Nevada
(State or other jurisdiction
of incorporation or organization)
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000-51229
(Commission File
Number)
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51-0482104
(I.R.S. Employer
Identification No.)
|
11011 Richmond Avenue, Suite 525
Houston, Texas
(Address of principal executive offices)
|
77042
(Zip code)
|
|
99.1
|
Audited financial statements of Cinco NRG, LLC
|
|
99.2
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Unaudited pro forma combined financial statements and notes related thereto as of and for the nine-month period ended September 30, 2013.
|
Company Name | |||
February 10, 2014
|
By:
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/s/ D. Hughes Watler, Jr. | |
D. Hughes Watler, Jr.
|
|||
Chief Financial Officer
|
|||
Assets
|
||||
Current assets:
|
||||
Cash and cash equivalents
|
$ |
27,042
|
||
Accounts receivable
|
28,020
|
|||
Other current assets
|
31,015
|
|||
Total current assets
|
86,077
|
|||
Property and equipment:
|
||||
Oil and gas properties (full cost method), unevaluated
|
354,004
|
|||
Oil and gas properties (full cost method), evaluated
|
527,531
|
|||
Total property and equipment
|
881,535
|
|||
Less: Accumulated depreciation, depletion and amortization
|
(12,492)
|
|||
Net property and equipment
|
869,043
|
|||
Other assets:
|
||||
Operator bond posted with state regulator
|
15,000
|
|||
Total other assets
|
15,000
|
|||
Total assets
|
$ |
970,120
|
||
Liabilities and Members' Equity
|
||||
Current liabilities:
|
||||
Accounts payable
|
$ |
1,567
|
||
Total current liabilities
|
1,567
|
|||
Convertible notes payable
|
50,000
|
|||
Asset retirement obligations
|
2,735
|
|||
Total liabilities
|
54,302
|
|||
Members' equity:
|
||||
Members' equity units (46,942,535 shares issued and outstanding)
|
969,283
|
|||
Accumulated deficit
|
(53,465)
|
|||
Total members' equity
|
915,818
|
|||
Total liabilities and members' equity
|
$ |
970,120
|
Revenues:
|
||||
Oil and gas sales
|
$ |
48,953
|
||
Total revenues
|
48,953
|
|||
Operating expenses:
|
||||
Lease operating expense
|
2,776
|
|||
Depreciation, depletion and amortization
|
12,492
|
|||
General and administrative
|
87,150
|
|||
Total operating expenses
|
102,418
|
|||
Net loss
|
$ |
(53,465)
|
Total
|
||||||||||||||||
Members' Equity Units
|
Accumulated
|
Members'
|
||||||||||||||
Shares
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Amount
|
Deficit
|
Equity
|
|||||||||||||
Original capital contributed
|
41,300,000 | $ | 10,051 | $ | - | $ | 10,051 | |||||||||
Conversion of convertible notes payable
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5,642,535 | 959,232 | - | 959,232 | ||||||||||||
Net loss
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- | - | (53,465 | ) | (53,465 | ) | ||||||||||
Balance at October 31, 2013
|
46,942,535 | $ | 969,283 | $ | (53,465 | ) | $ | 915,818 |
Cash flows from operating activities:
|
||||
Net loss
|
$ |
(53,465)
|
||
Adjustments to reconcile net loss to net
|
||||
cash provided by (used in) operations:
|
||||
Depreciation, depletion and amortization
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12,492
|
|||
Changes in current assets and liabilities
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(57,468)
|
|||
Net cash flows from operating activities |
(98,441)
|
|||
Cash flows from investing activities:
|
||||
Purchase of property and equipment
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(694,715)
|
|||
Purchase of other assets
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(15,000)
|
|||
Net cash flows from investing activities |
(709,715)
|
|||
Cash flows from financing activities:
|
||||
Original capital contributed
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10,051
|
|||
Proceeds of convertible notes payable
|
||||
Related parties
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705,000
|
|||
Non related parties
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325,000
|
|||
Repayments of notes payable
|
||||
Related parties
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(204,853)
|
|||
Net cash flows from financing activities |
835,198
|
|||
Cash and cash equivalents at end of period
|
$ |
27,042
|
||
Supplemental cash flow data:
|
||||
Notes payable issued for purchase of property and equipment
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$ |
184,085
|
||
Conversion of notes payable to members' equity
|
959,232
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Property acquisition
|
$ | 412,281 | ||
Exploration
|
469,254 | |||
Development
|
- | |||
Total costs incurred
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$ | 881,535 |
Oil
|
Gas
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Total
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||||||||||
(Bbl)
|
(Mcf)
|
(Bble)
|
||||||||||
Balance at April 5, 2013
|
- | - | - | |||||||||
Discoveries
|
20,231 | - | 20,231 | |||||||||
Production
|
(481 | ) | - | (481 | ) | |||||||
Balance at October 31, 2013
|
19,750 | - | 19,750 |
Future net revenues
|
$ | 2,021,343 | ||
Future lease operating expenses and production taxes
|
(601,486 | ) | ||
Future development costs
|
(50,000 | ) | ||
Future net cash flows
|
1,369,857 | |||
10% annual discount for estimated timing of cash flows
|
(356,555 | ) | ||
Standardized measure of discounted future net cash flows
|
$ | 1,013,302 |
Stratum
|
Cinco
|
Pro Forma
|
||||||||||||||
Holdings, Inc.
|
NRG, LLC
|
Adjustments
|
As Adjusted
|
|||||||||||||
Assets
|
||||||||||||||||
Current assets:
|
||||||||||||||||
Cash and cash equivalents
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$ | 148,381 | $ | 27,042 | $ | - | $ | 175,423 | ||||||||
Accounts receivable
|
297,471 | 28,020 | - | 325,491 | ||||||||||||
Prepaid expenses and other
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80,590 | 31,015 | - | 111,605 | ||||||||||||
Notes receivable
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1,174,363 | - | - | 1,174,363 | ||||||||||||
Total current assets
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1,700,805 | 86,077 | - | 1,786,882 | ||||||||||||
Property and equipment:
|
||||||||||||||||
Oil and gas properties (full cost method)
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14,939,987 | 881,535 | - | 15,821,522 | ||||||||||||
Other property and equipment
|
138,274 | - | - | 138,274 | ||||||||||||
15,078,261 | 881,535 | - | 15,959,796 | |||||||||||||
Less: Accumulated DD&A
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(9,943,168 | ) | (12,492 | ) | - | (9,955,660 | ) | |||||||||
Net property and equipment
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5,135,093 | 869,043 | - | 6,004,136 | ||||||||||||
Other assets:
|
||||||||||||||||
Other assets
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5,238 | 15,000 | - | 20,238 | ||||||||||||
Total other assets
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5,238 | 15,000 | - | 20,238 | ||||||||||||
Total assets
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$ | 6,841,136 | $ | 970,120 | $ | - | $ | 7,811,256 | ||||||||
Liabilities and Stockholders’ Equity
|
||||||||||||||||
Current liabilities:
|
||||||||||||||||
Current portion of long term debt
|
$ | 2,177,575 | $ | - | $ | - | $ | 2,177,575 | ||||||||
Accounts payable
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669,354 | 1,567 | - | 670,921 | ||||||||||||
Accrued liabilities
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1,704,962 | - | - | 1,704,962 | ||||||||||||
Fair value of oil and gas derivatives
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4,508 | - | - | 4,508 | ||||||||||||
Total current liabilities
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4,556,399 | 1,567 | - | 4,557,966 | ||||||||||||
Long-term debt, net of current portion
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96,978 | 50,000 | - | 146,978 | ||||||||||||
Deferred income taxes
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310,500 | - | (18,200 | )(B) | 292,300 | |||||||||||
Asset retirement obligations
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426,250 | 2,735 | - | 428,985 | ||||||||||||
Total liabilities
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5,390,127 | 54,302 | (18,200 | ) | 5,426,229 | |||||||||||
Stockholders’ equity:
|
||||||||||||||||
Preferred stock
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- | - | - | - | ||||||||||||
Common stock
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26,557 | - | 469,425 | (A) | 495,982 | |||||||||||
Additional paid-in capital
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12,894,490 | 969,283 | (469,425 | )(A) | 13,394,348 | |||||||||||
Accumulated deficit
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(11,470,038 | ) | (53,465 | ) | 18,200 | (B) | (11,505,303 | ) | ||||||||
Total stockholders’ equity
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1,451,009 | 915,818 | 18,200 | 2,385,027 | ||||||||||||
Total liabilities and stockholders equity
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$ | 6,841,136 | $ | 970,120 | $ | - | $ | 7,811,256 |
Stratum
|
Cinco
|
Pro Forma
|
||||||||||||||
Holdings, Inc.
|
NRG, LLC
|
Adjustments
|
As Adjusted
|
|||||||||||||
Revenues:
|
||||||||||||||||
Oil and gas sales
|
$ | 2,044,447 | $ | 48,953 | $ | - | $ | 2,093,400 | ||||||||
Total revenues
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2,044,447 | 48,953 | - | 2,093,400 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Lease operating expenses
|
1,014,718 | 2,776 | - | 1,017,494 | ||||||||||||
Depreciation, depletion and amortization
|
345,288 | 12,492 | - | 357,780 | ||||||||||||
Accretion expense
|
27,540 | - | - | 27,540 | ||||||||||||
Workover expenses
|
162,501 | - | - | 162,501 | ||||||||||||
Selling, general and administrative
|
743,431 | 87,150 | - | 830,581 | ||||||||||||
Total operating expenses
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2,293,478 | 102,418 | - | 2,395,896 | ||||||||||||
Operating loss
|
(249,031 | ) | (53,465 | ) | - | (302,496 | ) | |||||||||
Other income (expense):
|
||||||||||||||||
Interest income
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50,063 | - | - | 50,063 | ||||||||||||
Interest expense
|
(103,523 | ) | - | - | (103,523 | ) | ||||||||||
Loss on expected settlement of notes receivable
|
(286,235 | ) | - | - | (286,235 | ) | ||||||||||
Gain on oil and gas derivatives
|
392 | - | - | 392 | ||||||||||||
Loss before income taxes
|
(588,334 | ) | (53,465 | ) | - | (641,799 | ) | |||||||||
Benefit for income taxes
|
198,300 | - | 18,200 | (B) | 216,500 | |||||||||||
Net loss
|
$ | (390,034 | ) | $ | (53,465 | ) | $ | 18,200 | $ | (425,299 | ) | |||||
Net loss per share, basic and diluted
|
$ | (0.15 | ) | $ | (0.01 | ) | ||||||||||
Weighted average shares outstanding, basic and diluted
|
2,655,738 | 35,206,901 | (C) | 37,862,639 |
(A)
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To record the acquisition of the outstanding membership units of Cinco NRG, LLC, an entity which is under common control with the Company, by the issuance of 46,942,535 new shares of the Company’s Common Stock.
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(B)
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To record an income tax benefit on the net loss of Cinco NRG, LLC, an entity which is treated as a partnership for income tax purposes, for the period from its inception on April 5, 2013 to October 31, 2013.
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(C)
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To reflect the weighted average issuance of 46,942,535 new shares of the Company’s Common Stock for the nine month period ended September 30, 2013.
|