History
Daleco Resources, a minerals and oil and gas company, spent a decade shifting assets to partners, selling leases and raising small sums while carrying going-concern doubt and late filings.
2004-2005: Partnering out the minerals
Daleco's business was minerals and oil and gas. In September 2004 it amended its 2001 marketing agreement with Sumitomo Corporation of America, which held a 4.39% stake. Sumitomo's exclusive marketing and buyout rights were removed, the agreement was set to run to June 30, 2005, and Sumitomo's warrants for 2,240,000 shares were cancelled. Daleco said this removed a potential anti-takeover provision and gave it more freedom to market its mineral and timber products.
It then handed day-to-day running of two New Mexico properties to Tecumseh-linked operators. In December 2004 a memorandum covered Sierra Kaolin in Sierra County, and in February 2005 a second agreement covered calcium carbonate interests in Cibola County. In March 2005 the Sierra Kaolin deal became a formal operating license with Tecumseh Industrial Minerals. In each case profits were split 65% to the operator and 35% to Daleco, and the operator paid first-year costs.
In September 2005 Daleco closed a private placement of 6,500,000 shares at $.25, raising $1,625,000 with warrants attached. The money was to retire its Class A Preferred Stock, tied to the Kane litigation, and for working capital. The new shares diluted existing holders.
2005-2006: Restatement and an Ohio deal
In December 2005 Daleco agreed with SEC staff to restate its March 31 and June 30, 2005 quarterly reports. The issue was how it accounted for stock and warrants received from selling its I-Squared and I-Top software, later linked to Ostara and Rheologics. It had carried them at cost and would now use fair value from January 13, 2005. The effects were non-cash: securities rose $3,092,973 in the March quarter and fell $3,125,411 in the June quarter. Daleco still said its disclosure controls were effective.
In May 2006 it agreed to buy 119 producing wells and leases covering about 17,000 acres in Ohio, plus a gas gathering system and rigs. No price was stated, and later filings do not confirm that the purchase was completed. After this the record is quiet until 2012.
2012-2014: Asset sales and new investors
In January 2012 FINRA warned that Daleco's annual report for the year to September 30, 2011 was late, and that its shares would be removed from the OTC Bulletin Board if it was not filed by February 16. The same week it agreed to sell undeveloped leasehold rights for $898,355. The sale closed on March 28, 2012, and the money went to working capital. The company noted about $25 million of tax loss carryforwards.
In March 2013 Daleco agreed to sell 15,000,000 shares for $1,500,000, plus a five-year warrant for 18,000,000 shares at $0.20, to Far East Investments and DTE Investment. Far East also became exclusive sales agent in Asia for its natural resource products, excluding India and ZeoSure. Major creditors agreed to wait two years for payment, and $350,000 of the proceeds paid past-due debts. Shares on issue rose from 49,441,058 at the end of 2012 to 72,468,458 at the end of 2013.
As of January 3, 2014, Daleco had sold 280 net acres of Burleson County, Texas deep rights for $488,038, and a further sale was still to close. The Ohio purchase was unconfirmed, auditors had flagged going-concern doubt, and a late-filing notice for the 2013 annual report had been issued.
Written from the 12 story beats below (2004 to 27 Mar 2013), which come from the company's own announcements and filings.