Section 1 - Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
Purchase and Sale Agreement
On June 15, 2015 the Company signed a Purchase and Sales Agreement (“Agreement”) for the acquisition of certain assets further described below and in the attached exhibit, in exchange for ten million shares (see 3.02 below).
The Company under the agreement would acquire one hundred per cent of certain assets, and a nineteen and a half percent equity interest in three oil and gas production, transportation and distribution companies.
The three companies are SWO & ISM, LLC; Hein Oil Well Services, LLC; and Hein Oil Co., Inc. The 19.5% equity interest includes a provision for 19.5% of operating revenues to be allocated to the Company.
The assets include land, buildings, transportation equipment, office equipment, drilling service equipment, vehicles, and oil leases and working interests. The active leases cover 1306.53 acres in Clinton County KY; 1330 acres in Cumberland County KY; 2532 acres in Monroe County, KY and 160 acres in Wayne County. The land property assets acquired comprise two tracts totaling approximately 230 acres. The agreement lists a valuation of approximately $4.6 million dollars, and the company in the current quarter intends to secure appraisals, valuation estimates and physical review of assets to determine final accounting for the transaction including where necessary updated reserve studies deemed.
The agreement contains the provision that if on a quarterly basis production exceeds 2500 barrels per month, an additional ten million shares would be issued as part of the agreement.
This summary is qualified in its entirety by the actual agreement which is attached as an exhibit.
Section 3 - Securities and Trading Markets
Item 3.02 Unregistered Sales of Equity Securities.
As described in Item 1.01 of this Current Report, which is incorporated herein by reference, the Company issued 10,000,000 restricted common shares to two individuals as sellers of in the purchase and sale agreement, in a transaction pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The Transaction was made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of the Securities Act. The issuance of the shares did not involve a public offering and was made without general solicitation or general advertising. The recipients represented that the shares were received for investment purposes only and not with a view to or for sale in connection with any distribution thereof. The recipients were sophisticated investors due to knowledge of our industry and company having provided services to the company. The shares of Common Stock issued have been not registered under the Securities Act and neither may be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibit is filed herewith.
Exhibit No.
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Description
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10.1
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