Each one in plain English, with the numbers worked through for a shareholder.
13 Apr 2010financial restatement▼ BadMajor
On April 12, 2010 the board said the 2008 financial statements in the company's earlier annual report can no longer be relied on. Correcting a liquidated damages calculation adds a $604,652 expense, so the 2008 net loss restates from $93,703 to $698,355 (loss per share $0.02). The filing also reports the share count at December 31, 2008 was overstated by 1,000,000 shares (restated to 32,223,975) and the warrant count by 9,775,992. The restated figures will appear in the 2009 annual report, and Sherb & Co. is re-auditing 2008. This adds to the earlier concerns about the company's reporting record and relates to the unpaid registration rights penalties noted before.
8 Feb 2010asset acquisition disposition▲ GoodMajor
On February 2, 2010 the company signed two assignments in Green County, Kentucky. The first gives it a 27.5% net interest in each well location across the full 738-acre J.R. and Pansy Clark lease, for 425,000 shares valued at about $297,500, extending the December 2009 eight-location deal. The second gives it an 81.25% working interest in about 27 acres with one existing producing well and 100% of the equipment, for 175,000 shares valued at about $122,500. The company will operate the wells and the Coomers provide drilling services. Both deals are paid in stock, which dilutes existing holders.
On January 21, 2010 Rodefer Moss, engaged in May 2009, declined to stand for re-appointment, and on January 25 the company engaged Sherb & Co. LLP. Rodefer Moss had audited 2006, 2007 and 2008, and its reports from August 2009 raised going-concern doubt. The filing reports no disagreements with the firm and no adverse opinion. This closes the catch-up audit work begun in May 2009, and the company now has a third auditor in under two years.
On December 28 and 29, 2009 the company leased about 14.3 and 56.43 acres in Clinton County, Kentucky, near its David Irwin lease. The filing says this gives over 100 leased acres and potential for 20 or more well locations. Each lease required a $200 payment and carries a one-eighth royalty. Drilling has begun on the Todd Anderson Well #1. This extends the leasing program started in October 2009.
12 Nov 2009asset acquisition disposition▲ GoodMajor
On November 6, 2009 the company acquired a 27.5% revenue interest in 18 producing oil wells in Green County, Kentucky, plus a 27.5% share of the equipment. It paid with 4,000,000 restricted shares valued at $1 million and is responsible for 32% of operating costs. The filing estimates current production on the wells at about 100 barrels per day, with no reserve report yet. This is the company's first producing interest, beyond the earlier undeveloped leases, and the share issue dilutes existing holders. The company also said it began drilling the David Irwin Well #1 on November 9.
19 Oct 2009capital raising announcement● NeutralMajor
Between October 13 and 15, 2009 the company sold 196,154 shares for $51,000 in total, with warrants on 39,231 more shares at $0.31, for general working capital. Effective October 19, 2009 it renamed itself TN-K Energy Group Inc. through a short-form merger approved by the board without a shareholder vote, with a new CUSIP number and a new trading symbol still to be assigned. This explains the name that earlier filings used without explanation. The new shares and warrants dilute existing holders.
8 Oct 2009asset acquisition disposition● NeutralMajor
On October 2 and 5, 2009 the company (then still named Digital Lifestyles Group) signed oil and gas leases for about 10.5 acres in Overton County, Tennessee and about 32.7 acres in Clinton County, Kentucky, both undeveloped. The filing says this is the start of its energy operations and that it is no longer a shell company, with no change of control. This is the first oil and gas activity in the company's history, which had previously reported no operations. The company says its plan is to keep about a 25% working interest in wells it drills and sell the rest to third parties, and it lists Ken Page as its only employee. The filing also repeats the Laurus history and says unpaid registration rights penalties of about $2,165,625 were on the balance sheet at June 30, 2009.
On May 8, 2009 the company engaged Rodefer Moss & Co, PLLC as its new auditor to audit the years ended December 31, 2006, 2007 and 2008. This fills the gap left when Corbin resigned on December 31, 2007, and is a step toward catching up on the audits the company has said it is behind on.
On April 2, 2008 the company made its final payment to Laurus in full satisfaction of the April 2007 settlement, after paying $10,000 a month since the August 2007 schedule. This closes out the Laurus debt that was in default and accelerated in 2005. Under the settlement a warrant for one million shares at $0.40 was also part of the consideration, so that dilution remains (inference from the earlier terms).
The filing says KMJ Corbin & Company resigned as the company's auditor on December 31, 2007, though the 8-K was filed March 21, 2008. Its reports on 2004 and 2005 carried going-concern doubt, with no disagreements and no adverse opinion. The board did not recommend the change. The company is again without an auditor while it is still behind on SEC filings. Ken Page now signs as Chairman and CEO.
On July 31, 2007 Laurus again eased the payment terms, now allowing the remaining $100,000 to be paid as $25,000 on each of August 1, September 1, October 1 and November 1, 2007. Separately, the company agreed to issue 358,000 unregistered shares at $0.50 to Andy Teng, described as its former Chairman and CEO, to settle $179,000 of unpaid salary, expenses and loans. This swaps debt for new shares, which dilutes existing holders. It differs from the September 2005 plan to swap about $1 million owed to Teng for shares at $1.00.
On June 26, 2007 Laurus agreed to let the company pay $50,000 of the remaining $150,000 owed under the April 2007 settlement right away, and extended the due date for the final $100,000 to September 14, 2007. The company paid the $50,000 on June 27. The settlement terms are otherwise unchanged.
On April 23, 2007 the company agreed with Laurus to settle the remaining $2.1 million of debt for $200,000 cash ($50,000 immediately, $150,000 by August 1, 2007) plus a warrant for 1,000,000 shares at $0.40, and cut the exercise price of Laurus's earlier warrant from $0.44 to $0.40. This resolves the debt that was accelerated in May 2005 and replaces the Protron-linked terms from December 2005. The company also raised $250,000 from one investor via a 7.5% note convertible at $0.35, due April 23, 2008, with warrants on 20% of the conversion shares at $0.25, which could dilute shareholders. Its office moved to Crossville, Tennessee, in space controlled by its CEO at no charge. The filing is signed by L.E. Smith as Chairman and CEO, not Andy Teng.
The company disclosed more insider loans from CEO Andy Teng. The $40,000 August 2006 note, which the company could not repay on its September 7, 2006 due date, was extended to March 7, 2007, with about $41,788 now repayable. He also lent $10,000 (July 18, 2006) and $20,000 (October 14, 2006) at 8%, both due February 23, 2007. All the notes are unsecured, non-recourse and rank behind secured debt. The company said it lacked the funds to repay the first note on time.
On January 9, 2007 the company signed a two-year, non-exclusive agreement with Corion Industrial Corp., USA to represent and market Corion's products in North and South America. It earns a combined commission and royalty of 1.25% of net sales of products under the Digital Lifestyles brand, and Corion gets a non-exclusive license to the brand name. The two have developed a line of LCD TVs, HD LCD TVs and monitors under the brand. This is a new, commission-based business after the Protron deal failed.
The company terminated the March 2006 Protron merger agreement, effective September 11, 2006, after giving notice on September 6 and saying Protron breached covenants, including failing to deliver audited financial statements on time. Protron disputed this on September 7 and said it also wanted to terminate. The company says it incurred no material penalties. Director Leo Chen, a Protron owner, resigned from the board on August 29, 2006. This ends the Protron deal that would have given Protron's owners 70% of the company, and the planned Laurus settlement tied to the merger loses its trigger (inference).
The company filed a press release about the status of its overdue SEC filings, which also made statements about the pending Protron merger. The filing text itself does not reproduce the press release's content, so no figures or new facts can be drawn from it. It says a proxy statement on the merger will follow.
On August 11, 2006 CEO, CFO and director Andy Teng lent the company $40,000 on a 6% note due September 7, 2006, with about $40,197 to be repaid. The note is unsecured, non-recourse and ranks behind all other outstanding notes and credit arrangements. It is a small insider loan, continuing the company's reliance on Teng for funding.
Schottenfeld Qualified Associates LP, Schottenfeld Management Corp., Richard Schottenfeld disclosed a new substantial TN-K ENERGY GROUP INC. shareholding (7.01% of votes).
