CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM PROPHETIC … · Name: Copy No. CONFIDENTIAL PRIVATE...
Transcript of CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM PROPHETIC … · Name: Copy No. CONFIDENTIAL PRIVATE...
Name: Copy No.
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM
PROPHETIC OIL INC. $52,500,000
35,000,000 Common Shares
Par Value $0.00001 Per Share
$1.50 Per Share
Minimum Investment 4,000 shares ($6,000.00)
Prophetic Oil, Inc., a Nevada corporation (the “Company”), is offering 35,000,000 Common Shares, par value
$0.00001 per share (the “Shares”), at an offering price of $1.50 per share, for a period of 180 days from the date of
this Memorandum (the “Offering Period”), which period may be extended for an additional 90 days at the sole
discretion of the Company. (See “DESCRIPTION OF SECURITIES”)
The Shares are being offered by the Company through its officers and directors on a 35,000,000 Share “Best
Efforts” basis, pursuant to a non-public offering exemption from the registration requirements imposed by the
Securities Act of 1933, as amended. (“1933 Act”) The Shares may also be offered and sold through Broker-Dealers
(“Participating Broker-Dealers”) who are members of the National Association of Securities Dealers, Inc. (“NASD”)
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE 1933 ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED
TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE
SUBSTANTIAL DILUTION AND SHOULD ONLY BE PURCHASED BY THOSE WHO CAN AFFORD
TO LOSE THEIR INVESTMENT IN ITS ENTIRETY. (SEE “RISK FACTORS” AND “DILUTION”)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT, OR ANY OTHER
APPLICABLE SECURITIES LAW. THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE OFFERED TO “ACCREDITED INVESTORS” PURSUANT TO THE
NON-PUBLIC OFFERING EXEMPTION FROM REGISTRATION WITH THE SECURITIES AND
EXCHANGE COMMISSION PROVIDED BY RULE 506 OF REGULATION D UNDER THE
SECURITIES ACT AND RULE 144A UNDER THE SECURITIES ACT.
Offering
Price to Public
Underwriting Discounts
and Commissions (1)
Proceeds to the
Company (1) (2) (3)
Per Share
Total
$1.50
$52,500,000
$0.15
$5,250,000
$1.35
$47,250,000
See footnotes on Page 2.
PROPHETIC OIL INC. 1717 ANGEL PARKWAY
SUITE #136
ALLEN, TEXAS 75002
(214) 585-0524
(877) 645-4772
EMAIL: [email protected]
THE DATE OF THIS MEMORANDUM IS AUGUST 1, 2013
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(1) Includes a 10% sales commission payable to Participating Broker-Dealers (“Participating
Broker- Dealers”) based upon the gross proceeds from any sales made through the efforts
of such firms or their representatives. The Company has not entered into any agreement
with any Participating Broker-Dealers as of the date of this Memorandum. In connection
with any future engagement by the Company of Participating Broker-Dealers, the
Company may agree to indemnify Participating Broker-Dealers against certain liabilities,
including liabilities under the 1933 Act.
(2) Before deducting expenses of the Offering, currently estimated to be $5,000, including
legal and accounting fees, printing expenses, Blue Sky filing fees and other expenses.
(3) There is no minimum amount of Shares that the Company is required to sell prior to
using the proceeds received from a sale of Shares and none of the proceeds of this
Offering will be placed in an escrow account. Accordingly, all proceeds from the sale of
any of the Shares shall be provided directly to the Company to be used for the purposes
described in this Memorandum.
The Shares will be offered by the Company through its officers and directors and, upon engagement, through
broker-dealers that are members of the National Association of Securities Dealers, Inc., on a “Best Efforts” basis, for
a period of 180 days from the date of this Memorandum. This period may be extended for an additional 90 day
period at the sole discretion of the Company. Payment for the Shares offered hereby should be made payable to the
order of “Prophetic Oil Inc.”. Any subscriptions received by Participating Broker-Dealers on behalf of the
Company will be transmitted to the Company by noon on the next business day following receipt.
NO DEALER, SALESMAN OR OTHER PERSON UNAFFILIATED WITH THE COMPANY HAS BEEN
AUTHORIZED BY THE COMPANY TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THIS PRIVATE PLACEMENT MEMORANDUM IN CONNECTION
WITH THE OFFERING DESCRIBED HEREIN AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY, ANY
ONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS MEMORANDUM, NOR ANY SALES MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
THE COMPANY HAS AGREED TO MAKE AVAILABLE TO EACH OFFEREE OF THE SECURITIES OR HIS
ADVISOR(S) OR BOTH, THE OPPORTUNITY TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM,
THE COMPANY OR ANY PERSONS ACTING ON ITS BEHALF CONCERNING THE TERMS AND
CONDITIONS OF THIS OFFERING AND TO OBTAIN ANY ADDITIONAL INFORMATION, TO THE
EXTENT THAT THE COMPANY POSSESSES SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT
UNREASONABLE EFFORT OR EXPENSE, NECESSARY TO VERIFY THE ACCURACY OF THE
INFORMATION SET FORTH HEREIN. OFFEREES OR ADVISORS DESIRING SUCH ADDITIONAL
INFORMATION SHOULD CONTACT THE COMPANY, PROPHETIC OIL, INC., 1717 ANGEL PARKWAY,
SUITE #136, ALLEN, TEXAS 75002. THE TELEPHONE NUMBERS ARE (214) 385-0524 AND (877) 645-
4772. THE EMAIL ADDRESS IS [email protected]
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PROPHETIC OIL INC.
TABLE OF CONTENTS
Page
Summary of the Offering 5
The Capital Offering 6
Risk Factors 7
Use of Proceeds 10
Dilution 11
Business 11
Mission Statement 13
Competition 13
Regulation 14
Management 14
Principal Stockholders 15
Description of Capital Stock 16
Terms of the Offering 16
Exit Strategy 16
Dividends 17
Litigation 17
Additional Information 17
Information for Residents of Certain States 17
Suitability Information 19
Subscription Agreement 23
Accredited Investor Status 27
AUGUST 1, 2013
No dealer, salesman or any other person has been authorized in connection with this Offering to give any
information or to make any representations other than those contained in this Offering and, if given or
made, such information or representations must not be relied upon as having been made or authorized by
the Company. This Offering does not constitute an offer or a solicitation in any jurisdiction to any person
to whom it is unlawful to make such an offer or solicitation. Neither the delivery of this Offering nor, any
sale made hereunder shall, under any circumstances, create an implication that there has been no change
in the circumstances of the Company or the facts herein.
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THE SECURITIES OFFERED HEREIN HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
REGISTERED UNDER THE SECURITIES LAWS OF ANY STATE IN RELIANCE UPON EXEMPTIONS
FROM REGISTRATION AS PROVIDED IN APPLICABLE STATUTES. THE SALE OR OTHER
DISPOSITION OF THE SECURITIES IS RESTRICTED AND THE EFFECTIVENESS OF ANY SUCH SALE
OR OTHER DISPOSITION MAY BE CONDITIONED UPON RECEIPT BY THE COMPANY OF AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE OR OTHER
DISPOSITION CAN BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND OTHER APPLICABLE STATUTES. BY ACQUIRING THE SECURITIES OFFERED
HEREIN, THE PURCHASERS REPRESENT THAT THEY WILL NOT SELL OR OTHERWISE DISPOSE OF
THE SECUREITES WITHOUT REGISTRATION OR OTHER COMPLIANCE WITH THE AFORESAID
STATUTES AND THE RULES AND REGULATIONS THEREUNDER. THESE SECURITIES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR ANY
STATE SECURITIES COMMISSIONER, AND NEITHER THE COMMISSION NOR ANY STATE
SECURITIES COMMISSIONER HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SALE OF SECURITIES WHICH ARE THE SUBJECT OF THIS MEMORANDUM HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND
THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFORE PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE
AND SECURITIES IS EXEMPT FROM THE QUALIFICATION BY VIRTUE OF §25100, 25102 OR 25105 OF
THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES AS DESCRIBED IN THIS
PROSPECTUS ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.
PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS OFFERING AS LEGAL,
TAX OR BUSINESS ADVICE. EACH INVESTOR SHOULD CONSULT HIS OWN COUNSEL,
ACCOUNTANT OR PURCHASE REPRESENTATIVE AS TO ANY LEGAL, TAX AND RELATED MATTERS
CONCERNING HIS INVESTMENT.
THIS OFFERING DOCUMENT CONSTITUTES AN OFFER ONLY TO THE PERSON WHOSE NAME
APPEARS IN THE APPROPRIATE SPACE PROVIDED ON THE COVER HEREOF. DELIVERY OF THIS
OFFERING DOCUMENT, OR ANY OTHER DOCUMENTS OR INFORMATION FURNISHED TO AN
OFFEREE, TO ANYONE OTHER THAN THE PERSON NAMED ON THE COVER HEREOF IS
UNAUTHORIZED, AND ANY REPRODUCTION HEREOF, IN WHOLE OR IN PART, OR ANY
DIVULGENCE OF THE CONTENTS HEREOF, IN WHOLE OR IN PART, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMPANY IS PROHIBITED. ANY PERSON ACTING CONTRARY TO THE
FOREGOING RESTRICTIONS MAY PLACE HIMSELF AND THE COMPANY IN VIOLATION OF
FEDERAL AND STATE SECURITIES LAWS. THE OFFEREE, BY ACCEPTING DELIVERY OF THIS
OFFERING, AGREES TO PROMPTLY RETURN TO THE COMPANY THIS OFFERING DOCUMENT AND
ANY OTHER DOCUMENTS OR INFORMATION FURNISHED TO HIM UPON REACHING A DECISION
NOT TO MAKE AN INVESTMENT IN THE COMPANY.
ANY OFFER TO PARTICIPATE IN THE SECURITIES DESCRIBED HEREIN SHALL ONLY BE MADE TO
QUALIFIED PERSONS BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY. THE PURPOSE OF
THIS MEMORANDUM IS TO PROVIDE THE PROSPECTIVE INVESTOR WITH THAT INFORMATION
WHICH THE COMPANY FEELS IS PERTINENT TO AN INFORMED INVESTMENT DECISION. IT IS
RECOGNIZED THAT ADDITIONAL INFORMATION MAY BE NEEDED BY THE PROSPECTIVE
INVESTOR TO FORM SUCH AN INVESTMENT DECISION.
THEREFORE, EACH PERSON TO WHOM AN OFFER IS MADE IS ENCOURAGED TO MAKE FURTHER
INQUIRY OF THE COMPANY TO SATISFACTORILY ANSWER ANY QUESTIONS. REQUESTS FOR
FURTHER INFORMATION SHOULD BE MADE TO THE COMPANY AND SUCH INFORMATION SHOULD
ONLY BE RELIED UPON WHEN FURNISHED IN WRITTEN FORM AND SIGNED BY A DULY
AUTHORIZED REPRESENTATIVE OF THE COMPANY.
THERE ARE VARIOUS MATERIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE COMPANY
WHICH POTENTIAL INVESTORS SHOULD CAREFULLY CONSIDER, INCLUDING, BUT NOT LIMITED
TO; THE RISK FACTORS SET FORTH IN THE SECTION HEADED “RISK FACTORS”.
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THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) DOES NOT PASS UPON THE
MERITS OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, OR DOES IT PASS UPON
THE ACCURACY OR COMPLETENESS OF OR GIVE ITS APPROVAL TO, ANY OFFERING
MEMORANDUM OR OTHER SELLING LITERATURE. THESE SECURITIES ARE OFFERED PURSUANT
TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION
HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED
HEREUNDER ARE EXEMPT FROM REGISTRATION. THE SECURITIES MAY NOT BE TRANSFERRED
BY THE INVESTOR IN THIS OFFERING IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNLESS THE PROSPECTIVE TRANSFEREE ESTABLISHES, TO THE SATISFACTION OF
THE COMPANY, THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE. (SEE “DESCRIPTION
OF SECURITIES”)
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH, OR APPROVED OR
DISAPPROVED BY, THE COMMISSION, NOR BY THE SECURITIES REGULATORY AUTHORITY OF
ANY STATE, NOR HAS ANY SUCH AUTHORITY PASSED UPON OR ENDORSED THE MERITS OF THIS
OFFERING OR THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
INVESTMENT IN THESE SECURITIES MAY NOT BE SUITABLE FOR INDIVIDUALS OR ENTITIES WHO
DO NOT MEET THE SUITABILITY REQUIREMENTS ESTABLISHED BY THE COMPANY, OR WHO
CANNOT AFFORD A NON-LIQUID, SPECULATIVE INVESTMENT. (SEE “RISK FACTORS” AND
“SUBSCRIPTION AND PLAN OF DISTRIBUTION.”)
SUMMARY OF THE OFFERING
This summary is qualified in its entirety by the detailed information appearing elsewhere in this
Memorandum dated August 1, 2013.
The Company
Prophetic Oil Inc. was organized under the laws of the State of Nevada on January 9, 2008, as amended.
Prophetic Oil Inc., is an initial stage oil exploration planning company that intends to, subject to obtaining
adequate resources, build a business to locate and drill for oil in Israel, the focus to be the Southwest end
of the Dead Sea and possibly other or replacement location(s). The Company needs to develop more plans
and relationships to advance its business and is in need of capital which it may or may not adequately
obtain. Our plans have changed and are subject to change but currently our main plan focuses on using
relationships to identify business candidates who may be possible partners, joint venture partners, or
parties to contract with that are already familiar the Israeli government and or are drilling or have some
form of drilling related rights, since it appears to difficult now for us to secure the necessary permits from
the Ministry of National Infrastructure (Israel) or appropriate regulatory agency there. We also continue
our efforts to obtain existing geological information from others, joint venture or contracts with others
who are located in Israel, and other steps being developed. Current plans and activities could be deemed a
continuation of a preliminary stage.
The Company has a limited operating history and revenues and must be considered a development stage
company. Prospective investors should be aware of the difficulties encountered by such enterprises, as
the Company faces all the risks inherent in any business, including competition, the absence of both a
long term operating history, limited profitability and the need for additional working capital. The
likelihood of the success of the Company must be considered in light of the problems and expenses that
are frequently encountered in connection with the operation of a business and the competitive
environment in which the Company will be operating.
The Company is not subject to informational requirements of the Securities and Exchange Act of 1934, as
amended. However, the Company intends to provide annual reports to stockholders that will include
audited financial statements. In addition, the Company intends to provide stockholders with other
pertinent information regarding the Company, as its development progresses.
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This offering is being made on a best efforts basis with no minimum amount required to affect a closing.
No refunds will be given, no matter how many Shares are sold. The proceeds from this offering will be
immediately available to the Company for expenditure as set forth in the “Use of Proceeds’. If less than
the maximum number of Shares offered hereby are sold, the Company may not have sufficient funds to
accomplish all objectives for which the offering is being undertaken and, consequently, the risk to the
early investors in this offering is significantly greater than to those investing later. It should also be noted
that the percentage of funds available for operating purposes decreases if less than the maximum offering
is received.
THE CAPITAL OFFERING
Securities Offered: A maximum of 35,000,000 Common Shares
Par Value $0.00001 Per Share. (the “Shares”)
Offering Price: $1.50 per Share
Minimum subscription: 4,000 Shares ($6,000.00)
Common Shares Currently Outstanding: 42,518,500 Shares
Common Shares Outstanding After Offering: 77,518,500 Shares (Maximum)(1)
Termination of Offering: January 28, 2014, unless extended by the
Company for an additional 90-day period.
_____________________
(1) Includes 35,000,000 Common Shares, assuming the maximum Offering is
completed.
RISK FACTORS
The Shares offered hereby involve a high degree of risk. Risk factors involving the Company and the
offering include, but are not limited to; limited operating history, need for additional working capital,
dependence on key personnel and senior management’s history of experience, immediate availability of
funds, lack of cash dividend, industry, product liability, assumptions, lack of underwriter, no commitment
to purchase shares, shares subject to Rule 144, immediate substantial dilution, arbitrary offering price,
other non public sales of securities, no assurance of liquidity, public will bear risk of loss, officer and
director control, use of proceeds not specific and other information.
USE OF PROCEEDS
The proceeds from this Offering will be used to defray administrative expenses, legal and consulting,
equipment purchases, oil leases, miscellaneous, offering costs, salaries, supplies and working capital.
DILUTION
Purchasers of the Shares offered hereby will experience immediate and substantial dilution in net tangible
book value of their purchase. In the event we offer additional Shares in the future, purchasers in the
Offering may experience further dilution in the net tangible book value.
RESTRICTION ON TRANSFERABILITY
The Shares offered hereby are restricted securities and none may be transferred or sold without
registration under the Securities Act of 1933, as amended, unless an exemption from such registration is
available.
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RISK FACTORS
A purchase of the Shares offered hereby involves a high degree of risk. Prospective investors should
carefully consider the following factors, among others set forth in this Confidential Private Placement
Memorandum dated August 1, 2013, before making a decision to purchase the Shares offered hereby.
Limited Operating History. Prophetic Oil, Inc. was organized under the laws of the State of Nevada
on January 9, 2008, as amended. Prophetic Oil Inc., is an initial stage oil exploration planning company
that intends to, subject to obtaining adequate resources, build a business to locate and drill for oil in Israel,
the focus to be the Southwest end of the Dead Sea and possibly other or replacement location(s). The
Company needs to develop more plans and relationships to advance its business and is in need of capital
which it may or may not adequately obtain. Our plans have changed and are subject to change but
currently our main plan focuses on using relationships to identify business candidates who may be
possible partners, joint venture partners, or parties to contract with that are already familiar the Israeli
government and or are drilling or have some form of drilling related rights, since it appears to difficult
now for us to secure the necessary permits from the Ministry of National Infrastructure (Israel) or
appropriate regulatory agency there. We also continue our efforts to obtain existing geological
information from others, joint venture or contracts with others who are located in Israel, and other steps
being developed. Current plans and activities could be deemed a continuation of a preliminary stage.
The Company is not profitable, with no guarantee it will be, and does not generate material revenues and
also it currently operates within cash flow restraints. It has, and may continue, to seek money in the form
of capital and possibly loans or otherwise. The Company has attempted and may continue its efforts to
obtain necessary funding by means of private investment, and/or additional funding. Inability to obtain
such needed investment or funding may affect the Company’s ability to continue operations.
Dependence upon Key Personnel and Senior Management’s History of Experience. The success of
the Company will be largely dependent upon the active participation of its Management’s personnel. The
loss of the services of key personnel could materially and adversely affect the business of the Company
and its future prospects. While the Management brings a wide variety of and substantial experience to the
Company, this experience is no assurance that the Company will be successful.
Immediate Availability of Funds. This Offering is being made on a “Best Efforts” basis with no
minimum amount required to affect a closing. No refunds will be given no matter how many Shares are
sold. The proceeds from this Offering will be immediately available to the Company for expenditure in
accordance with the “Use of Proceeds” section set forth in this document. If less than the full number of
Shares offered hereby are sold, the Company may not have sufficient funds to accomplish all objectives
for which this Offering is being undertaken and consequently, the risk to the early investors in this
Offering is significantly greater than to those investing later.
Need for Additional Working Capital. The Company anticipates that the proceeds from the sale of all
of the Shares offered will provide the capital requirements to implement the Company’s business plans
over the next twelve (12) months. If less than all of the Shares offered are sold or if the capital needs of
the Company are greater than currently anticipated, the Company will be required to seek other sources of
financing. No assurance can be given that the Company will sell any of the Shares offered or that other
financing will be available, if required; or if available, will be available on terms and conditions
satisfactory to management.
Lack of Cash Dividends. The Company has not paid any cash dividends on its Common Shares to date
and there are no plans for paying cash dividends in the foreseeable future. Initial earnings that the
Company may realize will be retained to finance the growth of the Company. Any future dividends, of
which there can be no assurance, will be directly dependent upon earnings of the Company, its financial
requirements and other factors.
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Lack of Financial Statements. The Company does not have any material financial statements since the
Company has a limited operating history and we have not consistently expended time and expenses to
obtain and maintain an accountant to assist us. The Company does not know when we will have financial
statements or an audit. Also to the extent financial statements, once prepared, are not audited, be
cautioned that, as to any financial statements, an audit of any such financials may result in different
results. The Company believes our operations and liquidity reflect ongoing lack of revenues and losses
and lack of material cash or cash equivalents since we mostly are expending funds on our business plan
and are not seeking revenues in the short term, among other reasons. The Company intends to have
financial statements prepared subsequent to this Offering, but all plans and intentions are subject to risks
and conditions such as the need for sufficient capital to pay for such work.
Product Liability. The Company presently does not maintain any product liability insurance and will
not secure such insurance until the Company deems it necessary. Ultimately, such coverage may be a
requirement under certain agreements. As a result of the Company’s limited operations to date, no
threatened or actual claims have been made upon the Company for product liability.
Immediate Substantial Dilution. Purchasers of the Shares offered hereby will experience immediate
and substantial dilution in net tangible book value of their purchase. In the event we offer additional
Shares in the future, purchasers in the Offering may experience further dilution in the net tangible book
value.
Competition. The oil and gas industry is highly competitive in many of the phases, with competition for
favorable land leases, licenses, and rights being key, coupled with scientific data and good contractors
knowing how to drill and assist. The Company believes that price, the markets, politics and geological
and geophysical skill and familiarity with the industry is important as well as the area of good operations.
Major oil companies, a number of which have substantially greater technical and financial resources than
the Company, may be competitors at some point as we proceed to develop the business. We have no
reserves. The limited success of larger firms, can be viewed as supportive that there may be significant
finds or success ahead in locating significant oil and gas, but only is indicative that it is not a guarantee
and is costly apart from risk.
Government Regulations. The Company is subject to applicable provisions of Federal and State
securities and other laws. Also, our intended success may be dependent in the future upon the application
of foreign laws and regulations such as Israel. Although we will endeavor to comply with applicable laws
and regulations, we can provide no assurance of compliance nor can we predict the effect of these or
future laws and regulations on proposed activities.
Lack of Underwriter - No Commitment to Purchase Shares. The Shares are being offered by the
Company through its officers and directors and, upon engagement, through qualified broker-dealers, on a
“Best Efforts” basis. However, no broker-dealer has been retained as an underwriter and no broker-dealer
is under any obligation to purchase any of the Shares. In addition, the officers and directors of the
Company collectively have limited experience in the offer and sale of securities on behalf of the
Company. Consequently, there is no assurance that the Company is capable of selling all, or any, of the
Shares offered. In addition, no entity, including any broker-dealer or the Company, has an obligation to
purchase any of the Shares offered. Subscribers will not be entitled to any refund of their subscriptions
during such 90 day period or any extension thereof.
Shares Subject to Rule 144. On July 31, 2013, the Company had 42,518,500 Common Shares, par
value $0.00001 per share, issued and outstanding that have not been registered with the Commission or
any State securities agency and which are currently restricted pursuant to Rule 144 promulgated by the
Commission under the 1933 Act. Rule 144 provides, in essence, that a person holding restricted
securities for six months from the date the securities were purchased from the issuer, or an affiliate of the
issuer and fully paid, may sell limited quantities of the securities to the public without registration,
provided there shall be certain public information with respect to the issuer.
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Pursuant to Rule 144, securities held by non-affiliates for more than three years may generally be sold
without reference to the current public information or broker transaction requirements, or the volume
limitations. None of the current outstanding restricted shares are available for resale pursuant to Rule 144.
The sale of some or all of the currently restricted Common Shares could have a material negative impact
upon the market price of the Common Shares if a market for the Common Shares should develop in the
future.
No Assurance of Liquidity. There is currently no public market for the Common Shares or any other
securities of the Company, and there can be no assurance that a trading market will develop in the future.
Furthermore, the Common Shares are “Restricted Securities” as that term is defined in Rule 144 under the
1934 Act and, as a result, cannot be resold without registration under the 1934 Act or an exemption from
registration. As a result, purchasers must bear the economic risk of their investments for an indefinite
period of time and may have difficulty in selling the Shares, if and when they decide to do so.
Arbitrary Offering Price. The offering price of the Shares offered hereunder has been arbitrarily
determined by the Company and bears no relationship to any recognized criterion of value. The price
does not bear any relationship to the assets, book value, earnings or net worth of the Company. In
determining the offering price, the Company considered such factors as the prospects, if any, for the
Company’s products within the industry, the previous experience of management, the technological
development with respect to the Company's products to date, the Company's historical and anticipated
results of operations, the present financial resources of the Company and the likelihood of acceptance of
the proposed offering in the current securities markets.
Other Non Public Sales of Securities. As part of the Company's plan to raise additional working
capital, the Company may make a limited number of offers and sales of its Shares to qualified investors in
transactions that are exempt from registration under the 1934 Act. Accordingly, such purchasers may
acquire an investment in the Company on terms more favorable than offered hereunder. Other offers and
sales of Common Shares may be at prices per share that are higher or lower than the price of the Shares in
this Offering. The Company reserves the right to set prices at its discretion, which prices need not relate
to any ascertainable criterion of value. There can be no assurance the Company will not make other
offers of its securities at a lower price, when, in the Company's discretion, such prices are deemed by the
Company to be reasonable under the circumstances.
Public Will Bear Risk of Loss. The capital required by the Company to accelerate their development
plans are being sought from the proceeds of this Offering. Therefore, investors hereunder will bear most
of the risk of the Company’s operations until such time as it attains greater profitability, if ever.
Furthermore, if management is successful in attaining its goals for utilization of the proceeds of this
offering, the Company may need additional working capital, of which there is no assurance of its ability
to raise such funds upon terms and conditions favorable to the Company.
Officer and Director Control. Under the terms of the Company's Articles of Incorporation, as amended
and filed with the Secretary of State of Nevada, with respect to the rights, preferences and limitations of
the Shares offered hereunder. Although the maximum number of Shares offered hereunder may be sold,
of which there is no assurance the present officers and directors of the Company will own 52.27% of the
issued and outstanding Common Shares, which are the only voting shares of the Company authorized by
the Company’s Articles of Incorporation. In the event that the maximum number of Shares offered is sold,
the purchasers in this offering will own 45.15% of the Company's Common Shares. As a result,
purchasers of the Shares will have only a limited voice in the Company's management.
Use of Proceeds Not Specific. The proceeds of this offering have been allocated only generally.
Proceeds from the offering have been allocated generally to administrative expenses, legal and consulting,
equipment purchases, oil leases, miscellaneous, offering costs, salaries, supplies and working capital.
Accordingly, investors will entrust their funds with management in whose judgment investors may
depend, with only limited information about management's specific intentions with respect to a significant
amount of the proceeds of this offering.
10
Possible Conflict of Interest. We may contract with affiliated parties or other companies or members of
Management of the Company or companies that members of Company Management own, or control.
These persons may obtain compensation and other benefits in transactions relating to the Company.
Company Management has other pursuits outside the business of the Company, since Management
services are not supplied on an exclusive basis, unless and until employment agreements are executed
providing for exclusive services, and so the attention and time of the officers may be on other businesses
separate from the Company. Notwithstanding this, all decisions concerning Company transactions will be
made in the sole discretion of Management.
Other Information. No dealer, salesman or other person unaffiliated with the Company has been
authorized by the Company to give any information or make any representations other than those
contained in this Confidential Private Placement Memorandum dated August 1, 2013, in connection with
this Offering and if given or made, such information or representations must not be relied upon as having
been authorized by the Company.
USE OF PROCEEDS
The net proceeds to be realized by the Company from this offering, after allowance for commissions to
Participating Broker-Dealers, if any and estimated expenses of the Company in connection with this
offering ($5,000), will be $47,250,000, if the maximum is sold. The following summary, based upon
management estimates, illustrates the manner in which the net proceeds of this offering are expected to be
applied and allocated over the ensuing twelve (12) months.
Proceeds from this offering that are not expended for the purposes outlined above may be allocated to
working capital of the Company and be available for any valid corporate purpose. Working capital may
be utilized for acquisition or development of other products, business assets, for payment of general and
administrative expenses, including marketing, advertising and compensation of officers and employees of
the Company.
APPLICATION
MAXIMUM
PERCENTAGE
Administrative Expenses (1) $204,000 0.43%
Legal & Consulting
Equipment Purchases
Oil Leases
Miscellaneous
Offering Costs
Salaries
Supplies
Working Capital
Total
50,000
5,000,000
28,500,000
500,000
5,000
500,000
1,750,000
10,741,000
$47,250,000
0.10%
10.58%
60.32%
1.06%
0.01%
1.06%
3.71%
22.73%
100.00% __________________
(1) Will include the costs associated with opening an executive office for the
Company. It will include all normal expenses, but not limited to electricity,
telephone, utilities and other office expenses.
Although these amounts indicate the Company’s present intentions for the use of the proceeds of this
Offering, actual expenditures may vary substantially from those indicated, depending upon economic
conditions and other factors, including the results of future operations. Although the Company estimates
that the proceeds of this Offering will be used over the next 12 months, due to the uncertainty of the
Company's future sales revenue, it is not possible to predict with certainty the date by which the proceeds
will be fully utilized. Pending the specific application of the proceeds of this Offering, they will be
invested in interest bearing obligations.
11
DILUTION
Purchasers of the Shares offered hereby will experience immediate and substantial dilution in net tangible
book value of their purchase. In the event we offer additional Shares in the future, purchasers in the
Offering may experience further dilution in the net tangible book value.
BUSINESS
Prophetic Oil Inc. was organized under the laws of the State of Nevada on January 9, 2008, as amended.
Prophetic Oil Inc., is an initial stage oil exploration planning company that intends to, subject to obtaining
adequate resources, build a business to locate and drill for oil in Israel, the focus to be the Southwest end
of the Dead Sea and possibly other or replacement location(s). The Company needs to develop more plans
and relationships to advance its business and is in need of capital which it may or may not adequately
obtain. Our plans have changed and are subject to change but currently our main plan focuses on using
relationships to identify business candidates who may be possible partners, joint venture partners, or
parties to contract with that are already familiar the Israeli government and or are drilling or have some
form of drilling related rights, since it appears to difficult now for us to secure the necessary permits from
the Ministry of National Infrastructure (Israel) or appropriate regulatory agency there. We also continue
our efforts to obtain existing geological information from others, joint venture or contracts with others
who are located in Israel, and other steps being developed. Current plans and activities could be deemed a
continuation of a preliminary stage.
The Company has a limited operating history and revenues and must be considered a development stage
company. Prospective investors should be aware of the difficulties encountered by such enterprises, as
the Company faces all the risks inherent in any business, including competition, the absence of both a
long term operating history, limited profitability and the need for additional working capital. The
likelihood of the success of the Company must be considered in light of the problems and expenses that
are frequently encountered in connection with the operation of a business and the competitive
environment in which the Company will be operating.
Prophetic Oil Inc., is an initial stage oil exploration planning company that intends to, subject to obtaining
adequate resources, build a business to locate and drill for oil in Israel, the focus to be the Southwest end
of the Dead Sea and possibly other or replacement location(s). The Company needs to develop more plans
and relationships to advance its business and is in need of capital which it may or may not adequately
obtain. Our plans have changed and are subject to change but currently our main plan focuses on using
relationships to identify business candidates who may be possible partners, joint venture partners, or
parties to contract with that are already familiar the Israeli government and or are drilling or have some
form of drilling related rights, since it appears to difficult now for us to secure the necessary permits from
the Ministry of National Infrastructure (Israel) or appropriate regulatory agency there. We also continue
our efforts to obtain existing geological information from others, joint venture or contracts with others
who are located in Israel, and other steps being developed. Current plans and activities could be deemed a
continuation of a preliminary stage.
Although there has been much speculation as to the existence of oil reserves in Israel, and we ourselves
are aware of critics who don't believe exploration is viable, Israel has an established regulatory structure
for oil and gas exploration. It is our belief that adequate sources support our opinion that Israel contains
much of the same type of hydrocarbon formations as the remainder of the productive Middle Eastern
countries.
Our Chief Executive Officer and founder believes that scientific, business and scripture based data
support the goal of the project to seek oil and gas in Israel. While personal beliefs and opinions motivate
many companies, building upon the vision of the founder, we intend to operate as a commercial business
in dealing with regulatory, legal, financial and operational matters.
12
Nevertheless, our foundation is the vision that Israel is a remarkable, though risky, opportunity for
potential exploration with significant potential, based upon the studies of our founder. (Recent news from
Israel indicates, in our opinion, oil and gas reserves may be present at commercial levels. While we could
try and gather and present such news to you, the reader, given the fact that such information is third party
sources, and we cannot independently verify or obtain clarifications, we leave to you the opportunity to
obtain or consider such outside information and its value, if any.)
There are companies working projects and sufficient public information exists, in our opinion, to support
our beliefs to pursue the venture.
The Company believes there is sufficient basis from both scientific and faith based information, opinions
and beliefs that we could, with sufficient capital and success in a variety of key areas, like governmental
in obtaining needed Israeli exploration licenses, be a candidate or participant in the Israeli oil and gas
exploration industry and potentially locate a significant historical amount of oil and gas.
The Company is currently developing a comprehensive plan to address the overall needs of our business
including, without limitation, operations, auditing, legal, acquisition of key advisors and also of assets
such as licenses, scientific support, and needed materials. Some portions of this Plan are underway, such
as identifying certain firms for certain work, such as a candidate for accounting work for us.
Oil and Gas Exploration
The Company is not currently undertaking oil and gas exploration. We hope to partner or contract with
others in Israel who are or who plan to do so. The oil and gas industry is highly competitive in many of
the phases, with competition for favorable land leases, licenses, and rights being key, coupled with
scientific data and good contractors knowing how to drill and assist. The Company believes that price,
the markets, politics and geological and geophysical skill and familiarity with the industry is important as
well as the area of good operations. Major oil companies, a number of which have substantially greater
technical and financial resources than the Company, may be competitors at some point as we proceed to
develop the business. We have no reserves. The limited success of larger firms, can be viewed as
supportive that there may be significant finds or success ahead in locating significant oil and gas, but only
is indicative that it is not a guarantee and is costly apart from risk.
Israel and the market regulate and or impacts pursuits relating to the exploration, development, production
and prices on the sale of oil and gas. Markets for, and value of, oil and gas, discovered, could be
dependent on such factors as regulation, including well spacing and production allowable, quotas, and
proximity of pipelines and price-fixing by governments, all of which are beyond our control.
The Company believes building our management team and advisors and proceeding carefully will help us
to develop a sound business plan and improve on the chances of success.
Management and Affiliated Transactions
The Company is strictly in the hands of Stanley E. Johnson. If all the shares in the Offering are sold Mr.
Johnson will be the beneficial owner of 51.60% of the common shares of the Company . Therefore, Mr.
Johnson can determine the use of proceeds, operations, and other matters of the Company. Mr. Johnson
is the Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President and Secretary of
the Company.
Mr. Johnson believes he has pinpointed 30 scriptures which indicate Israel could have more oil and gas
discovered in the future than in Saudi Arabia.
Based on faith, and his understanding of Biblical scriptures, Mr. Johnson believes he can work with
professionals to project the best place to drill and how deep to drill to find oil in Israel and seeks to
confirm this belief through scientific means.
13
Mr. Johnson's personal beliefs are not absolutes nor free from conflicts nor can assurance be given these
will prove accurate. We are subject to many risks and the need for capital. Drilling based upon, in whole
or part, biblical interpretation, is not industry customary, nor scientific based, as a matter of faith. Mr.
Johnson anticipates his management skills and planning on the potential future drilling will be based upon
a mix of advice from professionals, data, and other aspects which may be deemed typical industry guides
but also personal biblically based interpretations. Since we don't anticipate drilling ourselves at this time,
any drilling is also subject to both arrangements we may hopefully reach with others and the possible
success of others, things we can't control.
Important Note. The Company's business description incorporates opinions, beliefs, and other
subjective information, and is primarily a statement of forecast of our plans. Plans may change without
notice and should not be taken as if being fully accurate or a promise or representation. Often, our
discussion should be considered not as reflecting actual results or facts about our Company or any
representation or promise, but being plans subject to risks, without assurance of accuracy or eventual
success (you are, therefore, cautioned, given we are a new company under development subject to many
risks and on-going re-direction in the discretion of Management).
Apart from being subject to risks, our statements may also be forecasts or projections which may differ
from actual results.
Potential Conflict of Interest. Mr. Johnson, the Company's controlling shareholder has formed and is
developing a company called Debash Oil, Inc. ("Debash"). Debash has similar risks, plans and financial
picture (losses and needs capital). In establishing Debash, it is his belief that more than one company with
investors and similar plans, but separate from one another, is beneficial as part of an overall plan to attract
capital, build relationships, and advance the pursuits of exploring in Israel and related goals. Conflicts
apply in that determinations and efforts may overlap or be more focused at times on one rather than the
other company. It may be at some point the companies merge, or enter into more definitive agreements,
but at this time risks apply apart from the conflicts, and assurances do not exist but the Company has
entered into a Cooperative Agreement with Debash (simple document confirming a memorandum of
understanding) that supplies for sharing of information and relationships.
MISSION STATEMENT
Prophetic Oil Inc. seeks to develop an international company primarily focused on the establishment, by
joint venture, direct drilling, contracted third parties, or otherwise, of an Oil and Gas exploration and
drilling business in Israel.
COMPETITION
The oil and gas industry is highly competitive in many of the phases, with competition for favorable land
leases, licenses, and rights being key, coupled with scientific data and good contractors knowing how to
drill and assist. The Company believes that price, the markets, politics and geological and geophysical
skill and familiarity with the industry is important as well as the area of good operations. Major oil
companies, a number of which have substantially greater technical and financial resources than the
Company, may be competitors at some point as we proceed to develop the business. We have no reserves.
The limited success of larger firms, can be viewed as supportive that there may be significant finds or
success ahead in locating significant oil and gas, but only is indicative that it is not a guarantee and is
costly apart from risk.
14
REGULATION
The Company is subject to applicable provisions of Federal and state securities and other laws. Also, our
intended success may be dependent in the future upon the application of foreign laws and regulations such
as Israel. Although we will endeavor to comply with applicable laws and regulations, we can provide no
assurance of compliance nor can we predict the effect of these or future laws and regulations on proposed
activities.
MANAGEMENT
The following sets forth information concerning the directors and officers of the Company:
Name Positions
Stanley E. Johnson Chairman of the Board, Chief Executive
Officer, Chief Financial Officer, President
and Secretary
Matt Lucchese Director
Larry Lyons Director
Mark Neil Speight, MD Director
Each director is elected to hold office until the next annual meeting of shareholders and until his
successor has been elected and qualified. Officers are elected annually by the Board of Directors and
hold office until such successors are duly elected and qualified. The following is a brief account of
business experience of each director and executive officer of the Company.
The Board members have advised Mr. Johnson that they are of the same personal beliefs as Mr. Johnson
for biblical support to seek oil and gas in Israel.
Stanley E. Johnson
Mr. Johnson has been the Chairman of the Board, Chief Executive Officer, Chief Financial Officer and
President since the Company was founded on January 9, 2008. Mr. Johnson's background is primarily
operating the Prophecy Club; a faith based non-profit media organization. Mr. Johnson grew up in the oil
patch in the Midland-Odessa Texas area. He is considered a national speaker and student and teacher in
Bible prophecy. Mr. Johnson has been the Chairman of the Board, Chief Executive Officer, President and
Secretary of Debash Oil since May 14, 2009. Given its extensive relationships, the Company, from time
to time, utilizes and pays expenses to obtain the assistance of the Prophecy Club to help the Companies
operations, such as printing, office space, staff assistance, phones, and the like. Mr. Johnson directly
benefits at times from his work and relationship with Prophecy Club.
Matt Lucchese
Mr. Lucchese is a Director of the Company. Mr. Lucchese obtained a Bachelors of Arts in Finance from
Wayne State University located in Detroit, Michigan in the year 1992. Mr. Lucchese has worked in the
Automotive Industry for 20 years in New Business Development; working with the major automotive
manufacturers.
15
Larry Lyons
Mr. Lyons is a Director of the Company. Mr. Lyons holds a Bachelors of Science degree in Civil
Engineering from University of Texas at El Paso he graduated in 1967. He graduated with a Master’s
Degree Education from Framingham College in Framingham Massachusetts in 1995. Mr. Lyons worked
for Amoco Production (and oil and gas company) in the 60's and 70's as a Petroleum Engineer. He was in
charge of many aspects of oil exploration, development and production. Beyond the oil business, Mr.
Lyons has run his own construction company for some 25 years.
Mark Neil Speight, MD
Dr. Speight is a Director of the Company. Dr. Neal Speight obtained his undergraduate degree in
Chemistry from the University of North Carolina at Chapel Hill in the year 1982 and medical degree from
Brody School of Medicine at East Carolina University in the year 1984. Currently Dr. Speight is a
medical doctor in Private Practice in Charlotte, North Carolina.
PRINCIPAL STOCKHOLDERS
On July 31, 2013, the Company had 42,518,500 Common Shares, par value $0.00001 per share issued
and outstanding. The following table sets forth information regarding ownership of the Company’s
Common Shares, par value $0.00001 per share, by each person known by the Company to be the
beneficial owner of the outstanding Common Stock, by each director and executive officer of the
Company. All shares are held beneficially and of record and each recorded stockholder has sole voting
and investment power.
Shares Percentage of Common Shares
Name Beneficially Owned Prior to Offering After Offering (3)(4)
Stanley E. Johnson (1) (2) 20,000,000 47.03% 25.80%
Pamela L. Johnson (2) 10,000,000 23.52% 12.90%
Matt Lucchese (1) 320,100 0.75% 0.41%
Larry Lyons (1) 100,000 0.24% 0.13%
Mark Neal Speight, MD (1) 100,000 0.24% 0.13%
All Officers and Directors
as a group (four) 30,520,100 71.78% 39.37%
_____________________
(1) Director and Officer of the Company.
(2) Stanley E. Johnson is the husband of Pamela L. Johnson and therefore is deemed to be the
beneficial owner of these shares. In addition, Mr. Johnson's children are the owners of record of
an additional 10,000,000 common shares.
(3) Assumes that none of the Shares offered hereby are purchased by officers, directors or principal
shareholders as listed herein.
(4) Assumes that the maximum offering is completed.
16
DESCRIPTION OF CAPITAL STOCK
Common Stock
The Company is authorized to issue 200,000,000 shares of Common Stock with par value $0.00001 per
share.
Holders of Common Stock are entitled to one vote per share in each matter to be decided by stockholders.
The Common Stock has no redemption provisions and the holders thereof have no preemptive rights.
Holders of Common Stock are entitled to receive ratably such dividends, if any, as the Board of Directors
may declare from time to time out of funds legally available thereof.
Preferred Stock
The Company has authorized a total of 30,000,000 shares of Preferred Stock with par value $0.00001 per
share. All preferred shares are to be issued within the discretion of the Board of Directors as to voting
rights, classes, preferences and other terms as may be fixed by the Board. No preferred shares have been
issued at this time.
Issuance Authority
The Board of Directors has the authority to provide the terms for the issuance of all securities and same
may include issuances to members of management as determined by the Board of Directors.
TERMS OF THE OFFERING
The Company is offering 35,000,000 Common Shares, par value $0.00001 per share at a purchase price
of $1.50 per share. The Offering is being made on a “Best Efforts” basis by the Officers and Directors of
the Company. The minimum investment is 4,000 Common Shares, par value $0.00001 per share
($6,000.00). An investor may subscribe for additional Shares.
Method of Subscribing
Persons may subscribe to the offering by delivering to the Company the completed Subscription
Agreement in the form attached hereto as "Exhibit A", together with the subscription price for the amount
of the desired subscription. The subscription price must be paid by check or bank draft, payable to the
order of “Prophetic Oil Inc.". The Company reserves the right to reject or accept subscriptions, in
whole or in part, in its sole discretion.
EXIT STRATEGY
It is anticipated that the Company will pursue filing a Form S-1 registration statement under the Securities
and Exchange Act of 1933 at such time as market conditions and Company fundamentals warrant such a
transaction. This is the Securities and Exchange general form for registration of securities of small
business issuers. Upon the completion of the corporate filing the Company will proceed with locating
market makers to commence trading of the Companies common shares on the “Electronic Bulletin Board”
maintained by the National Quotation Bureau, Inc., which reports quotations by brokers or dealers
making a market in the Company’s Common Shares, or other exchanges that market and Company
fundamentals might support. The Company does not make any representations as to how long the
registration process will take, nor does it warrant that such transaction may ever occur at all. If the proper
circumstances develop, the Company will retain a Broker/Dealer to pursue an initial public offering.
17
DIVIDENDS
Holders of the shares of Common Shares are entitled to dividends when, as and if declared by the Board
of Directors out of funds legally available. The Company has not paid any dividends on its Common
Shares and intends to retain earnings, if any, to finance the development and expansion of its business.
Future dividend policy is subject to the discretion of the Board of Directors and will depend upon a
number of factors, including future earnings, capital requirements and the financial condition of the
Company.
LITIGATION
The Company knows of no litigation pending, threatened or contemplated, or unsatisfied judgment
against it, or any proceedings in which the Company is a party. The Company knows of no legal actions
pending or threatened or judgment entered against any officer or director of the Company in their capacity
as such.
ADDITIONAL INFORMATION
This Confidential Private Offering document does not propose to restate all of the relevant provisions of
the documents referred to or relevant to the matters discussed herein. All of these documents must be
read for a thorough understanding of the terms of all matters relevant to the purchase of the Shares. Each
prospective investor is invited to ask questions of and receive answers from, authorized representatives of
the Company and to obtain such information concerning the terms and conditions of the Offering, to the
extent that they possess the same or can obtain it without unreasonable effort or expense, as such
prospective investor deems necessary to verify the accuracy of the information referred to in this
Confidential Private Placement Memorandum dated August 1, 2013.
INFORMATION FOR RESIDENTS OF CERTAIN STATES
For Arizona Investors Only:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE ARIZONA SECURITIES ACT IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION PURSUANT TO A.R.S. SECTION 44-1844 (1)
AND, THEREFORE, CANNOT BE RESOLD UNLESS THEY ARE ALSO REGISTERED OR UNLESS AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
For California Investors Only:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE CALIFORNIA CORPORATIONS CODE BY REASON OF SPECIFIC EXEMPTIONS
THEREUNDER, RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES
CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY
UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE CALIFORNIA CORPORATIONS CODE, IF SUCH REGISTRATION IS REQUIRED.
ALL OFFERS OR SALES MADE IN CALIFORNIA SHALL BE SUBJECT TO THE FOLLOWING
RESTRICTIONS: IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR
ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFORE, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES. UPON ANY TRANSFER IN
WHOLE OR IN PART OF ANY OF THE SHARES OR INTERESTS THEREIN TO CALIFORNIA RESIDENTS
OR TO, IN, OR FROM CALIFORNIA, ANY DOCUMENTS OR ASSIGNMENTS OF TRANSFER MUST BEAR
THE SAME LEGEND.
18
For Colorado Investors Only:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR THE COLORADO SECURITIES ACT OF 1991, BY REASON OF SPECIFIC
EXEMPTIONS THEREUNDER, RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING.
THESE SECURITIES CANNOT BE RESOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY
PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE ACT OF 1933, AS AMENDED,
OR THE COLORADO SECURITIES ACT 1991, IF SUCH REGISTRATION IS REQUIRED.
For Florida Investors Only:
PURSUANT TO §517.061(12) OF THE FLORIDA SECURITIES ACT, WHEN SALES ARE MADE TO 5 OR
MORE PERSONS IN FLORIDA, ANY SALE IN FLORIDA MADE TO A PURCHASER (OTHER THAN
THOSE EXCLUDED FROM THE DEFINITION OF “PURCHASER” BY §517.061(12)(b) PURSUANT TO
§517.061(12)(a) OF THE FLORIDA SECURITIES ACT, SHALL BE VOIDED BY THE PURCHASER IF SUCH
SALE IS WITHIN 3 DAYS AFTER (a) THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH
PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER, OR ANY ESCROW AGENT OR (b) THE
AVAILABILITY OF SUCH PURCHASER'S PRIVILEGE TO AVOID SUCH SALE IS COMMUNICATED TO
HIM (WHICHEVER IS LATER.)
For New Hampshire Investors Only:
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE
UNDER THIS CHAPTER HAS BEEN FILED WITH THE STATE OF NEW HAMPSHIRE, NOR THE FACT
THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF
NEW HAMPSHIRE, CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY
DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY
SUCH FACT, NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A
SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS NOT PASSED IN
ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL
TO, ANY PERSON, SECURITY, OR TRANSACTION.
For New York Investors Only:
THIS PRIVATE PLACEMENT MEMORANDUM HAS NOT BEEN REVIEWED BY THE ATTORNEY
GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW
YORK HAS NOT PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
For Oregon Investors Only:
THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY STATE SECURITIES COMMISSION
OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT
CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD, EXCEPT AS PERMITTED UNDER THE SECURITIES ACT PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO
BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
For Pennsylvania Investors Only:
EACH PERSON WHO ACCEPTS AN OFFER TO PURCHASE SECURITIES EXEMPTED FROM
REGISTRATION BY SECTION 203 (d), DIRECTLY FROM THE ISSUER OR AFFILIATE OF THIS ISSUER,
SHALL HAVE THE RIGHT TO WITHDRAW HIS ACCEPTANCE WITHOUT INCURRING ANY LIABILITY
TO THE SELLER, UNDERWRITER (IF ANY) OR ANY OTHER PERSON WITHIN TWO (2) BUSINESS
DAYS FROM THE DATE OF RECEIPT BY THE ISSUER OF HIS WRITTEN BINDING CONTRACT OF
PURCHASE OR, IN THE CASE OF A TRANSACTION IN WHICH THERE IS NO BINDING CONTRACT OF
PURCHASE, WITHIN TWO (2) BUSINESS DAYS AFTER HE MAKES THE INITIAL PAYMENT FOR THE
SECURITIES BEING OFFERED.
19
IF YOU HAVE ACCEPTED AN OFFER TO PURCHASE THESE SECURITIES MADE PURSUANT TO A
PROSPECTUS WHICH CONTAINS A NOTICE EXPLAINING YOUR RIGHT TO WITHDRAW YOUR
ACCEPTANCE PURSUANT TO SECTION 207 (m) OF THE PENNSYLVANIA SECURITIES ACT OF 1972
(70 P.S. § 1-207(m)), YOU MAY ELECT, WITHIN TWO (2) BUSINESS DAYS AFTER THE FIRST TIME YOU
HAVE RECEIVED THIS NOTICE AND A PROSPECTUS, TO WITHDRAW FROM YOUR PURCHASE
AGREEMENT AND RECEIVE A FULL REFUND OF ALL MONIES PAID BY YOU. YOUR WITHDRAWAL
WILL BE WITHOUT ANY FURTHER LIABILITY TO ANY PERSON.
TO ACCOMPLISH THIS WITHDRAWAL, YOU NEED ONLY SEND A LETTER OR TELEGRAM TO THE
ISSUER (OR UNDERWRITER IF ONE IS LISTED ON THE FRONT PAGE OF THE PROSPECTUS)
INDICATING YOUR INTENTION TO WITHDRAW. SUCH LETTER OR TELEGRAM SHOULD BE SENT
AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED SECOND BUSINESS DAY. IF
YOU ARE SENDING A LETTER, IT IS PRUDENT TO SEND IT BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO EVIDENCE THE TIME WHEN IT WAS
MAILED. SHOULD YOU MAKE THIS REQUEST ORALLY, YOU SHOULD ASK WRITTEN
CONFIRMATION THAT YOUR REQUEST HAS BEEN RECEIVED.
For Texas Investors Only:
THE SECURITIES OFFERED HEREUNDER HAVE NOT BEEN REGISTERED UNDER APPLICABLE
TEXAS SECURITIES LAWS AND, THEREFORE, ANY PURCHASER THEREOF MUST BEAR THE
ECONOMIC RISK OF THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME BECAUSE THE
SECURITIES CANNOT BE RESOLD UNLESS THEY ARE SUBSEQUENTLY REGISTERED UNDER SUCH
SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. FURTHER,
PURSUANT TO §109.13 UNDER THE TEXAS SECURITIES ACT, THE COMPANY IS REQUIRED TO
APPRISE PROSPECTIVE INVESTORS OF THE FOLLOWING: A LEGEND SHALL BE PLACED, UPON
ISSUANCE, ON CERTIFICATES REPRESENTING SECURITIES PURCHASED HEREUNDER, THE
TRANSFER AGENT FOR THE COMPANY SHALL BE ISSUED “STOP TRANSFER” INSTRUCTIONS WITH
RESPECT TO THE SECURITIES PURCHASED HEREUNDER, AND ANY PURCHASER HEREUNDER
SHALL BE REQUIRED TO SIGN A WRITTEN AGREEMENT THAT HE WILL NOT SELL THE SUBJECT
SECURITIES WITHOUT REGISTRATION UNDER APPLICABLE SECURITIES LAWS, OR EXEMPTIONS
THEREFROM.
All States:
THE PRESENCE OF A LEGEND FOR ANY GIVEN STATE REFLECTS ONLY THAT A LEGEND MAY BE
REQUIRED BY THE STATE AND SHOULD NOT BE CONSTRUED TO MEAN AN OFFER OR SALES MAY
BE MADE IN ANY PARTICULAR STATE. THIS MEMORANDUM MAY BE SUPPLEMENTED BY
ADDITIONAL STATE LEGENDS. IF YOU ARE UNCERTAIN AS TO WHETHER OR NOT OFFERS OR
SALES MAY BE LAWFULLY MADE IN ANY GIVEN STATE, YOU ARE ADVISED TO CONTACT THE
COMPANY FOR A CURRENT LIST OF STATES IN WHICH OFFERS OR SALES MAY BE LAWFULLY
MADE.
SUITABILITY INFORMATION
General Suitability Standards:
The Company is relying on certain Federal and State exemptions from the registration and qualification
provisions of the Act and applicable State securities laws in offering the Shares, including Regulation D
promulgated under the Act (“Registration D”). The Shares are being offered by the Company to a limited
number of persons subject to stringent standards of suitability pursuant to the foregoing exemptions. The
Company will offer and sell the Shares only to “Accredited Investors,” as that term is defined in Rule
501(a) promulgated under the Act.
20
The Shares offered hereby are suitable only for those “Accredited Investors”: (i) whose business and
investment experience makes them capable of evaluating the merits and risks of their prospective
investment in the Company; (ii) who can afford to bear the economic risks of their investment for an
indefinite period of time and do not have a need for liquidity in this investment; and (iii) who can afford
to assume the risk of receiving less than the anticipated return or a complete loss of their investment.
THESE STANDARDS REPRESENT MINIMUM REQUIREMENTS FOR PROSPECTIVE INVESTORS AND
DO NOT NECESSARILY MEAN THAT THESE SECURITIES ARE A SUITABLE INVESTMENT FOR ANY
INVESTOR MEETING THESE REQUIREMENTS. MOREOVER, THE COMPANY RESERVES THE RIGHT
TO MODIFY THE SUITABILITY STANDARDS ON A CASE-BY-CASE BASIS IN VIEW OF AN INVESTORS
FINANCIAL CIRCUMSTANCES OR INVESTMENT EXPERIENCE.
Each investor will be required to represent in writing that: (i) he or she is acquiring the Shares for his or
her own account, for investment and not for resale, distribution or on behalf of an undisclosed principal;
(ii) he or she is aware that the transfer of the Shares purchased through this Offering are restricted by
Federal and State securities laws and that a market does not exist for the Shares, except as may be
permitted under Rule 144(a); (c) he or she has such knowledge and experience in financial and business
matters that he or she is capable of evaluating the merits and risks of an investment in the Sharers; (iv) he
or she is financially capable of bearing the possible loss of his or her entire investment herein, can afford
to bear the economic risks of his or her investment for an indefinite period of time and does not have a
need for liquidity in this investment; (v) he or she has read this Memorandum and the related Exhibits and
in making his or her decision to purchase the Shares, all matters to this Memorandum and its Exhibits
have been discussed and explained to him or her to their satisfaction and he or she understands the highly
speculative nature of and the risks involved in the proposed investment; (vi) he or she is acquiring the
Shares without relying on any sales literature or information other than this Memorandum and the
Exhibits hereto; and (vii) he or she recognizes that the purchase of the Shares involves certain significant
risks, including, but not limited to; those set forth under the caption “Risk Factors” of this Memorandum.
In addition, each Qualified Investor will be required to represent in writing that such investor comes
within any of the following categories at the time of the sale of the Shares offered hereby:
(a) Any private business development company as defined in Section 202(a)(22) of
the Investment Advisors Act of 1940;
(b) Any organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, corporation, Massachusetts or similar trust, or partnership, not
formed for the specific purpose of acquiring the securities offered, with total
assets in excess of $5,000,000;
(c) Any director or executive officer of the issuer of the securities being offered or
sold, or any director or executive officer of that issuer;
(d) Any natural person whose individual net worth, or joint net worth with that
person’s spouse, at the time of his or her purchase, exceeds $1,000,000;
(e) Any bank as defined in Section 3(a)(2) of the Act, or any savings and loan
association or other institution, as defined in Section 3(a)(5)(A) of the Act,
whether acting in its individual or fiduciary capacity; any broker or dealer
registered pursuant to Section 15 of the Securities and Exchange Act of 1934; an
insurance company, as defined in Section 2(13) of the Act; an investment
company registered under the Investment Company Act of 1940 or a business
development company, as defined in Section 2(a)(48) of that Act; a Small
Business Investment Company licensed by the United States Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958; any plan established and maintained by a State, its political subdivisions
or any agency or instrumentality of a State or its political subdivisions for the
21
benefit of its employees, if such plan has total assets in excess of $5,000,000; or
an employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, if the investment decision is made by a
plan fiduciary, as defined in Section 3(21) of that Act, which is either a bank,
savings and loan association, insurance company, or registered investment
advisor, or if the employee benefit plan has total assets in excess of $5,000,000
or, if a self-directed plan, with investment decisions made solely by persons that
are accredited investors:
(f) Any natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with that person’s spouse in excess
of $300,000 in each of those years and has a reasonable expectation of reaching
the same income level in the current year;
(g) Any trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the Shares offered, whose purchase is directed by a
sophisticated person who has such knowledge and experience in financial and
business matters that he or she is capable of evaluating the merits and risks of the
prospective investment; and
(h) Any entity in which all of the equity owners are accredited investors under
subdivisions (a) - (g) of this paragraph.
IN ADDITION, EACH INVESTOR WILL FURTHERMORE BE REQUIRED TO REPRESENT AND
WARRANT IN WRITING TO THE COMPANY THAT:
(1) He or she recognizes that the purchase of the Shares involves certain risks,
including, but not limited to; those set forth under the caption “Risk Factors” of
this Memorandum.
(2) He or she is relying upon his or her own business judgment and financial
experience or that of a qualified Purchaser Representative, as defined below.
(3) He or she has read this Memorandum and the related Exhibits when making his
or her decision to purchase the Shares. All matters relating to the Memorandum
and its Exhibits have been discussed and explained to him or her to their
satisfaction and he or she understands the speculative nature of and the risks
involved in the proposed investment. He or she is acquiring the Shares
purchased by him or her without relying on any sales literature or information
other than this Memorandum and the Exhibits hereto.
Use of a Purchaser Representative:
Prior to purchase, any offeree who does not have the requisite knowledge or experience to be capable of
evaluating the merits and risks of an investment in the Company will be required to represent that he or
she has relied upon a “Purchaser Representative.”
The Company will evaluate the qualifications of each proposed Purchaser Representative and will notify
the prospective investor if such person is not acceptable as a Purchaser Representative. In order for a
person to qualify as a Purchaser Representative, the Company must believe and have reasonable grounds
to believe, that such person satisfies all of the following criteria; (a) such person is not affiliated with the
Company or its officers and directors, or other employees of the Company, or the beneficial owner of ten
percent (10%) or more of any class of the equity securities or ten percent (10%) or more of the equity
interest in the issuer (unless such person is also; (1) related to the offeree by blood, marriage or adoption,
no more remote than as first cousins;
22
(2) a trust or estate in which the Purchaser Representative and any person related to him or her, as
specified in subdivision (a)(1) of this paragraph or paragraph (h)(1)(ii) of Rule 501 under Regulation D,
collectively have more than fifty percent (50%) of the beneficial interest (excluding contingent interest),
or of which the Purchaser Representative serves as trustee, executor, or in any similar capacity; or (3) a
corporation or other organization of which the Purchaser Representative and any persons related to him or
her as specified in subdivision (a)(1) of this paragraph or paragraph (h)(1)(ii) of Rule 501 under
Regulation D, collectively are the beneficial owners of more than fifty percent (50%) of the equity
securities (excluding directors, qualifying shares or equity interests); (b) such person has such knowledge
and experience in financial and business matters that he or she, either alone or together with other
Purchaser Representatives of the offeree, is capable of evaluating the merits and risks of the prospective
investment; (c) such person is acknowledged by the investor, in writing during the course of the
transaction, to be his or her Purchaser Representative in connection with evaluating the merits and risks of
the prospective investment in the Company; and (d) such person discloses to the investor, in writing, prior
to the acknowledgment specified in subdivision (c) of this paragraph, any material relationship between
such person or his or her affiliates and the Company or its affiliates, which then exists or is mutually
understood to be contemplated or which has existed at any time during the previous two years and any
compensation received or to be received as a result of such relationship.
If any representation made by an offeree or other person acting on his or her behalf, misleads the
Company as to the financial or other circumstances of a particular offeree, or if, because of any error or
misunderstanding as to such circumstances, a copy of this Memorandum is delivered to such offeree, the
delivery of such copy of the Memorandum shall not be deemed to be an offer and such Memorandum
must be immediately returned to the Company.
THESE SECURITIES HAVE BEEN ACQUIRED PURSUANT TO INVESTMENT
REPRESENTATIONS BY THE HOLDER AND SHALL NOT BE SOLD, PLEDGED,
HYPOTHECATED OR DONATED OR OTHERWISE TRANSFERRED, EXCEPT UPON
THE ISSUANCE TO PROPHETIC OIL INC. A FAVORABLE OPINION OF COUNSEL
AND THE SUBMISSION TO THE COMPANY OF OTHER EVIDENCE,
SATISFACTORY TO IT AND AS REQUIRED BY COUNSEL TO THE COMPANY,
THAT ANY SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT OF 1933,
AS AMENDED AND APPLICABLE STATE SECURITIES LAWS.
The Subscription Agreement that accompanies this Memorandum are designed to elicit information
necessary to enable the Company and Participating Broker-Dealers, if any, to determine the suitability of
a prospective investor and to assure that the Offering complies with the applicable Federal and State
securities laws. The information supplied in those documents will be reviewed to determine the suitability
of prospective investors. The Company and Participating Broker-Dealers, if any, will have the right to
refuse any subscription, if in its discretion it believes that the prospective investor does not meet the
applicable suitability standards or that the Shares are otherwise unsuitable as an investment for the
prospective investor.
This document contains “forward looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21B of the Securities Exchange Act of 1934. Any
statements that express or involve discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, goals, assumptions or future events of performance are not
statements of historical fact and may be “forward looking statements”. “Forward looking
statements” are based on expectations, estimates and projections at the time the statements are
made that involve a number of risks and uncertainties that could cause actual results or events to
differ materially from those presently anticipated.
23
PROPHETIC OIL INC. 1717 ANGEL PARKWAY
SUITE #136
ALLEN, TEXAS 75002
(214) 585-0524
EMAIL: [email protected]
EXHIBIT "A"
SUBSCRIPTION AGREEMENT
IMPORTANT -- PLEASE READ CAREFULLY AND COMPLETLY BEFORE SIGNING.
SIGNIFICANT PURCHASER REPRESENTATIONS ARE REQUIRED HEREIN. THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR QUALIFIED UNDER ANY STATE SECURITIES LAWS IN RELIANCE
UPON EXEMPTIONS THEREFROM. THE SECURITIES MAY BE ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE AND MAY NOT BE
SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR
OFFERED TO BE SO TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933 AND QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH TRANSACTION SHALL NOT VIOLATE ANY FEDERAL OR STATE
SECURITIES LAWS.
The undersigned desires to become a holder of the Common Shares, $0.00001 par value per share, of
Prophetic Oil Inc., (the “Company”) pursuant to the Company’s Confidential Private Placement
Memorandum (the “Offering”) dated August 1, 2013, upon the terms and conditions set forth below:
1. Subscription. The undersigned hereby agrees to contribute to the capital of the Company the sum of
$_______________ representing the purchase price of ___________ Common Shares at a price of $1.50
per Share. A check payable to the order of “Prophetic Oil Inc. ” in full payment of the purchase price of
the Shares is delivered herewith. A minimum purchase of four thousand (4,000) Shares ($6,000.00) is
required. An investor may subscribe to additional Shares.
2. Representations and Warranties. The undersigned hereby represents and warrants to and agrees
with the Company as follows:
(a) The Shares are being purchased for his own account, for investment purposes only and
not for the account of any other person and not with a view to distribution, assignment or
resale to others or to fractionalization in whole or in part and that the offering and sale of
the Shares is intended to be exempt from registration under the Securities Act of 1933
(the “Act”) by virtue of Section 4(2) of the Act and the provisions of Regulation D
promulgated thereunder (“Regulation D”). In furtherance thereof, the undersigned
represents, warrants, and agrees as follows: (i) no other person has or will have a direct or
indirect beneficial interest in such Shares and the undersigned will not sell, hypothecate
or otherwise transfer his Shares except in accordance with the Act and applicable state
securities laws or unless, in the opinion of counsel for the Company, an exemption from
the registration requirements of the Act and such laws is available; and (ii) the Company
is under no obligation to register the Shares on behalf of the undersigned or to assist him
in complying with any exemption from registration.
24
(b) The undersigned has been furnished with and has carefully read the Offering. In
evaluating the suitability of an investment in the Company, the undersigned has not relied
upon any representations or other information (whether oral or written) from the
Company, the Sales Agent or any of its agents other than as set forth in the Offering and
no oral or written representations have been made or oral or written information
furnished to the undersigned or his advisors, if any, in connection with the offering of the
Shares which were in any way inconsistent with the Offering.
(c) The Company has made available to the undersigned all documents and information that
the undersigned has requested relating to an investment in the Company.
(d) The undersigned recognizes that the Company has a limited financial and operating
history and that an investment in the Company involves substantial risks and he has taken
full cognizance of and understands all of the risk factors related to the purchase of Shares,
including, but not limited to, those set forth under the caption “Risk Factors” in the
Offering.
(e) The undersigned has carefully considered and has, to the extent he believes such
discussion necessary, discussed with his professional legal, tax and financial advisers the
suitability of an investment in the Company for his particular tax and financial situation
and he has determined that the Shares are a suitable investment for him.
(f) All information which the undersigned has provided to the Company concerning himself
and his financial position is correct and complete as of the date set forth below and if
there should be any change in such information prior to his acceptance as a shareholder
of the Company, he will immediately provide such information to the Company and will
promptly send confirmation of such information to the Company.
(g) If this Subscription Agreement is executed and delivered on behalf of a partnership,
corporation, trust or estate, (i) the undersigned has been duly authorized and is duly
qualified (a) to execute and deliver this Subscription Agreement and all other instruments
executed and delivered on behalf of such partnership, corporation, trust or estate in
connection with the purchase of the Shares and (b) to purchase and hold Shares and (ii)
the signature of the undersigned is binding upon such partnership, corporation, trust or
estate, and (iii) such entity has not been formed for the specific purpose of acquiring
Shares.
3. Investor Information.
(a) Name: _______________________________________________________________________
Taxpayer Identification or Social Security Number: ____________________________________
(b) Address: _______________________________________________________________________
________________________________________________ Zip Code: _____________________
Telephone Number: _____________________________________________________________
25
(c) Title to the Shares shall be taken as follows (circle one):
(i) Individual or separate property;
(ii) Husband and wife, as community property;
(iii) Joint Tenancy with right of survivorship;
(iv) Tenants in Common;
(v) Other (e.g., corporation, partnership, custodian, trustee, etc.):
4. Understandings. The undersigned understands, acknowledges and agrees with the Company as
follows:
(a) This Subscription may be rejected, in whole or in part, by the Company in its sole
discretion, at any time prior to the Closing Date, notwithstanding prior receipt by the
undersigned of notice of acceptance of the undersigned’s subscription.
(b) This Subscription is and shall be irrevocable, except that the undersigned shall have no
obligations hereunder in the event that (i) this Subscription is rejected for any reason or
(ii) the purchase and sale of Shares is not consummated by the Closing Date.
(c) No federal or state agency has made any finding or determination as to the fairness of this
offering for investment, nor any recommendation or endorsement of the Shares.
(d) There can be no assurance as to the federal or state tax results of an investment in the
Shares.
(e) The undersigned acknowledges that the information contained in the Offering is
confidential and non-public and agrees that all such information shall be kept in
confidence by him and neither used by him to his personal benefit (other than in
connection with his subscription for Shares) nor disclosed to any third party for any
reason; provided that this obligation shall not apply to any such information which (i) is
part of the public knowledge or literature and readily accessible at the date hereof; (ii)
becomes part of the public knowledge or literature and readily accessible by publication
(except as a result of a breach of these provisions); or (iii) is received from third parties
(except third parties who disclose such information in violation of any confidentiality
agreements including, without limitation, any Subscription Agreement they may have
with the Company).
(f) The undersigned’s commitment to investments that are not readily marketable is not
disproportionate to his net worth and will not become so after purchasing the Shares and
the undersigned has such knowledge and experience in financial and business matters that
he is capable of evaluating the merits and risks of an investment in the Company and of
making an informed investment decision.
26
5. Miscellaneous.
(a) All pronouns and any variations thereof used herein shall be deemed to refer to the
masculine, feminine, singular or plural as the identity of the person or persons may
require.
(b) Neither this Subscription Agreement, nor any provisions hereof shall be waived,
modified, changed, discharged, terminated, revoked or canceled except by an instrument
in writing signed by the party against whom any change, discharge or termination is
sought.
(c) Notices required or permitted to be given hereunder shall be in writing and shall be
deemed to be sufficiently given when personally delivered or sent by registered mail,
return receipt requested, addressed to the other party at the address of such party set forth
in the Offering, as amended from time to time, or to such other address furnished by
notice given in accordance with this Section 5.
(d) This Subscription Agreement and the Offering constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and supersede any and all prior or
contemporaneous representations, warranties, agreements and understandings in
connection therewith. This Agreement may be amended only in writing executed by all
parties hereto.
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement on this
______day of ___________________, 2013.
_____________________________________________
Name of Purchaser
____________________________________________
Signature of Purchaser
_____________________________________________
Title of Authorized Signatory if Purchaser is a
corporation, partnership or other entity.
_____________________________________________
Name of Co-Purchaser (if applicable)
_____________________________________________
Signature of Co-Purchaser
27
PROPHETIC OIL INC. 1717 ANGEL PARKWAY
SUITE #136
ALLEN, TEXAS 75002
(214) 585-0524
EMAIL: [email protected]
FOR ALL SUBSCRIBERS, PLEASE COMPLETE
Accredited Investor Status. Please answer by marking the appropriate item below.
(i) Did your individual annual income during each of the last two years exceed $200,000 and do you
expect your annual income during the current year to exceed $200,000, or did your joint annual income
(together with your spouse) during each of the last two years exceed $300,000 and do you expect your
joint annual income during the current year to exceed $300,000?
Yes _____ No
(ii) Does your individual or joint (together with your spouse) net worth, exclusive of your primary
residence, exceed $1,000,000?
Yes _____ No
(iii) If you are an organization, do you otherwise satisfy the requirements of being an accredited
investor as stated above except having net worth of at least $5,000,000?
Yes _____ No
Investor Suitability Information. Please supply as much information as possible to confirm you are a
sophisticated experienced business person, investor or on your own or through your purchaser advisor, if
true.
Occupation/Profession: ___________________________________________________
Business: ______________________________________________________________
Do you have sufficient knowledge and experience in financial and business matters so as to be capable of
evaluating the merits and risks associated with investing in the Company?
_____
Yes No
Please briefly describe the basis of your knowledge and experience:
_____________________________________________________________________________________
_____________________________________________________________________________________
Return this page with your subscription agreement