Imperial Resources, Inc. (IPRC) company history: the story so far

History

Imperial Resources bought into Texas and Oklahoma oil ventures and a salt water disposal site, funded by share issues and convertible notes, then deregistered from SEC reporting in 2015.

2010-2011: Wells, investors and a disposal site

Imperial Resources, based in Austin, Texas, began its disclosed record in July 2010 with three deals made through its subsidiary Imperial Oil and Gas. It lent $1,500,000 to HydroFX Holding for a waste water disposal venture in Wise County, Texas, convertible at Imperial's choice into 40% of the venture. It also took a 70% working interest in two Grayson County, Texas wells, and a 50% interest in a horizontal drilling project in Kingfisher County, Oklahoma.

The company paid for this partly with shares. In December 2010 Coach Capital converted its $900,000 note and accrued interest into 1,625,059 new shares at $0.58, cancelling the debt and lifting shares on issue to 41,625,059. In January 2011 one accredited investor bought 737,041 shares at $0.6784 for $500,000, with an option to buy up to $2,500,000 more by the end of 2011.

In February 2011 Imperial said its 2009 accounts could no longer rely on their audit, because the auditor's registration had been revoked. It engaged a new auditor, Madsen, to re-audit them. Both auditors' reports had raised doubt about the company's ability to keep going.

In April 2011 the company agreed to buy a salt water disposal facility in Wise County from Legion Land & Exploration for $500,000, mostly through a $450,000 convertible note. In June a subsidiary, Green Tide Water Disposal, signed a $1,200,000 convertible note with Quarry Bay Capital to rework and run the site. The lender could convert it into up to half of Green Tide.

2012-2015: Restatement and exit

In July 2012 the board said its quarterly results for the three periods ended June, September and December 2011 should not be relied on. The $450,000 convertible debt had been wrongly accounted for, and no restated figures were given. By the end of 2012 shares on issue stood at 43,476,197.

In February 2013 the board dismissed Madsen and engaged Sadler, Gibb & Associates as auditor. The record shows no disagreements. The disclosures leave several matters open, including whether the disposal facility was completed and the status of the Texas and Oklahoma wells.

The record then goes quiet. On 27 February 2015 Imperial Resources deregistered its securities, ending its obligation to file reports with the SEC.

Written from the 8 story beats below (2010 to 27 Feb 2015), which come from the company's own announcements and filings.

Beat by beat

The events that changed the company's story, in plain English, each written against everything known about the company at the time. The dot shows whether it was good, bad or neutral for shareholders.

shares on issue market cap (log scale)

201543.5m shares · US$261k market cap

27 Feb
Imperial Resources, Inc. deregistered its securities, ending its obligation to file reports with the SEC.
listing compliance notice
43.5m shUS$261k

201243.0m shares · US$6.0m market cap

23 July
On July 16, 2012 the board concluded that quarterly financial statements for the periods ended June 30, September 30 and December 31, 2011 should not be relied on. The $450,000 convertible debt from the salt water disposal facility purchase was wrongly accounted for: the conversion feature should be treated as a derivative liability at fair value, not a beneficial conversion feature. The filing gives no restated figures.
financial restatement
43.0m shUS$6.0m

2011

20 June
Green Tide Water Disposal, a wholly owned subsidiary, signed a $1,200,000 convertible note to Quarry Bay Capital (not an affiliate) to rework and run the Wise County salt water disposal well bought in April 2011. The note carries 20% interest, paid monthly from 80% of the facility's net cash flow, and the lender can convert the unpaid balance into up to 50% of the equity in Green Tide. This funds the facility's development but could give the lender up to half of that subsidiary.
material agreement
29 Apr
On April 27, 2011 Imperial Oil & Gas agreed to buy about 41 acres, a salt water disposal facility and a wellbore with permits in Wise County, Texas from Legion Land & Exploration for $500,000: $50,000 at signing plus a $450,000 convertible note at 6%, repaid monthly ($9,529.59 for 54 months from June 1, 2011). The holder can convert the balance into shares six months after signing at a 15% discount to the recent average price. The press release describes it as one of two key projects for the company, to be reopened after deepening the well; the facility's cost, revenue and break-even figures are company expectations.
material agreement
7 Feb
Because J. Crane's registration was revoked, Imperial said the 2009 financial statements in its July 2010 annual report can no longer rely on that audit. It has engaged Madsen to re-audit March 31, 2009 and expects to file an amended annual report on or before April 15, 2011. Both auditors' reports had included a going-concern uncertainty.
financial restatement
4 Jan
Imperial signed a Securities Purchase Agreement with one U.S. accredited investor, who bought 737,041 shares at $0.6784 for $500,000 and has the option until December 31, 2011 to subscribe for a further $500,000 to $2,500,000 of shares at a 15% discount to the recent average price or $0.6784, whichever is greater. Shares outstanding rise to 42,362,100, and further dilution is possible if the investor uses the option.
capital raising announcement

2010

13 Dec
Coach Capital converted its $900,000 loan note (January 2010, owed by the Imperial Oil and Gas subsidiary), with $42,534.25 accrued interest, into 1,625,059 new shares at $0.58 per share. The note is cancelled, including Coach's claim on production from a producing well, and shares outstanding rise to 41,625,059, so existing holders are diluted but this debt is gone.
capital raising announcement
16 July
Imperial's subsidiary Imperial Oil and Gas signed three deals: a $1,500,000 loan to HydroFX Holding for a waste water disposal venture in Wise County, Texas (convertible, at Imperial's election, into a 40% stake in the venture); a July 1, 2010 agreement with OKT Resources for a 70% working interest (78% net revenue interest) in two Grayson County, Texas wells, with costs estimated at $1,744,475; and a July 12, 2010 agreement with Husky Ventures for a 50% working interest in a horizontal drilling project in Kingfisher County, Oklahoma, for $398,750 plus estimated drilling costs of $1,503,225. These are the company's first disclosed oil, gas and disposal commitments in this history.
material agreement