issued.
F-7
BUMGARNER ENTERPRISES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (MARCH 18, 1998)
THROUGH DECEMBER 31, 2000
1. Summary of significant accounting policies and basis of presentation
(continued):
Income taxes:
Deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. This method also requires the recognition of future
tax benefits such as net operating loss carryforwards, to the extent that
realization of such benefits is more likely than not. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The deferred tax assets are reviewed
periodically for recoverability and valuation allowances are provided, as
necessary.
2. Business combination:
As indicated in Note 1, The Company acquired a 74.415% interest in Joint
Venture - Henryetta in October 2000. Consideration for this equity interest
was in the form of a $2,073,728 promissory note payable to Henryetta, which
bears interest at 6% and is payable in full by October 10, 2002. The
Company will forfeit its interest in Henryetta (pro-rata with any unpaid
balance) if the note is not paid by the due date. (Since the note is
payable to an entity included in the consolidated financial statements, the
note payable and related interest has been eliminated in consolidation.)
Results of operations of Henryetta, which are nominal, have been included
in the accompanying consolidated financial statements from the October 2000
date of acquisition through December 31, 2000.
Pro-forma results of operations for the years ended December 31, 2000 and
1999 as though the joint venture had been acquired at January 1, 1999 are
as follows:
Years Ended December 31,
2000 1999
------------ -------------
Revenues $ - $ -
Net loss ($ 93,989) ($ 50,233)
============ =============
F-8
BUMGARNER ENTERPRISES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (MARCH 18, 1998)
THROUGH DECEMBER 31, 2000
3. Oil and gas properties:
All of the interests held by the Joint Venture are in undeveloped acreage
in Coal and Okfuskee counties, in south central and central Oklahoma,
respectively. This prospect consists of four leases from private
landowners.
The leases (A, B, C and D) are each "fully-paid" leases that require no
additional annual rental payments or other payments before expiration of
their primary lease terms. Each of the leases will continue beyond their
primary terms as long as oil or gas is being produced from the lease in
paying quantities. In each case, the wells contemplated are expected to
meet this requirement, provided that they can be successfully completed;
however, there can be no assurance that any of the wells will produce oil
or gas in paying quantities, even if completed.
The Joint Venture is in the process of acquiring the entire working
interest within the area of the four leases and believes it has acquired
the entire working interest in Lease B. As of the date hereof, the signed
leases have not been returned. The Joint Venture expects to commence
drilling of the Joshua #1 well on Lease B in the very near future. The
Joint Venture is actively negotiating with landowners to acquire the
remaining property interests in the other three lease areas and believes it
will be able to acquire those interests. After it acquires the outstanding
property interests, it will be able to drill the planned wells, subject to
adequate financing. The Joint Venture expects to drill Joshua #2 on Lease A
after the completion of Joshua #1, and the Company believes it has
sufficient capital to participate in Joshua #2. Thereafter, and subject to
adequate financing, the Joint Venture expects to drill a well on each of
Leases C and D.
Oklahoma has a procedure called "forced pooling" by which an oil and gas
operator can apply to the Oklahoma Corporation Commission to force other
landowners to pool their mineral interests with the interests of that
operator. If the Joint Venture is not able to lease the remaining working
interests on reasonable terms, it intends to apply to force pool the
remaining working interests on terms similar to the leases which it has
obtained from the other property owners, including royalty interest no
greater than 20%.
F-9
BUMGARNER ENTERPRISES, INC. AND SUBSIDARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (MARCH 18, 1998)
THROUGH DECEMBER 31, 2000
3. Oil and gas properties (continued):
The following table summarizes the Joint Venture's interest in its four
leases.
------------------------------------------ -------------- -------------- ----------- ------------- ------------ ------------ -------
Gross Net Acres (2) Net Acres Primary
Nature of Acres (to the Joint (3) (to lease Lessor
Land Description Reserves (1) Venture) Bumgarner) term Royalty
------------------------------------------ -------------- -------------- ----------- ------------- ------------ ------------ -------
Lease A Private Proved 80 40 29.766 October 2003 20%
SW 1/4SW1/4Section 14, T10N, R12E landowner undeveloped
------------------------------------------ -------------- -------------- ----------- ------------- ------------ ------------ -------
Lease B Private Unproved 480 337.89 251.44 June 2002 20%
SW 1/4SW1/4Section 28, landowner
SE1/4Section 29, NW1/4NE1/4
Section 32, E1/2NE1/4 Section 32,
NW1/4Section 33,
all in T11N, R11E Okfuskee County
------------------------------------------ -------------- -------------- ----------- ------------- ------------ ------------ -------
Lease C Private Unproved 520 282.5 210.22 August 2002 20%
SE 1/4 NE 1/4 Section 11, landowner
N 1/2 and N 1/2 S 1/2
Section 12, all in T3N, R8E Coal County
------------------------------------------ -------------- -------------- ----------- ------------- ------------ ------------ -------
Lease D Private Unproved 440 320 238.1 August 2002 20%
NE 1/4SW1/4and W1/2W1/2 Section 5, landowner
NE1/4SE1/4and S1/2 SE 1/4Section 6,
NE1/4Section 7, and NW1/4Section 8,
all in T3N, R9E Coal County NE 1/4
Section 19, T10N, R13E Section 19,
T10N, R13E
(1) A "gross acre" is an acre in which a working interest is owned. The number of gross acres is the total number of acres in
which a working interest is owned. The disclosure of net acres subject to lease reflects lease status as of March 31, 2001.
(2) A "net acre" is deemed to exist when the sum of fractional ownership working interests in gross acres equals one. The number
of net acres is the sum of the fractional working interests owned in gross acres expressed as whole numbers and fractions
thereof.
(3) Reflects Bumgarner's interest in the Joint Venture (74.415%) multiplied by the net acres owned by the Joint Venture.
Bumgarner's interest in this property is through the Joint Venture; Bumgarner has no direct interest in the leased properties.
F-10
BUMGARNER ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (MARCH 18, 1998)
THROUGH DECEMBER 31, 2000
4. Related party transactions:
Syndication and other fees:
The Company has agreed to pay one of the partners in the Joint Venture-
Henryetta (Inter-Oil & Gas, Inc. - "Interoil") a fee aggregating $149,316
in connection with the Company's investment in Henryetta, which is payable
by Interoil to an unrelated third party pro-rata upon satisfaction of the
note discussed in Note 2. This amount is recorded as a liability in the
accompanying consolidated balance sheet. That partner also manages the
joint venture and is reimbursed for any costs it incurs in that regard.
Finally, in addition to the aforementioned fees, that same partner will
earn $25,000 as an operating fee in connection with the two initial wells
to be drilled in Coal County and $12,000 for the wells to be drilled in
Okfuskee County.
Due to officer:
Due to officer represents non-interest bearing unsecured advances from an
officer of the corporation. These advances are payable on demand.
5. Partnership agreement:
Under the terms of the Joint Venture - Henryettta agreement, and subject to
satisfaction of the promissory note, the Company is responsible for
approximately 93% of expenses and is entitled to 93% of all distributions
until such time as its investment has been recovered. The other partners
will collectively share in the remaining 7%. Thereafter, profits, losses
and distributions shall be allocated 74.415% to the Company, 20% to
Inter-Oil and 5.585% to others.
6. Income taxes:
Income taxes consist of the following:
Deferred tax benefit of operating loss carryforward $ 23,000
Increase in valuation allowance ( 23,000)
--------
Income tax expense $ -
========
Income tax expense differs from that which would result from applying
statutory tax rates to pre-tax loss due to the increase in the valuation
allowance.
Deferred tax assets consist of the deferred tax benefit from the operating
loss carryforward of $23,000, reduced by a $23,000 valuation allowance
since management cannot presently determine that it is more likely than not
that such deferred tax assets will be realized.
F-11
BUMGARNER ENTERPRISES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (MARCH 18, 1998)
THROUGH DECEMBER 31, 2000
7. Subsequent events:
In February 2001, the Company merged with Ranger Industries, Inc.'s
("Ranger") subsidiary (BEI Acquisition Corporation) in consideration of
Ranger's issuance of 14,720,000 shares for 100% of Bumgarner's issued and
outstanding stock. This transaction will be accounted for as though it were
a re-capitalization of Bumgarner and a sale of shares by Bumgarner in
exchange for the net assets of Ranger. Subsequently, the Company completed
a tender offer for 4,225,000 shares of Ranger common stock at $2.00 per
share. Simultaneously, the Company acquired an additional 163,181 shares
pursuant to the terms of a related merger and acquisition agreement. In
addition, the Company obtained a bank loan in the amount of $8,500,000,
which is collateralized by an equivalent amount in cash and cash
equivalents. The loan bears interest at 6.4% and matures January 2003.
F-12
PRO FORMA FINANCIAL INFORMATION
The accompanying pro forma financial statements have been prepared to reflect
the effect of the February 2001 merger of Ranger Industries, Inc.'s ("Ranger")
subsidiary (BEI Acquisition Corporation) into Bumgarner Enterprises, Inc.
("Bumgarner") and the simultaneous completion by Bumgarner of a tender offer for
4,225,000 shares of Ranger's previously issued and outstanding common stock and
163,181 shares in accordance with the merger and acquisition agreement for both
at $2 per share. The accompanying historical financial statements are derived
from audited financial information of Ranger and Bumgarner as of December 31,
2000. The pro forma adjustments are based upon management's assumptions as
discussed in Note 1.
The objective of this pro forma financial information is to show what the
significant effects on the historical financial information might have been had
the merger and tender offer occurred at January 1, 2000. However, the pro forma
condensed financial statements are not necessarily indicative of the results of
operations or related effects on financial position that would have been
attained had the above-mentioned merger and tender offer actually occurred
earlier.
RANGER INDUSTRIES, INC. AND
BUMGARNER ENTERPRISES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2000
Pro Forma Pro Forma
Bumgarner Ranger Adjustments Consolidated
-------------------------------- ----------------------------------
Assets
Current assets:
Cash and cash equivalents:
Unrestricted $ 85 $ 10,233,478 (1b) $ (8,670,000) $ 1,563,563
Restricted - - (1b) 8,670,000 8,670,000
Other current assets 2,000 35,030 37,030
-------------------------------- ----------------------------------
Total current assets 2,085 10,268,508 - 10,270,593
-------------------------------- ----------------------------------
Oil and gas properties, using
successful efforts method 161,316 - - 161,316
-------------------------------- ----------------------------------
$ 163,401 $ 10,268,508 $ - $ 10,431,909
================================ ==================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 51,618 $ 199,344 (1c) $ 225,000 $ 475,962
Syndication fees payable 151,416 - 151,416
-------------------------------- ----------------------------------
Total current liabilities 203,034 199,344 225,000 627,378
-------------------------------- ----------------------------------
Note payable - - (1b) 8,500,000 8,500,000
-------------------------------- ----------------------------------
Minority interest in joint venture 12,000 - - 12,000
-------------------------------- ----------------------------------
Stockholders' equity:
Common stock 14,720 52,786 (1b) 88,599 156,105
Additional paid-in capital - 12,664,062 (1b) (88,599) 12,575,463
Accumulated deficit (66,353) (2,647,684) (1c) (225,000) (2,939,037)
Treasury stock, at cost - - (1b) (8,500,000) (8,500,000)
-------------------------------- ----------------------------------
Total stockholders' equity (51,633) 10,069,164 (8,725,000) 1,292,531
-------------------------------- ----------------------------------
-------------------------------- ----------------------------------
$ 163,401 $ 10,268,508 $ - $ 10,431,909
================================ ==================================
See Notes to Pro Forma Condensed Consolidated Financial Statements
RANGER INDUSTRIES, INC. AND
BUMGARNER ENTERPRISES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FROM THE PERIOD FROM JANUARY 1, 2000 THROUGH DECEMBER 31, 2000
Pro forma Pro forma
Bumgarner Ranger Adjustment Consolidated
--------- ------ ---------- ------------
Revenues $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------
Operating costs and expenses:
Administrative 51,634 1,815,160 -- 1,866,794
Stock based compensation 14,719 -- -- 14,719
Consulting and professional fees -- 293,745 (1c) 225,000 518,745
------------ ------------ ------------ ------------
Total operating expenses 66,353 2,108,905 225,000 2,400,258
------------ ------------ ------------ ------------
Interest income -- 356,770 -- 356,770
------------ ------------ ------------ ------------
Loss before income taxes (66,353) (1,752,135) (225,000) (2,043,488)
Income tax benefit -- (20,370) -- (20,370)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net loss $ (66,353) $ (1,731,765) $ (225,000) $ (2,023,118)
============ ============ ============ ============
------------ ------------
Pro forma loss per common share $ (0.33) $ (0.13)
============ ============
Weighted average number of shares 5,278,644 15,610,463
============ ============
See Notes to Pro Forma Condensed Consolidated Financial Statements
RANGER INDUSTRIES, INC. AND BUMGARNER ENTERPRISES, INC.
NOTES TO CONDENSED CONSOLIDATED PRO FORMA
FINANCIAL STATEMENTS
DECEMBER 31, 2000
1. Pro forma adjustments:
The pro forma adjustments reflected in the accompanying pro forma financial
statements give effect to the following:
(a) Merger of Ranger Industries, Inc.'s ("Ranger") subsidiary (BEI
Acquisition Corporation) into Bumgarner Enterprises, Inc.
("Bumgarner") in consideration of Ranger's issuance of 14,720,000
shares for 100% of Bumgarner's issued and outstanding stock. This
transaction has been accounted for as though it were a
re-capitalization of Bumgarner and a sale of shares by Bumgarner in
exchange for the net assets of Ranger.
(b) The purchase of Ranger shares by Bumgarner for 4,225,000 issued and
outstanding shares of Ranger common stock in accordance with the
published tender offer and an additional 163,181 shares in accordance
with the merger and acquisition agreement. All shares were purchased
at $2 per share. The tender offer was financed primarily by a
$8,500,000 two-year bank loan which will be secured by $8,670,000 cash
and cash equivalents provided by Ranger.
(c) Accrued $225,000 of additional consulting and professional fees
associated with the merger and tender offer.
2. Oil and gas properties are stated in the accompanying Pro forma condensed
consolidated balance sheet based upon generally accepted accounting
principles and do not reflect the underlying fair values of such
properties.