25 PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents Filed as Part of the Report
(1) Financial Statements. Page No.
Reports of Independent Accountants F-1
Consolidated Balance Sheets
December 31, 1997 and 1996 F-3
Consolidated Statement of Operations
Years Ended December 31, 1997, 1996 and 1995 F-4
Consolidated Statement of Cash Flows
Years Ended December 31, 1997, 1996 and 1995 F-5
Consolidated Statement of Changes in
Stockholders' Equity - Years Ended
December 31, 1997, 1996 and 1995 F-6
Notes to Consolidated Financial Statements F-7
Supplementary Oil and Gas Information F-26
(2) Financial Statement Schedules.None.(3) Exhibits.
2.1 Share Purchase Agreement dated February 25, 1997, among Registrant and
AIPCC, PAIPC and MIP. (8)
3.1 Restated Articles of Incorporation of the Registrant. (6)
3.2 By-laws of the Registrant, as amended. (11)
4.1 Form of Class A Warrant. (3)
4.2 1995 Stock Option Plan and Form of related Option Agreements of the
Registrant. (5)
4.3 Form of 8% Convertible Subordinated Debentures due August 1, 1999. (9)
4.4 Form of Subscription Agreement used in connection with the offering of the
Registrants' debentures referenced in Exhibit 4.3. (9)
4.5 Form of Warrant to purchase shares of the Registrants' Common Stock issued
in connection with the offering of the Registrants' debentures referenced
in Exhibit 4.3. (9)
4.6 Form of Registration Agreement used in connection with the offering of the
Registrants' debentures referenced in Exhibit 4.3. (9)
4.7 Form of 14% convertible Notes due October 15, 1999. (10)
4.8 Form of Subscription Agreement used in connection with the offering of the
Registrants' debentures referenced in Exhibit 4.7. (10)
4.9 Form of Warrant to purchase shares of the Registrants' common Stock issued
in connection with the offering of the Registrants' debentures referenced
in Exhibit 4.7. (10) 26
4.10 Form of Registration Rights Agreement used in connection with the offering
of the Registrants' debentures referenced in Exhibit 4.7. (10)
4.11 Form of Subscription Agreement used in connection with the repayment of
debt to a foreign individual. (10)
4.12 Form of Subscription Agreement used in connection with the Registrant's
purchase of a 70% interest of MED Shipping Usturt Petroleum Company
Ltd.(10)
4.13 Form of Warrant to purchase shares of the Registrant's common Stock issued
in connection with the purchase referenced in Exhibit 4.12. (10)
4.14 1998 Stock Option Plan of the Registrant.
4.15 1998 Stock Award Plan of the Registrant.
10.1 Employment Agreement dated May 1, 1989 by and between George N. Faris and
the Registrant. (1)
10.2 Amendment #1 to Employment Agreement, dated October 13, 1995, between
George N. Faris and the Registrant. (6)
10.3 Registration Rights Agreement dated July 11, 1996 between George N. Faris
and the Registrant. (6)
10.4 $3 million Exchangeable Debenture, granted by AIPCC to the Registrant due
February 25, 1999. (8)
10.5 Agreement dated April 22, 1997 between the Registrant and MED Shipping and
Trading S.A. used in connection with the Registrant's purchase of a 70%
interest of MED Shipping Usturt Petroleum Company Ltd. (10)
10.6 Amendment dated May 9, 1997 to the Agreement attached hereto as Exhibit
10.5. (10)
16.1 Letter dated August 19, 1996 regarding change in certifying accountant. (6)
21.1 Subsidiaries of the Registrant.27.1 Financial Data Schedule.
--------------------
(1) Incorporated herein by reference to the Registration Statement on Form S-1
declared effective on February 13, 1990.
(2) Incorporated herein by reference to the Registrant's form 8-K, dated
December 4, 1990.
(3) Incorporated herein by reference to the Registration Statement on Form S-3,
declared effective January 15, 1998.
(4) Incorporated herein by reference to Amendment #19 to Schedule 13D of George
N. Faris for October 13, 1995.
(5) Incorporated herein by reference to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1995.
(6) Incorporated herein by reference to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996.
(7) Incorporated herein by reference to the Registrant's Form 8-K dated August
19, 1996.
(8) Incorporated herein by reference to the Registrant's Form 8-K dated March
12, 1997.
(9) Incorporated herein by reference to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997.
(10) Incorporated herein by reference to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997.
(11) Incorporated herein by reference to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1997.(b) Reports on Form 8-K
None. 27
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders American International Petroleum
Corporation
We have audited the accompanying consolidated balance sheets of American
International Petroleum Corporation and Subsidiaries as of December 31, 1997 and
1996, and related consolidated statements of operations, stockholders' equity
and cash flows for the years then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated 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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit also 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
American International Petroleum Corporation and Subsidiaries as of December 31,
1997 and 1996, and the results of their operations and their cash flows for the
years then ended, in conformity with generally accepted accounting principles.
The Company reported a net loss of approximately $18.0 million during 1997, of
which approximately $12.5 million represented non-operating or non-cash items,
and has commitments to fund the operations of its Kazakstan subsidiary (see Note
10) and has convertible debentures totaling $10,000,000 (see Note 6), which may
or may not be converted to common stock, that mature in October 1998. The
Company had virtually no revenue-generating operating activities during 1997 and
does not, as of December 31, 1997, have the resources to fulfill these
commitments. These matters raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans in regards to these matters
are discussed in Note 2 to the financial statements.HEIN + ASSOCIATES LLP
Certified Public AccountantsHouston, TexasMarch 17, 1998
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of American International Petroleum
Corporation
In our opinion, based upon our audit and the report of other auditors, the
consolidated financial statements for 1995 listed in the Index appearing under
items 14(a)(1) on page 25 present fairly, in all material respects, the results
of operations and cash flows of American International Petroleum Corporation and
its subsidiaries for the year ended December 31, 1995, in conformity with
generally accepted accounting principles. 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 audit. We did not audit the
financial statements for the year ended December 31, 1995 of American
International Petroleum Corporation of Colombia (AIPC-Colombia), a wholly-owned
subsidiary, which statements were prepared in accordance with generally accepted
accounting principles in Colombia and which statements reflect total revenues of
$1,214,213 for the year ended December 31, 1995. Those statements were audited
by other auditors whose report thereon has been furnished to us, and our opinion
expressed herein, insofar as it relates to the amounts included for
AIPC-Colombia, is based solely on the report of the other auditors. We conducted
our audits of these statements in accordance with generally accepted auditing
standards which 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 (including the conversion of the financial statements of
AIPC-Colombia to generally accepted accounting principles in the United States)
and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit and the report of
other auditors provide a reasonable basis for the opinion expressed above.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Notes 2 and 11 to the
financial statements, the Company has suffered recurring losses from operations,
has a working capital deficiency and is in the process of trying to resolve
certain contingencies, all of which raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
PRICE WATERHOUSE LLPHouston, TexasApril 9, 1996
F-2Bogota, March 15, 1996
To the Members of the Board of Directors
American International Petroleum Corporation
I have audited the balance sheet of the Colombian Branch of American
International Petroleum Corporation of Colombia as of December 31, 1995, and the
corresponding statements of income, changes in the net worth of the Branch,
changes in the financial position and cash flows for the year 1995. The
presentation of those financial statements and their corresponding notes is the
responsibility of the Branch's administration and they reflect its performance.
It is among my functions to audit them and to render an opinion about them. The
financial statements of the Company for the year 1994 were audited by a
different Auditor, who expressed his opinion in his Report.
I obtained the necessary information to comply with my functions as Auditor and
conducted my work in accordance with generally accepted auditing standards which
require that the audit be planned and carried out to make sure that the
financial statements reasonably reflect the financial condition of the company
and the results of its operations. An audit of financial statements implies,
among other things, to conduct an examination based on selective tests of the
evidence that support the figures and disclosures of the financial statements,
as well as to evaluate the accounting principles used, the accounting estimates
made by the Administration, and the presentation of the financial reports as a
whole. I consider that my audit provides a reasonable basis for the opinion
regarding the financial reports as expressed below.
In its accounting and in the presentation of the financial statements, the
Branch follows accounting principles generally accepted for oil companies,
established by the Superintendency of Companies and the Colombian law. In my
opinion, the financial statements previously mentioned, which were faithfully
taken from the books present fairly the financial position of the Colombian
Branch of American International Petroleum Corporation of Colombia at December
31, 1995, the results of its operations, changes in its financial position and
its cash flows for the year then ended, in accordance with and based on
accounting principles generally accepted in Colombia.
Furthermore, it is also my opinion that the Branch's accounting for the year
ended on December 31, 1995, was kept in compliance with the legal norms and
accounting practices; the operations registered in the books and the
administrator's actions complied with the statutes and the decisions of the
Board of Directors of its Home Office, the correspondence and vouchers of the
accounts were duly carried out and kept, and adequate measures of internal
control and maintenance and custody of the Branch's and third parties' assets in
its possession were observed. |
