ROYALITE PETROLEUM CO INC. company history: the story so far

History

A former internet business turned Utah oil explorer, then Texas-focused under new control, it sold its legacy unit in 2008 and deregistered from SEC reporting in 2011.

2005-2007: From Worldbid to Royalite

The record opens in April 2005, when management concluded that its audited accounts for the years to April 30, 2003 and 2004 could no longer be relied on. Errors in accounting for convertible debentures (loans that can turn into shares), warrants and deferred revenue meant the fiscal 2004 loss rose by $452,878 to $1,136,921, and the fiscal 2003 loss rose by $774,523 to $1,198,349.

In August 2006, Worldbid agreed to merge with Royalite Petroleum Corp., an explorer on Utah's Hingeline Trend. A planned raising of about $2.6 million from units at $0.75 was replaced by an offering of up to 15,000,000 units at $1.50. A November proxy said existing holders would own about 19.4% of the merged company. In February 2007 the deal was restructured so no Worldbid shareholder vote or spin-off of the Worldbid International subsidiary was needed.

The merger closed on February 28, 2007. The company became Royalite Petroleum Company Inc., issued 24,960,667 shares to former Royalite holders (about 69.6%), and gained leases on about 67,000 acres plus a 2.5% royalty on 285 acres. It also assumed Royalite's debts. Michael L. Cass became CEO.

In October 2007 it won an option to buy 62.5% of the Keystone Project in Utah for 200,000 shares, and signed a non-binding letter of intent over the Green River Prospect. It had no financing for either, and both expired in November 2007. The company said it was trying to renegotiate, with no assurance. It also issued 100,000 shares to CRG Partners for consulting, approved a possible $250,000 of 8% convertible notes, and moved to Austin, Texas.

2008-2011: A Texas turn and the end of reporting

In April 2008 the company agreed to buy a Matagorda County, Texas prospect from May Petroleum, including the Airport Lease of about 1,500 acres, for 50,000,000 new shares and reimbursement of a $100,000 deposit. It owed a further $900,000 in two payments, a $150,000 landowner bonus, and had to start drilling by August 1, 2008. The share issue gave May 56.68% of the company, a change of control and heavy dilution for others. May is controlled by Norris R. Harris, who became Chairman and CEO and is paid $10,000 a month. A placement of up to 8,000,000 shares at $0.25 was approved.

By June 2008 the placement was oversubscribed, with $2,015,000 received. The company had added about 1,200 acres near the lease, expected about 3,000 more, and had an environmental study done for a 16,800-foot well that still needed financing. It also agreed to sell the Worldbid internet subsidiary to Marktech Acquisition Corp. for $50,000 plus about $93,000 of liabilities assumed, to focus on oil and gas.

The latest context, to January 2009, shows a further 1,200,000 shares sold at $0.25 for $300,000. The record does not say whether the well was drilled or the Utah deals revived. In October 2011 the company deregistered its securities, ending its duty to file reports with the SEC.

Written from the 10 story beats below (2005 to 11 Oct 2011), 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.

2011

11 Oct
ROYALITE PETROLEUM CO INC. deregistered its securities, ending its obligation to file reports with the SEC.
listing compliance notice

2008

6 June
On June 5, 2008 the company agreed to sell its Worldbid internet subsidiary, the legacy business kept after the 2007 merger, to Marktech Acquisition Corp. for $50,000 and assumption of about $93,000 of liabilities, to focus on oil and gas. The company also reported its $0.25 placement was oversubscribed (up to 8,400,000 shares, $2,015,000 received so far), that it has added about 1,200 acres near the Texas Airport Lease with about 3,000 more expected (5,700 total), and that it has an environmental study done for a 16,800-foot well, subject to further financing.
material agreement
4 Apr
On April 2, 2008 the company agreed to acquire from May Petroleum, Inc. a Matagorda County, Texas prospect (an assignment of a purchase agreement for a 70% net revenue interest in a lease of about 1,500 acres, the Airport Lease, plus data and a 30-square-mile area of mutual interest) for 50,000,000 new shares and reimbursement of May's $100,000 deposit. It must pay a further $900,000 ($400,000 by April 21 and $500,000 by July 13, 2008), start drilling by August 1, 2008 and pay a $150,000 bonus to the landowner. The share issue gave May 56.68% of the company, a change of control. May is controlled by Norris R. Harris, who became Chairman, CEO and director on March 31, 2008 and is paid $10,000 a month under a two-year management agreement, so this is a related-party deal and existing holders are heavily diluted. The company also approved a private placement of up to 8,000,000 shares at $0.25 for $2,000,000, and will need substantial financing. This shifts focus from the Utah leases to Texas.
business combination

2007

6 Dec
The Keystone option expired unexercised on November 21, 2007, and the Twilight letter of intent for the Green River Prospect expired on November 20, 2007 without a formal agreement. This resolves the October 2007 deal threads negatively for now, though the company says it is trying to negotiate a further option and an extension, with no assurance of success. The company also signed a six-month consulting agreement (shareholder information and public relations) with CRG Partners, Inc. for 100,000 shares, and its board approved on December 4, 2007 an offering of up to $250,000 of 8% convertible notes due December 31, 2009, not yet completed. The address moved to Austin, Texas.
material agreement
15 Oct
On October 1, 2007 the company got an option from Central Utah Lease Acquisition, L.P. to buy 62.5% of its interest in the Keystone Project (66,700 net leasehold acres in Sanpete and Juab Counties, Utah), in exchange for 200,000 shares; the option had to be exercised by November 21, 2007. Exercising would cost $1.5 million cash plus 7,300,000 shares by November 26, 2007, further cash payments totalling $2.26 million by December 31, 2007 and $7.5 million through June 2009, and drilling two carried wells. The company says it has no financing in place. Separately, on October 2, 2007 it signed a non-binding amended letter of intent with Twilight Resources, LLC to buy half of Twilight's interest in the Green River Prospect in Grand and Emery Counties, Utah (about 6,216 net acres) for $6,216,000 plus two carried wells, conditional on the Keystone option being exercised. These are new potential acquisitions beyond the existing Utah leases, and none is certain.
material agreement
6 Mar
The Royalite merger closed on February 28, 2007 and the company became Royalite Petroleum Company Inc. It issued 24,960,667 shares to former Royalite holders, who now own about 69.6% (expected to fall to about 67% after the pending placement units), a change of control. It gained Royalite's oil and gas leases on about 67,000 acres on the Utah Hingeline Trend plus a 2.5% royalty on 285 acres, and assumed all its debts. Michael L. Cass replaced Logan Anderson as CEO and President, with Anderson staying as director and CFO. The earlier plan to spin off the Worldbid subsidiary was dropped, and Royalite's financial statements are to be filed within 71 days.
business combination
14 Feb
On February 9, 2007 the companies replaced the August 2006 merger agreement, with no penalties, by an amended plan under which Royalite merges into a new subsidiary, Royalite Acquisition Corp., followed by a merger into the company. The company no longer has to dispose of Worldbid International Inc. and is dropping the spin-off. Under Nevada law no Worldbid shareholder vote is needed, so the December special meeting was cancelled. Completion was expected by February 28, 2007, subject to Royalite shareholder approval and delivery of its financial statements.
material agreement termination

2006

14 Nov
A preliminary proxy statement called a December 8, 2006 special meeting to vote on the Royalite merger and the spin-off of subsidiary Worldbid International Inc. to existing shareholders. It states existing Worldbid holders would own about 19.4% of the merged company and former Royalite holders 80.6%, so current holders would be diluted. This is the shareholder-vote step required by the August 2006 merger agreement.
business combination
29 Aug
Worldbid agreed on August 23, 2006 to merge with Royalite Petroleum Corp., a Utah Hingeline Trend oil and gas explorer with 24,960,667 shares outstanding, with Worldbid to be renamed Royalite Petroleum Company Inc. Each Royalite share would convert to one Worldbid share, and closing depended on spinning off or disposing of the Worldbid Canada subsidiary, delivery of financial statements and shareholder approvals. The filing also reports about $2.6 million raised from 3,480,200 units at $0.75, which was terminated and replaced by a new offering of up to 15,000,000 units at $1.50. Royalite states it holds leases on over 33,000 acres at a 100% working interest.
business combination

2005

8 Apr
Management concluded on April 7, 2005 that the audited financial statements for the years ended April 30, 2004 and 2003 should no longer be relied on because of errors. The restatement increases the loss for fiscal 2004 by $452,878 to $1,136,921 and for fiscal 2003 by $774,523 to $1,198,349, and lifts the 2003 loss per share from $0.01 to $0.03. It concerns the convertible debentures, warrants and deferred revenue accounting.
financial restatement