WORTHINGTON ENERGY, INC.

On March 16, 2018 the board decided to file for Chapter 11, with about $2,841,314 of debt and about $50 of assets. A prepackaged plan would pay creditors in cash and stock, form a successor corporation and have it acquire Smart Tech (automated reminder pill bottles and fiber optic cables). The company states shareholders will receive and keep nothing of value and are deemed to have rejected the plan, so they get no vote. Charles Volk resigned as CEO (staying a director) and Al Kau, an earlier investor, became CEO and director on March 14, 2018. The filing gives the March 2017 date in the header, but the text says 2018.

bankruptcy or receivership

In April 2014, court-approved settlements let Tarpon Bay Partners ($1,127,495 of payables it bought from vendors) and IBC Funds ($74,514.01) be paid in newly issued shares at deep discounts (Tarpon at 30% of the stated price, IBC at a 50% discount to market), plus a $75,000 Tarpon note convertible at 50% of the low bid. Already $36,897 was settled with 310M shares to Tarpon and $22,900 with 234M shares to IBC. The company issued 2.82 billion shares between January 1 and September 4, 2014, leaving 2,869,519,180 outstanding, a massive dilution of existing holders compared with 174.7M in March 2013. This continues the Ironridge-style settlement of payables for shares.

capital raising announcement

On January 25, 2013 the company settled with former CEO Anthony Mason and Black Cat: it hands back the Mustang Island 818-L lease, the I-1 well and the other Black Cat assets (with production since about August 30, 2012 going to Black Cat), and pays $125,000 in 10 monthly instalments from March 11, 2013, accelerated if it obtains a credit facility of $3.5M or more. Black Cat returns the 4.5 million shares it received (the filing's pro forma describes them as post-reverse-split) plus VM 179 seismic studies, and Mason resigned as CEO and director. This reverses the Black Cat purchase thread. Charles Volk returns as CEO and President, David Pinkman joins the board, and directors Paul Jordan and Cliff Henry also resigned for personal reasons.

asset acquisition disposition

The company said on November 12, 2012 that its financial statements for the quarters ended March 31 and June 30, 2012 should not be relied on and will be restated. The cause was how warrants issued in May and June 2011 had been valued: earlier valuation studies assumed their share count would rise when the company sold shares cheaply (full ratchet), but the warrants only lower their exercise price (price ratchet). Restated reports were expected by November 14, 2012. The filing does not give the size of the corrections.

financial restatement

Between August 22 and September 12, 2012 the company issued about 38 million shares, mostly on note conversions (GEL 12M for $45,000; Asher about 9.2M for $31,200; La Jolla 10M for $5,000; Prolific 1.9M for $9,000), plus 500,000 to an employee and 5,000,000 to Ironridge Global IV under a court-approved settlement of $1,388,407 of payables, accrued pay, interest and notes. Shares outstanding were 312,005,193 as of September 17, 2012. This continues rapid dilution and shows the Ironridge settlement clearing some liabilities for shares.

capital raising announcement

In August 2012 the company issued about 9.4 million shares to directors and a former employee to retire $42,500 of salary and debt, 22.5 million shares to Black Cat under the amended purchase agreement (payable on starting production at the Mustang Island Well), and 10 million shares to Charles Volk under his 2010 change-of-control agreement. Shares outstanding were 273,409,745 as of August 30, 2012, up from about 68 million in March. The Black Cat issuance suggests the Mustang Island well began producing (inference from the share trigger); the filing does not state that closing occurred. Heavy dilution for existing holders.

capital raising announcement

La Jolla Cove Investors said on June 14, 2012 that the company defaulted on its $200,000 convertible debenture (issued under an April 30, 2012 agreement; 4¾% interest) because its average share price was below $0.01 for three consecutive trading days (June 4–6, 2012). La Jolla accelerated repayment and demanded $120,585.62 ($100,000 unconvertible principal, a $20,000 premium and $585.62 interest). This is a new debt problem, and the filing shows the share price had fallen below one cent.

debt financing

The company (now named Worthington Energy, confirming the earlier name inference) reported more small convertible financings: a $10,000 debenture with 100,000 warrants (What Happened LLC, December 1, 2011) and $70,000 of debentures with 700,000 warrants to four investors (January–February 2012), all convertible at 50% of recent low bids. It also amended the Black Cat deal on March 5, 2012: cash drops to $175,000, the note rises to $1,075,000 (with $100,000 due May 31, 2012 and the rest later), the 45 million shares stay, the December 15, 2011 closing date is removed, and $250,000 had to go into escrow. Mr. Mason's job is now a consulting agreement at closing with a covenant to recommend CEO/director roles. The filing also lists conversions of notes into about 3.4 million shares in February–March 2012, with 68,362,770 shares outstanding as of March 12, 2012. The Black Cat deal has therefore not closed on its original timetable.

capital raising announcement

On November 14, 2011 the company agreed to buy Black Cat Exploration & Production's interests in certain Gulf of Mexico wells for $250,000 cash, a $1,000,000 note (four monthly $250,000 installments after closing) and 45 million new shares. The press release describes the assets as a 2% override interest in the Mustang Island 818-L lease (14,400 acres) with a 10.35% working interest in the recently drilled I-1 well. Closing is targeted by December 15, 2011 and depends on conditions including title due diligence; Anthony Mason is to become President/CEO and a director at closing. This is a new acquisition alongside the pending Virgin merger and Black Sands deal, and the 45 million shares would heavily dilute existing holders if it closes (about 60 million shares were outstanding in August 2011).

material agreement

On October 25, 2011 the company agreed to buy 50% of Black Sands Energy, LLC's interest in the Redwater/Maud lease (1,462 acres, Bowie County, Texas) for $3.25 million and 2.5 million restricted shares, plus $3 million to be deposited into a rework escrow account by December 30, 2011. The press release says three of seven wells are producing and projects the rework could raise output from about 45 to over 400 barrels of oil a day. Closing depends on conditions including title due diligence and is not assured by the expected December 31, 2011 date. This is a new acquisition thread on top of the Gulf of Mexico Vermilion 179 interest; the filing does not say how the company will fund the payments (inference: it would need new financing, given its low cash balance).

material agreement

The company sold Asher Enterprises an $50,000 8% convertible debenture maturing May 15, 2012, convertible from February 8, 2012 at 50% of the average of the three lowest closing bids in the prior 10 trading days. It also reported second-quarter results (June 30, 2011 balance sheet: total assets $6.76 million, cash $4,031, total stockholders' equity $2.89 million) and furnished a June 19, 2011 reserve report by James F. Hubbard. A conversion price at half the market price could mean heavy dilution if converted; the low cash balance is from the filing's balance sheet. Shares outstanding were 60,346,033 as of August 22, 2011.

capital raising announcement

The company issued 15 million bonus shares to CEO Charles Volk and 750,000 to President James Burden, and 1,067,825 shares to four investors who converted $50,000 of convertible debentures. Shares outstanding were 58,715,556 as of June 7, 2011. The bonus shares to management dilute other shareholders.

capital raising announcement

The company completed the Montecito Offshore purchase on May 6, 2011, acquiring a 70% working interest (51.975% net revenue interest) in leases at Vermilion 179, about 547 acres in the shallow Gulf of Mexico off Louisiana. It paid $1.5 million cash, a $500,000 subordinated note (junior to the May 5 secured convertible notes) and 15 million shares. No drilling or production has started, and the company can choose to operate it or hire another operator. This resolves the Montecito agreement from April.

asset acquisition disposition

The company raised $2,133,250 in cash by selling units of a $30,000 secured convertible note plus a warrant for 200,000 shares. The notes mature May 5, 2012, pay 9% interest, convert at $0.15 per share and carry full ratchet anti-dilution protection; warrants are exercisable at $0.30 for five years. The placement agent, Buckman, Buckman & Reid, received $305,990 in cash and warrants for 1,422,167 shares. The notes get a first lien on the Montecito assets once that acquisition closes (otherwise they are unsecured), so this funds the Montecito purchase but adds debt and potential dilution. (The press release describes a $2.55 million placement, which is the stated maximum.)

capital raising announcement

The company agreed to merge with Virgin Oil Company, Inc., giving Virgin's shareholders 70 million new company shares so that Virgin becomes a wholly owned subsidiary. Virgin is currently in Chapter 11 bankruptcy, and closing depends on conditions including audited financials, an updated engineering report, the company raising funds, creditor settlements and the bankruptcy judge's approval; either side may terminate if it is not closed by December 31, 2011. For shareholders, 70 million shares is a large issuance relative to the company's share count, and the deal is far from certain.

material agreement

The company (filing under the name Paxton Energy, Inc.) changed the payment terms of its March 28, 2011 deal with Montecito Offshore, L.L.C. to buy a 70% working interest (51.975% net revenue interest) in certain oil and gas leases. Payment is now $1.5 million cash, a $500,000 subordinated note due 90 days after closing, and 15 million shares, instead of $2 million cash plus 15 million shares; closing is scheduled on or before April 19, 2011. Note: the filing names the company Paxton Energy, while the history labels it Worthington Energy.

material agreement