To All:
The recent 10QSB included information concerning the $1,375,000 debenture issued by Oilex to Austost Anstalt Schaan. This information contains material that I believe is pertinent to the lawsuit that was not reported in SEC documents because it would not have a "materially adverse affect" on the company.
The lawsuit is, in my reading of it, for approximately $1,400,000, plus costs and attorney's fees. I arrive at this figure by multiplying the number of unrestricted shares the plaintiff claims he should have received (1,400,000+) by the price of the shares at the time of their promised delivery (approximately $1.00/share). I do not intend to argue the merits of the claim. That is what they have courts for. The fact is that the suit has been on file since February 7, 1997, and has gone unreported in SEC filings. It is possible that the plaintiff might prevail and judgment of over $1,400,000 could be entered against the company. Aside from the fact that Oilex would have difficulty appealing such a judgment (in Texas, one has to post a bond to appeal, costing 10% of the value of the judgment-$140,000), much less satisfying it, it appears that this possible outcome could have other serious adverse effects on the company.
I will now quote from the 10QSB filing dated September 30, 1997. However, I urge individual investors to read the document in its entirety to form their own opinion.
(Section 8) "If one or more of the following described Events of Default shall occur (and shall not be caused by misrepresentation or omission by Holder in Holders Subscription Agreement) and continue for 30 days unless a differed period is otherwise stated below:
(g) Any money judgment, writ or warrant of attachment, or similar process, in excess of One Hundred Thousand ($100,000) Dollars in the aggregate shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder;"
"Then, or at any time thereafter, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Debenture immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein of any other rights of remedies afforded by law".
What this tells me, in layman's terms, is that if the plaintiff is successful in the above lawsuit, it could trigger the default clause in the Debenture as provided by the above clause 8(g). That could make the entire $1,375,000 plus accrued interest immediately due and payable. Considering that the company is paying consultants in stock because it does not have cash, it is hard to see how it would be able to pay any significant judgment, or even post bond to appeal such judgment. For those who have said that this lawsuit does not constitute the threat of a "materially adverse affect" on the company, I beg to differ with you. It appears to me that the company had a duty to report this lawsuit in its SEC filings and let the shareholders make that determination for themselves.
Just my humble opinion.
Prude
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