BAKKEN RESOURCES INC

The bankruptcy court dismissed the Chapter 11 case on March 5, 2019, so the company continues as a going concern under new management: Allan Holms became CEO, President and Chairman and William Wood became CFO, and offices moved from Helena to Spokane, WA. A March 27, 2019 Nevada judgment ruled Allan Holms the rightful owner of the 26,235,000 shares formerly held by Val Holms and lifted the restraining order, ending that ownership dispute (claims against former directors remain pending). The company says bankruptcy-related legal costs of about $1.5 million consumed most of its prior cash, that its last SEC financial filing covered September 2017, and that it is reviewing what reporting to resume.

bankruptcy or receivership

On December 7, 2018 the company filed for Chapter 11 bankruptcy in Nevada and keeps operating as debtor-in-possession. Its auditor DMT resigned December 6, restructuring officers David Hindman and Richard Robbins (firm APS Services, $150,000 retainer) were appointed, and employee Karen Midtlyng's employment ended December 3 though she stays as a director and secretary. The company warns shareholders may receive little or nothing and that their shares may be cancelled, but no plan has been confirmed yet.

bankruptcy or receivership

On July 27, 2018 the Audit Committee, after its investigation of Eagle's allegations, concluded that six quarterly reports (March 2016 to September 2017, excluding the quarters of December and the 2016 year-end) can no longer be relied on because of misstatements about $250,000 described as held in escrow for a contemplated Eagle transaction. It also found that the transaction in the January 9, 2018 8-K did not occur. The 2016 annual report was not affected. This resolves the investigation opened in April 2018, though the Eagle rescission demand is not stated as settled.

financial restatement

On May 4, 2018 the company bought an overriding royalty interest in what is currently 25 oil and gas wells in the Niobrara-DJ Basin (Colorado/Wyoming) for $1 million, effective January 1, 2018, again through EnergyNet. About $220,000 is held in escrow for royalties accrued since the effective date. This continues the EnergyNet buying program started in December 2017 and is much larger than those purchases.

asset acquisition disposition

On April 2, 2018 Eagle Private Equity, the company's lender and Series A preferred holder, told the company it believed it had been misled in the transactions described in an 8-K filed January 9, 2018 (not in the provided history), and that it now seeks to rescind them. The company disputes any misrepresentation, and its Audit Committee is investigating. This is a new dispute with Eagle, which had been a rescuer in the 2016 control fight.

material agreement

On July 20, 2016 a group led by Allan Holms (half-brother of Val Holms, now described as the former CEO) tried to take over the company's Helena offices using a stockholder consent signed by 24 holders, including Val Holms (26,235,000 shares). The company obtained temporary restraining orders in Montana and Nevada, with hearings set for Aug 1 and Sept 21, 2016. The takeover triggered Eagle Private Equity's rights under its May 2016 loan, and Eagle put and converted $600,000 of loans into 600,000 Series A Preferred shares carrying votes equal to 60 million common shares. That is a large new voting block, which dilutes the voting power of existing common holders; the outcome of the control dispute is unresolved.

capital raising announcement

On July 1, 2015 the board ratified restating the audited 2013 annual report, so statements in the original 10-K on the matters covered should no longer be relied on. This follows the Dec 2014 10-Q/A and the independent investigation begun after the audit committee chairman resigned from the board (March 2015 filing). The company says it is not aware of any material impact of the investigation on the original 10-K, and the auditor will withhold audit sign-off until it reviews the investigator's report.

financial restatement

On July 9, 2014 the company signed a two-year oil and gas lease with Big Willow Properties, LLLP for about 9,300 net mineral acres in Payette, Ada and Canyon Counties, Idaho. Per-acre terms and royalties are undisclosed and depend on title confirmation. Drilling must start and a seismic survey be completed within the initial term, and Big Willow can take up to a 15% working interest in each well. This is a new area beyond North Dakota and Montana.

material agreement

On Feb 4, 2014 the company sold 767 net mineral acres in McKenzie County, ND (part of the Holms Property assets bought in Nov 2010 for $1,535,000) to Athene Annuity & Life Assurance Company for $7,871,248 ($10,250 per acre). It keeps a 2% royalty on the sold assets, and 10% of proceeds is held in escrow pending title review. The press release says about 1,600 net mineral acres remain.

asset acquisition disposition

On Sept 21, 2011 the company paid $250,000 at closing to buy oil and gas mineral rights from John L. Reely and Lincoln Green, Inc. in Glacier County, Montana. The press release says about 1,100 acres near Duck Lake in what it calls the 'Alberta Bakken', adding to its North Dakota holdings; production potential is management's belief, not shown.

material agreement

On May 20, 2011 the company closed $230,000 of 6% convertible notes (with warrants), part of an offering of up to $300,000. The notes convert at a 25% discount if the company raises at least $2,000,000 in equity by Dec 31, 2011; otherwise they fall due with accrued interest. This is new debt that could dilute shareholders if converted.

material agreement

On November 26, 2010 the company exercised the Holms option: it paid $100,000, issued 40,000,000 restricted shares and granted a 5% overriding royalty for ten years on the Holms Property (about 6,000 gross acres, McKenzie County, North Dakota). Holms' members now hold a controlling interest, so existing shareholders are diluted. It also issued 6,180,000 shares at $0.25 for gross proceeds of $1,545,000. The company's address moved to Helena, Montana. The filing's table of contents also lists director/officer changes and a change in shell company status, but that part of the text is truncated here.

business combination

The company took $525,000 in 30-day non-interest-bearing loans (due December 11, 2010), convertible into the private offering, and used part to lend $485,000 to Holms Energy to fund the Greenfield mineral-rights option. Shareholders holding 81.4% of the 6,157,500 shares voted for all four proposals, including the 40,000,000-share issuance to Holms, the option plan increase and the name change to Bakken Resources. The private offering and the Holms option deadline were extended to November 30, 2010. This moves the Holms deal forward.

material agreement

The company's subsidiary, Multisys Acquisition, obtained an option (agreement dated June 21, 2010, extended to November 15, 2010) to buy oil and gas royalty rights on about 6,000 gross acres in McKenzie County, North Dakota (Bakken Formation) from Holms Energy, LLC. Exercise requires $100,000, 40,000,000 new shares and a 5% overriding royalty for ten years. Holms' members would end up with about 71% of the company, heavily diluting the existing holders of 6,157,500 shares, and the name would change to Bakken Resources, Inc. The option depends on raising at least $1,500,000 in a private placement and raising the stock option plan from 1,000,000 to 5,000,000 shares.

material agreement