Each one in plain English, with the numbers worked through for a shareholder.
28 May 2020capital raising announcement▼ BadMajor
On May 28, 2020 the company created Series A Preferred Stock (10,000,000 shares designated, each convertible into 200 common shares) and issued all 10,000,000 shares. Beijing Gas Blue Sky Holding Limited, described as a related party, received 5,000,000 shares for $50,000 cash under an April 6, 2020 agreement. Executive Chairman Kevin Sylla received 5,000,000 shares in exchange for $100,000 of debt owed to him. The filing states these shares convert into 2,000,000,000 common shares and vote alongside common holders on an as-if-converted basis. After a change of control (as defined), the preferred holders can elect a majority of the board. For existing common shareholders this is very large potential dilution and a shift in voting power (inference from the stated terms), set against the 475M authorized common noted earlier.
On September 19, 2019 the company closed a $115,000 convertible note with an unnamed lender (net $115,000), 12% interest payable in stock, due September 19, 2020. After 180 days it converts at 55% of the lowest trading price over 20 days, and unpaid principal rises 10% if not repaid at maturity. Proceeds are to retire two convertible notes and for working capital, continuing the cycle of replacing older notes with new discounted ones.
On July 11, 2019 the company closed a $236,250 convertible note with an unnamed lender (net $236,250), 12% interest payable in stock, due July 11, 2020. After 180 days it converts at 55% of the lowest trading price over 20 days, and unpaid principal rises 10% if the note is not paid at maturity. Proceeds are to retire two existing convertible notes and for working capital, so this is partly refinancing older short-term debt and the largest recent single raise.
On June 4-6, 2019 the company closed four more small convertible loans from unaffiliated lenders, totalling $249,825 principal and $230,750 net. The three notes whose terms appear (GW Holdings $86,625, JSJ Investments $57,000, GS Capital $60,000) are due in late May 2020, convert after 180 days at 45-55% of the lowest recent trading price, and carry 10-12% interest; GW also gets warrants for 160,000 shares at $0.50. The filing text is cut off before the fourth loan (LG Capital Funding) is described. This continues the pattern of deeply discounted notes and adds share reserves of 2.7M, 1.8M and 1.7M shares, which points to more dilution (inference).
The company closed a $131,250 convertible note on May 15, 2019 (net $125,000, 12% interest, due May 15, 2020), convertible after 180 days at 55% of the lowest recent trading price. To cover the required share reserve, Executive Chairman Kevin Sylla lent 1.4 million of his shares, to be returned once shareholders' April 18 approval to raise authorized common stock from 100 million to 475 million shares takes effect. The company also said it is in advanced discussions to buy Montana oil and gas assets (87 wells, about $1.1 million annual gross oil revenue, about 106 barrels/day gross), through a new vehicle, with no assurance it will close. The authorized share increase is a sign of expected further dilution (inference).
Two more small convertible financings closed March 28, 2019: a $52,250 note from Jefferson Street Capital (net $47,500, 10%, due December 19, 2019, conversion at 60% of the lowest recent price, warrants for 83,078 shares at $0.50), and a second tranche of $40,018 under the December 2018 Crown Bridge note (net $36,500, 12%, 50% discount conversion, warrants for 80,036 shares at $0.50). This continues the pattern of small deeply discounted notes and funds the previously unfunded Crown Bridge tranche.
The company closed another convertible loan, a $380,000 note dated March 6, 2019 (10% discount, $342,000 proceeds, 12% interest, due September 6, 2019), plus five-year warrants for 608,000 shares at $0.50. The lender can convert at 50% of the lowest recent trading price, and the filing itself warns shareholders could be materially diluted and a change in control could occur. Of the proceeds, $110,000 went to partially repay the November 1, 2018 note and $40,000 to the auditor; the rest is for field optimization of the recently acquired gas wells and working capital.
12 Mar 2019capital raising announcement● NeutralMajor
On March 6, 2019 the company closed the Wyoming gas acquisition flagged in the November 2018 letter of intent (agreement dated December 11, 2018): 22 natural gas wells on about 18,214 gross acres in the Greater Green River Basin, 78% held by production, for about $700,000 cash. The wells produce around 900 Mcf/d, and title transfer awaits the BLM process. It was funded by a $705,882 senior secured convertible note (proceeds $600,000, 10% interest, due September 1, 2019, convertible at $0.50) with warrants for 1,125,000 shares at $0.50 and a guarantee from Sylla. The note is secured by the acquired assets, and the lender also gets a 10% net profits interest from September 2, 2019 to September 1, 2022, with $20,000 monthly payments under a cash management agreement. This resolves the letter of intent but adds short-term debt due in about six months.
On December 19, 2018 the company issued a $58,300 convertible note (funded December 21 for net $53,000, after a $5,300 original issue discount) at 10% interest, due September 19, 2019. After 180 days the lender can convert at 60% of the lowest recent trading price (a 40% discount), so conversions could dilute shareholders. Proceeds are for general corporate and working capital purposes. This is another small financing in the series since November 2018.
On December 6, 2018 the company agreed to a convertible note of up to $136,500, funded in three tranches; the first tranche of $45,500 closed December 7 for net proceeds of $41,500. Interest is 12%, each tranche matures 12 months after funding, and after 180 days the lender can convert at 50% of the lowest recent trading price. Each funded tranche also carries warrants for up to 227,500 shares at $0.20 over 5 years. Only the first tranche is funded, and the filing says there is no assurance the others will be. This is another small, heavily dilutive financing following the November 2018 note.
On November 1, 2018 the company issued a $380,000 convertible note (10% original issue discount, 12% interest, due May 1, 2019) for $342,000 of proceeds, plus 650,000 restricted shares and two 5-year warrant tranches (687,500 and 2,062,500 shares) at $0.20. The lender can convert at 50% of the lowest recent trading price, and the filing itself warns shareholders could be materially diluted and a change in control could occur. Proceeds are to retire certain loan obligations currently due, plus working capital. Separately, a subsidiary signed a letter of intent to buy producing natural gas properties in Wyoming (about 18,000 gross acres, mostly stripper gas production), subject to due diligence, definitive agreements and financing; no price is given. The company's address has moved to Los Angeles from Denver. The terms are much harsher than the 2017 notes (conversion at $0.665 and warrants at $1.00), a point the filing's own figures support.
The company borrowed on a $267,500 senior convertible note from an unaffiliated investor (named in the press release as FirstFire Global Opportunities Fund), receiving about $250,000 before costs. The note carries 8% interest and is due August 17, 2018, and the lender can convert it to shares at $0.665. The company also issued 60,000 restricted shares and warrants for 267,500 shares at $1.00 (18 months). Executive Chairman Sylla guaranteed the note, as he did the September 2017 $250,000 note. The company can avoid conversion by repaying 115% of principal within six months. The proceeds are for general corporate and working capital purposes. This continues the pattern of small financings with dilutive terms. The press release also says the company is working with a placement agent on a reserve-based financing and exploring options with its Hong Kong stakeholders; these are intentions, with no agreement stated.
On September 29, 2017 the company issued a $250,000 note to an unaffiliated investor, due January 2, 2018 (interest-free if paid on time, 15% afterward), along with warrants for 375,000 shares at $0.665 (to 2019), 375,000 at $1.25 and 185,000 at $2.00 (both to 2020). Executive Chairman Kevin Sylla personally guaranteed the note. Because of price-protection terms in earlier unit sales, it will also issue 136,015 shares and matching warrants to earlier investors (100,752 to Wilshire), with warrant prices reset to $0.665, which dilutes existing holders. The proceeds are for general operating purposes.
7 July 2016capital raising announcement● NeutralMajor
On June 30, 2016 the company agreed to sell 3,007,519 new shares to Berwin Trading Limited at $0.665 per share, raising $2 million. This is the first new money raised since the Foothills Petroleum share exchange and adds new shares for existing holders (dilution).
What it means for a shareholder
3.0m new shares at $0.665 to raise about $2.0m. That's 21% dilution: every existing holder's slice gets 21% smaller. If you held $1,000 of shares (1,504 at the issue price), your slice goes from 0.013% to 0.0103% of the company. To keep it you'd need 392 more shares - about $261 at the issue price.
