6-K 1 v07654_6k.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A - 16 OR 15D - 16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month of September 2004 Assure Energy, Inc. -------------------------------------------------------------------------------- (Registrant's name) 521 3rd Avenue, S.W., Suite 800 Calgary, Alberta T2P 3T3 Canada -------------------------------------------------------------------------------- (Address of principal executive office) Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40F Form 20-F |X| Form 40-F |_| Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes |_| No |X| If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 1 TABLE OF CONTENTS 1. Stock option issuances to employees and consultants. 2. Appointment of placement agent for private offering of up to US$7,500,000. 3. Creation of board committees. 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. Dated: October 19, 2004 ASSURE ENERGY, INC. By: /s/ Harvey Lalach ------------------------------------- Name: Harvey Lalach Title: President 2 1. Stock option issuances to employees and consultants. Effective September 21, 2004 we issued an aggregate of 670,000 non-statutory stock options to various employees and consultants, including our president and chief executive officer, Harvey Lalach. Each option is exercisable for the purchase of a like number of shares of our common stock at an exercise price of $2.50 per share at any time, upon vesting, during the five year period ending September 20, 2009. The granted options vest in equal amounts each consisting of 1/4 of the total number of options granted on each of September 21, 2005; December 21, 2005; March 21, 2006; and June 21, 2006. 2. Appointment of placement agent for private offering of up to US$7,500,000. Effective September 23, 2004 we engaged Research Capital Corporation of Toronto, Canada as lead agent for a private placement of units and flow-through common shares to raise gross proceeds of up to approximately US$7,500,000. Each unit and flow-through share will be priced in the context of the market, but in any event no higher than the Canadian dollar equivalent of US$2.75 in the case of the units or US$3.25 in the case of the flow-through shares. Each unit will consist of one common share and one common share purchase warrant. Each warrant entitles the holder thereof to acquire one common share for a period of two years from closing at the Canadian dollar equivalent of US$3.25. The flow-through shares will compromise approximately 20-25% of the offering. The flow through shares are common shares under which we will renounce certain Canadian tax benefits to eligible holders of the flow through shares. The net proceeds of the offering will be used to fund the continued exploration and development of our oil and natural gas properties primarily in the Western Sedimentary Basin of Canada and for general working capital purposes. Closing is subject to normal closing conditions including obtaining required regulatory approvals and is expected to close in Toronto, Canada on or about December 15, 2004. The offering is also conditional on our achieving a listing on either the Toronto Stock Exchange or the TSX Venture Exchange but it is not conditional on a minimum amount of proceeds being raised. No assurance can be given as to timing or the amount of securities that may be sold. 3. Creation of board committees. Effective September 1, 2004 we approved the establishment of the following board committees: o Audit Committee o Compensation Committee o Oil and Gas Committee o Corporate Governance Committee 3

----------------------------------------------------------------------------------------------------- SIX MONTHS ENDED JUNE 30 % 2004 2003 CHANGE ----------------------------------------------------------------------------------------------------- OPERATIONS Production: Crude oil & NGL's (Bbl/d) 708 121 485 Natural gas (Mcf/d) 2,236 1,431 56 TOTAL (BOE/D) 1,081 360 201 Average sales prices: Crude oil ($/Bbl) $ 27.31 $ 25.73 6 Natural gas ($/Mcf) $ 4.71 $ 5.28 (11) Total ($/boe) $ 27.63 $ 29.69 (7) Royalty expense ($/ Boe) $ (6.46) $ (6.16) 5 Operating expense ($/ Boe) $ (8.64) $ (5.79) 49 Netback ($/ Boe) $ 12.52 $ 17.73 (29) WELLS DRILLED Gross 10 -- Net (bpo) 8 -- Success rate (percent) 90 -- FINANCIAL (UNAUDITED) (US$) Revenues: Crude oil & NGL's $ 3,520,895 $ 563,768 525 Natural gas 1,915,501 1,368,425 40 ----------------------------------------------------------------------------------------------------- 5,436,396 1,932,193 181 Royalty expenses (1,271,448) (400,996) 217 Operating expenses (1,700,773) (377,010) 351 ----------------------------------------------------------------------------------------------------- Net revenue from oil and gas production $ 2,464,175 $ 1,154,187 113 ----------------------------------------------------------------------------------------------------- NET LOSS $ 1,709,264 $ 898,620 90 ----------------------------------------------------------------------------------------------------- NET LOSS PER SHARE $ 0.12 $ 0.06 100 ----------------------------------------------------------------------------------------------------- CASH FLOW FROM OPERATIONS BEFORE CHANGES IN $ 268,863 $ 542,859 (50) WORKING CAPITAL ----------------------------------------------------------------------------------------------------- CAPITAL EXPENDITURES $ 6,086,899 $ 1,337,047 355 ----------------------------------------------------------------------------------------------------- WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 19,868,014 16,096,983 23 -----------------------------------------------------------------------------------------------------

================================================================================================================================ JUNE 30, 2004 DECEMBER 31, 2003 ================================================================================================================================ ASSETS (UNAUDITED) Current Assets: Cash $ 156,768 $ 3,569,889 Accounts receivable 2,741,301 2,547,460 Prepaid expenses 545,776 425,214 -------------------------------------------------------------------------------------------------------------------------------- Total current assets 3,443,845 6,542,563 Restricted cash 107,814 123,085 Investment in unconsolidated subsidiary 694,392 702,877 Oil and gas properties and other, net, using the full cost method of accounting, net of depletion and depreciation and including $3,067,358 and $1,151,851 of unproved properties excluded from costs being depleted and depreciated (note 4) 22,724,056 19,085,551 -------------------------------------------------------------------------------------------------------------------------------- $ 26,970,107 $ 26,454,076 ================================================================================================================================ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Demand bank loan (note 5) $ 4,934,623 $ 6,016,140 Accounts payable and accrued expenses 5,626,751 4,474,963 Advances from shareholders, unsecured, non-interest bearing, no fixed terms of repayment 325,000 - Debenture payable, net of debt discount $31,200 and $78,000 905,972 886,125 Current portion of long-term debt (note 6) 797,948 640,260 -------------------------------------------------------------------------------------------------------------------------------- 12,590,294 12,017,488 Deferred income tax payable 660,405 1,298,756 Long-term debt, net of debt discount $244,258 and $327,000 (note 6) 2,710,558 3,044,040 Asset retirement obligation 921,056 866,780 -------------------------------------------------------------------------------------------------------------------------------- 16,882,313 17,227,064 Minority interest in consolidated subsidiary 2,242,414 2,364,428 -------------------------------------------------------------------------------------------------------------------------------- Total Liabilities 19,124,727 19,591,492 -------------------------------------------------------------------------------------------------------------------------------- Commitments and contingencies (note 9) Stockholders' Equity (note 7): Preferred stock; 4,977,250 shares authorized - Series A; stated value $100, 5% cumulative dividend; 17,500 shares, issued and outstanding and Series B; stated value $100, 5% cumulative dividend, 5,250 shares authorized, issued and Outstanding 2,308,005 1,847,672 Common stock; $0.001 par value; 100,000,000 shares authorized; and 20,368,663 and 19,650,100 shares issued and outstanding, respectively 20,369 19,650 Additional paid-in capital 15,912,948 13,354,192 Accumulated other comprehensive income 1,606,699 1,817,779 Accumulated deficit (12,002,641) (10,176,709) -------------------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 7,845,380 6,862,584 -------------------------------------------------------------------------------------------------------------------------------- $ 26,970,107 $ 26,454,076 ================================================================================================================================

============================================================================================================================== 6 MONTHS ENDED JUNE 30, 2004 JUNE 30, 2003 ============================================================================================================================== (RESTATED - NOTE 2) NET OPERATING REVENUES: Oil and gas production, net of royalties $ 4,164,948 $ 1,557,375 ------------------------------------------------------------------------------------------------------------------------------ COSTS AND EXPENSES: Oil and gas operating expenses 1,700,773 377,010 General and administrative 2,107,364 559,667 Interest 469,541 413,246 Accretion 29,415 5,127 Depletion and depreciation 2,352,686 1,046,457 ------------------------------------------------------------------------------------------------------------------------------ 6,659,779 2,401,507 ------------------------------------------------------------------------------------------------------------------------------ LOSS BEFORE INCOME TAXES (BENEFIT) (2,494,831) (844,132) ------------------------------------------------------------------------------------------------------------------------------ INCOME TAX EXPENSE (BENEFIT): Current 44,327 - Deferred (577,808) 54,488 ------------------------------------------------------------------------------------------------------------------------------ (533,481) 54,488 ------------------------------------------------------------------------------------------------------------------------------ LOSS BEFORE MINORITY INTEREST AND EQUITY IN UNCONSOLIDATED SUBSIDIARY (1,961,350) (898,620) Minority interest in consolidated subsidiary 232,223 - Equity income in unconsolidated subsidiary 19,863 - ------------------------------------------------------------------------------------------------------------------------------ NET LOSS (1,709,264) (898,620) ------------------------------------------------------------------------------------------------------------------------------ Less preferred dividends on Class A and B preferred shares (116,668) - Less amortization of beneficial conversion feature on Series A and Series B Preferred Stock (460,333) - ------------------------------------------------------------------------------------------------------------------------------ NET LOSS ATTRIBUTED TO COMMON STOCK $ (2,286,265) $ (898,620) ============================================================================================================================== LOSS PER COMMON SHARE - BASIC AND DILUTED: NET LOSS PER COMMON SHARE $ (0.12) $ (0.06) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 19,868,014 16,096,983

========================================================================================================================= 6 MONTHS ENDED JUNE 30, 2004 JUNE 30, 2003 ========================================================================================================================= (RESTATED - NOTE 2) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (1,709,264) $ (898,620) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depletion and depreciation 2,352,686 1,066,682 Accretion charge 29,415 5,127 Amortization of debt discount 129,542 19,455 Warrants issued for interest - 181,260 Options and warrants issued for services - 127,500 Deferred income taxes (577,808) 41,455 Minority interest in consolidated subsidiary (232,223) - Equity income of unconsolidated subsidiary (19,863) - Stock compensation expense 153,973 - Interest paid through issuance of common stock 142,405 - Change in working capital items: Accounts receivable (265,058) (622,565) Prepaid expenses and other current assets (132,449) - Accounts payable and accrued expenses 1,618,687 (414,195) Accrued interest payable - 210,000 Income tax payable 21,092 76,957 ------------------------------------------------------------------------------------------------------------------------ Net cash provided by (used in) operating activities 1,511,135 (206,944) ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (6,086,899) (1,337,047) Contributions to restricted cash 11,830 (9,374) Purchase of available-for-sale securities - (138,108) ------------------------------------------------------------------------------------------------------------------------ Net cash used in investing activities (6,075,069) (1,484,529) ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from (repayment of) demand bank loan (913,330) - Proceeds from long-term debt, net of repayments - 4,500,000 Advances from shareholders 325,000 - Proceeds from sale of common stock 1,735,200 2,400,750 ------------------------------------------------------------------------------------------------------------------------ Net cash provided by financing activities 1,146,870 6,900,750 ------------------------------------------------------------------------------------------------------------------------ Effect of exchange rate changes on cash 3,943 1,570,513 ------------------------------------------------------------------------------------------------------------------------ Increase (decrease) in cash (3,413,121) 6,779,790 ------------------------------------------------------------------------------------------------------------------------ Cash, beginning of period 3,569,889 1,216,754 ------------------------------------------------------------------------------------------------------------------------ Cash, end of period $ 156,768 $ 7,996,544 ========================================================================================================================= Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 217,334 $ 231,986 ------------------------------------------------------------------------------------------------------------------------ Supplemental disclosure of non-cash financing activities: Common stock issued in payment of interest and principal on long term debt $ 327,862 $ - Common stock issued in payment of preferred share dividends $ 201,250 $ - Warrants exercised in payment of long term debt interest and principal $ 310,000 $ - Stock options and warrants issued for services $ - $ 127,500 ------------------------------------------------------------------------------------------------------------------------

========================================================================================================================== 6 MONTHS ENDED JUNE 30, 2004 JUNE 30, 2003 ========================================================================================================================== (RESTATED - NOTE 2) NET LOSS $ (1,709,264) $ (898,620) Foreign translation gain (loss), net of taxes (211,080) 1,434,045 --------------------------------------------------------------------------------------------------------------------------- COMPREHENSIVE INCOME (LOSS) $ (1,920,344) $ 535,425 ==========================================================================================================================

========================================================================================================================== PREFERRED STOCK COMMON STOCK --------------- ------------ SHARES AMOUNT SHARES AMOUNT ========================================================================================================================== Balance, December 31, 2003 22,750 $ 1,847,672 19,650,100 $ 19,650 Payment of preferred dividend - - 36,974 37 Exercise of warrants - - 100,000 100 Private placements - - 482,000 482 Payment of preferred dividends - - 21,135 21 Debt and interest conversion - - 53,769 54 Payment of interest - - 24,685 25 Stock compensation - - - - Amortization of beneficial conversion feature on Series A and Series B Preferred Stock - 460,333 - - Effect of subsidiary's equity transaction (note 3) - - - - Other comprehensive income - - - - Series A and Series B Preferred Share dividends - - - - Net loss - - - - -------------------------------------------------------------------------------------------------------------------------- Balance, June 30, 2004 22,750 $ 2,308,005 20,368,663 $ 20,369 ========================================================================================================================== ================================================================================================================================= OTHER TOTAL ADDITIONAL ACCUMULATED COMPREHENSIVE STOCKHOLDERS' PAID IN CAPITAL DEFICIT INCOME EQUITY ================================================================================================================================= Balance, December 31, 2003 $ 13,354,192 $ (10,176,709) $ 1,817,779 $ 6,862,584 Payment of preferred dividend 113,713 - - 113,750 Exercise of warrants 309,900 - - 310,000 Private placements 1,734,718 - - 1,735,200 Payment of preferred dividends 87,479 - - 87,500 Debt and interest conversion 225,238 - - 225,292 Payment of interest 102,545 - - 102,570 Stock compensation 153,973 - - 153,973 Amortization of beneficial conversion feature on Series A and Series B Preferred Stock (460,333) - - - Effect of subsidiary's equity transaction (note 3) 291,523 - - 291,523 Other comprehensive income - - (211,080) (211,080) Series A and Series B Preferred Share dividends - (116,668) - (116,668) Net loss - (1,709,264) - (1,709,264) --------------------------------------------------------------------------------------------------------------------------------- Balance, June 30, 2004 $ 15,912,948 $ (12,002,641) $ 1,606,699 $ 7,845,380 =================================================================================================================================

JUNE 30, 2004 DEC. 31, 2003 ========================================================================================================= Oil and natural gas properties: Proved oil and gas properties $ 22,891,433 $ 20,541,735 Unproved properties not subject to amortization 3,067,358 1,151,851 Facilities and equipment 10,426,852 8,707,060 Accumulated depletion and depreciation (13,687,085) (11,343,115) --------------------------------------------------------------------------------------------------------- Net oil and gas properties 22,698,558 19,057,531 --------------------------------------------------------------------------------------------------------- Other: Furniture and fixtures 87,821 81,627 Accumulated amortization (62,323) (53,607) --------------------------------------------------------------------------------------------------------- Net other property and equipment 25,498 28,020 --------------------------------------------------------------------------------------------------------- ========================================================================================================= Oil and gas properties and other, net of accumulated depletion and $ 22,724,056 $ 19,085,551 amortization =========================================================================================================

NUMBER OF SHARES AMOUNT ============================================================================================== Balance December 31, 2003 19,650,100 $ 19,650 Payment of dividend on preferred shares 36,974 37 Exercise of warrants 100,000 100 Private placement 482,000 482 Payment of dividend on preferred shares 21,135 21 Payment of principal on long term debt 53,769 54 Payment of principal on long term debt 12,377 13 Payment of principal on long term debt 12,308 12 ---------------------------------------------------------------------------------------------- Balance June 30, 2004 20,368,663 $ 20,369 ==============================================================================================

WEIGHTED AVERAGE NUMBER OF WARRANTS EXERCISE PRICE ===================================================================================================== Balance December 31, 2003 10,036,400 $ 0.92 Exercised in payment of interest (100,000) $ 3.10 Issued in connection with private placement 482,000 $ 4.00 Issued in connection with investor relation services 60,000 $ 4.05 ----------------------------------------------------------------------------------------------------- Balance June 30, 2004 10,478,400 $ 1.50 =====================================================================================================

==================================================================================================================== SIX MONTHS ENDED JUNE 30 TOTAL INCLUSION ASSURE 2004 2003 CHANGE OF QUARRY O&G ==================================================================================================================== OPERATIONS Production: Crude oil & NGL's (bbls/d) 708 121 587 616 (29) Natural gas (mcf/d) 2,236 1,431 805 893 (88) TOTAL (BOE/D) 1,081 360 721 765 (43) Average sales prices: Crude oil ($/bbl) $27.31 $25.73 $1.58 Natural gas ($/mcf) $4.71 $5.28 $(0.57) Total ($/boe) $27.63 $29.69 $(2.06) Royalty expense ($/ boe) $(6.46) $(6.16) $(0.30) Operating expense ($/ boe) $(8.64) $(5.79) $(2.85) Netback ($/ boe) $12.52 $17.73 $(5.21) FINANCIAL - ( UNAUDITED) (US$) Revenues: Crude oil & NGL's $3,520,895 $563,768 $2,957,127 $3,165,777 $(208,650) Natural gas 1,915,501 1,368,425 547,076 750,931 (203,855) -------------------------------------------------------------------------------------------------------------------- Total revenues from oil and gas production 5,436,396 1,932,193 3,504,203 3,916,708 (412,505) Royalty expenses (1,271,448) (400,996) (870,452) (925,697) 55,245 Operating expenses (1,700,773) (377,010) (1,323,763) (1,430,714) 106,951 -------------------------------------------------------------------------------------------------------------------- Net revenues from oil and gas production 2,464,175 1,154,187 1,309,988 1,560,297 (250,309) Interest income -- 26,178 (26,178) -- (26,178) General and administrative (2,107,364) (559,667) (1,547,697) (457,397) (1,090,300) Interest expenses (469,541) (413,246) (56,295) (191,273) 134,978 Accretion (29,415) (5,127) (24,288) (22,245) (2,043) Depletion and depreciation (2,352,686) (1,046,457) (1,306,229) (1,572,578) 266,349 Income taxes 533,481 (54,488) 587,969 221,702 366,267 Minority interest 232,223 -- 232,223 232,223 -- Equity income in unconsolidated subsidiary 19,863 -- 19,863 19,863 -- -------------------------------------------------------------------------------------------------------------------- NET LOSS $(1,709,264) $(898,620) $(810,644) $(209,408) $(601,236) ====================================================================================================================

======================================================================================================== SIX MONTHS ENDED JUNE 30 CHANGE 2004 2003 ======================================================================================================== Net income after adjustment for non-cash items $ 268,863 $ 542,859 $ (273,996) Reduction (increase) in working capital 1,242,272 (749,803) 1,992,075 -------------------------------------------------------------------------------------------------------- Provided by operating activities 1,511,135 (206,944) 1,718,079 Used in investing activities (6,075,069) (1,484,529) (4,590,540) Provided by financing activities 1,146,870 6,900,750 (5,753,880) Effect of exchange rate changes on cash 3,943 1,570,513 (1,566,570) -------------------------------------------------------------------------------------------------------- NET CHANGE IN CASH $ (3,413,121) $ 6,779,790 $ (10,192,911) ========================================================================================================

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