Credit Facility

12 Months Ended

Mar. 31, 2016

Debt Disclosure [Abstract]

Credit Facility

4. Credit Facility

The Company has a loan agreement with Bank of America, N.A. (the “Agreement”), which provided for a credit facility of $5,630,000 with no monthly commitment reductions and a borrowing base to be evaluated on July 30 and January 1 of each year or at any additional time in the Bank’s discretion as of March 31, 2016. The borrowing base will be reset to the extent the Company sells or otherwise disposes of any of its oil and gas properties. The Company is required to pay 100% of such net proceeds to the lender resulting in a permanent reduction of the borrowing base. Subsequently, in April 2016, the Company sold some of its oil and gas properties for $60,000 and used these proceeds to pay on its line of credit, thus reducing its credit facility and borrowing base to $5,570,000. Amounts borrowed under the Agreement are collateralized by the common stock of the Company’s wholly owned subsidiaries and substantially all of the Company’s oil and gas properties.

The Agreement was renewed ten times with the tenth amendment effective as of March 31, 2016 with a maturity date of November 30, 2020. Under such renewal agreement, interest on the facility accrues at an annual rate equal to the British Bankers Association London Interbank Offered Rate (“BBA LIBOR”) daily floating rate, plus an increased rate from 2.5 to 3.0 percentage points, which was 2.935% on March 31, 2016. Interest on the outstanding amount under the credit agreement is payable monthly. In addition, the Company no longer will pay an unused commitment fee in an amount equal to ½ to 1 percent (.5%) times the daily average of the unadvanced amount of the commitment. There was no availability of this line of credit at March 31, 2016. No principal payments are anticipated to be required through November 30, 2020.

The Agreement contains customary covenants for credit facilities of this type including limitations on change in control, disposition of assets, mergers and reorganizations. The Company is also obligated to meet certain financial covenants under the Agreement except that the tenth amendment replaces the tangible net worth test and requires minimum earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $100,000 for the two fiscal quarters ending September 30, 2016, $300,000 for the three fiscal quarters ending December 31, 2016, $500,000 for the four fiscal quarters ending March 31, 2017 and $650,000 for each trailing fiscal quarter period thereafter and minimum interest coverage ratios (EBITDA/Interest Expense) of 1.25 to 1 for the fiscal quarter ending June 30, 2016 and 2.00 to 1.00 for each quarter thereafter. The Company is in compliance with all covenants as of March 31, 2016.

In addition, this Agreement prohibits the Company from paying cash dividends on its common stock. The Agreement does grant the Company permission to enter into hedge agreements however, it is under no obligation to do so.

The amended Agreement allows for up to $500,000 of the facility to be used for outstanding letters of credits. As of March 31, 2016, one letter of credit for $50,000, in lieu of plugging bond with the Texas Railroad Commission (“TRRC”) covering the properties the Company operates is outstanding under the facility. This letter of credit renews annually. The company will pay a fee in an amount equal to 1 percent (1.0%) per annum of the outstanding undrawn amount of each standby letter of credit, payable monthly in arrears, on the basis of the face amount outstanding on the day the fee is calculated.

The balance outstanding on the line of credit as of March 31, 2016 was $5,580,000 and as of June 15, 2016 was $5,520,000. The following table is a summary of activity on the Bank of America, N.A. line of credit for the year ended March 31, 2016:

	Principal
Balance at April 1, 2015:	$	5,950,000
Borrowings		400,000
Repayments		(770,000	)
Balance at March 31, 2016:	$	5,580,000