Glen Rose Petroleum CORP

On Oct 17, 2011 management concluded that fiscal 2010 financing and equity transactions needed restating for non-cash changes in the value of warrant and derivative liabilities, so the June, September and December 2010 quarterly reports should not be relied on; amended reports are to follow. The press release reports fiscal 2011 (to March 31) oil sales of $1,103,227 against $124,815, and a net loss of $14,662,555 against a restated $12,176,826, with non-cash warrant and derivative charges of $8,731,562 (2011) and $6,931,936 (2010). It says production was 40-50 net barrels a day, that it expects to raise more capital, and that the office has moved to Houston. This is another restatement in a long series.

financial restatement

Under agreements dated June 24, June 28 and July 4, 2011, the company sold 4,292,990 common shares to non-U.S. investors for about $1,931,810 (about $0.45 a share), plus two-year warrants for the same number of shares at $0.45. A further 373,430 shares went to ABG Sundal Collier as an advisor fee. This adds to the share count after the January 2011 raise.

capital raising announcement

On Jan 21, 2011 the company sold 7,000 Series D convertible preferred shares to non-U.S. investors for $2.1 million, with two series of warrants (7,000,000 shares at $0.40 and 7,000,000 at $0.60) and a fee package to ABG Sundal Collier. The preferred converts into 7,280,000 common shares once authorized common stock is raised to at least 125 million, from the 20 million currently authorized; this is significant dilution. Because of the sale, the warrants held by the March 2010 Iroquois convertible note investors reset to 23,333,334 shares at $0.30, and Iroquois waived defaults tied to the 20 million share limit. The press release says the company produced an average of 85 barrels a day in late 2010 from about 30 reworked wells and plans up to 10 delineation wells. The company now trades on the OTC bulletin board and is based in Katy, Texas.

capital raising announcement

Glen Rose Petroleum CORP's exchange filed to remove a class of its securities from listing.

listing compliance notice

On Jan 7, 2010 Nasdaq told the company its bid price was below the listing minimum and its shares would be delisted on Jan 18, 2010 unless it asks for a hearing, which it intends to do. Nasdaq noted that panels have generally seen a reverse stock split within 30-60 days as the only acceptable plan, though a panel can allow up to 180 days. This escalates the bid price deficiency open since 2008; if delisted, the stock could not be quoted on the OTC Bulletin Board or Pink Sheets until a market maker files and clears a Form 211.

listing compliance notice

On Aug 11, 2009 the company received $250,000 from Dr. Howard Berg in return for a three-month senior secured note at 1.5% per month, plus warrants for 250,000 shares at $0.33 (expiring Jan 30, 2011) and 250,000 shares at $0.67 (expiring July 30, 2012). The note is secured by company assets, and the warrants could dilute shareholders.

debt financing

The company fired Hein & Associates on Sept 25, 2008 and hired Jonathon P. Reuben CPA for the year ending March 31, 2009; Hein reported a material weakness in internal controls and no disagreements. It also swapped former CEO C. Scott Wilson's 500,000 options for 62,500 restricted shares with mutual releases. Nasdaq separately gave a new 180-day period on the $1.00 bid price rule; the filing's stated deadline of 'March 23, 2008' appears to be a typo for 2009 (inference).

auditor change

The company (now Glen Rose Petroleum, Delaware) agreed on July 23, 2008 to sell WHL Energy of Australia a 50% interest in 2,560 acres of its Wardlaw Field (Edwards County) for $2.5 million, with options on two more 2,560-acre phases for $3.0 million and $4.0 million. This is the financing partner sought for the Edwards County project. The company keeps a 50% carried interest in amounts WHL advances. It also ended its Chadbourn Securities placement agreement with mutual releases and 25,000 restricted shares to Chadbourn. A press release notes Hein's going-concern opinion on the March 31, 2008 10-K.

material agreement

Auditor Weaver & Tidwell resigned on Feb 25, 2008, and on March 28 the audit committee engaged Hein & Associates to audit the year ending March 31, 2008. Weaver & Tidwell's report on the year to March 31, 2007 included a going-concern warning and the company disclosed a material weakness in internal controls; no disagreements were reported.

auditor change

On Jan 31, 2008 Nasdaq told the company its share price had closed below the $1.00 minimum for 30 straight business days, giving it until July 29, 2008 to get back above it. If it cannot, it may get a further 180 days if it meets other listing criteria, otherwise delisting. This adds to the listing problems already open from the Dec 2007 hearing process; this filing does not mention that earlier hearing's outcome.

listing compliance notice

After the company filed a plan in August 2007 and received an extension, its Sept 30, 2007 quarterly report (shareholders' equity of $2,254,444) still showed non-compliance, and Nasdaq said on Nov 30 that trading would be suspended Dec 11, 2007 unless appealed. The company appealed, with a hearing set for Jan 17, 2008. It cites a $600,000 placement of stock and warrants (announced Nov 29, 2007) and says it hired two Calgary professionals and aims to line up financing for Phase 1 of its Edwards County pilot, hoping this satisfies Nasdaq. The filing is signed by Joseph F. Langston as Interim CEO and gives a new address (1310 West Wall, Midland), which shows leadership and office changes from the context.

listing compliance notice

Nasdaq notified the company on July 19, 2007 that it fails the Capital Market equity/market value/net income requirement ($2.5M equity, or $35M market value, or $500,000 net income). It had until Aug 3, 2007 to submit a compliance plan and said it did not yet have one and was not certain it would. This adds a second listing deficiency to the June bid-price notice.

listing compliance notice

Nasdaq told the company on June 15, 2007 that its stock closed below $1.00 for 30 consecutive business days; it has until Dec 12, 2007 to regain compliance, with a possible further 180 days or delisting. Separately, the filing says Lothian, the largest shareholder that funded operations, filed for Chapter 11 on June 13, 2007, and the company does not know what effect this will have on its operations. This is a new listing issue and the failure of the funder behind the Lothian merger thread.

listing compliance notice

The filing explains that Lothian's Cato Loan (raised from $4M to $8M, $6,554,000 drawn) was cut to $2,156,000 principal after $4,398,000 of sale proceeds were applied. On June 6, 2007 the company and UHC New Mexico agreed to hand the Cano shares to Lothian as full and final payment of the loan, which stood at $2,009,917 principal plus $434,111 interest, with Cano shares closing at $5.27. This ends the Cato loan and uses up the Cano shares from the New Mexico sale.

material agreement

On March 30, 2007 UHC New Mexico sold all its assets (the Permian Basin leases, including the Cato San Andres Unit area) to a Cano Petroleum subsidiary for $7 million cash and 404,204 restricted Cano shares, with $800,000 of the cash held back for 120 days. About $4.4 million went to Sterling Bank, curing the Jan 31 default; the press release says the company and UHC New Mexico were released from the Sterling loan. The rest went against the Lothian Cato loan, with the Cano shares pledged for the balance. Pro forma Dec 31, 2006 figures show total assets of $9.3 million, shareholders' equity of $5.4 million, and unproved oil and gas properties of $5.8 million. This resolves the Sterling default thread and removes the New Mexico leases that were the company's main assets in the context.

asset acquisition disposition

The Sterling Bank forbearance expired with Lothian out of compliance, and the borrowers missed a $1,500,000 payment due Jan 31, 2007, which the bank declared an Event of Default (Feb 5, 2007 letter, also sent to guarantors UHC Petroleum Services and UHC Petroleum Corp). If accelerated, about $4,600,000 would be owed, excluding a $500,000 letter of credit, late fees and default interest; the company is negotiating a limited waiver to Feb 15, 2007 but no deal exists. The company says its board never approved the Jan 12 Second Amendment (the bank says it is enforceable), and that Lothian, which has funded operations since Nov 2005, may no longer be able to do so. This worsens the Nov 2006 forbearance thread.

debt financing

UHC New Mexico, the company's subsidiary, signed an Agreed Compliance Order with the New Mexico Oil Conservation Division (signed by the OCD Dec 4, 2006; effective Sept 1, 2006), replacing the Dec 7, 2005 order. It must bring at least 220 inactive wells into compliance (restore to production, plug, or approved temporary abandonment), with at least 40 by March 15, 2007 and at least 36 per six-month extension after that. Missing the quota triggers a penalty of $1,000 per well not brought into compliance, and plugged-well sites must be remediated (penalty of $1,000 per full month out of compliance).

material agreement

On November 10, 2006 Sterling Bank agreed not to act on defaults under the $20,000,000 credit agreement: Lothian missed the current ratio covenant at September 30, 2006 and was late with financial statements for periods ended March 31 and June 30, 2006. The bank waived the late-statements default, agreed to forbear on the ratio breach, and gave Lothian until December 1, 2006 for its September quarter statements. The bank could have demanded full repayment but did not; the facility is secured by company subsidiary assets, so this matters to the company's shareholders. The filing says no more about the ratio breach beyond the forbearance.

material agreement

The company filed an S-4 registration/information statement for the Lothian merger, reflecting the Sept 21 terms (0.80 share per Lothian share; $3.00 warrants for holders of record April 26, 2006). It also describes approved actions: reincorporation in Delaware, a possible one-for-two reverse split if the board deems it necessary, and a 2006 equity incentive plan. Shareholders are told their vote is not needed because majority holders already consented. The stock closed at $2.65 on Sept 28, 2006. This continues the pending merger and adds the Delaware and reverse-split steps.

business combination

On September 21, 2006 the merger agreement with Lothian was amended: Lothian holders now get 0.80 company share per Lothian share instead of 0.60606, so more shares go to Lothian holders. The $3.00 warrants for other shareholders can now be called early if the stock closes above $4.50 for ten straight trading days, and the outside termination date moved from Sept 30, 2006 to April 30, 2007. The preferred stock was resized (Series A to 176,000, B-1 to 40,000, B-2 to 60,000 shares) with lower conversion prices ($1.25, $1.25, $1.5625). The press release attributes the change to new engineering and financial information and a revised fairness opinion.

material agreement

On June 16, 2006 the company and its subsidiary UHC New Mexico signed, together with Lothian entities, a $20,000,000 credit line with Sterling Bank, secured by UHC New Mexico's oil and gas leases and by the company's pledge of its UHC New Mexico shares. The initial borrowing base is $5,250,000, the loan is due April 30, 2008, and $3,449,000 of principal plus a $500,000 letter of credit were already outstanding under a prior Lothian agreement. Lothian also agreed to rank its $4,000,000 loan to the company behind the bank. The company's assets now back debt that began as Lothian's line. A press release in the same filing says Lothian-funded work lifted Cato Unit output to about 170 barrels of oil equivalent per day from 40 wells, that Lothian committed over $1 million to a Wardlaw drilling pilot expected to start in August 2006, and that the annual report would be late (targeted for July 14, 2006).

debt financing

The company extended the earlier restatement to also cover fiscal years ended March 31, 2000 and 2001, again because "proved" reserves were incorrectly stated; it expects those reserves to be reduced. It also filed for up to a 15-day delay of its annual report for the year ended March 31, 2006. This continues and widens the June 16 restatement.

financial restatement

On June 15, 2006 the board decided that the company's financial statements for the fiscal years ended March 31, 2002 through 2005 can no longer be relied on, because the reserves labelled "proved" were incorrectly stated. The company expects a significant portion of those reserves to be reclassified as "unproved" or "unevaluated"; the press release says the problem centres on the Cato Unit and Wardlaw Field, and the final changes have not yet been decided. This undercuts the reserves figures the company had been reporting (such as the 35.2 million barrels stated in Oct 2005) and comes while the Lothian merger is still pending.

financial restatement

The company filed terms for new preferred stock (133,334 Series A, 30,303 Series B-1 and 45,455 Series B-2 shares) on May 17, 2006, to be issued to Lothian's preferred holders in the pending merger. The preferred pays 8% cumulative dividends and ranks ahead of common stock on dividends and liquidation, and converts to common at $1.65 (Series A, B-1) or about $2.06 (B-2). Series B-1 holders can elect one director. Because the preferred ranks ahead of common, common shareholders' claims are subordinate to it after the merger. No preferred stock has yet been issued by the company; this continues the Lothian merger.

security holder rights change

Glen Rose Petroleum CORP's exchange filed to remove a class of its securities from listing.

listing compliance notice

On February 22, 2006 the company and Lothian Oil signed a merger agreement under which Lothian, which already owns 58.32% of the company's stock, will be merged into the company, which will be renamed Lothian Oil Inc. Lothian holders get 2 company shares (or matching preferred shares) for every 3.3 Lothian shares held. The filing says the required shareholder approvals have been obtained, dissenters' rights are not available, and the deal can be abandoned if not completed by September 30, 2006. Mize, Gilliam and the other five directors resigned on February 21, 2006 and were replaced by Lothian-linked appointees including Bruce Ransom, Thomas Kelly and Michael Raleigh; C. Scott Wilson is CEO and President and Kenneth Levy is CFO. The company's address is now Midland, Texas. This moves control from the Mize-era management to Lothian.

business combination

On October 7, 2005 the company agreed to sell Lothian Oil Inc. 3,280,000 new shares at $1.05 ($3,444,000 total) plus five-year warrants on 8,720,000 more shares at $1.05, $1.12 and $1.25, subject to shareholder approval. The cash is to repay the Almac Financial line of credit (owned by CEO Mize) with any remainder used for working capital. Separately, Mize and six other holders sold 8,000,000 shares to Lothian for $10,651,000 (Mize sold 5,080,590 and keeps 49,000 shares plus a 1,000,000-share option at $0.50). Lothian also is to enter a development and operating agreement on the Texas and New Mexico properties; the press release says Lothian becomes operator and has committed up to $6.5 million for development. Lothian paid for the purchased shares with a promissory note, and can require the sellers to take the shares back if shareholders reject the company's sale. The press release says Mize stays Chairman and CEO and Lothian may appoint four more directors.

material agreement

Imperial Petroleum told the company on August 31, 2005 that the merger agreement signed October 14, 2004 was terminated, because the merger was not completed by the February 1, 2005 date. This resolves the long-pending Imperial merger; the filing says neither side owes any penalty, and the planned move of Jeffrey Wilson to CEO will not happen. The February 2005 operations management agreement (company subsidiaries as named operators of Imperial's wells) is not terminated by this filing; either side may end it since the merger missed May 1, 2005.

material agreement termination

On August 30, 2005 Nasdaq said the company failed to regain the minimum bid price compliance, so its stock may be delisted from the SmallCap Market. The company has appealed and requested a hearing, which pauses any action, and says it could be quoted on the OTC Bulletin Board if needed. This continues the bid-price problem first flagged in September 2004.

listing compliance notice

Subsidiary UHC Petroleum assigned Dominion Oklahoma Texas Exploration & Production its rights below 2,000 feet on 7,840 of its 10,502 net acres in Edwards County, Texas, with a surrounding area of mutual interest of about 12,800 acres. In return it gets cash, an overriding royalty interest, a carried working interest in the first, second or third wells, and the right to join as a working interest partner. A Joint Operating Agreement is still being prepared, and the first well must start within two years.

material agreement

The company did not regain the $1.00 minimum bid price by the February 28, 2005 deadline set in the September 2004 Nasdaq notice. Nasdaq gave it another 180 days, until August 29, 2005, because it meets the other SmallCap listing criteria.

listing compliance notice

The company settled its lawsuit with Southwest Securities Bank (formerly First Savings Bank) on February 22, 2005, paying $700,000 in full satisfaction of the $2,000,000 line of credit from April 2000. The company says this removed a $2,300,000 liability and added an estimated $1,600,000 in earnings (about $0.10 per share). Separately, Almac Financial Corporation, controlled by CEO Walter Mize, agreed to raise its loan to the company from $3,000,000 to $4,000,000 and extend the maturity.

material agreement

The company's food subsidiary, Heritage Food Group, merged into BMW Holdings on January 27, 2005, after the 'Heritage Lifestyle' meat-business assets were moved into it. The company received a 7.5% stake in BMW (8,823,530 Class A shares) plus $75,000 in 12 monthly payments, and intends to distribute the BMW shares to its own shareholders. Management says the company is now involved strictly in oil and gas.

asset acquisition disposition

On October 14, 2004 the company signed a merger agreement to acquire Imperial Petroleum, Inc. Imperial holders get one company share for every three Imperial shares, and Imperial's CEO Jeffrey T. Wilson would become CEO. The deal still needs approval from both sets of shareholders, Imperial's lenders and an effective Form S-4. The earlier plan for Wilson to buy 13,188,834 company shares at $0.75 is off because he told the company he cannot proceed.

business combination

Nasdaq told the company (filing as United Heritage Corporation, the name used in its filings) that its stock closed below the $1.00 minimum bid price for 30 straight business days. It has until February 28, 2005 to regain compliance, with a possible extra 180 days, and management says it expects to comply.

listing compliance notice