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.
