Each one in plain English, with the numbers worked through for a shareholder.
21 July 2017auditor change▼ BadMajor
MaloneBailey, the auditor Baron hired in October 2014, resigned on June 1, 2017 (reported July 2017). It had been engaged to audit fiscal years ended July 31, 2012 through 2016 and review the related quarters, but the filing says it never issued an opinion on any of those years or completed audit procedures or reviews for any of them. The filing reports no disagreements and no reportable events. For a shareholder, this means the audits of those years, a thread open since the 2014 engagement, remain unfinished, and no replacement auditor is named in this filing.
On October 24, 2014 Baron dismissed its auditor GBH CPAs by mutual agreement and hired MaloneBailey. GBH's last report was August 10, 2012, for the year ended July 31, 2011, so audits for later years were not done by GBH. The filing reports no disagreements, but GBH's audit report included a going concern disclaimer. MaloneBailey is engaged to audit the year ended July 31, 2012 and later periods.
11 Aug 2014capital raising announcement● NeutralMajor
Baron issued Series A Convertible Preferred Stock at $1.00 a share: 250,000 shares to Petro Capital Energy Credit for $250,000 cash (Aug 8, 2014), and 2,602,354 shares to 6 parties in exchange for cancelling the same amount of promissory note debt and interest (Aug 7, 2014). This converts debt to preferred equity, which can later convert to common stock and dilute holders.
This amendment corrects a typo in the Ricochet acquisition filing: gas production is 180 thousand cubic feet a day, not 180 million. The other terms (8,060 gross acres, 14 producing wells, $7,720,743 price) are unchanged.
1 Aug 2014asset acquisition disposition● NeutralMajor
On July 28, 2014 Baron's new subsidiary Baron Production bought oil and gas interests in Frio and LaSalle Counties, Texas from Ricochet Energy for $7,720,743 (89.10% to 100% working interests, 8,060 gross acres, 14 producing wells, current gross output of 204 barrels of oil a day). It was funded with a Petro Capital Energy Credit facility of up to $5,150,000 and a $6,100,000 sale of a limited-term overriding royalty on oil from existing wells to PCEC Sub 1, an affiliate of Petro. Baron also issued Petro warrants at $0.0175 for 5% of its fully diluted shares and created a 7,000,000-share Series A Convertible Preferred class. This is a much larger asset base than the small Permian interests before, with Baron guaranteeing the debts.
Baron sold three convertible notes of $33,333 each on February 2, 2012 (to Roger Tichenor, Siesta Fiesta Holdings and Randall Oser), raising $99,999 at 8% interest, due Feb 2, 2013, with proceeds for working capital. After 180 days the holders can convert into shares at the higher of 80% of a recent low-price average or $0.005, so repayment in shares could dilute existing holders. The filing was made in September 2012, well after the event.
10 May 2011asset acquisition disposition● NeutralMajor
Baron settled the BaseLine lawsuit through a restated loan: it paid $175,000 cash and signed a new $100,000 note at 8% due May 1, 2015, with $2,442 monthly payments from June 1, 2011 and a $650 monthly fee. The $40,000 of principal is forgiven if $60,000 is paid by Oct 27, 2011. Baron also assigned BaseLine 25% of its interest in the mortgaged properties, which BaseLine can take up on payout or Oct 27, 2011 at the earlier date. Separately, Baron bought Pronto Limited's interest in the Kirkpatrick '69' Lease and a salt water disposal agreement in Garza County for $59,000 ($35,000 cash and 300,000 shares at $0.08), producing about 3 barrels of oil equivalent a day.
This amendment adds share-issue details to the June 2010 American State Bank loan filing. To get the consent of two subordinated lenders, Baron issued 250,000 shares (valued at $50,000) to Charles Darter and 557,435 shares (valued at $111,487) to four BaseLine affiliates on June 15, 2010. That is 807,435 shares in total, which adds to the share count.
On March 16, 2011 Baron was served with a lawsuit from subordinated lender BaseLine Capital, which says Baron breached a $500,000 note (inherited from Permian Legend in the 2010 merger) and that senior lender Newton breached a subordination agreement. BaseLine says $299,813 is due; the note matured Aug 1, 2010 and is secured by thirteen properties. BaseLine's January 2011 default letter cited the December 2010 property sale. Baron says it will defend and also explore a settlement, with no assurance of success.
On March 11, 2011 Baron settled four small old notes (originally signed by Esconde in 2005, plus some later loans) by issuing restricted shares instead of cash: 59,615 to Lavaca Energy, 232,288 to PWH Resources, 45,215 to SJM Family and 789,303 to Pierce-Hamilton Energy Partners. That is 1,126,421 new shares in total, which adds to the share count; the filing does not state the total debt cleared.
On February 22, 2011 Baron hired Sunrise Securities Corp. as financial adviser for debt and equity financings, restructuring and acquisitions. Fees are 7% of equity raised, 3% of debt and 5% of convertible instruments, and Sunrise received warrants for 1,250,000 shares at $0.01 each. It earns another 1,250,000 warrants if Baron recapitalizes all its current debt, and 2,500,000 more if a merger or asset deal is completed. For shareholders, any of these would add shares at a very low price.
27 Dec 2010asset acquisition disposition● NeutralMajor
On December 21, 2010 Baron sold all its non-operated working interests in Borden and Garza Counties and certain ones in Scurry County, Texas, to the McCabe Family Trust and Rochford Living Trust (50% each) for $1.18 million cash, effective December 1, 2010. These interests produced about 15 barrels of oil equivalent per day net, part of the assets gained in the February 2010 merger. The filing does not say how the cash will be used.
On August 31, 2010 American State Bank sold the loan to Newton Energy, Inc., and Baron replaced it with a $1,006,000 note at 13.5% interest maturing August 25, 2015, with interest-only payments of $11,317.50 a month until September 2011, then $27,238.78 a month. The new note releases the officers' share pledges and guarantees, while the property security stays in place. Prepayment before August 31, 2011 carries a penalty of $135,810 less interest paid. Separately, Baron issued 420,168 shares to CEO Steinocher in place of $50,000 cash pay for Feb 22 to May 12, 2010. The Kodiak equity line is not mentioned.
This resolves the March 2010 default notice: on June 2, 2010 Baron signed a $1,000,000 loan agreement with American State Bank (effective May 1), as two notes of $550,000 and $450,000 maturing September 1, 2010, and the bank agreed not to pursue the earlier defaults. The loan is secured by mortgages on Baron's properties and guaranteed by Steinocher, Hamilton and Pierce-Hamilton Energy Partners, who pledged about 3.0 million Baron shares. It also includes a $50,000 letter of credit for the Texas Railroad Commission that the bank will not renew beyond August 1, 2011.
Baron disclosed that it assumed loans from American State Bank in the Esconde/Permian merger and that on March 4, 2010 the bank gave notice of default, saying $688,724.40 (Permian) and $299,282.29 (Esconde), plus interest, were owed after the loans matured March 1, 2010. The bank threatened to foreclose on the pledged oil and gas properties in 10 days and to seek a deficiency judgment. Baron also announced a non-binding term sheet for up to a $10 million equity line with Kodiak Capital Group over three years, which depends on final agreements, and a March 13 conference presentation.
Baron completed its merger with Esconde Resources and Permian Legend Petroleum effective Feb 22, 2010, issuing 40,000,000 new shares so the former owners hold 50% of Baron (80,000,000 shares outstanding). This is the deal outlined in the Dec 2009 Pertex letter of intent, now done by merger (the filing names only Esconde and Permian as acquired). Baron first redeemed 8,600,000 shares from founder Albert Abah, and a 1-for-2 reverse split effective March 4, 2010 cuts shares to 40,000,000. The assets are about 3,100 gross acres in the Permian Basin of west Texas with current net production of about 39 barrels of oil equivalent per day. Esconde and Permian's Ronnie Steinocher (CEO, Chairman) and Lisa Hamilton (CFO) replace Michael Maguire, who resigned, and HQ moves to Midland, Texas. Audited financials and pro forma figures are still to come.
Baron disclosed several recent share sales: 300,000 shares at $0.10 ($30,000) accepted December 12, 2009 to a non-U.S. buyer; 1,900,000 shares at $0.10 ($190,000) to accredited investors in January 2010; and the 2,000,000 shares issued February 8, 2010 to the investor-relations firm under the January 29 agreement. Cash raised totals $220,000, at a price well below the $0.50 paid in the 2008 placement.
What it means for a shareholder
300,000 new shares at $0.100 to raise about $30,000. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.
On January 29, 2010 Baron hired Capital Financial Media to run investor relations and email marketing through February 15, 2011. It will receive 2,000,000 restricted shares plus $150,000 ($50,000 non-refundable deposit on signing, $100,000 due before its first email to Small Cap Fortunes subscribers).
On December 15, 2009 Baron signed a non-binding letter of intent to acquire oil and gas assets from three private Texas partnerships (Pertex Production, Esconde Resources, Permian Legend Petroleum) across nine Texas counties, with working interests of 5% to 100%. Payment would be in restricted Baron stock so that, if all assets are acquired, Pertex-related holders own 50% of Baron. Completion depends on due diligence and approval of final agreements, so it is not yet a done deal.
On June 9, 2009 Baron dismissed its auditor Malone & Bailey and hired GBH CPAs, PC (the firm that had audited the Lucas properties statements in the 2008 acquisition). Malone's reports for fiscal 2008 and 2007 had no adverse opinion, and the filing reports no disagreements.
11 May 2009asset acquisition disposition▼ BadMajor
This amendment changes the TMG Partners deal: the share count rises from 9,000,000 to 18,000,000 restricted shares if all TMG members accept. A first closing with majority holders covers 11,230,000 shares, with 6,770,000 more for the remaining holders. This doubles the dilution stated in the April filing. The amendment also gives the agreement date as April 6, versus April 7 in the original.
On April 7, 2009 Baron agreed to acquire 100% of TMG Partners, LLC in exchange for 9,000,000 restricted Baron shares. TMG (founded August 11, 2008) explores the Deep Yegua gas trend in South Texas. The filing describes Baron as an exploration-stage company with no revenues, and for shareholders the deal means a large issuance of new shares.
14 Oct 2008asset acquisition disposition● NeutralMajor
Baron bought 100% of the working interests in the Rendham Pool, Green Lease (Green K and Green M leases) in Baylor County, Texas from Lucas Energy for $213,500, closing October 14, 2008. It also took on all liabilities, including well-plugging obligations and a duty to deliver 225 barrels of oil to a third party. The properties' revenue was $25,566 against $27,947 of direct operating expenses for the year to July 31, 2008, and reserves were 4,001 barrels at that date.
Baron Energy completed a private placement on August 29, 2008, selling 700,000 shares of common stock at $0.50 per share for $350,000 in total. This is new money from the sale of shares, following the company's 2007 registration of a small offering.
What it means for a shareholder
700,000 new shares at $0.500 to raise about $350,000. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.
