History
Terax went from a failed supplements shell to a Texas gas explorer funded by about $24 million of raisings, lost everything by 2007, and was a dormant shell by 2010.
2004-2005: From supplements shell to Texas gas
The company began as Royal Phoenix, with a plan to sell nutritional supplements. In October 2004 it dropped that plan, citing no revenue and heavy competition, and went looking for a business to merge with. It did a three-for-one share split, taking shares outstanding from 9,516,000 to 28,845,000, and raised authorized shares from 20 million to 60 million. Management warned that a deal would likely dilute holders substantially.
By June 2005 it was named Terax Energy and had bought Erath Energy Inc., which held oil and gas leases on 10,482 gross acres in Erath County, Texas. It paid 318,000 shares, valued at $1,590,000. The sellers could reverse the deal if a financing of at least $5,000,000 did not close by July 31, 2005. A private placement followed: $5,700,000 in August and a further $1,680,000 in September, closing at $7,390,000.
2005-2006: Borrowing and a big raise
In December 2005 Terax agreed a $2,500,000 note at 12.5% interest, secured on its wells. It also published projections that depended on raising about $62,500,000 of equity and $90,000,000 of debt by the end of 2007. Lawrence Finn was interim CEO and CFO, replacing J. William Rhea IV as signatory.
In February 2006 the company settled all claims with Rhea, its former CEO. It paid him $800,000, released 800,000 of his 5,000,000 escrowed shares and cancelled the other 4,200,000. It borrowed another $2,500,000 on the same terms, bringing its notes to $7,500,000. Days later it sold 12,805,600 shares with matching warrants for $16,007,000 at $1.25 per unit, a price about 30% below the market price when agreed. In April it signed a five-year gas sales agreement with Louis Dreyfus Gas Development L.P. for gas from its Erath County leases. In May it issued a further $2,500,000 note at 12.5% to Paul A. Turner, Trustee, secured on the same leases and equipment.
2007: Control passes to Westar
By April 2007 the picture had changed sharply. Terax told shareholders of a control change: Westar Oil, Inc. bought 618,000 shares at $0.21 for $129,780, with Linda Contreras becoming CEO and the sole director, David Pratt, resigning. The share table showed 3,066,631 shares outstanding, far below the earlier base. The filings do not explain this.
In July the second closing completed. Westar paid $948,780 in total for 4,518,000 shares, or 55% of the company. Finn resigned as CEO and CFO. Shareholders approved renaming the company Westar Oil and Gas, Inc. and raising authorized shares to 200 million. A 2-for-1 restricted share dividend and a share exchange with Westar were announced, with no terms given.
2008-2010: A dormant shell
The record for these years is quiet. Malone & Bailey resigned as auditor in September 2007. In July 2010 new management said Terax had lost all its operations and assets, including the Erath County leases, through foreclosure or other means by June 30, 2007, and had been dormant since. It referred to a 2007 SEC trading suspension and an OTC Bulletin Board delisting, saying all such matters were settled with no continuing obligations as far as it knew. The filing did not say what became of the Westar deal.
As of July 19, 2010, Charles Stidham, appointed July 13, was sole director, President and CEO. The company had no assets and no pending transactions. It planned to combine with a private company, none yet named, and to file overdue reports for 2007-2010, subject to engaging S. W. Hatfield, CPA as auditor.
Written from the 12 story beats below (2004 to 19 July 2010), which come from the company's own announcements and filings.