Each one in plain English, with the numbers worked through for a shareholder.
29 Dec 2015material agreement● NeutralMajor
On December 28, 2015 the company, through its subsidiary HERC, LLC, signed an agreement to acquire Monroad LLC, a Mongolian road construction and earth moving company, from its sole shareholder. In exchange it would issue 1,000,000 shares of 6% Series A Convertible Preferred Stock (face value $16 million), convertible into 16 million common shares, or about 49% of the outstanding shares at closing, so existing shareholders would be diluted if it completes. The deal is not final: it depends on due diligence, converting certain company debt to equity, a $2.00 per share trading price, and enough funding for the combined business plan (some conditions can be waived). Monroad's 2014 audited revenue was reported as $19,214,805, and the company says this adds to its Hertz franchise plans in Mongolia, which have not yet been shown to have started.
On June 9, 2015 the company and Hydrocarbons Holdings settled a dispute with B&J Oil Company over costs from its Kentucky oil production. B&J is owed $412,270.73, paid from Kentucky crude oil sale proceeds, with Hydrocarbons responsible for any shortfall, and the company issued B&J 130,000 restricted shares. The company says it was never served with a complaint and the case was dismissed with prejudice.
On January 22, 2015 the subsidiary Rental Equipment, LLC signed a loan agreement with XacBank for a credit line of up to $10,000,000 over 60 months at 12% interest, to buy equipment for the Hertz franchise. It can fund up to 80% of equipment cost, requires rental agreements before funds are released, and is secured by a pledge of the equipment bought. The parent company guarantees all of the borrower's obligations and must keep a 1.2 debt service coverage ratio. The press release calls it the first $10 million of a proposed $40 million line, and the company says it will look for more funding with no assurance of getting it.
On December 16, 2014 the Hertz franchise agreement was amended to move the start date from July 1, 2013 to December 31, 2014. The franchise therefore had not started on the original date (inference from the change). The filing gives no reason.
Mongolia Holdings parted company with its auditor GBH CPAs, which confirmed it had no quarrel with the company's account of the change. The incoming firm is not named in the surviving exhibit.
On March 21, 2013 the company's subsidiary Mongolia Equipment Rental Corporation signed a 10-year Hertz Equipment Rental franchise agreement for Mongolia, starting July 1, 2013, with two 5-year renewal options. It pays a $45,000 initial fee and a monthly fee of 6% of gross revenue (minimum $135,000 a year). Hertz may not license another equipment rental business in Mongolia, and the company gets a right of first opportunity for Burma (Myanmar). This is a new business line alongside the oil and gas assets.
On February 21, 2013 the company agreed to transfer substantially all of its oil and gas assets and liabilities to its wholly owned subsidiary Hydrocarbons Holdings, Inc., effective February 28, 2013. The assets stay inside the group but are now held in a separate subsidiary.
Effective February 1, 2013 the company signed one-year consulting agreements (to January 31, 2014) with Brady Strahl as President and Sean Kirwan as Vice President and in-house counsel, each for up to 20 hours a week. Each receives 200,000 shares, so 400,000 shares are being issued. The filing is signed by Gary Kucher as CEO and President, and it does not say whether Strahl replaces him as President.
The company amended Carl Casareto's December 2012 consulting agreement to give him 200,000 more shares of common stock as extra incentive pay, saying he is proving a valuable addition to management.
Effective January 1, 2013 Richard S. Polep continues as CFO under a one-year consulting contract (to January 1, 2014). He is granted 400,000 shares for serving as CFO from August 8, 2011 to December 31, 2012, plus another 400,000 for the new term, which adds 800,000 shares in total.
Effective December 1, 2012 the company hired Carl Casareto as Chief Operations Officer on a one-year consulting contract (to December 1, 2013) at $7,000 a month for up to 20 hours a week. He can earn a 25% bonus on annual base pay if the company reaches $5M revenue, $1M EBITA, or $3M of annual funding.
MONGOLIA HOLDINGS, INC. shareholders approved the routine matters put to a vote at the company's annual meeting (director elections, auditor ratification, and the executive-pay advisory vote).
