Each one in plain English, with the numbers worked through for a shareholder.
20 Oct 2015material agreement▼ BadMajor
Effective October 9, 2015, the company and its Texas subsidiary signed a Tenth Amendment with lender Melody Business Finance, raising the loan commitments to $20,245,945.15 and extending the forbearance, alongside a Restructuring Support Agreement. The term sheet calls for a pre-packaged Chapter 11 plan, to be filed within 30 days of signing, in which Melody gets 100% of the equity in the reorganized Texas subsidiary and current equity holders, including the company, get no recovery and lose their equity. The filing says that subsidiary is the company's sole asset, so the company would have no operations or revenue and would likely be a shell. This is the reorganization that the February 2015 forbearance pointed to, and it ends in a total loss for shareholders; unsecured creditors are to be paid in full.
On April 2, 2015 the company and Melody Business Finance signed a Ninth Amendment to the loan and forbearance agreement. It raises the note principal to $16,729,200.78 and extends forbearance on existing and certain anticipated defaults to June 1, 2015. The filing says nothing about progress on the reorganization plan that was due by April 6; the higher principal is consistent with the 15% paid-in-kind interest, which is an inference.
On February 20, 2015 the company signed a forbearance agreement with Melody Business Finance, which took over the May 2011 Green Bank loan of $15,750,000 maturing June 1, 2015. Melody agrees not to act on existing and certain anticipated defaults. Interest becomes 15% paid in kind (21% on default), New York law replaces Texas law, and the company must pursue a plan of reorganization by April 6, 2015, to be implemented within 90 days. If no reorganization happens through its own failure or inconsistent action, it owes a $2,000,000 closing fee plus lender costs; no terms have been agreed. This continues the covenant default problem from June 2014 and points to a possible restructuring of the company, with the effect on shareholders undetermined.
On July 30, 2014 the company signed a joint venture with Core Resource Management to drill up to ten wells at its Pampa, Texas core area. Core pays 100% of drilling and completion costs up to $475,000 per well, with costs above that split 60% TransCoastal and 40% Core. Each party gets a 50% working interest; net revenue interest is 42.6% Core and 28.4% TransCoastal until costs are paid back, then 35.5% each. CoreTerra Operating is operator. This is partner-funded drilling on the proved undeveloped locations the company has described.
Effective June 30, 2014 the company borrowed $1,500,000 from Dalton Lott, father-in-law of CEO Stuart Hagler, at 5.5% simple interest for six years. No payments are due until January 1, 2015; interest-only payments of $6,875 a month follow until September 30, 2015, then 60 monthly payments of $28,651.74. Hagler, David May and Wilbur Westmoreland personally guarantee the note, and it can be prepaid without penalty. It is a related-party loan.
Rothstein Kass told the company it must resign as auditor, and the board approved Whitley Penn, the auditor dropped in July 2013, as the new auditor for 2014. Rothstein Kass's reports for 2013 and 2012 included a going concern paragraph, and the filing states no disagreements. The resignation comes days after the second restatement notice; the filing does not give a reason for it.
On June 9, 2014 the company said its 2013 annual statements and first-quarter 2014 statements should no longer be relied on, because its notes payable were wrongly shown as long-term. The majority of the lending group had signalled it would waive covenant failures at December 31, 2013 and March 31, 2014, but in June some non-majority lenders did not waive their right to call the loan. About $17.1 million (December 2013) and $16.8 million (March 2014) of notes payable move to current liabilities, with no cash effect. For a shareholder this means the main loan could be called due.
The company said its 2013 and 2012 financial statements should no longer be relied on, because of an error in reserve estimates and the related depletion expense. Restated 2013 net loss goes from $3,921K to $4,053K, and restated 2012 net income from $1,154K to $1,036K. Total shareholders' equity falls to $3,044K at end 2013 (from $3,415K) and $5,393K at end 2012 (from $5,632K), with no change to cash flows. This also trims the 2012 profit the company had cited, though 2012 stays profitable; proved natural gas reserves at the end of 2013 are restated from 28,702,340 to 10,502,930.
The company hired CorProminence, LLC, an investor relations firm, to run a market and shareholder awareness program. The filing gives no fee or term in its text.
On November 5, 2013 the company signed an agreement with Kodiak Capital Group under which it may sell Kodiak up to $5,000,000 of common stock, at 75% of the lowest closing bid in the five trading days after each put notice. Kodiak must buy only once the shares are registered with the SEC, and it cannot go above 9.99% ownership. The company gave Kodiak 256,410 restricted shares and paid a $15,000 document fee. This is a possible answer to the open funding question, but no money is committed until registration, and sales at a discount to market would dilute shareholders.
On July 30, 2013 the board approved converting all 3,721,036 Series F preferred shares into 21,154,478 common shares, issued as restricted stock. This resolves the open thread about Series F conversion: the former TransCoastal holders' preferred stake becomes common stock, and existing holders are diluted accordingly. The filing does not state the resulting total shares outstanding.
On July 15, 2013 the company dismissed Whitley Penn as its auditor and hired Rothstein, Kass & Company for the year ending December 31, 2013. Whitley Penn's reports for 2012 and 2011 carried a going concern qualification, and the filing says there were no disagreements. Rothstein Kass had already audited the private Texas TransCoastal Corporation for 2012 and 2011, so the auditor now matches the oil and gas business acquired in May.
3 July 2013asset acquisition disposition▲ GoodMajor
On June 27, 2013 the company sold its old claims-processing subsidiary, ANC Holdings, to its debt holders in exchange for all the debt owed to them; the 8-K leaves the debt amount blank, while the press release says about $1.5 million of debt was eliminated and no cash changed hands. The 200-to-1 reverse split and the name change to TransCoastal Corporation took effect July 1, 2013, and authorized shares rose to 250,000,000 common and 25,000,000 preferred. This completes the plan set out in March: the healthcare business is gone and the company is now only the oil and gas business.
This notice to shareholders formally announces the change in majority of directors that follows the May 9 closing: TransCoastal's Stuart Hagler and W.A. Westmoreland replace the two Class II directors, and David May fills a new Class I seat, with Don Crosbie remaining. It reports 35,644,656 common shares outstanding, with Elmira United holding 17,999,466 (50.5%) and Schellenberg 2,845,206 (8.0%), and the Series F holders having 99.2% of the votes. It says the claims business sits in a subsidiary, ANC Holdings, LLC, to be sold to debt holders. The filing also lists Hagler as CEO and Judson Hoover as CFO, replacing the earlier management.
On May 9, 2013 the TransCoastal acquisition closed: the company issued 3,721,036 Series F preferred shares for 21,154,478 TransCoastal shares, which is 93.03% of TransCoastal's common stock. The preferred shares carry about 99.2% of the votes, so TransCoastal's former shareholders now control the company, and existing common holders are heavily diluted in voting terms. The company's stated primary business becomes Texas oil and gas, with Barnett shale and Pampa-area oil properties; the filing says TransCoastal made a profit from operations in 2012 and is seeking more funding. This resolves the main open thread about whether the deal would close before the May 31 deadline.
On April 24, 2013 Claimsnet and TransCoastal amended their March 18 deal: instead of up to 23,401,590 post-split common shares, TransCoastal's shareholders would get up to 4,000,000 new Series F preferred shares, each convertible into 1,170.076 common shares and voting with the common on an as-converted basis. The preferred class could elect three directors (a board majority) while at least 1,000,000 are outstanding. The amendment drops the name change, and the reverse-split information statement was abandoned because the amended deal needs no shareholder vote. The May 31, 2013 deadline, the plan to sell the claims business to debt holders (expected to be Thomas Michel, National Financial and J.R. Schellenberg) for debt cancellation, and the board changes at closing (Michel and Willems out, May, Hagler and Westmoreland in) remain. The company also borrowed $25,000 from Schellenberg on April 29 on a 1.75% demand note, to pay costs of the TransCoastal deal.
On March 27, 2013 the company borrowed another $20,000 from related party J. R. Schellenberg on an unsecured 1.75% demand note, for working capital. It continues his series of small loans, now made while the TransCoastal acquisition is pending.
22 Mar 2013capital raising announcement● NeutralMajor
On March 18, 2013 Claimsnet.com (the healthcare claims-processing company) agreed to buy all shares of TransCoastal Corporation, a Texas oil and gas exploration and production company, paying with up to 23,401,590 new post-split Claimsnet shares; closing is targeted by May 31, 2013, after which the agreement lapses. A 200-to-1 reverse split would leave existing Claimsnet holders with about 178,000 shares in total (adjusted upward if TransCoastal's fair market value is under $53 million), all directors except Don Crosbie would resign, and the company would be renamed TransCoastal Corporation. The existing claims business is to be moved into a subsidiary and sold to certain debt holders in exchange for cancelling debt owed to them. This turns a long-running borrowing story into a reverse takeover that would sharply dilute current shareholders (the share counts support this).
On September 7, 2012 the company borrowed another $25,000 from related party J. R. Schellenberg on an unsecured 1.75% demand note, for working capital.
On February 8, 2012 the company borrowed another $25,000 from related party J. R. Schellenberg on an unsecured 1.75% demand note, for working capital. It follows his January 2012 loan of the same size.
On January 17, 2012 the company borrowed a further $25,000 from related party J. R. Schellenberg on an unsecured 1.75% demand note, for working capital.
On November 30, 2011 the company borrowed another $25,000 from related party J. R. Schellenberg on an unsecured 1.75% demand note, for working capital. It is the fourth $25,000 loan from him since July 2011.
On September 29, 2011 the company borrowed a further $25,000 from related party J. R. Schellenberg on an unsecured 1.75% demand note, for working capital. Separately, the $50,000 Novinvest (Elmira United) note from September 2010 had its due date extended from September 9, 2011 to September 9, 2013, with other terms unchanged. The filing calls this Amendment Number 2.
On August 29, 2011 the company borrowed another $25,000 from related party J. R. Schellenberg on an unsecured 1.75% demand note, for working capital. It is his second $25,000 loan in about a month.
On July 27, 2011 the company borrowed $25,000 from related party J. R. Schellenberg on an unsecured 1.75% demand note, for working capital. It follows his $15,000 loan in March 2011.
On May 3, 2011 the company borrowed $40,000 from related party National Financial Corporation on an unsecured 1.75% demand note, for working capital. Separately, on May 6, 2011 the board decided the first-quarter 2011 results in the April 29 10-Q should no longer be relied upon: a $138,000 impairment loss was wrongly booked in the income statement and should have been a cumulative adjustment to accumulated deficit on adopting accounting guidance ASU 2010-28. A corrected 10-Q/A will remove that loss from the reported net loss.
On March 2, 2011 the company borrowed $15,000 from director Thomas Michel and $15,000 from related party J. R. Schellenberg, each on an unsecured demand note at 1.75%, for working capital. Schellenberg appears for the first time as a lender here, and the rate is lower than the 3% on Michel's earlier notes. This continues reliance on insider borrowing.
On September 9, 2010 the company borrowed $50,000 from Novinvest Associated S.A., a division of its 5% shareholder Elmira United, on an unsecured 3% note due September 9, 2011. The proceeds paid the $50,000 non-refundable retainer to Blackhawk Partners, which the company engaged the same day to seek debt or equity financing, potentially in connection with a merger or acquisition. Blackhawk is also owed an advisory fee of 6% of equity and 3% of debt it raises from outside sources, plus $12,000 a month for six months starting six months after the effective date; the fee applies for 18 months after termination.
On March 18, 2010 the company borrowed $80,000 from related party National Financial Corporation on an unsecured 3% demand note, for working capital. The filing's default clause refers to 'Mr. Michel' rather than NFC, which looks like a drafting carry-over from the Michel notes (inference).
