Each one in plain English, with the numbers worked through for a shareholder.
30 Dec 2016capital raising announcement▼ BadMajor
On December 28, 2016 Jayhawk finalised the terms of a November 2016 settlement with Kelly Stopher, a former officer and director. It issued him a $177,173.49 four-year, 0% convertible note (convertible at $0.01 per share, secured by a pledge of 350,000 shares) and a 5-year warrant for 75,000 shares at $0.01. A second amendment protects his net equity, warrants and collateral if the company changes the conversion ratio of its proposed 100:1 reverse split. The note can be repaid in full at his option once the company raises at least $3,000,000, and he can foreclose on the pledged shares if substantially all assets are sold. Stopher is now described as a former officer and director, while Scott Mahoney is the signing Interim President/CEO and CFO.
On November 3, 2015 Jayhawk granted Vast Exploration a further 39,645,872 warrants, exercisable at $0.005 per share until November 3, 2020, in return for Vast eliminating about $198,229.36 of company liabilities. This is a second grant under the September 25, 2015 Warrant Purchase Agreement, following the 94,333,678 warrants of October 8, and adds to potential dilution from Vast.
On October 19, 2015 OTC Markets told Jayhawk its stock had closed below $0.01 for more than 30 consecutive days, so it no longer met the OTCQB continued-eligibility standard. The company says it plans to regain compliance within the grace period; the filing gives no length for that period or how it will do so. The filing also lists the company as a Nevada corporation with a Spokane, WA address, whereas earlier filings showed Colorado and Coeur d'Alene, Idaho.
On October 8, 2015 Jayhawk granted controlling shareholder Vast Exploration 94,333,678 warrants, exercisable at $0.005 per share until October 7, 2020, in return for Vast taking on about $471,668.39 of company liabilities. The grant was made under a September 25, 2015 Warrant Purchase Agreement. At $0.005 the exercise price is below the $0.01 conversion price on the debentures, and exercise would add shares to the 199,125,629 outstanding (inference: further dilution for other shareholders and more control for Vast).
On October 2, 2015 Jayhawk sold all of its North Dakota assets (leases, mineral and royalty interests, wells, equipment, contracts and records), effective September 1, 2015, to Vast Holdings, a wholly owned subsidiary of its controlling shareholder Vast Exploration, for $10. The filing says the transfer was made in lieu of foreclosure of certain company debt obligations; it does not say which debts or how much. Chairman Scott Mahoney, who controls Vast Holdings and Vast Exploration, recused himself from the vote. This disposes of the Candak/Crosby North Dakota oil wells listed in the company's holdings, leaving the Kansas assets as the remaining property named in the context.
On August 6, 2015 Jayhawk raised the maximum on its June 30, 2015 revolving credit note with controlling shareholder Vast Exploration from $100,000 to $150,000. Chairman Scott Mahoney, who controls Vast, recused himself from the vote.
14 July 2015material agreement termination● NeutralMajor
On July 8, 2015 Jayhawk signed a contract operating agreement, retroactive to January 1, 2015, making controlling shareholder Vast Exploration operator of record for all its properties for $20,000 a month. The company still pays all property fees, expenses and taxes. The term is two years with automatic one-year renewals, and the agreement ratifies services Vast already gave. Chairman Mahoney recused himself from the vote.
On June 30, 2015 Jayhawk set up a revolving credit loan with Vast Exploration, its controlling shareholder, allowing borrowing up to $100,000 at 1.5% per month. Principal is due on demand or by June 30, 2016, and Vast can convert the loan into common stock at any time. Chairman Scott Mahoney, who controls Vast, recused himself from the vote.
6 May 2015material agreement termination▼ BadMajor
Vast Exploration, LLC bought the 2009 and 2010 debentures from the original holders on April 17, 2015. Effective April 30, 2015 the conversion price on all of them is reset to $0.01 and the derivative provisions are deleted. Vast converted four of them ($1,187,497.88 of principal and interest) into 118,749,788 shares, giving it 59.64% of the voting stock of 199,125,629 shares and majority control. Vast keeps debentures worth $1,079,964.38. Vast is controlled by board chairman Scott Mahoney, and an affiliate, Vast Petroleum, is the company's Kansas farmout partner. Control has moved to Vast, and existing shareholders were diluted.
On June 3, 2014 Jayhawk and one of the existing debenture investors agreed a further partial reset of the 2009 and 2010 debentures. That investor can convert up to $200,000 more of principal at $0.01 per share, in addition to the amount covered by the 2013 reset. This continues the pattern of cutting the conversion price and adds to potential dilution (inference).
On June 6, 2014 Jayhawk agreed to sell a further $200,000 secured convertible debenture to an accredited investor. It is due in 60 months, convertible at $0.01 (20,000,000 shares), and secured by Kansas assets and the pipeline subsidiary's stock. The investor also gets a wastewater disposal fee on the North Dakota wells of $0.50 per barrel for five years, then $0.25. Unlike the June 3 deals, no royalty is mentioned.
On June 3, 2014 Jayhawk agreed to sell $200,000 of secured convertible debentures each to an institutional investor and to director Lindsay Gorrill, $400,000 in total. They are due in 60 months and convertible at $0.01 (40,000,000 shares in total). They are secured by Kansas assets and a pledge of the pipeline subsidiary's stock. Each investor also gets a 1% royalty on five North Dakota oil wells and a $1.00 per barrel wastewater disposal fee for the first five years, then $0.50.
On April 18, 2014 Jayhawk signed a farmout with Vast Petroleum Corporation covering its leases, wells and gas pipeline. Vast must restart natural gas production within a year, after which it earns a 50% interest in the Farmout Area. Vast also agreed to evaluate for oil and drill test wells, up to twenty, and to operate the leases under a joint operating agreement and bear the development costs. This hands half of the Kansas-type lease assets to Vast in return for its work and spending.
On July 16, 2013 Jayhawk settled the Gross Capital lawsuit, filed March 2012 in Texas federal court seeking over $132,000, by agreeing to pay $60,000 in four $15,000 monthly installments from July 19 to October 19, 2013. The suit will be dismissed with prejudice once paid in full. The company had earlier offered $42,000.
On April 23, 2013 Jayhawk and the debenture investors agreed that each investor can convert up to 25% of the principal outstanding at April 12, 2013 at $0.01 per share (down from $0.05 set in 2012), subject to a 9.99% ownership cap per investor. Debenture maturity moves to December 31, 2013, and the 2009 and 2010 warrants are extended to July 21, 2014 and January 26, 2015. Existing shareholders face further dilution (inference).
On February 15, 2012 Jayhawk engaged Cynergy Advisors LLC to advise on financial or business transactions, including capital raises, mergers, acquisitions, joint ventures, and sales or trades of a working interest. Cynergy was the placement agent on the 2009 debentures. No specific transaction is announced and no fees are stated.
On February 16, 2012 Jayhawk and the debenture holders signed a modification agreement. The 2009 debentures' maturity is extended to March 15, 2012, and the conversion price of the 2009 and 2010 debentures and the exercise price of their warrants are both cut to $0.05 per share. This is down from $0.30 and $0.12 on the debentures, so the same debt can convert into many more shares and dilute existing holders (inference from the lower price).
Jayhawk widened its January restatement. Besides the December 2009 and October 2010 debenture and derivative accounting, it now says leases in Kansas and North Dakota were amortized when they should have been kept as capitalized assets. It plans to restate the 10-K for September 30, 2010 and the 10-Qs for December 2009, March, June and December 2010, and March and June 2011, with the restatement shown in the notes to the FY2011 10-K due on or before February 16, 2012. No restated amounts are given.
Management determined that its accounting for the convertible debentures issued December 14, 2009 and October 20, 2010 was wrong, including derivative liabilities that were not previously recorded, and past financial statements should not be relied on. It plans to restate the 10-K for the year ended September 30, 2010 (the filing writes 'September 3') and the 10-Qs for March, June and September 2010. The filing gives no restated amounts. The address is now Coeur d'Alene, Idaho.
On November 11, 2011 Jayhawk engaged DeCoria Maichel and Teague P.S. as its new auditor, replacing BehlerMick, with audit committee approval. The filing reports no prior consultations with the new firm on accounting issues.
BehlerMick PS resigned as auditor effective November 1, 2011 (accepted November 4) after its audit practice was reorganized following the former managing partner's departure in December 2010. Its reports for fiscal 2009 and 2010 carried a going-concern paragraph, and the filing reports no disagreements. The company could not get the usual auditor letter because BehlerMick no longer practices public accounting.
On April 13, 2011 Jayhawk closed a $321,000 private placement of 2,675,000 shares at $0.12, with no warrants; CEO Lindsay Gorrill bought $144,000 (44.9%). Because of that lower price, the October 2010 debentures and warrants were re-priced from $0.18 to $0.12 per share under their own terms, which increases the shares they could convert into.
What it means for a shareholder
2.7m new shares at $0.120 to raise about $321,000. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.
On October 18, 2010 Jayhawk agreed to sell $500,000 of 10% secured convertible debentures, due in two years, convertible at $0.18 per share (2,777,778 shares) with 1,805,556 warrants at $0.45 for 42 months. The debentures are secured by a lien on company assets including its North Dakota properties but not certain Kansas assets. This is more debt with a conversion price lower than the earlier $0.30 debentures.
On April 19, 2010 Jayhawk and the investors amended the December 2009 debenture deal, merging the third and fourth tranches into one final $600,000 tranche and waiving certain closing conditions for the third. When funded this brings the total to $1.5 million and ends the offering. Funds are for continued drilling at the Crosby, North Dakota Madison oil pool.
On February 22, 2010 Jayhawk agreed to issue 1,600,000 shares in exchange for cancelling the $800,000 Starshell Consultants convertible debenture (the July 2008 note, extended in 2009), including all accrued interest. This resolves that debt thread, trading it for new shares.
The second tranche of the December 2009 debenture offering closed on December 30, 2009 for $600,000, bringing the total raised to $900,000 of the up to $1.5 million. The terms are unchanged (10%, convertible at $0.30, warrants at $0.45), and the funds are meant for the first two wells of a multiwell program on its Crosby, North Dakota Madison Formation oil pool, with permitting under way for drilling shortly after the New Year.
On December 9, 2009 Jayhawk agreed to sell up to $1.5 million of 10% senior secured convertible debentures in stages, due two years out, convertible at $0.30 per share, with 42-month warrants at $0.45. The first $300,000 was received; the money is for working capital, with plans to begin drilling two wells before year-end, and later tranches depend on that drilling's success. The conversion price of $0.30 is far below the $1.75 conversion on the 2008 note, so conversion could add many shares. A placement-agent (Cynergy Advisors) gets a cash fee and warrants.
On October 7, 2009 the board dismissed auditor Meyers Norris Penny and appointed Williams & Webster, P.S. of Spokane, Washington. The filing reports no disagreements with the old auditor; its earlier reports carried a going-concern doubt paragraph due to recurring losses.
The $800,000 convertible note from July 2008 (due July 30, 2009) was extended to July 30, 2010. Accrued interest to July 30, 2009 was paid in 384,000 restricted shares, and a $40,000 extension fee was paid in 160,000 restricted shares, so the extension adds shares. An attached press release updates the southeast Kansas projects (Uniontown and Girard, about 45,000 gross acres): only 5 wells are producing, at over 105 mcf/day, and True Energy has piloted 5 wells with its own stimulation methods. The release describes the True Energy deal as up to 85% for $1.8 million over 3 years, which differs from the $500,000 + $1,300,000 minimum in the August letter agreement (the two figures sum to $1.8 million, so likely consistent but not stated). The press release names the note holder as Starshell Consultants.
On August 7, 2009 Jayhawk signed a letter agreement letting DK True Energy Development earn up to an 85% working interest in its southeast Kansas coal bed methane project by paying Jayhawk $500,000 and spending at least $1,300,000 over three years. True Energy bears the development cost; formal documents were expected by August 31, 2009, with activity to start in September 2009.
