UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2003
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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 0 - 24012
DEEP WELL OIL & GAS, INC.
(formerly ALLIED DEVICES CORPORATION)
-------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 13 - 3087510
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
31 Walmer Rd., Unit 6, Toronto, Ontario, M5R 2W7, Canada
--------------------------------------------------------
(Address of principal executive offices - Zip code)
(416) 928 - 3095
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No ___
-----
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No ___
------
The aggregate market value of the voting stock held by non-affiliates of
the Registrant (based upon the closing price of the Registrant's common stock on
December 31, 2003 of $0.55 per share) was approximately $90,878. Shares of
common stock held by each executive officer and director of the outstanding
common stock have been excluded in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
As of December 31, 2003, the Registrant had approximately 2,165,233 shares
of Common Stock, $.001 par value per share outstanding. This figure accounts
for, or takes into consideration, a reverse split of the Company's common stock
that occurred and became effective on November 21, 2003. For financial statement
purposes, the Company has shown 6,165,233 shares of common stock issued and
outstanding. This incorporates an additional 4 million shares that are to be
issued by the Company as ordered by the Bankruptcy Court.
DEEP WELL OIL & GAS, INC.
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INDEX
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PART I
Item 1. Business 1
Item 2. Properties 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 6
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters 6
Item 6. Selected Financial Data 8
Item 7. Management's Discussion and Analysis or Plan of Operation 9
Item 7A. Quantitative and Qualitative Disclosure About Market Risks 12
Item 8. Financial Statements and Supplementary Data 12
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 20
Item 9A. Controls and Procedures 21
PART III
Item 10. Directors and Executive Officers of the Registrant 21
Item 11. Executive Compensation 22
Item 12. Security Ownership of Certain Beneficial Owners and Management 22
Item 13. Certain Relationships and Related Transactions 23
Item 14. Principal Accountant Fees and Services 23
PART IV
Item 15. Exhibits and Reports on Form 8-K 24
SIGNATURES 24
PART I
ITEM 1. BUSINESS
HISTORY
Deep Well Oil & Gas, Inc. ("Deep Well Oil & Gas", "Deep Well" or the "Company")
(formerly "Allied Devices Corporation") was originally incorporated on July 18,
1988 under the laws of the state of Nevada as Worldwide Stock Transfer, Inc.
These articles were complicated and lengthy, the type of provisions one would
expect to find in by-laws, and consisted of 14 pages, single-spaced. On October
25, 1990, an amendment to our articles was made changing our name to Illustrious
Mergers, Inc. At that time an article prohibiting preemptive rights was also
added.
On June 18, 1991, a company known as Allied Devices Corporation was merged with
and into Illustrious Mergers, Inc., and our name was at that time changed to
Allied Devices Corporation. On August 19, 1996, a company called Absolute
Precision, Inc., was merged with and into us and we retained our name; however,
as a result of that transaction, our principal offices were relocated to New
York.
We thereafter engaged in substantial business operations, primarily in the
manufacture and distribution of standard and custom precision mechanical
assemblies and components throughout the United States, however, on February 19,
2003, we filed a Petition for Relief under Chapter 11 of the U.S. Bankruptcy
Code in the United States Bankruptcy Court in and for the Eastern District of
New York titled In re: Allied Devices Corporation, et al., Chapter 11, Case No.
03-80962-511 ("the Bankruptcy Action").
REORGANIZATION
On July 23, 2003, a Liquidating Plan of Reorganization ("Plan") was filed and
submitted to the Bankruptcy Court for the Court's approval. See Exhibit 2.1
attached hereto, a full and complete copy of such Plan. See also Form 8-K/A
filed by the Company on November 25, 2003 for additional information.
On September 10, 2003, after notice to all creditors and a formal hearing, U.S.
Bankruptcy Judge Melanie L. Cyganowski issued an "Order Confirming Liquidating
Plan of Reorganization" in the Bankruptcy Action (hereinafter "Bankruptcy
Order"). In conjunction with that Bankruptcy Order, the Company's liabilities,
among other things, were paid off and extinguished. See Exhibit 2.2 attached
hereto and incorporated by reference, a full and complete copy of such
Bankruptcy Order.
The Bankruptcy Order, among other things, implements a change of control whereby
Champion Equities, a Utah limited liability company ("Champion"), a Mr. David
Roff, of Toronto, Canada ("Roff"), and a group of new investors, took control of
the Company. The principal provisions of the Plan, which are authorized and
implemented by the Bankruptcy Order, are the following, which is not an
exhaustive list thereof:
1
a) the termination of present management and the present Board of Directors
and appointment of Mr. David Roff in their place and stead;
b) giving a Utah entity known as Champion Industries ("Champion"), the power
and authority to appoint such other directors, in addition to Mr. Roff, as
Champion, in its sole discretion deems appropriate;
c) the reverse split of the Company's common capital stock 1-for-30 on the
basis of 5,048,782 shares issued and outstanding immediately prior to the
Bankruptcy Order;
d) authorizing Champion to amend the Company's Articles of Incorporation and
Bylaws to (i) effect a quasi-reorganization for accounting purposes, (ii)
provide the maximum indemnification or other protections to the Company's
officers and directors that is allowed under applicable law, (iii) conform
to the provisions of the Plan and the corollary Confirmation Order, (iv)
set the authorized stock of the Company, post-reverse split, at fifty
million (50,000,000) common capital shares; and (v) take all action
necessary and appropriate to carry out the terms of the Plan;
e) authorizing Champion, without solicitation of or notice to shareholders, to
issue (i) 2,000,000 post-reverse split shares of the Company's common stock
to the Company's new management, and (ii) 4,000,000 post-reverse split
shares, legend free, in the sole and unfettered discretion of Champion;
f) the Company's Board of Directors, was authorized, without seeking or
obtaining shareholder approval to take any and all actions necessary or
appropriate to effectuate amendments to the Company's Certificate of
Incorporation and/or Bylaws called for under the Plan and the Company's
Board of Directors and officers was authorized to execute, verify,
acknowledge, file and publish any and all instruments or documents that may
be required to accomplish the same; and
g) the Company's charter is to be amended in conformance with applicable
bankruptcy rules and the amended charter or bylaws shall, among other
provisions, authorize the issuance of any new shares while simultaneously
prohibiting the issuance of nonvoting equity securities to the extent
required by section 1123(a)(6) of the United States Bankruptcy Code.
After the entry of the Bankruptcy Order, the Company drafted and submitted a
form of Restated and Amended Articles of Incorporation to the Secretary of State
of Nevada implementing the foregoing, including but not limited to other
provisions required of the Company under the Bankruptcy Order.
As a result of the Bankruptcy Order giving Mr. Roff the power and authority to
change the Company's name and direction, we decided to change our name from
"Allied Devices Corporation" to "Deep Well Oil and Gas, Inc." Accordingly, in
the form of Restated and Amended Articles of Incorporation filed with the State
of Nevada in October, we changed our name to "Deep Well Oil and Gas, Inc." Our
2
form of Restated and Amended Articles of Incorporation was accepted by the
Nevada Secretary of State on October 22, 2003, pursuant to provisions of Nevada
corporate law allowing the amending of corporate articles on the basis of orders
entered by U.S. Bankruptcy Courts. A complete copy of our accepted form of
Restated and Amended Articles of Incorporation, signed by Mr. Roff and stamped
by the Nevada Secretary of State, is attached hereto as Exhibit 3.1.
Prior to the Bankruptcy Order adopting the Liquidating Plan of Reorganization,
there were 5,048,782 outstanding shares of our common stock. Following the
Bankruptcy Order and the acceptance by the Nevada Secretary of State of our form
of Restated and Amended Articles which implements the 1-for-30 reverse split of
our shares, and rounding up any fractional shares to the nearest share and also,
after the issuance of 2 million shares to Mr. Roff as ordered by the Bankruptcy
Court, there are now 2,165,233 issued and outstanding shares of the Registrant's
common stock. For financial statement purposes, the Company has shown 6,165,233
shares of common stock issued and outstanding. This incorporates the additional
4 million shares that are to be issued by the Company as ordered by the
Bankruptcy Court.
As part of the implementation of the Bankruptcy Order, the Company's stock
symbol was changed from ALDVQ to DWOG. The Company's stock is quoted on the
"Pink Sheets".
FRESH START
Upon emergence from Chapter 11 proceedings on September 10, 2003, the Company
adopted fresh-start reporting in accordance with the American Institute of
Certified Public Accountants Statement of Position 90-7, Financial Reporting By
Entities in Reorganization Under the Bankruptcy Code (SOP 90-7). In connection
with the adoption of fresh-start reporting, a new entity has been deemed created
for financial reporting purposes. For financial reporting purposes, the Company
adopted the provisions of fresh-start reporting effective September 10, 2003.
All periods presented prior to September 10, 2003, have been designated
Predecessor Company.
BUSINESS
The Company is no longer operating as Allied Devices Corporation, the
Predecessor Company, and has emerged from Chapter 11 protection as a development
stage company with no assets and liabilities. The past results of the
Predecessor Company are no longer relevant to the operations of the Company.
As a result of the Bankruptcy Order and the implementation of the Liquidating
Plan of Reorganization, we are currently headquartered in Toronto, Canada at the
address set forth above. We intend to enter into the oil and gas exploration
business once our restructuring is completed. At this time, we presently intend
to look for properties or projects involving "heavy oil" projects. "Heavy oil"
is a dark black, viscous oil that does not flow well and which has a high carbon
to hydrogen ratio, along with a high amount of carbon residues, asphaltenes,
sulphur, nitrogen, heavy metals, aromatics and/or waxes. Heavy oil is younger in
3
age than the typical oil people are familiar with. It is found at relatively
shallow depths in the earth where there is not as much heat and pressure. In
this regard, reference is made the website "Heavyoil.com". As the world's oil
supplies become depleted, we believe that there will be more reliance on heavy
oil. No assurance can be made or given that we will successfully engage in the
oil and gas business or the heavy oil business, nor can any assurance be given
that even if we are remotely or relatively successful, that we will have a
profit or that our stock will appreciate in value.
At this time, the Company is in discussions to acquire properties or projects
involving "heavy oil" projects.
RISKS
The Company has no recent operating history and no representation is made, nor
is any intended, that the Company will in fact be able to carry on future
business activities successfully.
Development stage companies like the Company compete to obtain favorable
business opportunities. The Company faces competition from other development
stage companies similarly situated.
The Company is unable to ascertain the exact number of competitor companies, or
whether or when such competitors' competitive positions could improve or change.
Thus, The Company may be unable to acquire merger or other partners or otherwise
locate business combinations on terms acceptable to management. Accordingly,
such competition, although customary with development stage companies, could
result in delays, increased costs, or other types of adverse consequences
affecting The Company and its financial condition.
Need for Additional Capital or Financing and Risks Associated Therewith
Management does not presently intend to borrow funds to compensate any persons,
consultants, promoters or affiliates in relation to the implementation of its
plans. However, if the Company engages outside advisors or consultants in its
search for opportunities, it may be necessary for the Company to attempt to
raise additional funds. As of the date hereof, the Company has not made any
arrangements or definitive agreements to use outside advisors or consultants or
to raise any capital. In the event the Company does need to raise capital, most
likely the only method available to the Company would be the private sale of its
securities. These possible private sales would more than likely have to be to
persons known by the director or other shareholders of the Company or to venture
capitalists that would be willing to accept the substantial risks associated
with investing in a company with limited history, no current operations and
nominal capital.
Because of the nature of the Company as a development stage company, it is
unlikely that it could make a public offering of securities or be able to borrow
any significant sum from either a commercial or private lender. Management will
attempt to acquire funds or financing, if necessary, on the best available
4
terms. However, there can be no assurance that the Company will be able to
obtain additional funding or financing when and if needed, or that such funding,
if available, can be obtained on terms reasonable or acceptable to the Company.
Although not presently anticipated, a possibility exists that the Company would
offer and sell additional securities to its existing shareholders or their
affiliates or possibly even "accredited investors."
Risks of Penny Stock Investing
The Company's common stock is considered to be a "penny stock" because it meets
one or more of the definitions in the Exchange Act Rule 3a51-1, a Rule made
effective on July 15, 1992. These include but are not limited to the following:
(i) the stock trades at a price less than five dollars ($5.00) per share; (ii)
it is NOT traded on a "recognized" national exchange; (iii) it is NOT quoted on
the NASD's automated quotation system (NASDAQ), or even if so, has a price less
than five dollars ($5.00) per share; OR (iv) is issued by a company with net
tangible assets less than $2,000,000, if in business more than three years
continuously, or $5,000,000, if in business less than a continuous three years,
or with average revenues of less than $6,000,000 for the past three years. The
principal result or effect of being designated a "penny stock" is that
securities broker-dealers cannot recommend the stock but must trade in it on an
unsolicited basis.
Risks Related to Broker-Dealer Requirements Involving Penny Stocks / Risks
Affecting Trading and Liquidity
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2
promulgated thereunder by the Commission require broker-dealers dealing in penny
stocks to provide potential investors with a document disclosing the risks of
penny stocks and to obtain a manually signed and dated written receipt of the
document before effecting any transaction in a penny stock for the investor's
account. These rules may have the effect of reducing the level of trading
activity in the secondary market, if and when one develops.
Potential investors in the Company's common stock are urged to obtain and read
such disclosure carefully before purchasing any shares that are deemed to be
"penny stock." Moreover, Commission Rule 15g-9 requires broker-dealers in penny
stocks to approve the account of any investor for transactions in such stocks
before selling any penny stock to that investor. This procedure requires the
broker-dealer to (i) obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Pursuant to the
Penny Stock Reform Act of 1990, broker-dealers are further obligated to provide
5
customers with monthly account statements. Compliance with the foregoing
requirements may make it more difficult for investors in the Company's stock to
resell their shares to third parties or to otherwise dispose of them in the
market or otherwise.
EMPLOYEES
The Company currently has one part time employee. We expect to hire from time to
time, independent consultants and contractors during the stages of implementing
our plans.
ITEM 2. PROPERTY
Administrative operations are conducted from the offices of a consulting firm
known as Brave Consulting located at Mr. Roff's offices in Toronto, Canada. We
expect to operate for as long as possible from these offices to minimize
operating expenses. We do not currently pay rent for these offices and do not
anticipate paying rent to Mr. Roff or Brave Consulting for any such offices in
the future. Our operations do not currently require office or laboratory space
to meet our objectives, and therefore administration from these offices is
sufficient. At some point in the future, as may be necessary to implement and
carry our plans to engage in the oil and gas business, we may require additional
office space requiring rental expense, but we do not anticipate any such need
during the next six to nine months. We will however, incur common office
operating expenses such as telephone, office supplies, postage, etc.
ITEM 3. LEGAL PROCEEDINGS
See Item 1 of Part I hereof titled "Business" and Item 7 of Part II hereof
titled "Management's Discussion and Analysis or Plan of Operation" for a
detailed discussion of the Company's Bankruptcy Action.
The company is not currently aware of any legal proceedings or claims that the
company believes will have, individually or in the aggregate, a material adverse
effect on the company's financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
PREDECESSOR COMPANY
6
The Company's common stock was originally listed on the National Association of
Securities Dealers Automated SmallCap Market ("NASDAQ") as of November 17, 1994.
Following the downturn in sales and profits in 2001-2002, the Company no longer
met the listing criteria for NASDAQ's SmallCap Market and accordingly the
Company's stock was delisted to the OTC Bulletin Board ("OTC-BB") on September
16, 2002. Subsequent to the delisting, the Company did not file its Form 10-Q
for the quarter ended December 31, 2002 on a timely basis, and accordingly, the
Company's stock was delisted to the Pink Sheets on March 25, 2003.
SUCCESSOR COMPANY
The Company's stock is currently quoted on the Pink Sheets under the symbol
DWOG. The Company's trading ranges by quarter for fiscal 2003 and 2002 were as
follows:
High Low
Fiscal 2002
First Quarter $1.45 $0.65
Second Quarter $1.16 $0.40
Third Quarter $0.70 $0.35
Fourth Quarter $0.47 $0.05
Fiscal 2003
First Quarter $0.24 $0.12
Second Quarter $0.13 $0.01
Third Quarter $0.03 $0.002
Fourth Quarter $0.002 $0.0003
The Company has not paid cash dividends since inception. The Company intends to
retain all of its earnings, if any, for use in its business and does not
anticipate paying any cash dividends in the foreseeable future. The payment of
any future dividends will be at the discretion of the board of directors and
will depend upon a number of factors, including future earnings, the success of
the company's business activities, capital requirements, the general financial
condition and future prospects of the company, general business conditions and
such other factors as the board of directors may deem relevant.
As of October 16, 2003, we had approximately 423 holders of record of the
Successor Company's common stock.
RECENT SALES OF UNREGISTERED SECURITIES
On September 10, 2003, the Company issued 2 million shares of common stock to
Mr. David Roff pursuant to the Bankruptcy Order. For financial statement
purposes, the Company has shown 6,165,233 shares of common stock issued and
outstanding. This incorporates the additional 4 million shares that are to be
issued by the Company as ordered by the Bankruptcy Court.
7
ITEM 6. SELECTED FINANCIAL DATA
The Company emerged from Chapter 11 proceedings with no assets and no
liabilities and a new plan of operation. Upon emergence from Chapter 11
proceedings on September 10, 2003, we adopted fresh-start reporting in
accordance with the American Institute of Certified Public Accountants Statement
of Position 90-7, Financial Reporting By Entities in Reorganization Under the
Bankruptcy Code. The Company has included selected financial data for the
Successor Company. The following selected financial data should be read in
conjunction with the consolidated financial statements and related notes
included elsewhere in this Form 10-K.
Deep Well Oil & Gas, Inc.
(Development Stage Company)
Selected Financial Data
Period Sep. 10 -
Sep. 30
2003
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS DATA:
Revenue $ --
Expenses $ 50,000
Net loss $ (50,000)
Net loss per share - basic and diluted $ (0.01)
Weighted average outstanding shares 6,165,233
Sep. 30
2003
- --------------------------------------------------------------------------------
BALANCE SHEET DATA:
Total assets $--
Total debt $--
Stockholders' equity $--
- --------------------------------------------------------------------------------
8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
All statements contained herein that are not historical facts, including, but
not limited to, statements regarding the Company's current business strategy,
the Company's projected sources and uses of cash, and the Company's plans for
future development and operations, are based upon current expectations. These
statements are forward-looking in nature and involve a number of risks and
uncertainties. Actual results may differ materially. Among the factors that
could cause actual results to differ materially are the following: the
availability of sufficient capital to finance the Company's business plans on
terms satisfactory to the Company; competitive factors; changes in labor,
equipment and capital costs; changes in regulations affecting the Company's
business; future acquisitions or strategic partnerships; general business and
economic conditions; and factors described from time to time in the reports
filed by the Company with the Securities and Exchange Commission. The Company
cautions readers not to place undue reliance on any such forward-looking
statements, which statements are made pursuant to the Private Litigation Reform
Act of 1995 and, as a result, are pertinent only as of the date made.
REORGANIZATION
On February 19, 2003, the Company filed a Petition for Relief under Chapter 11
of the U.S. Bankruptcy Code in the United States Bankruptcy Court in and for the
Eastern District of New York titled In re: Allied Devices Corporation, et al.,
Chapter 11, Case No. 03-80962-511 ("the Bankruptcy Action").
On July 23, 2003, a Liquidating Plan of Reorganization ("Plan") was filed and
submitted to the Bankruptcy Court for the Court's approval. See Exhibit 2.1
attached hereto, a full and complete copy of such Plan. See also Form 8-K/A
filed by the Company on November 25, 2003 for additional information.
On September 10, 2003, after notice to all creditors and a formal hearing, U.S.
Bankruptcy Judge Melanie L. Cyganowski issued an "Order Confirming Liquidating
Plan of Reorganization" in the Bankruptcy Action (hereinafter "Bankruptcy
Order"). In conjunction with that Bankruptcy Order, the Company's liabilities,
among other things, were paid off and extinguished. See Exhibit 2.2 attached
hereto and incorporated by reference, a full and complete copy of such
Bankruptcy Order.
The Bankruptcy Order, among other things, implements a change of control whereby
Champion Equities, a Utah limited liability company ("Champion"), a Mr. David
Roff, of Toronto, Canada ("Roff"), and a group of new investors, took control of
the Company. The principal provisions of the Plan, which are authorized and
implemented by the Bankruptcy Order, are the following, which is not an
exhaustive list thereof:
9
a) the termination of present management and the present Board of Directors
and appointment of Mr. David Roff in their place and stead;
b) giving a Utah entity known as Champion Industries ("Champion"), the power
and authority to appoint such other directors, in addition to Mr. Roff, as
Champion, in its sole discretion deems appropriate;
c) the reverse split of the Company's common capital stock 1-for-30 on the
basis of 5,048,782 shares issued and outstanding immediately prior to the
Bankruptcy Order;
d) authorizing Champion to amend the Company's Articles of Incorporation and
Bylaws to (i) effect a quasi-reorganization for accounting purposes, (ii)
provide the maximum indemnification or other protections to the Company's
officers and directors that is allowed under applicable law, (iii) conform
to the provisions of the Plan and the corollary Confirmation Order, (iv)
set the authorized stock of the Company, post-reverse split, at fifty
million (50,000,000) common capital shares; and (v) take all action
necessary and appropriate to carry out the terms of the Plan;
e) authorizing Champion, without solicitation of or notice to shareholders, to
issue (i) 2,000,000 post-reverse split shares of the Company's common stock
to the Company's new management, and (ii) 4,000,000 post-reverse split
shares, legend free, in the sole and unfettered discretion of Champion;
f) the Company's Board of Directors, was authorized, without seeking or
obtaining shareholder approval to take any and all actions necessary or
appropriate to effectuate amendments to the Company's Certificate of
Incorporation and/or Bylaws called for under the Plan and the Company's
Board of Directors and officers was authorized to execute, verify,
acknowledge, file and publish any and all instruments or documents that may
be required to accomplish the same; and
g) the Company's charter is to be amended in conformance with applicable
bankruptcy rules and the amended charter or bylaws shall, among other
provisions, authorize the issuance of any new shares while simultaneously
prohibiting the issuance of nonvoting equity securities to the extent
required by section 1123(a)(6) of the United States Bankruptcy Code.
After the entry of the Bankruptcy Order, the Company drafted and submitted a
form of Restated and Amended Articles of Incorporation to the Secretary of State
of Nevada implementing the foregoing, including but not limited to other
provisions required of the Company under the Bankruptcy Order.
As a result of the Bankruptcy Order giving Mr. Roff the power and authority to
change the Company's name and direction, we decided to change our name from
"Allied Devices Corporation" to "Deep Well Oil and Gas, Inc." Accordingly, in
the form of Restated and Amended Articles of Incorporation filed with the State
of Nevada in October, we changed our name to "Deep Well Oil and Gas, Inc." Our
form of Restated and Amended Articles of Incorporation was accepted by the
Nevada Secretary of State on October 22, 2003, pursuant to provisions of Nevada
10
corporate law allowing the amending of corporate articles on the basis of orders
entered by U.S. Bankruptcy Courts. A complete copy of our accepted form of
Restated and Amended Articles of Incorporation, signed by Mr. Roff and stamped
by the Nevada Secretary of State, is attached hereto as Exhibit 3.1.
Prior to the Bankruptcy Order adopting the Liquidating Plan of Reorganization,
there were 5,048,782 outstanding shares of our common stock. Following the
Bankruptcy Order and the acceptance by the Nevada Secretary of State of our form
of Restated and Amended Articles which implements the 1-for-30 reverse split of
our shares, and rounding up any fractional shares to the nearest share and also,
after the issuance of 2 million shares to Mr. Roff as ordered by the Bankruptcy
Court, there are now 2,165,233 issued and outstanding shares of the Registrant's
common stock. For financial statement purposes, the Company has shown 6,165,233
shares of common stock issued and outstanding. This incorporates the additional
4 million shares that are to be issued by the Company as ordered by the
Bankruptcy Court.
PLAN OF OPERATION
The Company is no longer operating as Allied Devices Corporation, the
Predecessor Company, and has emerged from Chapter 11 protection as a development
stage company with no assets and liabilities. Accordingly, the Company has
prepared this Plan of Operations to discuss its current plans. The past results
of the Predecessor Company are no longer relevant to the operations of the
Company.
As a result of the Bankruptcy Order and the implementation of the Liquidating
Plan of Reorganization, we are currently headquartered in Toronto, Canada at the
address set forth above. We intend to enter into the oil and gas exploration
business once our restructuring is completed. At this time, we presently intend
to look for properties or projects involving "heavy oil" projects. "Heavy oil"
is a dark black, viscous oil that does not flow well and which has a high carbon
to hydrogen ratio, along with a high amount of carbon residues, asphaltenes,
sulphur, nitrogen, heavy metals, aromatics and/or waxes.
Heavy oil is younger in age than the typical oil people are familiar with. It is
found at relatively shallow depths in the earth where there is not as much heat
and pressure. In this regard, reference is made the website "Heavyoil.com". As
the world's oil supplies become depleted, we believe that there will be more
reliance on heavy oil. No assurance can be made or given that we will
successfully engage in the oil and gas business or the heavy oil business, nor
can any assurance be given that even if we are remotely or relatively
successful, that we will have a profit or that our stock will appreciate in
value.
11
At this time, the Company is in discussions to acquire properties or projects
involving "heavy oil" projects. Reference is made to our Form 8-K/A filed on
EDGAR on November 25, 2003.
OFFICES
Administrative operations are conducted from the offices of a consulting firm
known as Brave Consulting located at Mr. Roff's offices in Toronto, Canada. We
expect to operate for as long as possible from these offices to minimize
operating expenses. We do not currently pay rent for these offices and do not
anticipate paying rent to Mr. Roff or Brave Consulting for any such offices in
the future. Our operations do not currently require office or laboratory space
to meet our objectives, and therefore administration from these offices is
sufficient. At some point in the future, as may be necessary to implement and
carry our plans to engage in the oil and gas business, we may require additional
office space requiring rental expense, but we do not anticipate any such need
during the next six to nine months. We will however, incur common office
operating expenses such as telephone, office supplies, postage, etc.
RAISING CAPITAL
The Company currently lacks the capital resources to implement and carry out its
business plan as described herein. Operations to date have involved
identification of properties and leases we wish to investigate for oil and gas
potential. We believe we have sufficient capital resources funded through
current shareholders to perform initial investigations in this regard. At some
point in the future we expect to raise additional capital, either through debt,
equity or any combination thereof. In the event that additional capital is
raised at some time in the future, existing shareholders will experience
dilution of their interest in the Company.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
12
SELLERS & ANDERSEN L.L.C.
- ---------------------------
Certified Public Accountants and Business Consultants
Member SEC Practice Section of the AICPA 941 East 3300 South, Suite 202
Salt Lake City, Utah 84106
Telephone 801 486-0096
Fax 801 486-0098
Board of Directors
Deep Well Oil & Gas, Inc.
Toronto, Ontario, Canada
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheet of Deep Well Oil & Gas, Inc.
(development stage company) at September 30, 2003 and the statements of
operations, stockholders' equity, and cash flows for the period September 10,
2003 to September 30, 2003. 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 auditing standards generally accepted
in the United States of America. 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 over all
financial statement presentation. We believe that our audits provide 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 Deep Well Oil & Gas, Inc. at
September 30, 2003 and the statements of operations, and cash flows for the
period September 10, 2003 to September 30, 2003 in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company will need additional
working capital for its planned activity, which raises substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are described in the notes to the financial statements. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Salt Lake City, Utah
December 18, 2003 s\Sellers & Andersen L.L.C.
13
Deep Well Oil & Gas, Inc.
(Development Stage Company)
Balance Sheet
September 30, 2003
- -------------------------------------------------------------------------------
Assets
Current assets
Cash $ --
- -------------------------------------------------------------------------------
Total current assets --
- -------------------------------------------------------------------------------
Total assets $ --
===============================================================================
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ --
- -------------------------------------------------------------------------------
Total current liabilities --
- -------------------------------------------------------------------------------
Total liabilities --
- -------------------------------------------------------------------------------
Stockholders' Equity
Common stock,
50,000,000 shares authorized at $.001 par value;
6,165,233 shares issued and outstanding 6,165
Capital in excess of par value 43,835
Deficit accumulated during the development stage -
dated September 10, 2003 - note 1 (50,000)
- -------------------------------------------------------------------------------
Total stockholders' equity --
- -------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ --
===============================================================================
The accompanying notes are an integral part of these financial statements
14
Deep Well Oil & Gas, Inc.
(Development Stage Company)
Statement of Operations
For the period September 10, 2003 to September 30, 2003
Revenue $ --
Expenses 50,000
- -------------------------------------------------------------------------------
Net loss $ (50,000)
===============================================================================
Net loss per share - basic and diluted $ (0.01)
===============================================================================
Weighted average outstanding shares 6,165,233
===============================================================================
The accompanying notes are an integral part of these financial statements
15
Deep Well Oil & Gas, Inc.
(Development Stage Company)
Statement of Changes in Stockholders Equity
Common Stock Capital in Total
--------------------------- Excess of Accumulated Stockholders'
Shares Amount Par Value Deficit Equity
-----------------------------------------------------------------------
Balance, September 10, 2003 165,233 165 (165) -- --
Issuance of common stock pursuant
to bankruptcy agreement
September 10, 2003 - notes 1 & 4 6,000,000 6,000 44,000 -- 50,000
Net operating loss for the period
September 10, 2003 to September 30, 2003 -- -- -- (50,000) (50,000)
-----------------------------------------------------------------------
Balance, September 30, 2003 6,165,233 $ 6,165 $ 43,835 $ (50,000) $ --
=======================================================================
The accompanying notes are an integral part of these financial statements
16
Deep Well Oil & Gas, Inc.
(Development Stage Company)
Statement of Cash Flows
For the period September 10, 2003 to September 30, 2003
Cash flows from operating activities
Net loss (50,000)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Issuance of common stock for expenses - note 1 50,000
- -------------------------------------------------------------------------
Net change in cash from operating activities -
- -------------------------------------------------------------------------
Cash flows from investing activities
- -------------------------------------------------------------------------
Cash flows from financing activities
- -------------------------------------------------------------------------
Net increase (decrease) in cash -
Cash, beginning of period -
- -------------------------------------------------------------------------
Cash, end of period -
=========================================================================
Schedule of non-cash operating activities
Issuance of 6,000,000 common shares pursuant to bankruptcy
agreement - expenses $ 50,000
The accompanying notes are an integral part of these financial statements
17
Deep Well Oil & Gas, Inc.
(Development Stage Company)
Notes to Financial Statements
1. ORGANIZATION
The Company, and its former subsidiaries, were engaged in the manufacture and
distribution of standard and custom precision mechanical assemblies and
components throughout the United States.
On February 19, 2003 the Company filed a petition for bankruptcy in the United
States Bankruptcy Court under Chapter 11 in the Eastern District of New York
titled "Allied Devices Corporation, Case No. 03-80962-511". The Company emerged
from bankruptcy pursuant to a Bankruptcy Court Order entered on September 10,
2003 with no remaining assets or liabilities.
The terms of the bankruptcy settlement included (1) a reverse common stock split
of 30 shares of outstanding stock for one share (2) increasing the authorized
common capital stock from 25,000,000 to 50,000,000 shares with a par value of
$.001 (3) a change in the name of the Company from "Allied Devices Corporation"
to "Deep Well Oil & Gas, Inc." (4) and the authorization for the issuance of
2,000,000 post split restricted common shares and 4,000,000 post split common
shares in exchange for $50,000, which was paid into the bankruptcy court by the
recipients of the shares.
Restated and amended articles of incorporation completing the terms of the
bankruptcy have been filed in the state of Nevada.
This report has been prepared showing the name "Deep Well Oil & Gas, Inc." and
the post split common stock, with $.001 par value, from inception. The
accumulated deficit has been restated to zero and dated September 10, 2003 with
the statement of operations to begin on that date.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
- ------------------
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
- ---------------
The Company has not yet adopted a policy regarding payment of dividends.
Financial and Concentrations Risk
- ---------------------------------
The Company does not have any concentration or related financial credit risk.
Income Taxes
- ------------
The Company utilizes the liability method of accounting for income taxes. Under
the liability method deferred tax assets and liabilities are determined based on
the differences between financial reporting and the tax bases of the assets and
18
liabilities and are measured using the enacted tax rates and laws that will be
in effect, when the differences are expected to reverse. An allowance against
deferred tax assets is recorded, when it is more likely than not, that such tax
benefits will not be realized.
On September 30, 2003, the Company had a net operating loss available for carry
forward of $50,000. The income tax benefit of approximately $15,000 from the
loss carry forward has been fully offset by a valuation reserve because the use
of the future tax benefit is undeterminable since the Company has no operations.
The loss carryover will expire in 2023.
Revenue Recognition
- -------------------
Revenue is recognized on the sale and delivery of a product or the completion of
a service provided.
Advertising and Market Development
- ----------------------------------
The company expenses advertising and market development costs as incurred.
Basic and Diluted Net Income (Loss) Per Share
- ---------------------------------------------
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equivalent shares outstanding as if shares had been issued on the
exercise of the preferred share rights unless the exercise becomes antidilutive
and then only the basic per share amounts are shown in the report.
Financial Instruments
- ---------------------
The carrying amounts of financial instruments are considered by management to be
their estimated fair values.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
Recent Accounting Pronouncements
- --------------------------------
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
19
3. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
An officer-director, or his controlled entity, has acquired 32% of the Company's
outstanding common capital stock.
4. COMMON CAPITAL STOCK
The outstanding common capital stock on February 19, 2003 (the date the Company
filed for bankruptcy) was 5,048,742 shares. As part of the settlement from the
bankruptcy the Company completed a reverse stock split, reducing the outstanding
shares to 165,233, and the rights to issue 6,000,000 post split common shares,
in exchange for $50,000, resulting in total outstanding shares of 6,165,233.
(note 1) On the report date the 6,000,000 shares were in the process of being
issued, and for reporting purposes the shares are shown as outstanding on
September 30, 2003.
5. GOING CONCERN
The Company intends to seek business opportunities that will provide a profit,
however, the Company does not have the working capital necessary to be
successful in this effort, which raises substantial doubt about its ability to
continue as a going concern.
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed a
strategy, which it believes will accomplish this objective through short term
related party loans, and equity funding, which will enable the Company to
operate for the coming year.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Effective March 20, 2003, BDO Seidman, LLP (the "Predecessor Accountant")
resigned as the independent auditors for the Company. Sellers and Andersen, LLC
(the "Successor Accountant") were appointed as the Company's new independent
accountants. The Company's Board of Directors approved this action on November
10, 2003. During the last two fiscal years ended September 30, 2002 and 2001 and
the subsequent periods to March 20, 2003 (i) there were no disagreements between
the Company and BDO Seidman, LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure which,
if not resolved to the satisfaction of BDO Seidman, LLP would have caused BDO
Seidman, LLP to make reference to the matter in its reports on the Company's
financial statements, and (ii) BDO Seidman, LLP's reports did not contain an
adverse opinion or a disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope, or accounting principles. During the last two most
recent fiscal years ended September 30, 2002 and 2001 and the subsequent periods
to March 20, 2003, there were no reportable events as the term described in Item
304(a)(1)(iv) of Regulation S-B. BDO Seidman, LLP's opinion in its report on the
Company's financial statements for the year ended September 30, 2002 and 2001,
expressed substantial doubt with respect to the Company's ability to continue as
a going concern.
20
The Company has not previously consulted with the Successor Accountant regarding
the application of accounting principles to a specific completed or contemplated
transaction or the type of audit opinion that might be rendered on the Company's
financial statements.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
Mr. David Roff, the Company's current President, CEO and CFO has
concluded, based on his evaluation as of a date within 90 days prior
to the filing of this report, that the Company's disclosure controls
and procedures are effective to ensure that information required to be
disclosed by the Company in the reports filed or submitted by it under
the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported as specified in the Securities and
Exchange Commission's rules and forms, and include controls and
procedures designed to ensure that information required to be
disclosed by the Company in such reports is accumulated and
communicated to the Company's management, as appropriate, to allow
timely decisions regarding required disclosure.
(b) Changes in internal controls over financial reporting.
Since the Company filed its Form 10-K for the year ended September 30,
2002, the Company has entered and emerged from Chapter 11 protection
under the U.S. Bankruptcy Code with a new board of directors and new
management. The Company contracted the past management of the Company,
including its CFO, to assist in the preparation of the financial
statements presented herein (for the Predecessor Company) and believes
that the control environment that existed to prepare this financial
information has not materially affected, or is not reasonably likely
to materially affect, our internal control over financial reporting.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The executive
officers and directors of the Company are as follows:
Name Age Position
David Roff 32 President, CEO, Chairman of the Board,
Sole Director and CFO
21
Brief biographies of the Executive Officers and Directors of the Company are set
forth below. All Directors hold office until the next Annual Stockholders'
Meeting or until their death, resignation, retirement, removal, disqualification
or until their successors have been elected and qualified. Vacancies in the
existing Board may be filled by majority vote of the remaining Directors.
Officers of the Company serve at the will of the Board of Directors. There are
no written employment contracts outstanding.
David Roff, age 32, is the co-president of a private consulting firm called
Brave Consulting. Brave Consulting invested in, started and manages four private
Internet companies. Mr. Roff has held this position since 2001. From 1998 until
2001, Mr. Roff founded and was vice president of an investor relations and
public relations firm. From 1995 until 1998, Mr. Roff was a management
consultant for Coopers & Lybrand Consulting where he advised large financial
institutions, mutual funds, pension funds and other organizations on technology,
internal control strategies and where he additionally provided computer audit
support. Mr. Roff has a Bachelor of Arts degree from the University of Western
Ontario located in London, Ontario. He is also a Canadian Chartered Accountant.
ITEM 11. EXECUTIVE COMPENSATION
No executive officer currently receives any cash compensation or other benefits
from the Company. Cash compensation amounts will be determined in the future
based on the services to be rendered and time devoted to the affairs of the
Company and the availability of funds. Other elements of compensation, if any,
will be determined at that time or at other times in the future.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of the shares of the
Company's Common Stock owned of record and beneficially by each person or entity
owning more than 5% of such shares and by all executive officers, officers and
directors, as a group at December 31, 2003:
Number of Shares Percentage of Shares
Name Beneficially Owned Beneficially Owned (1)
David Roff (2) 2,000,000 92.4%
All officers and directors
as a group (1 person) 2,000,000 92.4%
(1) Based on 2,165,233 common shares outstanding on December 31, 2003.
(2) The address for David Roff is c/o Deep Well Oil & Gas, Inc., 31 Walmer Rd.,
Suite 6, Toronto, Ontario, Canada, M5R 2W7.
22
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table is a summary of the fees billed to us by Sellers & Andersen,
LLC for professional services for the fiscal years ended September 30, 2003 and
September 30, 2002:
Fee Category Fiscal 2003 Fees Fiscal 2002 Fees
Audit Fees $4,075 -
Audit-Related Fees - -
Tax Fees - -
All Other Fees - -
- -
Total Fees $4,075 -
====== ===
Audit Fees. Consists of fees billed for professional services rendered
for the audit of our financial statements and review of the interim financial
statements included in quarterly reports and services that are normally provided
by Sellers & Andersen, LLC in connection with statutory and regulatory filings
or engagements.
Audit-Related Fees. Consists of fees billed for assurance and related
services that are reasonably related to the performance of the audit or review
of our consolidated financial statements and are not reported under "Audit
Fees." These services include employee benefit plan audits, accounting
consultations in connection with acquisitions, attest services that are not
required by statute or regulation, and consultations concerning financial
accounting and reporting standards.
Tax Fees. Consists of fees billed for professional services for tax
compliance, tax advice and tax planning. These services include assistance
regarding federal, state and international tax compliance, tax audit defense,
customs and duties, mergers and acquisitions, and international tax planning.
All Other Fees. Consists of fees for products and services other than
the services reported above. In fiscal 2003 and 2002, there were no other fees
other than as reported above.
23
PART IV
ITEM 15. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
o 2.1 - July 23, 2003, Liquidating Plan of Reorganization of Allied Devices
Corporation, now known as Deep Well Oil and Gas, Inc.
o 2.2 - September 10, 2003, Order and Plan of Reorganization of the U.S.
Bankruptcy Court in and for the Eastern District of New York, In re: Allied
Devices Corporation, Chapter 11, Case No. 03-80962-511
o 3.1 - Restated and Amended Articles of Incorporation filed with and
accepted by the Secretary of State of Nevada on October 22, 2003, changing
the name to "Deep Well Oil and Gas, Inc." and otherwise implementing the
Plan
o 31 - Certification of President and Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
o 32 - Certification of President and Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
REPORTS ON FORM 8-K
The Company has filed the following Form 8-K's since it filed a Form 10-K for
the year ended September 30, 2002 with the SEC on January 14, 2003:
o February 20, 2003 - Form 8-K filed to announce the Company's voluntary
filing for relief under Chapter 11 of the U.S. Bankruptcy Code.
o April 15, 2003 - Form 8-K filed with a press release announcing that the
Company's auditors had declined to continue as auditors of the Company and
that the Company intended at the time to wind down its operations and
liquidate its assets.
o November 18, 2003 - Form 8-K filed to announce the Company's emergence from
Chapter 11 of the U.S. Bankruptcy Code, the change in control of the
Company, the change in the Company's certifying accountant and the changes
in the Company's directors.
o November 25, 2003 - Form 8-K/A filed to amend the Company's discussion of
the change in the Company's certifying accountant.
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 thereunto duly authorized.
DEEP WELL OIL & GAS, INC.
(Registrant)
Dated: December 31, 2003 By: /s/ DAVID ROFF
-------------------
David Roff
President, CFO and Sole Director
24