NOTE 19 - SUBSEQUENT EVENTS

On May 20, 2016, we notified Morgan Stanley Capital Group, Inc. that we determined that we were in default under numerous provisions under the First Amended Credit Agreement dated as of July 31, 2015 (the “Credit Agreement”) among our subsidiary American Shale Development, Inc., a Delaware corporation (“Borrower”), the lenders party thereto from time to time (the “Lenders”), and Morgan Stanley Capital Group Inc., as administrative agent for such Lenders (in such capacity, “Administrative Agent “). The following defaults currently exist under the Credit Agreement:

The Borrower has failed to maintain the Asset Coverage Ratio as set forth in Section 6.21 of the Credit Agreement since September 30, 2015;

The Borrower has failed to timely provide the materials required pursuant to Sections 5.06 (r), (u), and (v) for the months ended December 31, 2015, January 31, 2016, February 29, 2016 and March 31, 2016;

10.

The Borrower has failed to timely effect the Tug Hill Disposition in accordance with Section 5.19;

11.

The Borrower has failed to timely engage a financial advisor reasonably acceptable to Administrative Agent and to commence the related refinancing activities in accordance with Section 5.20;

12.

The Borrower has failed to timely provide the annual financial statements pursuant to Section 5.06 (a) for the year ended December 31, 2015;

13.

The Borrower has failed to timely provide the Reserve Report pursuant to Section 5.06 (d) for the year ended December 31, 2015;

14.

The Borrower has failed to timely provide the Quarterly Report on Hedging pursuant to Section 5.06 (g) for the quarter ended September 30, 2015.

If these defaults under the Credit Agreement are not waived or otherwise resolved within the cure periods provided, the Administrative Agent will have the right to accelerate all of the outstanding indebtedness under the Credit Facility. If the Administrative Agent were to accelerate all of the obligations outstanding under the Credit Facility, we estimate that we would be required to pay approximately $135 million to the Administrative Agent and the Lenders. The debt balance under the Credit Agreements is presented as a current liability on the Company’s balance sheet as of December 31, 2015.

We are currently in discussions with the Administrative Agent and the Lenders regarding a potential restructuring of the obligations outstanding under the Credit Agreement. While we hope to close the restructuring as soon as possible, definitive documentation is subject to negotiation. Additionally, we can provide no assurances that we will be able to successfully finalize such a restructuring, that the terms of any such restructuring will be acceptable to us or the timing or closing of such a restructuring.

Effective May 1, 2016, Tyler Construction Company, Inc., a subsidiary of the Company (“Assignor”) entered into an assignment and bill of sale of Gas Pipeline (hereinafter, “Assignment”) with Diversified Gas & Oil Corp. (“Assignee”) whereby the Assignor assigned the pipeline, customers, sales meters and equipment to the Assignee, and the Assignee assumed the Assignor’s obligation to Dominion Field Services, Inc. under a contract between them in the amount of $87,469. Additionally, at closing, the Assignee paid the Assignor the sum of $32,530.