Each one in plain English, with the numbers worked through for a shareholder.
18 Aug 2014financial restatement▼ BadMajor
On August 18, 2014 the company said its 10-Q for the quarter ended January 31, 2014 should no longer be relied on. The gain on the January 2014 royalty sale was overstated: it was restated from $1,728,235 to $1,232,279, and nine-month depletion expense from $134,685 to $496,659. Net income for the three months falls from $1,566,415 to $708,485, and for nine months from $1,089,117 to $231,187. The errors were found during the audit of the April 30, 2014 statements, and an amended 10-Q is expected.
On March 6, 2014 the company authorized 7,758,621 restricted shares at $0.0145 each: 4,310,345 to CEO S. Jeffrey Johnson for a $50,000 bonus (including a 25% tax gross-up), 3,103,448 to Jayme Wollison for $135,500 of accrued salary being settled for $45,000, and 344,828 to an employee for a $5,000 bonus. This continues the practice of paying people in shares seen in June 2013, and dilutes existing holders; the filing does not give a reason.
4 Mar 2014capital raising announcement● NeutralMajor
On February 28, 2014 the company settled with Mediapark and Soloman, holders of the 10% convertible notes due February 8, 2013 (originally $1,375,000 each), who had sued in October 2013 to force payment. The company paid $500,000 to each and issued new $1,155,000 notes at 12% due December 31, 2014, guaranteed by JHE and secured on oil and gas properties; 70% of proceeds from any further JHE asset or NPI sales must go to the noteholders. It also agreed to issue 2,500,000 shares to each holder (the CEO votes them for six months and the company can buy them back at $0.15) plus two-year warrants for 2,500,000 shares each at $0.05, exercisable from February 1, 2015. The lawsuit is to be dismissed once the deeds of trust are filed, and the old notes cancelled. This resolves the overdue 2012 notes thread but adds dilution and a new debt deadline.
30 Jan 2014asset acquisition disposition▲ GoodMajor
On January 24, 2014 the company sold all its royalty and overriding interests in properties held by its subsidiary JHE Holdings (in Madison, Grimes, Dimmit and Fayette Counties, Texas) for $2,000,000 cash to three unrelated buyers: GOC Madison, AshTan Royalties and WABR. The filing says most of the proceeds are being used to reduce debt and accounts payable. JHE itself is still owned by the company; only these royalty and overriding interests were sold.
The company authorized 4,201,007 restricted shares, mostly in place of accrued salary and employment-agreement share installments: 1,591,675 to CEO S. Jeffrey Johnson for $63,667 of accrued salary and 1,568,750 to Jayme Wollison for $62,750 (each including a 25% tax gross-up), 757,249 to Johnson for his June 1, 2013 restricted share installment and gross-ups, and 283,333 to two employees. The Johnson and Wollison shares were valued at $0.05 versus a $0.0353 closing price. Paying salary in shares dilutes holders; the filing does not give the reason for doing so.
11 Oct 2012capital raising announcement● NeutralMajor
Holders of the February 2012 10% convertible notes agreed to extend maturity from Feb 8, 2013 to Sept 30, 2014, but only if the company closes a $5,000,000 financing within 90 days (extendable in 30-day steps at the holders' discretion); otherwise the original terms stand. The company issued 250,000 shares now and owes another 250,000 shares on closing of the financing. Interest since May 1, 2012 is paid at closing, then monthly. The extension depends on a financing that has not happened yet.
A holder of a $500,000 convertible note (due March 14, 2013, originally convertible at $1.50) agreed to convert it, with the company cutting the conversion price to $0.4677, in exchange for 1,100,000 shares covering the principal and $14,516.13 of interest. This removes that debt but issues 1,100,000 new shares at a much lower price than the original terms, diluting existing holders.
13 July 2012capital raising announcement● NeutralMajor
The company amended an April 17, 2012 agreement with BlueRidge Petroleum and other sellers for Kansas leases. It now pays $50,000 (already paid) and issues 2,611,000 shares for the Sheridan County interests, and gets an option, exercisable by Sept 28, 2012, to buy interests in 80,871 acres (including Rawlins and Graham Counties) for $10,108,875 in cash plus shares worth $1,000,000. This replaces the original $5,308,375 plus 560,000 shares deal and brings a large share issuance for Sheridan. The option is not an obligation, and the filing does not say how the cash would be funded.
The Wevco Kansas purchase closing was pushed again, from May 31 to September 28, 2012. The company paid another non-refundable $100,000 and will issue 600,000 shares to Wevco; $500,000 in total has now been credited toward the $5,000,000 price. The deal is still not closed after a second delay, and the company is paying in cash and extra shares to keep it alive.
The company raised $750,000 by selling 500,000 units at $1.50 to one accredited investor, each unit being one share plus a half warrant exercisable at $2.75 for three years. It says proceeds are aimed at debt payments, acquisition capital and/or general purposes. More new shares and warrants mean some dilution.
All 4,800,000 warrants from the June 2011 unit placement were exercised at $0.50, bringing in $2,400,000 and issuing 4,800,000 new shares. The company says it intends to use the money for debt repayment, acquisitions and/or general purposes. This adds cash but dilutes existing holders by the new shares.
The company extended the closing date of the Wevco Kansas lease purchase from April 30 to May 31, 2012, paying a non-refundable $100,000 extension fee that is credited to the price if the $5,000,000 is paid by the closing date. The deal had not closed by the original date; the filing does not say why.
The company agreed to buy Wevco Production's working interests in oil and gas leases of up to 64,575 net acres in Gove and Trego Counties, Kansas, for $5,000,000 at closing plus 1,000,000 shares. It paid a non-refundable $100,000 at signing and owes another $200,000 by March 15, 2012, both credited against the price. This is a new Kansas acquisition thread; the filing does not say how the $5,000,000 will be funded. The company's address also moved to Fort Worth, Texas.
10 Feb 2012material agreement termination▼ BadMajor
The company terminated the planned $9,350,000 sale of JHE to Colonial Royalties on Feb 6, 2012 after Colonial missed the $2,100,000 payment due Jan 29; only the first $100,000 had been received. The company withdrew its shareholder-consent information statement and says it no longer has corporate authority to proceed with that sale, though it keeps the right to pursue Colonial for breach. This resolves the JHE sale announced in January: it did not happen, and the company still owns JHE.
The company issued $2,750,000 of 10% convertible notes (due Feb 8, 2013, convertible at $1.50 per share) and used the proceeds to make the $2,000,000 December 2011 payment to the Edsels on the JHE note, which had been missed and extended twice (a $100,000 payment bought the first extension). The Edsels also pushed the March 2012 payment to April 30, 2012. In return the noteholders get a pledge over JHE and a 3.5% overriding royalty in certain properties the company may acquire, and the company dropped the clauses that would release JHE oil and gas properties from the Edsels' pledge as the note is paid down. The company says it is current on the note after the Feb 8 payment.
The company agreed on December 30, 2011 to sell 100% of its JHE Holdings interests, the assets bought in June 2011, to Colonial Royalties, LLC for $9,350,000. Payments are $100,000 received December 30, then $2,100,000, $3,200,000 and $3,950,000 due in January to March 2012, with the transfer happening March 29, 2012. Of the total, High Plains, owned by CEO and director S. Jeffrey Johnson, gets $935,000 for its retained 10% profits interest in JHE, and a majority of shareholders consented in writing. This reverses the JHE acquisition less than seven months after it closed. The same filing reports that the company dismissed auditor Silberstein Ungar, PLLC around October 17, 2011 (no disagreements reported; its earlier reports carried going concern uncertainty) and engaged Hein & Associates LLP, effective November 1, 2011.
The company amended CFO G. Jonathan Pina's July 2011 employment agreement so his share grants vest later. Instead of 500,000 shares at signing, 500,000 at 12 months and 500,000 at 24 months, he gets 1,000,000 at 12 months and 500,000 at 24 months, and the 500,000 shares originally issued were cancelled. The total of 1,500,000 shares is unchanged.
The company signed a letter agreement to buy interests in the Redfish 56 Prospect in Glasscock County, Texas from Ingebritson Energy LLC, GTP Energy Partners, LLC, Wind Rush Energy, LLC, Gabriel Barerra and Charles T. Brackett. The sellers get 203,572 company shares and the company takes on certain operating expenses and capital spending. It has 90 days for due diligence and can reduce the price or walk away if title or environmental defects are found, including if they exceed $25,000.
Now named Circle Star Energy Corp., the company issued $1,500,000 of 6% convertible notes due September 14, 2014, convertible at $1.50 per share, sold to non-U.S. investors. The filing says the proceeds went toward the $1,500,000 September 1, 2011 installment on the JHE promissory note, which addresses the funding gap flagged in June. The filing says only that the proceeds paid 'a portion' of that installment.
21 June 2011asset acquisition disposition● NeutralMajor
Digital Valleys Corp. closed its purchase of JHE Holdings, LLC from High Plains Oil, LLC on June 16, 2011. JHE owns small working and revenue interests in producing Texas oil and gas wells, with up to a 5% working interest in some properties. In exchange the company issued 1,000,000 shares to High Plains and 600,000 shares to the Edsels, paid $1,000,000 at closing, and took over a $7,500,000 promissory note at 5% interest to the Edsels (the sellers of JHE to High Plains) that is secured by a pledge of all JHE interests. The filing states the company lacks the cash for the next $1,500,000 payment due September 1, 2011 and needs new financing, or it could lose some or all of the JHE properties. Separately, the filing reports a private placement closed June 15, 2011 of 4,800,000 units at $0.25 each, each unit being one share plus one warrant.
On October 7, 2009 the company dismissed Seale and Beers, CPAs, which it had hired only two months earlier, and engaged Maddox Ungar Silberstein, PLLC as its new auditor. The filing reports no disagreements with Seale and Beers, who supplied a letter; Moore & Associates, under advice of counsel, declined to provide one. The filing does not say why the change was made.
A second amendment to the August auditor-change report repeats the PCAOB revocation of Moore & Associates and says Moore had not responded to the company's request for a letter as of September 22, 2009. It states the company intends to have its annual financial statements on Form 10-K re-audited by Seale and Beers in the immediate future.
This amendment to the August auditor-change report adds that the PCAOB (the auditor regulator) revoked Moore & Associates' registration on August 27, 2009 for rule violations and non-cooperation with an investigation. Moore did not provide the letter the company requested. The amendment states no disagreements with Moore and describes Moore's reports as carrying a going concern qualification.
Under its earlier name Digital Valleys Corp., the company dismissed its auditor Moore & Associates Chartered and hired Seale and Beers, CPAs on August 7, 2009. The filing says there were no disagreements with Moore, and that Moore's report on the fiscal year ended April 30, 2009 carried a going concern qualification (doubt about continuing as a business).
