UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 22, 2014
T-REX OIL, INC.
Formerly Rancher Energy Corp.
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(Exact name of Registrant as specified in its charter)
Colorado 000-51425 98-0422451
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
520 Zang St., Suite 250, Broomfield, CO 80021
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(Address of principal executive offices)
(720) 502-4483
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(Registrant's Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
EXPLANATORY NOTE
T-REX OIL, INC. (THE "COMPANY") IS FILING THIS AMENDMENT NO. 1 TO ITS FORM
8K12G3 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 22, 2014
FOR THE PURPOSE OF REVISING ITEM 1.01 - ENTRY INTO A MATERIAL DEFINITIVE
AGREEMENT, ITEM 2.01 - COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS, ITEM
3.02 UNREGISTERED SALES OF EQUITY SECURITIES, ITEM 5.01 CHANGES IN CONTROL OF
REGISTRANT, ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
OFFICERS AND ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS TO AMEND PRO FORMA
FINANCIAL STATEMENTS.
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
----------------------------------------------------
On December 22, 2014, T-Rex Oil, Inc. ("the Company" or "T-Rex") acquired 100%
of the stock of Terex Energy Corp. ("Terex") after agreeing to exchange
7,385,700 shares with the Terex shareholders. The shares are exchanged on a one
for one basis. Pursuant to the Exchange Agreements, the Company agreed to issue
shares of its restricted common stock for 100% of the issued and outstanding
common stock of Terex. As a result, Terex will be a wholly owned subsidiary of
the Company.
Prior to the exchange of shares, Terex owned 371,003 shares of common stock of
the Company. These shares of T-Rex were surrendered and cancelled. The officers
and directors of the Company remain the officers and directors post-acquisition.
At the time of the acquisition, Donald Walford and Martin Gottlob, were officers
and directors of Company, and were and are officers, directors, and major
(control) shareholders of Terex.
SECTION 2 - FINANCIAL INFORMATION
ITEM 2.01 - COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
--------------------------------------------------------------
Completion of Acquisition of Terex Energy Corp.
On December 22, 2014, T-Rex Oil, Inc. acquired 100% control of Terex Energy
Corp. after agreeing to exchanging 7,385,700 shares with the Terex shareholders.
The shares are exchanged on a one for one basis. Pursuant to the Exchange
Agreements, the Company agreed to issue shares of its restricted common stock
for 100% of the issued and outstanding common stock of Terex. As a result, Terex
will be a wholly owned subsidiary of the Company.
In addition to the exchange of common stock, the Company exchanged on a one for
one basis the following outstanding equity shares or options and warrants with
those of its own. The table below sets forth the equity that is being exchanged.
Type of Equity Terex Balance Issued by T-Rex
--------------------- --------------------- ----------------------
Options (1) 900,000 900,000
Warrants (2) 800,000 800,000
---------------------
(1) The Options, subject to vesting, have an exercise price of $0.10 per share
and a term of 3 years.
(2) The Warrants, subject to vesting, have an exercise price of $1.00 per share
and a term of 3 years.
On August 19, 2014, the Company entered into a Securities Purchase Agreement
with Terex in which it sold 129,851,356 pre-reverse shares of its restricted
common stock to Terex for $1,300,000 in cash. Concurrently, two members of the
Board of Directors of the Company resigned, and two new members of the Board of
Directors were appointed who were members of the Board of Directors and officers
of Terex prior to the Agreement. As a result of this transaction, Terex became
the majority shareholder of the Company, owning 52% of the issued and
outstanding shares of the Company's common stock as well as controlling the
Company's operations. Prior to this Securities Purchase Agreement, Terex owned
no shares of the Company's 119,862,791 issued and outstanding pre-reverse shares
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of common stock nor was any member of the Board of Directors or officer of Terex
a part of the Board of Directors or management of the Company.
Prior to the exchange of shares, Terex owned 371,003 shares of common stock of
the Company. These shares of T-Rex were surrendered and cancelled as of date
hereof. The officers and directors of the Company remain the officers and
directors post-acquisition. At the time of the acquisition, Donald Walford and
Martin Gottlob, were officers and directors of Company, and were and are
officers, directors, and major (control) shareholders of Terex.
BUSINESS DESCRIPTION
T-Rex Oil, Inc. ("We," "Us," "Our") was organized under the laws of the State of
Nevada as Rancher Energy Corp. We merged into our wholly owned subsidiary, T-Rex
Oil, Inc., a Colorado corporation, to redomicile to Colorado as a Colorado
Corporation. Effective October 29, 2014, we amended our Articles of
Incorporation to change our name to T-Rex Oil, Inc. and to authorize 50,000,000
shares of preferred stock in addition to our common stock. On October 8, 2014,
an amendment to the Articles of Incorporation was filed in order to authorize a
reverse split of the common stock, issued and outstanding, on a one (1) new
share for three hundred fifty (350) old shares basis, with fractional shares
being redeemed in cash. The Financial Industry Regulatory Authority approved the
amendment, effective October 29, 2014. We are engaged in the acquisition,
exploration, and if warranted, development of oil and gas prospects in the Rocky
Mountain and Mid Continent regions.
Prior to August 2014, we had minimal operations that were focused mainly on
administrative activities, the identification of potential oil and gas
prospects, and one prospect participation in Colorado that was rescinded in June
2014. On December 22, 2014, we acquired 100% of the issued and outstanding
common stock of Terex Energy Corp., Inc. ("Terex") pursuant to Exchange
Agreements with the shareholders of Terex Energy Corp.
On August 19, 2014, prior to entering into the Agreement, Terex had purchased
371,003 shares (adjusted for reverse split) from us. After such purchase, Terex
held approximately 52% of the issued and outstanding common stock of the
Company.
EXCHANGE AGREEMENTS
On December 22, 2014, we entered into the Exchange Agreements with the Terex
shareholders for 100% of the shares of Terex. Pursuant to the Exchange
Agreements, we agreed to issue 7,385,700 shares of our restricted common stock
for 100% of the issued and outstanding common stock of Terex. The shares are to
be exchanged on a one for one basis. As a result, Terex became a wholly-owned
subsidiary of the Company.
The effective date of the acquisition was December 22, 2014, with T-Rex being
the legal acquirer. However, since T-Rex is a public company, which had nominal
activity, the acquisition was treated as a recapitalization of Terex. Though
T-Rex was the legal acquirer in the acquistion, Terex was the accounting
acquirer since its shareholders gained control of T-Rex. Therefore at the date
of the acquisition the historical financial statements of Terex became those of
T-Rex. As a result, the historical financial statements of Terex supersede any
prior financial statements of T-Rex.
TEREX
Terex was incorporated in the State of Colorado in February 2014 and is
headquartered in Denver, Colorado. Terex has interests in oil and gas
properties. Terex acquired interests in several prospects and projects discussed
hereafter.
Terex intends to strive to be a low cost and effective producer of hydrocarbons
and intends to develop the business model and corporate strategy as discussed
herein.
The Company's approach to lease acquisition, development and production is
founded on the discipline of acquiring leases in areas of proven production. In
most cases the leases that are under consideration have at one time contained
producing oil or gas wells have had offset production and currently have
production or shut-in wells that are viable for work over and or re-completion.
-2-
This managed risk approach greatly reduces the risk normally associated with oil
and gas development. There are hundreds of wells in our area of interest that
meet these criteria. In many instances, the wells were shut-in during a period
of declining oil and gas prices and in most cases are ideal for our business
model. Our business model is simple; strict adherence to lease acquisition
surrounded by proven production, offering well workovers, re-completion, and
enhanced oil recovery opportunities in the known producing formations, with long
term production potential at a low cost of development, maintenance, and
operation. The Company is NOT an exploration company, per se, rather it seeks
leases with discovered oil and gas with current or prior production.
One strategy that has grown in prominence and application with respect to
petroleum is to use a development program approach. We describe our development
plan approach as a set of techniques utilizing the injection of specific fluids
such as: water, steam, natural gas, carbon dioxide, nitrogen, and various
chemicals and surfactants intended to increase the amount of oil that can
ultimately be extracted from any oil field. Many oil exploration and production
companies are using development program approaches to maximize the potential of
old oil fields.
Our business operations are in the development, production, and low risk
exploration of oil and gas including unconventional natural gas, in the Rocky
Mountain region of the continental United States; specifically, in the Rocky
Mountain area of Utah, Colorado, Wyoming and Kansas.
CORPORATE STRATEGY
Our corporate strategy in developing our operations and evaluating potential
acquisitions is as follows.
PURSUE CONCURRENT DEVELOPMENT OF OUR CORE AREA OF THE ROCKY MOUNTAINS.
We plan to spend up to $10,000,000 on acquisition, drilling, re-completion, and
development programs in 2015. We plan to raise these funds in Private Placements
of Common Stock, Preferred Stock and/or convertible debt. Many of our targeted
prospects are in reservoirs that have demonstrated predictable geologic
attributes and consistent reservoir characteristics, which typically lead to
more repeatable drilling and re-completion results than those achieved through
wildcats.
ACHIEVE CONSISTENT RESERVE GROWTH THROUGH REPEATABLE DEVELOPMENT
We intend to achieve consistent reserve growth over the next four years through
a combination of acquisitions and drilling. In 2015, we intend to continue to
focus on acquisition, drilling, re-completion and development programs. We
anticipate that the majority of future reserve and production growth will come
through the acquisition of production, the execution of our drilling and
re-completion program, enhanced oil recovery in old reservoirs and on
development activities on prospects of which we are aware, which include proved
and unproved locations. Our targets generally will consist of locations in
fields that demonstrate low variance in well performance, which leads to
predictable and repeatable field development.
Our reserve estimates, if any, may change continuously and we intend to evaluate
such reserve estimates internally on a frequent basis--quarterly if
warranted--with independent engineering evaluation on an annual basis.
Deviations in the market prices of both crude oil and natural gas and the
effects of acquisitions, dispositions, development and any successful
exploration activities may have a significant effect on the quantities and
future values of our reserves, if any.
MAINTAIN HIGH PERCENTAGE OWNERSHIP AND OPERATIONAL CONTROL OVER OUR ASSET BASE
We intend to retain a high degree of operational control over our asset base,
through a high average Working Interest or acting as the operator in our areas
of significant activity. This is designed to provide us with controlling
interests in a multi-year inventory of drilling locations, positioning us for
reserve and production growth through our drilling operations. We plan to
control the timing, level and allocation of our drilling capital expenditures
and the technology and methods utilized in the planning, drilling and completion
process on related targets. We believe this flexibility to opportunistically
pursue low risk exploration and development projects relating to selected
prospects may provide us with a meaningful competitive advantage.
-3-
ACQUIRE AND MAINTAIN ACREAGE POSITIONS IN HIGH POTENTIAL RESOURCE PLAYS
We believe that our intended acquisition and development in known production
prospects in the Rockies should be supplemented with exploratory efforts that
may lead to new discoveries in the future. We intend to continually evaluate our
opportunities and pursue potential opportunities that take advantage of our
strengths. We are examining potential prospects in such areas as Utah, Colorado
and Wyoming, which have gained substantial interest within the exploration and
production sector due to their relatively under-explored nature and the
potential for meaningful hydrocarbon recoveries. There are other mid-size and
large independent exploration and production companies conducting drilling
activities in these plays.
PURSUE A DISCIPLINED ACQUISITION STRATEGY IN OUR CORE AREAS OF OPERATION
We intend to also focus on growing through targeted acquisitions. Although
drilling prospects may provide us with the opportunity to grow reserves and
production without acquisitions, we continue to evaluate acquisition
opportunities, primarily in our core areas of operation.
EXPERIENCED MANAGEMENT AND OPERATIONAL TEAM WITH ADVANCED EXPLORATION AND
DEVELOPMENT TECHNOLOGY
Our senior management team has over 75 years of experience in the oil and gas
industry, and has a proven track record of creating value both organically and
through strategic acquisitions. Our management intends to utilize the best
available and fit-for-purpose technology, sophisticated geologic and 3-D seismic
models to enhance predictability and reproducibility over significantly larger
areas than historically possible. We also intend to utilize state-of-the art
drilling and completion technology, as well as multi-zone, multi-stage
artificial stimulation ("frac") technology in completing wells to substantially
increase near-term production, resulting in faster payback periods and higher
rates of return and present values. Our team has successfully applied these
techniques, normally associated with completions in the most advanced Rocky
Mountain crude oil and natural gas fields, to improve initial and ultimate
production and returns, in other companies.
OIL AND GAS PROJECTS
Our initial project participation is in the Covenant Overthrust area of Utah.
Utah has long been known to contain petroleum and natural gas and has
established itself as a petroleum production discovery area in the United
States.
DESCRIPTION OF PROPERTIES/ASSETS/OIL AND GAS PROSPECTS
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(a) Real Estate. None.
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(b) Title to properties. None.
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(c) Oil and Gas Properties.
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As is customary in the oil and natural gas industry, we generally conduct a
preliminary title examination prior to the acquisition of properties or
leasehold interests. Prior to commencement of operations on such acreage, a
thorough title examination will usually be conducted and any significant defects
will be remedied before proceeding with operations. We believe the title to our
leasehold properties is good, defensible and customary with practices in the oil
and natural gas industry, subject to such exceptions that we believe do not
materially detract from the use of such properties. With respect to our
properties of which we are not the record owner, we rely instead on contracts
with the owner or operator of the property or assignment of leases, pursuant to
which, among other things, we generally have the right to have our interest
placed on record.
Our properties are generally subject to royalty, overriding royalty and other
interests customary in the industry, liens incident to agreements, current taxes
and other burdens, minor encumbrances, easements and restrictions. We do not
believe any of these burdens will materially interfere with our use of these
properties.
-4-
SUMMARY OF OIL AND NATURAL GAS RESERVES
PROVED RESERVES - NONE
The following table sets forth our estimated net proved reserves as of December
2014.
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RESERVES
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ESTIMATED PROVED RESERVES DATA: OIL NATURAL GAS
(MBBLS) (MMSCF)
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Proved developed reserves 0 0
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Proved undeveloped reserves 0 0
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Total proved reserves 0 0
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Estimates of proved developed and undeveloped reserves are inherently imprecise
and are continually subject to revision based on production history, results of
additional exploration and development, price changes and other factors. See
"Qualifications of Technical Persons and Internal Controls Over Reserves
Estimation Process."
PROVED UNDEVELOPED RESERVES - NONE
Our proved undeveloped reserves at December 31, 2014 were no oil and no natural
gas reserves.
QUALIFICATIONS OF TECHNICAL PERSONS AND INTERNAL CONTROLS OVER RESERVES
ESTIMATION PROCESS
Estimates of oil and natural gas reserves are projections based on a process
involving an independent third party engineering firm's collection of all
required geologic, geophysical, engineering and economic data, and such firm's
complete external preparation of all required estimates and are forward-looking
in nature. These reports rely upon various assumptions, including assumptions
required by the SEC, such as constant oil and natural gas prices, operating
expenses and future capital costs. The process also requires assumptions
relating to availability of funds and timing of capital expenditures for
development of our proved undeveloped reserves. These reports should not be
construed as the current market value of our reserves. The process of estimating
oil and natural gas reserves is also dependent on geological, engineering and
economic data for each reservoir. Because of the uncertainties inherent in the
interpretation of this data, we cannot be certain that the reserves will
ultimately be realized. Our actual results could differ materially.
Under SEC rules, proved reserves are those quantities of oil and natural gas,
which, by analysis of geoscience and engineering data, can be estimated with
reasonable certainty to be economically producible from a given date forward,
from known reservoirs, and under existing economic conditions, operating
methods, and government regulations. The term "reasonable certainty" implies a
high degree of confidence that the quantities of oil and/or natural gas actually
recovered will equal or exceed the estimate. The technologies and economic data
used in the estimation of our proved reserves include, but are not limited to,
well logs, geologic maps and available downhole and production data, seismic
data and well test data.
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SUMMARY OF OIL AND NATURAL GAS PROPERTIES AND PROJECTS
PRODUCTION, PRICE AND COST HISTORY
The following table presents net production sold, average sales prices and
production costs and expenses for the year ended December 31, 2014. The Company
did not have any activities that resulted in production or sales during the year
2014. During the year ended December 2014, the Company did not have any
production of or sales of natural gas.
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Revenue
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Oil sales $0
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Net production sold
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Oil (Bbl) $0
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Average sales prices
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Oil ($/Bbl) $0
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Costs and expenses (per Bbl)
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Lease operating expenses $0
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Transportation and marketing expenses $0
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DEVELOPED AND UNDEVELOPED ACREAGE
The following table presents our total gross and net developed and undeveloped
acreage by region as of December 31, 2014:
--------------------- ------------------------------- ------------------------------- ---------------- ---------------
Developed Acres Undeveloped Acres Working Net Revenue
Interest Interest
--------------------- ------------------------------- ------------------------------- ---------------- ---------------
Gross (1) Net(2) Gross Net Net (%) Net (%)
--------------------- --------------- --------------- ---------------- -------------- ---------------- ---------------
Covenant Mondo 3,995 558 14% (3) 10.78%
--------------------- --------------- --------------- ---------------- -------------- ---------------- ---------------
Cole Creek (Shannon 4,000 2,039 50.975%
formation Only (4))
--------------------- --------------- --------------- ---------------- -------------- ---------------- ---------------
Burke Ranch 1,467.64 1,163.1 2,237 1,789.60 80%
--------------------- --------------- --------------- ---------------- -------------- ---------------- ---------------
Sioux County 252.17 249.08 91.54% 72.39%
Nebraska
--------------------- --------------- --------------- ---------------- -------------- ---------------- ---------------
Total 1,467.64 1,163.1 14,484.17 4,635.68
--------------------- --------------- --------------- ---------------- -------------- ---------------- ---------------
(1) "Gross" means the total number of acres in which we have a working
interest.
(2) "Net" means the sum of the fractional working interests that we own in
gross acres.
(3) The working interest after tanks are constructed will be 11.6667% or
approximately 465 acres.
(4) Farmout
PRODUCTIVE WELLS
The following table presents the total gross and net productive wells by area
and by oil or natural gas completion as of December 31, 2014:
Oil Wells Natural Gas Wells
----------------------- --------------------------
Gross (1) Net(2) Gross(1) Net % (2)
------------ ---------- ------------ -------------
Covenant Mondo 0 0 0 0%
Cole Creek 0 0 0 0%
Burke Ranch 5 5 0 0%
Sioux County Nebraska 2 .65 0 0%
============ ========== ============ =============
Total 7 5.65 0 0%
============ ========== ============ =============
(1) "Gross" means the total number of wells in which we have a working
interest.
(2) "Net" means the sum of the fractional working interest that we own in gross
wells.
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DRILLING ACTIVITY
The Company's operational activities are focused on re-work of existing wells
and fields, for production purposes, and minority drilling participation to
minimize risk.
At December 31, 2014, the Company had no wells being drilled.
Our oil and natural gas prospects are located in the Western US, Rocky Mountain
Region.
The following is a description of our properties.
COMPANY PROJECTS AND MATERIAL AGREEMENT TERMS
1) COVENANT MONDO
-------------------------------------
We agreed to:
- Participation in 3,986 net acres - 2 miles adjacent to Covenant Field
- Sevier County, Utah T22S-R1W - Overthrust Belt
- (comment #8) Legal ownership interest: We own working interest in the
oil and gas leases which comprise the Covenant Mondo Prospect, subject
to participation/contribution requirements on a well by well basis.
Well is expected to Spud in early March 2015.
First Well:
- Working interest before tanks - 14%.
- Working interest after tanks - 11.6667%
- Net Revenue Interest - 8.9833%
- On same seismic and gravity data set as Covenant Field discovery.
- Drilled a dry hole. Second well currently drilling. Expected to be
800' hi to live oil shows in offset well.
- Navajo Sandstone - reservoir characteristics 12-15% Porosity, 100 mD
permeability
- Terex has paid for a 14.00% working interest in first two wells;
spudded first in 2014, resulted in a dry hole.
2) WATER DISPOSAL FACILITY
-------------------------------------
- Sioux County, Nebraska, T25N-R56W Sec. 13
- Legal ownership interest: Terex purchased 100% of the rights, title
and interests to the properties located in Sioux County, Nebraska. 240
acres
- Letter of Intent subject to permitting for purchase of a well with 7
inch casing for a water disposal well.
- Current rates for water disposal are $1.65 per barrel. Disposal demand
is very high.
- State of Nebraska - Approval from state of Nebraska for water disposal
well expected March 2015.
- Surface use agreement negotiated for 5.00% royalty, 95% LNRI.
- Potential injection rates up to 15,000 BWPD.
3) COLE CREEK FIELD
-------------------------------------
- Cole Creek Field located in SW margin of Powder River Basin, Natrona
and Converse Counties, WY. Shannon sand reservoir is one of the main
oil producing formations in the field.
- Legal ownership interest: Farmout Limited to one zone - Shannon Leases
are held by production to other producers. We agreed to drill two
Shannon Formation wells in the prospect area of the Cole Creek Unit
under a Farmout Agreement within 24 months of September 30, 2014.
- There are up to 7 undrilled Shannon locations on the periphery of the
field.
- Red Hawk owns 50.9% of the field and farmed out interest to our
company on a 90/10 basis for 750,000 shares stock, 77% Net Revenue
Interest
- Alpha Development owns 17.5% and Slawson owns 31.6% working interests.
4) DEVELOPMENT OIL WELL PROSPECT
-------------------------------------
- We acquired 240 acres, Sioux County, Nebraska, T25N-R55W
- Purchase of a producing oil well, that when initially drilled tested
24-30 BOPH from two different stratigraphic horizons. The well
produced 30,000 barrels of oil and still produces intermittently. The
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prospect is for two wells to be located in an updip direction
structurally from the prior well that flowtested 720 BOPD from the
Virgil Formation.
- The formation was damaged in the drilling and completion stages, and
only produced a fraction of what it tested for.
- We have designed a drilling and completion program to prevent this
formation damage from occurring.
- Executed Purchase and Sale for purchased 100% working interest and 75%
NRI in the well and key acreage for $50,000 and 400,000 options @
$0.25 expiring September 30, 2017.
5) BURKE RANCH UNIT
-------------------------------------
- Natrona County, Wyoming
- Dakota CUM Production = 5,551,000 BO to date - not currently producing
- Additional development locations can be drilled on 40 acre spacing (It
has been developed on 80 acre spacing) and management believes
downspacing represents significant potential upside.
- Mapped structural anomalies in the Tensleep and Frontier Formations
represent additional exploration targets with potential reserves.
- Terex purchased Burke Ranch Unit for $400,000 and 400,000 shares of
restricted common stock.
- Legal Ownership Interest: assignment of Unit/Leases
- Working interest inside the Unit - 100% - 1467.64 gross acres - (Unit
HBP) Shut In
- NRI inside the Unit - 79.25%
- Working interest outside the Unit - 100% - 2917.02 gross acres -
Various leases with terms expiring 1 to 3 years with renewal options
- NRI outside the Unit - 80%
- Total Acres - 4821.88 gross
6) NIOBRARA/CODELL ACREAGE
-------------------------------------
- Legal ownership interest: none - prospects being sought
- Participation in Wattenberg Niobrara/Codell acreage that is in the
heart of the known thermally mature Niobrara/Codell productive trend.
The acreage has significant Niobrara and Codell potential, with 8-16
horizontal wells per section likely, surrounding local oil field
development has demonstrated. Local wells
7) MILLER PROSPECT (SUBJECT TO PARTICIPATION AGREEMENT)
---------------------------------------------------------
- An agreement to participate in the drilling of two development wells
in Kimball County, Nebraska. One offsets a J Sand Field that has
produced oil and the other offsets several D Sand producers in an
updip direction. Management believes the prospect represents low risk
development wells in a prolific area of the DJ Basin. (40 Acres)
- Legal ownership interest:
Under the Participation Agreement we may earn as follows:
- Working Interest D Sand 100%
- Net Revenue Interest D Sand 87.5% - Working Interest J Sand 10%
- Net Revenue Interest to be earned by participation - J Sand 80%
COMPETITION, MARKETS, REGULATION AND TAXATION
COMPETITION.
There are a large number of companies and individuals engaged in the exploration
for minerals and oil and gas; accordingly, there is a high degree of competition
for desirable properties. Almost all of the companies and individuals so engaged
have substantially greater technical and financial resources than we do.
MARKETS.
The availability of a ready market for oil and gas discovered, if any, will
depend on numerous factors beyond our control, including the proximity and
capacity of refineries, pipelines, and the effect of state regulation of
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production and of federal regulations of products sold in interstate commerce,
and recent intrastate sales. The market price of oil and gas are volatile and
beyond our control. The market for natural gas is also unsettled, and gas prices
have increased dramatically in the past four years with substantial fluctuation,
seasonally and annually.
There generally are only a limited number of gas transmission companies with
existing pipelines in the vicinity of a gas well or wells. In the event that
producing gas properties are not subject to purchase contracts or that any such
contracts terminate and other parties do not purchase our gas production, there
is no assurance that we will be able to enter into purchase contracts with any
transmission companies or other purchasers of natural gas and there can be no
assurance regarding the price which such purchasers would be willing to pay for
such gas. There presently exists an oversupply of gas in the certain areas of
the marketplace due to pipeline capacity, the extent and duration of which is
not known. Such oversupply may result in restrictions of purchases by principal
gas pipeline purchasers.
EFFECT OF CHANGING INDUSTRY CONDITIONS ON DRILLING ACTIVITY.
Lower oil and gas prices have caused a decline in drilling activity in the U.S.
from time to time. However, such reduced activity has also resulted in a decline
in drilling costs, lease acquisition costs and equipment costs, and an
improvement in the terms under which drilling prospects are generally available.
We cannot predict what oil and gas prices will be in the future and what effect
those prices may have on drilling activity in general, or on our ability to
generate economic drilling prospects and to raise the necessary funds with which
to drill them.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL CONSIDERATION.
Oil and Gas: The oil and gas business in the United States is subject to
regulation by both federal and state authorities, particularly with respect to
pricing, allowable rates of production, marketing and environmental matters.
The production of crude oil and gas has, in recent years, been the subject of
increasing state and federal controls. No assurance can be given that newly
imposed or changed federal laws will not adversely affect the economic viability
of any oil and gas properties we may acquire in the future. Federal income and
"windfall profit" taxes have in the past affected the economic viability of such
properties.
The above paragraphs only give a brief overview of potential state and federal
regulations. Because we have only acquired specific properties, and because of
the wide range of activities in which we may participate, it is impossible to
set forth in detail the potential impact federal and state regulations may have
on us.
COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS.
Our operations are subject to local, state and federal laws and regulations
governing environmental quality and pollution control. To date our compliance
with these regulations has had no material effect on our operations, capital,
earnings, or competitive position, and the cost of such compliance has not been
material. We are unable to assess or predict at this time what effect additional
regulations or legislation could have on our activities.
THE DEPARTMENT OF ENERGY.
The Department of Energy Organization Act (Pub. L. No. 95-91) became effective
October 1, 1977. Under this Act various agencies, including the Federal Energy
Administration (FEA) and the Federal Power Commission (FPC), have been
consolidated to constitute the cabinet-level Department of Energy (DOE). The
Economic Regulatory Administration (ERA), a semi-independent administration
within the DOE, now administers most of the regulatory programs formerly managed
by the FEA, including oil pricing and allocation. The Federal Energy Regulatory
Commission (FERC), an independent agency within the DOE, has assumed the FPC's
responsibility for natural gas regulation.
REGULATION AND PRICING OF NATURAL GAS.
Our operations may be subject to the jurisdiction of the Federal Energy
Regulatory Commission (FERC) with respect to the sale of natural gas for resale
in interstate and intrastate commerce. State regulatory agencies may exercise or
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attempt to exercise similar powers with respect to intrastate sales of gas.
Because of its complexity and broad scope, the price impact of future
legislation on the operation of us cannot be determined at this time.
CRUDE OIL AND NATURAL GAS LIQUIDS PRICE AND ALLOCATION REGULATION.
Pursuant to Executive Order Number 12287, issued January 28, 1981, President
Reagan lifted all existing federal price and allocation controls over the sale
and distribution of crude oil and natural gas liquids. Executive Order Number
12287 was made effective as of January 28, 1981, and consequently, sales of
crude oil and natural gas liquids after January 27, 1981 are free from federal
regulation. The price for such sales and the supplier-purchaser relationship
will be determined by private contract and prevailing market conditions. As a
result of this action, oil which may be sold by us will be sold at deregulated
or free market prices. At various times, certain groups have advocated the
reestablishment of regulations and control on the sale of domestic oil and gas.
STATE REGULATIONS.
Our production of oil and gas, if any, will be subject to regulation by state
regulatory authorities in the states in which we may produce oil and gas. In
general, these regulatory authorities are empowered to make and enforce
regulations to prevent waste of oil and gas and to protect correlative rights
and opportunities to produce oil and gas as between owners of a common
reservoir. Some regulatory authorities may also regulate the amount of oil and
gas produced by assigning allowable rates of production.
PROPOSED LEGISLATION.
A number of legislative proposals have been and probably will continue to be
introduced in Congress and in the legislatures of various states, which, if
enacted, would significantly affect the petroleum industries. Such proposals and
executive actions involve, among other things, the imposition of land use
controls such as prohibiting drilling activities on certain federal and state
lands in roadless wilderness areas. At present, it is impossible to predict what
proposals, if any, will actually be enacted by Congress or the various state
legislatures and what effect, if any, such proposals will have. However,
President Clinton's establishment of numerous National Monuments by executive
order has had the effect of precluding drilling across vast areas of the Rocky
Mountain West.
ENVIRONMENTAL LAWS.
Oil and gas exploration and development are specifically subject to existing
federal and state laws and regulations governing environmental quality and
pollution control. Such laws and regulations may substantially increase the
costs of exploring for, developing, or producing oil and gas and may prevent or
delay the commencement or continuation of a given operation.
All of our operations involving the exploration for or the production of any
minerals are subject to existing laws and regulations relating to exploration
procedures, safety precautions, employee health and safety, air quality
standards, pollution of stream and fresh water sources, odor, noise, dust, and
other environmental protection controls adopted by federal, state and local
governmental authorities as well as the right of adjoining property owners. We
may be required to prepare and present to federal, state or local authorities
data pertaining to the effect or impact that any proposed exploration for or
production of minerals may have upon the environment. All requirements imposed
by any such authorities may be costly, time consuming, and may delay
commencement or continuation of exploration or production operations.
It may be anticipated that future legislation will significantly emphasize the
protection of the environment, and that, as a consequence, our activities may be
more closely regulated to further the cause of environmental protection. Such
legislation, as well as future interpretation of existing laws, may require
substantial increases in equipment and operating costs to us and delays,
interruptions, or a termination of operations, the extent to which cannot now be
predicted.
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TITLE TO PROPERTIES.
We are not the record owner of our interest in our properties and rely instead
on contracts with the owner or operator of the property, pursuant to which,
among other things, we have the right to have our interest placed of record. As
is customary in the oil and gas industry, a preliminary title examination will
be conducted at the time unproved properties or interests are acquired by us.
Prior to commencement of drilling operations on such acreage and prior to the
acquisition of proved properties, we will conduct a title examination and
attempt to remedy extremely significant defects before proceeding with
operations or the acquisition of proved properties, as we may deem appropriate.
Our properties are subject to royalty, overriding royalty and other interests
customary in the industry, liens incident to agreements, current taxes and other
burdens, minor encumbrances, easements and restrictions. Although we are not
aware of any material title defects or disputes with respect to its undeveloped
acreage, to the extent such defects or disputes exist, we would suffer title
failures.
BACKLOG OF ORDERS.
We currently have no orders for sales at this time.
GOVERNMENT CONTRACTS.
We have no government contracts.
COMPANY SPONSORED RESEARCH AND DEVELOPMENT.
We are not conducting any research.
NUMBER OF PERSONS EMPLOYED.
At closing, T-Rex had no full-time employees. After the transaction, T-Rex has 6
full-time employees. Donald Walford, Allen Heim and Jon Nicolaysen, officers and
directors of T-Rex, have Employment Agreements (see Exhibits 10.11 through
10.14) with our subsidiary Terex. Martin Gottlob's Employment Agreement is with
T-Rex Oil, Inc. All directors work 40 hours per week.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
Our Common Stock is presently traded on the over-the-counter market on the OTC
Markets. On November 26, 2014 we began trading on the OTC Pink Sheets under the
symbol "TRXO," prior to the Company's name change in October 2014, the Company's
trading symbol was "RNCH."
The succession of the shares registered hereby could have a material negative
effect on the market price for the stock.
RULES GOVERNING LOW-PRICE STOCKS THAT MAY AFFECT OUR SHAREHOLDERS' ABILITY TO
RESELL SHARES OF OUR COMMON STOCK
Our stock is currently traded on the OTC Pink Sheets. Quotations on the OTC/BB
reflect inter-dealer prices, without retail mark-up, markdown or commission and
may not reflect actual transactions. Our common stock will be subject to certain
rules adopted by the SEC that regulate broker-dealer practices in connection
with transactions in "penny stocks." Penny stocks generally are securities with
a price of less than $5.00, other than securities registered on certain national
exchanges or quoted on the Nasdaq system, provided that the exchange or system
provides current price and volume information with respect to transaction in
such securities. The additional sales practice and disclosure requirements
imposed upon broker-dealers are and may discourage broker-dealers from effecting
transactions in our shares which could severely limit the market liquidity of
the shares and impede the sale of shares in the secondary market.
-11-
The penny stock rules require broker-dealers, prior to a transaction in a penny
stock not otherwise exempt from the rules, to make a special suitability
determination for the purchaser to receive the purchaser's written consent to
the transaction prior to sale, to deliver standardized risk disclosure documents
prepared by the SEC that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer must also
provide the customer with current bid and offer quotations for the penny stock.
In addition, the penny stock regulations require the broker-dealer to deliver,
prior to any transaction involving a penny stock, a disclosure schedule prepared
by the SEC relating to the penny stock market, unless the broker-dealer or the
transaction is otherwise exempt. A broker-dealer is also required to disclose
commissions payable to the broker-dealer and the registered representative and
current quotations for the securities. Finally, a broker-dealer is required to
send monthly statements disclosing recent price information with respect to the
penny stock held in a customer's account and information with respect to the
limited market in penny stocks.
HOLDERS
As of the date of this filing, we have 137 shareholders of record of our common
stock. Sales under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public information about
us. Under Rule 144(k), a person who has not been one of our affiliates at any
time during the three months preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least 6 months, is entitled to sell shares
without complying with the manner of sale, volume limitation or notice
provisions of Rule 144.
DIVIDENDS
To date, we have not paid any dividends to shareholders. There are no
restrictions which would limit our ability to pay dividends on common equity or
that are likely to do so in the future. The Colorado Revised Statutes, however,
do prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend; we would not be able to pay our debts as they
become due in the usual course of business; or our total assets would be less
than the sum of the total liabilities plus the amount that would be needed to
satisfy the rights of shareholders who have preferential rights superior to
those receiving the distribution.
LEGAL PROCEEDINGS
We are not a party to any pending legal proceedings, nor are we aware of any
civil proceeding or government authority contemplating any legal proceeding
since our emergence from Chapter 11 bankruptcy reorganization. One case is
pending under the pre-bankruptcy action covered by insurance.
PLAN OF OPERATIONS
We have not recognized revenues from our operations during 2014. We have minimal
capital, moderate cash. We are illiquid and need cash infusions from investors
or shareholders to provide capital, or loans from any sources, none of which
have been arranged nor assured.
We will need substantial additional capital to support our existing and proposed
future energy operations. We have RECOGNIZED NO OPERATING revenues since
bankruptcy emergence. We have NO committed source for any funds as of date here.
No representation is made that any funds will be available when needed. In the
event funds cannot be raised when needed, we may not be able to carry out our
business plan, may never achieve sales or royalty income, and could fail in
business as a result of these uncertainties.
Decisions regarding future participation in exploration wells or geophysical
studies or other activities will be made on a case-by-case basis. We may, in any
particular case, decide to participate or decline participation. If
participating, we may pay our proportionate share of costs to maintain our
proportionate interest through cash flow or debt or equity financing. If
participation is declined, we may elect to farmout, non-consent, sell or
otherwise negotiate a method of cost sharing in order to maintain some
continuing interest in the prospect.
-12-
EXPECTED 2015 BUDGET - 12 MONTHS
Development of connection, rework, recompletion, $2,500,000
Working Capital $4,009,500
Acquisitions $2,000,000
General and Administrative Expenses:
Legal and Accounting/Auditing $257,000
Consulting $695,000
Filing Fees (State, SEC, etc.) $7,500
Travel $60,000
Interest $66,000
Miscellaneous $405,000
--------------------
TOTAL $10,000,000
The Company may change any or all of the budget categories in the execution of
its business model. None of the line items are to be considered fixed or
unchangeable. The Company may need substantial additional capital to support its
budget. The Company has minimal revenues to date in the oil and gas exploration,
development and production business.
We intend to conduct a Private Offering of shares of our restricted Common Stock
for capital. We intend to raise up to $10,000,000 in the next twelve months with
a structure not yet determined in debt or equity. We cannot give any assurances
that we will be able to raise the full $10,000,000 to fund the budget. Further,
we will need to raise additional funds to support not only our expected budget,
but our continued operations. We cannot make any assurances that we will be able
to raise such funds or whether we would be able to raise such funds with terms
that are favorable to us.
Our plan of operations is as follows:
MILESTONES
--------------------------- ----------------------------------------------------
1st Quarter 2015 Continuation of Recompletion Operations; and Oversee
operations of Wyoming oil and gas prospects.
--------------------------- ----------------------------------------------------
2rd Quarter 2015 Continuation of Recompletion Operations and
production operations and development of any new
oil and gas prospects
--------------------------- ----------------------------------------------------
3rd Quarter 2015 Continuation of Recompletion Operations; and
Expand operations of Wyoming oil and gas prospects.
--------------------------- ----------------------------------------------------
4th Quarter 2015 Continuation of Recompletion Operations and
production operations and development of any new
oil and gas prospects
--------------------------- ----------------------------------------------------
We will need substantial additional capital to support our proposed future
energy operations. We have MINIMAL revenues. We have NO committed source for any
funds as of date here. No representation is made that any funds will be
available when needed. In the event funds cannot be raised when needed, we may
not be able to carry out our business plan, may never achieve sales or royalty
income, and could fail in business as a result of these uncertainties.
Decisions regarding future participation in exploration wells or geophysical
studies or other activities will be made on a case-by-case basis. We may, in any
particular case, decide to participate or decline participation. If
participating, we may pay our proportionate share of costs to maintain our
proportionate interest through cash flow or debt or equity financing. If
participation is declined, we may elect to farmout, non-consent, sell or
otherwise negotiate a method of cost sharing in order to maintain some
continuing interest in the prospect.
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OFF BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR AUDITED
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN. WE CAUTION READERS
REGARDING CERTAIN FORWARD LOOKING STATEMENTS IN THE FOLLOWING DISCUSSION AND
ELSEWHERE IN THIS REPORT AND IN ANY OTHER STATEMENT MADE BY, OR ON OUR BEHALF,
WHETHER OR NOT IN FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
FORWARD-LOOKING STATEMENTS ARE STATEMENTS NOT BASED ON HISTORICAL INFORMATION
AND WHICH RELATE TO FUTURE OPERATIONS, STRATEGIES, FINANCIAL RESULTS OR OTHER
DEVELOPMENTS. FORWARD LOOKING STATEMENTS ARE NECESSARILY BASED UPON ESTIMATES
AND ASSUMPTIONS THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC
AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND OUR
CONTROL AND MANY OF WHICH, WITH RESPECT TO FUTURE BUSINESS DECISIONS, ARE
SUBJECT TO CHANGE. THESE UNCERTAINTIES AND CONTINGENCIES CAN AFFECT ACTUAL
RESULTS AND COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED
IN ANY FORWARD LOOKING STATEMENTS MADE BY, OR ON OUR BEHALF. WE DISCLAIM ANY
OBLIGATION TO UPDATE FORWARD-LOOKING STATEMENTS.
PLAN OF OPERATIONS
We have no revenues from our operations. We have minimal capital, moderate cash.
We are illiquid and need cash infusions from investors or shareholders to
provide capital, or loans from any sources, none of which have been arranged nor
assured.
We will need substantial additional capital to support our existing and proposed
future energy operations. We have only recognized minimal and sporadic revenues.
We have no committed source for any funds as of date here. No representation is
made that any funds will be available when needed. In the event funds cannot be
raised when needed, we may not be able to carry out our business plan, may never
achieve sales or royalty income, and could fail in business as a result of these
uncertainties.
Decisions regarding future participation in exploration or other activities will
be made on a case-by-case basis. We may, in any particular case, decide to
participate or decline participation. If participating, we may pay our
proportionate share of costs to maintain our proportionate interest through cash
flow or debt or equity financing. If participation is declined, we may elect to
farmout, non-consent, sell or otherwise negotiate a method of cost sharing in
order to maintain some continuing interest in the prospect.
RESULTS OF OPERATIONS (as consolidated with Terex Energy Corp.)
FOR THE YEAR ENDED MARCH 31, 2014 COMPARED TO THE SAME YEAR ENDED MARCH 31, 2013
OVERVIEW. With respect to our operations, for the fiscal year ended March 31,
2014, we reported a net loss of $744,306 compared to a net loss of $214,631 for
fiscal year ended March 31, 2013.
REVENUES. The Company had no revenues from operations during 2014 or 2013.The
Company does not anticipate recognizing any revenues from its limited operations
during the next 12 months.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for
2014 were $747,219 compared to $531,241 for 2013. The increase of $215,978 was
primarily attributable to increase in legal and professional costs incurred in
pursuing the business combination with PetroShare which was not completed.
INTEREST EXPENSE. There was no interest expense for 2014 compared to an interest
credit of $47,236 for 2013 as a result of the Court rendering a determination of
the amount of interest due on the notes and therefore the Company recording such
adjustment.
INTEREST AND OTHER INCOME. Interest income for 2014 was $2,913 compared to other
income of $350,494 for 2013. This decrease of $347,581 is primarily due to the
CO2 supply agreement being terminated in December 2012.
-14-
REORGANIZATION EXPENSES. Reorganization items for 2014 were $0 as a result of
the Company no longer being in bankruptcy compared to $47,274 for 2013.
LIQUIDITY
The report of our independent registered public accounting firm on the financial
statements for the years ended March 31, 2014 and 2013 includes an explanatory
paragraph relating to the uncertainty of our ability to continue as a going
concern. We have incurred a cumulative net loss of approximately $91.9 million
for the period from incorporation (February 4, 2004) to September 30, 2014.
We do not have any sources of revenue and our projected revenue is not
sufficient to sustain our ongoing general and administrative costs. We had no
operations as of April 1, 2012 and are not certain at the date of this filing
whether there will be any during the 2015 fiscal year.
RESULTS OF OPERATIONS (Consolidated with Terex Energy Corp. for purposes of
filing)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014, COMPARED TO THE SIX MONTHS ENDED
SEPTEMBER 30, 2013
We have incurred operating losses for the six months ended September 30, 2014 of
($1,081,917) compared to $357,879) in losses for the same period in 2013. Loss
per share was ($0) each period of which $1,053,282 in 2014 and $342,535 in 2013
were general and administrative, and $27,368 in 2014 were asset impairment. Our
income was interest only at $488 in 2014 and $1,288 in 2013 for the period.
At September 30, 2014, on a consolidated basis, we had $2,607,886 in cash on
hand. We had a total of $4,075,360 in assets at September 30, 2014 and current
and total liabilities of $210,762 at September 30, 2014.
SHORT TERM
On a short-term basis, we have not generated any revenue or revenues sufficient
to cover operations. Based on prior history, we will continue to have
insufficient revenue to satisfy current and recurring liabilities as the Company
continues exploration activities.
CAPITAL RESOURCES
The Company has only common stock as its capital resource.
We have no material commitments for capital expenditures within the next year,
however if operations are commenced, substantial capital will be needed to pay
for participation, investigation, exploration, acquisition and working capital.
NEED FOR ADDITIONAL FINANCING
We do not have capital sufficient to meet cash needs for any significant
prospect rework program or participations. We will have to seek loans or equity
placements to cover such cash needs. Once exploration commences, its needs for
additional financing is likely to increase substantially.
No commitments to provide additional funds have been made by the Company's
management or other stockholders. Accordingly, there can be no assurance that
any additional funds will be available to us to allow us to cover the Company's
expenses as they may be incurred.
The Company will need substantial additional capital to support its proposed
future energy operations. We have MINIMAL revenues. The Company has NO committed
source for any funds as of the date hereof. No representation is made that any
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funds will be available when needed. In the event funds cannot be raised when
needed, we may not be able to carry out our business plan, may never achieve
sales or royalty income, and could fail in business as a result of these
uncertainties.
Decisions regarding future participation in exploration wells, workers' other
activities will be made on a case-by-case basis. The Company may, in any
particular case, decide to participate or decline participation. If
participating, we may pay its proportionate share of costs to maintain the
Company's proportionate interest through cash flow or debt or equity financing.
If participation is declined, the Company may elect to farmout, non-consent,
sell or otherwise negotiate a method of cost sharing in order to maintain some
continuing interest in the prospect.
CRITICAL ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity of
three months or less and money market instruments to be cash equivalents.
OIL AND GAS PROPERTIES, FULL COST METHOD
The Company uses the full cost method of accounting for oil and gas producing
activities. Costs to acquire mineral interests in oil and gas properties, to
drill and equip exploratory wells used to find proved reserves, and to drill and
equip development wells including directly related overhead costs and related
asset retirement costs are capitalized.
Under this method, all costs, including internal costs directly related to
acquisition, exploration and development activities are capitalized as oil and
gas property costs. Properties not subject to amortization consist of
exploration and development costs which are evaluated on a property-by-property
basis. Amortization of these unproved property costs begins when the properties
become proved or their values become impaired. The Company assesses the
realization of unproved properties, taken as a whole, if any, on at least an
annual basis or when there has been an indication that impairment in value may
have occurred. Impairment of unproved properties is assessed based on
management's intention with regard to future exploration and development of
individually significant properties and the ability of the Company to obtain
funds to finance such exploration and development. If the results of an
assessment indicate that the properties are impaired, the amount of the
impairment is added to the capitalized costs to be amortized.
Costs of oil and gas properties will be amortized using the units of production
method.
In applying the full cost method, the Company will perform an impairment test
(ceiling test) at each reporting date, whereby the carrying value of property
and equipment is compared to the "estimated present value," of its proved
reserves discounted at a 10-percent interest rate of future net revenues, based
on current economic and operating conditions, plus the cost of properties not
being amortized, plus the lower of cost or fair market value of unproved
properties included in costs being amortized, less the income tax effects
related to book and tax basis differences of the properties. If capitalized
costs exceed this limit, the excess is charged as an impairment expense.
REVENUE RECOGNITION
The Company recognizes revenue when it is earned and expenses are recognized
when they occur.
RISK FACTORS RELATED TO OUR COMPANY
OUR BUSINESS HAS AN OPERATING HISTORY OF ONLY TWO YEARS AFTER BANKRUPTCY
EMERGENCE AND IS UNPROVEN AND THEREFORE RISKY.
We propose operations under the business plan discussed herein. Potential
investors should be made aware of the risk and difficulties encountered by a new
enterprise in the oil and gas industry, especially in view of the intense
competition from existing businesses in the industry.
-16-
WE HAVE A LACK OF REVENUE HISTORY AND HAVE A NO HISTORY OF SUCCESSFUL OPERATIONS
AFTER BANKRUPTCY REORGANIZATION.
We are not profitable and the business effort is considered to be in an early
stage of operations. We must be regarded as a new or development venture with
all of the unforeseen costs, expenses, problems, risks and difficulties to which
such ventures are subject.
WE ARE NOT DIVERSIFIED AND WE WILL BE DEPENDENT ON ONLY ONE BUSINESS.
Because of the limited financial resources that we have, it is unlikely that we
will be able to diversify our operations. Our probable inability to diversify
our activities into more than one area will subject us to economic fluctuations
within the energy industry and therefore increase the risks associated with our
operations due to lack of diversification.
WE CAN GIVE NO ASSURANCE OF SUCCESS OR PROFITABILITY TO OUR INVESTORS.
There is no assurance that we will ever operate profitably. There is no
assurance that we will generate revenues or profits, or that the market price of
our common stock will be increased thereby.
WE MAY HAVE A SHORTAGE OF WORKING CAPITAL IN THE FUTURE WHICH COULD JEOPARDIZE
OUR ABILITY TO CARRY OUT OUR BUSINESS PLAN.
Our capital needs consist primarily of expenses related to geological
evaluation, general and administrative and potential project participation and
could exceed $10,000,000 in the next twelve months. Such funds are not currently
committed to any project.
If we find oil and gas reserves to exist on a prospect we will need substantial
additional financing to fund the necessary exploration and development work.
Furthermore, if the results of that exploration and development work are
successful, we will need substantial additional funds for continued development.
We will need to obtain the necessary funds either through debt or equity
financing, some form of cost-sharing arrangement with others, joint venture, or
the sale of all or part of the prospects. There is no assurance that we will be
successful in obtaining any financing. These various financing alternatives may
dilute the interest of our shareholders and/or reduce our interest in the
prospects.
WE WILL NEED ADDITIONAL FINANCING FOR WHICH WE HAVE NO COMMITMENTS, AND THIS MAY
JEOPARDIZE EXECUTION OF OUR BUSINESS PLAN.
We have limited funds, and such funds may not be adequate to carry out the
business plan in the oil and gas industry. Our ultimate success depends upon our
ability to raise additional capital. We have not investigated the availability,
source, or terms that might govern the acquisition of additional capital and
will not do so until it determines a need for additional financing. If we need
additional capital, we have no assurance that funds will be available from any
source or, if available, that they can be obtained on terms acceptable to us. If
not available, our operations will be limited to those that can be financed with
our modest capital.
WE MAY IN THE FUTURE ISSUE MORE SHARES WHICH COULD CAUSE A LOSS OF CONTROL BY
OUR PRESENT MANAGEMENT AND CURRENT STOCKHOLDERS.
We may issue further shares as consideration for the cash or assets or services
out of our authorized but unissued common stock that would, upon issuance,
represent a majority of the voting power and equity of our Company. The result
of such an issuance would be those new stockholders and management would control
our Company, and persons unknown could replace our management at this time. Such
an occurrence would result in a greatly reduced percentage of ownership of our
Company by our current shareholders, which could present significant risks to
investors.
-17-
WE WILL DEPEND UPON MANAGEMENT BUT WE WILL HAVE LIMITED PARTICIPATION OF
MANAGEMENT.
Our directors are also acting as our officers. We will be heavily dependent upon
their skills, talents, and abilities, as well as several consultants to us, to
implement our business plan, and may, from time to time, find that the inability
of the officers, directors and consultants to devote their full-time attention
to our business results in a delay in progress toward implementing our business
plan. Consultants may be employed on a part-time basis under a contract to be
determined.
Our directors and officers are, or may become, in their individual capacities,
officers, directors, controlling shareholder and/or partners of other entities
engaged in a variety of businesses. Thus, our officers and directors may have
potential conflicts including their time and efforts involved in participation
with other business entities. Each officer and director of our business is
engaged in business activities outside of our business, and the amount of time
they devote as Officers and Directors, (See "Executive Team"). Because investors
will not be able to manage our business, they should critically assess all of
the information concerning our officers and directors.
We do not know of any reason other than outside business interests that would
prevent them from devoting full-time to our Company, when the business may
demand such full-time participation.
OUR OFFICERS AND DIRECTORS MAY HAVE CONFLICTS OF INTERESTS AS TO CORPORATE
OPPORTUNITIES WHICH WE MAY NOT BE ABLE OR ALLOWED TO PARTICIPATE IN.
Presently there is no requirement contained in our Articles of Incorporation,
Bylaws, or minutes which requires officers and directors of our business to
disclose to us business opportunities which come to their attention. Our
officers and directors do, however, have a fiduciary duty of loyalty to us to
disclose to us any business opportunities which come to their attention, in
their capacity as an officer and/or director or otherwise. Excluded from this
duty would be opportunities which the person learns about through his
involvement as an officer and director of another company. We have no intention
of merging with or acquiring business opportunity from any affiliate or officer
or director.
WE HAVE AGREED TO INDEMNIFICATION OF OFFICERS AND DIRECTORS AS IS PROVIDED BY
COLORADO STATUTES.
Colorado Statutes provide for the indemnification of our directors, officers,
employees, and agents, under certain circumstances, against attorney's fees and
other expenses incurred by them in any litigation to which they become a party
arising from their association with or activities our behalf. We will also bear
the expenses of such litigation for any of our directors, officers, employees,
or agents, upon such person's promise to repay us therefore if it is ultimately
determined that any such person shall not have been entitled to indemnification.
This indemnification policy could result in substantial expenditures by us that
we will be unable to recoup.
OUR DIRECTORS' LIABILITY TO US AND SHAREHOLDERS IS LIMITED
Colorado Revised Statutes exclude personal liability of our directors and our
stockholders for monetary damages for breach of fiduciary duty except in certain
specified circumstances. Accordingly, we will have a much more limited right of
action against our directors that otherwise would be the case. This provision
does not affect the liability of any director under federal or applicable state
securities laws.
(COMMENT #4)
-18-
RISK FACTORS RELATING TO OUR BUSINESS
OUR BUSINESS, THE OIL AND GAS BUSINESS HAS NUMEROUS RISKS WHICH COULD RENDER US
UNSUCCESSFUL.
The search for new oil and gas reserves frequently results in unprofitable
efforts, not only from dry holes, but also from wells which, though productive,
will not produce oil or gas in sufficient quantities to return a profit on the
costs incurred. There is no assurance we will find or produce oil or gas from
any of the wells we have acquired or which may be acquired by us, nor are there
any assurances that if we ever obtain any production it will be profitable.
WE HAVE SUBSTANTIAL COMPETITORS WHO HAVE AN ADVANTAGE OVER US IN RESOURCES AND
MANAGEMENT.
We are and will continue to be an insignificant participant in the oil and gas
business. Most of our competitors have significantly greater financial
resources, technical expertise and managerial capabilities than us and,
consequently, we will be at a competitive disadvantage in identifying and
developing or exploring suitable prospects. Competitor's resources could
overwhelm our restricted efforts to acquire and explore oil and gas prospects
and cause failure of our business plan.
WE WILL BE SUBJECT TO ALL OF THE MARKET FORCES IN THE ENERGY BUSINESS, MANY OF
WHICH COULD POSE A SIGNIFICANT RISK TO OUR OPERATIONS.
The marketing of natural gas and oil which may be produced by our prospects will
be affected by a number of factors beyond our control. These factors include the
extent of the supply of oil or gas in the market, the availability of
competitive fuels, crude oil imports, the world-wide political situation, price
regulation, and other factors. Current economic and market conditions have
created dramatic fluctuations in oil prices. Any significant decrease in the
market prices of oil and gas could materially affect our profitability of oil
and gas activities.
There generally are only a limited number of gas transmission companies with
existing pipelines in the vicinity of a gas well or wells. In the event that
producing gas properties are not subject to purchase contracts or that any such
contracts terminate and other parties do not purchase our gas production, there
is assurance that we will be able to enter into purchase contracts with any
transmission companies or other purchasers of natural gas and there can be no
assurance regarding the price which such purchasers would be willing to pay for
such gas. There may, on occasion, be an oversupply of gas in the marketplace or
in pipelines; the extent and duration may affect prices adversely. Such
oversupply may result in reductions of purchases and prices paid to producers by
principal gas pipeline purchasers. (See "Our Business and Competition, Markets,
Regulation and Taxation.")
WE BELIEVE INVESTORS SHOULD CONSIDER CERTAIN NEGATIVE ASPECTS OF OUR OPERATIONS.
DRY HOLES: We may expend substantial funds acquiring and potentially
participating in exploring properties which we later determine not to be
productive. All funds so expended will be a total loss to us.
TECHNICAL ASSISTANCE: We will find it necessary to employ technical assistance
in the operation of our business. As of the date of this Prospectus, we have not
contracted for any technical assistance. When we need it such assistance is
likely to be available at compensation levels we would be able to pay.
UNCERTAINTY OF TITLE: We will attempt to acquire leases or interests in leases
by option, lease, farmout or by purchase. The validity of title to oil and gas
property depends upon numerous circumstances and factual matters (many of which
are not discoverable of record or by other readily available means) and is
subject to many uncertainties of existing law and our application.
GOVERNMENT REGULATIONS: The area of exploration of natural resources has become
significantly regulated by state and federal governmental agencies, and such
regulation could have an adverse effect on our operations. Compliance with
statutes and regulations governing the oil and gas industry could significantly
increase the capital expenditures necessary to develop our prospects.
-19-
NATURE OF OUR BUSINESS: Our business is highly speculative, involves the
commitment of high-risk capital, and exposes us to potentially substantial
losses. In addition, we will be in direct competition with other organizations
which are significantly better financed and staffed than we are.
GENERAL ECONOMIC AND OTHER CONDITIONS: Our business may be adversely affected
from time to time by such matters as changes in general economic, industrial and
international conditions; changes in taxes; oil and gas prices and costs; excess
supplies and other factors of a general nature.
OUR BUSINESS IS SUBJECT TO SIGNIFICANT WEATHER INTERRUPTIONS.
Our activities may be subject to periodic interruptions due to weather
conditions. Weather-imposed restrictions during certain times of the year on
roads accessing properties could adversely affect our ability to benefit from
production on such properties or could increase the costs of drilling new wells
because of delays.
WE ARE SUBJECT TO SIGNIFICANT OPERATING HAZARDS AND UNINSURED RISK IN THE ENERGY
INDUSTRY.
Our proposed operations will be subject to all of the operating hazards and
risks normally incident to exploring, drilling for and producing oil and gas,
such as encountering unusual or unexpected formations and pressures, blowouts,
environmental pollution and personal injury. We will maintain general liability
insurance but we have not obtained insurance against such things as blowouts and
pollution risks because of the prohibitive expense. Should we sustain an
uninsured loss or liability, or a loss in excess of policy limits, our ability
to operate may be materially adversely affected.
WE ARE SUBJECT TO FEDERAL INCOME TAX LAWS AND CHANGES THEREIN WHICH COULD
ADVERSELY IMPACT US.
Federal income tax laws are of particular significance to the oil and gas
industry in which we engage. Legislation has eroded various benefits of oil and
gas producers and subsequent legislation could continue this trend. Congress is
continually considering proposals with respect to Federal income taxation which
could have a material adverse effect on our future operations and on our ability
to obtain risk capital which our industry has traditionally attracted from
taxpayers in high tax brackets.
WE ARE SUBJECT TO SUBSTANTIAL GOVERNMENT REGULATION IN THE ENERGY INDUSTRY WHICH
COULD ADVERSELY IMPACT US.
The production and sale of oil and gas are subject to regulation by state and
federal authorities, the spacing of wells and the prevention of waste. There are
both federal and state laws regarding environmental controls which may
necessitate significant capital outlays, resulting in extended delays,
materially affect our earnings potential and cause material changes in the in
our proposed business. We cannot predict what legislation, if any, may be passed
by Congress or state legislatures in the future, or the effect of such
legislation, if any, on us. Such regulations may have a significant effect on
our operating results.
LEGAL PROCEEDINGS
The Company anticipates that it (including current and any future subsidiaries)
will from time to time become subject to claims and legal proceedings arising in
the ordinary course of business. It is not feasible to predict the outcome of
any such proceedings and we cannot assure that their ultimate disposition will
not have a materially adverse effect on the Company's business, financial
condition, cash flows or results of operations. The Company is not a party to
any pending legal proceedings, nor is the Company aware of any civil proceeding
or government authority contemplating any legal proceeding as of the date of
this filing.
-20-
RISK FACTORS RELATED TO OUR STOCK
A LIMITED PUBLIC MARKET EXISTS FOR OUR COMMON STOCK AT THIS TIME, AND THERE IS
NO ASSURANCE OF A CONTINUED FUTURE MARKET.
There is a limited public market for our common stock, and no assurance can be
given that a market will continue or that a shareholder ever will be able to
liquidate his investment without considerable delay, if at all. If a market
should develop, the price may be highly volatile. Factors such as those
discussed in the "Risk Factors" section may have a significant impact upon the
market price of the shares offered hereby. Due to the low price of our
securities, many brokerage firms may not be willing to effect transactions in
our securities. Even if a purchaser finds a broker willing to effect a
transaction in our shares, the combination of brokerage commissions, state
transfer taxes, if any, and any other selling costs may exceed the selling
price. Further, many lending institutions will not permit the use of our shares
as collateral for any loans.
OUR STOCK, WHICH IS CURRENTLY LISTED ON THE OTC PINK MARKET UNDER TRXO, WILL IN
ALL LIKELIHOOD BE THINLY TRADED AND AS A RESULT YOU MAY BE UNABLE TO SELL AT OR
NEAR ASK PRICES OR AT ALL IF YOU NEED TO LIQUIDATE YOUR SHARES.
The shares of our common stock may be thinly-traded. We are a small company
which is relatively unknown to stock analysts, stock brokers, institutional
stockholders and others in the investment community that generate or influence
sales volume, and that even if we came to the attention of such persons, they
tend to be risk-averse and would be reluctant to follow an unproven, early stage
company such as ours or purchase or recommend the purchase of any of our
Securities until such time as we became more seasoned and viable. As a
consequence, there may be periods of several days or more when trading activity
in our Securities is minimal or non-existent, as compared to a seasoned issuer
which has a large and steady volume of trading activity that will generally
support continuous sales without an adverse effect on Securities price. We
cannot give you any assurance that a broader or more active public trading
market for our common Securities will develop or be sustained, or that any
trading levels will be sustained. Due to these conditions, we can give
stockholders no assurance that they will be able to sell their shares at or near
ask prices or at all if they need money or otherwise desire to liquidate their
securities.
OUR COMMON STOCK MAY BE VOLATILE, WHICH SUBSTANTIALLY INCREASES THE RISK THAT
YOU MAY NOT BE ABLE TO SELL YOUR SECURITIES AT OR ABOVE THE PRICE THAT YOU MAY
PAY FOR THE SECURITY.
Because of the possible price volatility, you may not be able to sell your
shares of common stock when you desire to do so. The inability to sell your
securities in a rapidly declining market may substantially increase your risk of
loss because of such illiquidity and because the price for our securities may
suffer greater declines because of our price volatility.
The price of our common stock that will prevail in the market after this
business combination may be higher or lower than the price you may pay. Certain
factors, some of which are beyond our control, that may cause our share price to
fluctuate significantly include, but are not limited to the following:
o Variations in our quarterly operating results;
o Loss of a key relationship or failure to complete significant
transactions;
o Additions or departures of key personnel; and
o Fluctuations in stock market price and volume.
Additionally, in recent years the stock market in general, has experienced
extreme price and volume fluctuations. In some cases, these fluctuations are
unrelated or disproportionate to the operating performance of the underlying
company. These market and industry factors may materially and adversely affect
our stock price, regardless of our operating performance. In the past, class
action litigation often has been brought against companies following periods of
volatility in the market price of those companies common stock. If we become
involved in this type of litigation in the future, it could result in
substantial costs and diversion of management attention and resources, which
could have a further negative effect on your investment in our stock.
-21-
THE REGULATION OF PENNY STOCKS BY THE SEC AND FINRA MAY DISCOURAGE THE
TRADABILITY OF OUR SECURITIES.
We are a "penny stock" company, as our stock price is less than $5.00 per share.
As a "penny stock," our stock is subject to a Securities and Exchange Commission
rule that imposes special sales practice requirements upon broker-dealers who
sell such securities to persons other than established customers or accredited
stockholders. For purposes of the rule, the phrase "accredited stockholders"
means, in general terms, institutions with assets in excess of $5,000,000, or
individuals having a net worth in excess of $1,000,000 or having an annual
income that exceeds $200,000 (or that, when combined with a spouse's income,
exceeds $300,000). For transactions covered by the rule, the broker-dealer must
make a special suitability determination for the purchaser and receive the
purchaser's written agreement to the transaction prior to the sale. Effectively,
this discourages broker-dealers from executing trades in penny stocks.
Consequently, the rule will affect the ability of shareholders to sell their
securities in any market that might develop therefore because it imposes
additional regulatory burdens on penny stock transactions.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange
Act of 1934, as amended. Because our securities constitute "penny stocks" within
the meaning of the rules, the rules would apply to us and to our securities. The
rules will further affect the ability of owners of shares to sell our securities
in any market that might develop for them because it imposes additional
regulatory burdens on penny stock transactions.
Stockholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
Inventory in penny stocks have limited remedies in the event of violations of
penny stock rules. While the courts are always available to seek remedies for
fraud against us, most, if not all, brokerages require their customers to sign
mandatory arbitration agreements in conjunctions with opening trading accounts.
Such arbitration may be through an independent arbiter. Stockholders may file a
complaint with FINRA against the broker allegedly at fault, and FINRA may be the
arbiter, under FINRA rules. Arbitration rules generally limit discovery and
provide more expedient adjudication, but also provide limited remedies in
damages usually only the actual economic loss in the account. Stockholders
should understand that if a fraud case is filed an against a company in the
courts it may be vigorously defended and may take years and great legal expenses
and costs to pursue, which may not be economically feasible for small
stockholders.
That absent arbitration agreements, specific legal remedies available to
stockholders of penny stocks include the following: If a penny stock is sold to
the investor in violation of the requirements listed above, or other federal or
states securities laws, the investor may be able to cancel the purchase and
receive a refund of the investment.
If a penny stock is sold to the investor in a fraudulent manner, the investor
may be able to sue the persons and firms that committed the fraud for damages.
The fact that we are a penny stock company will cause many brokers to refuse to
handle transactions in the stocks, and may discourage trading activity and
volume, or result in wide disparities between bid and ask prices. These may
cause stockholders significant illiquidity of the stock at a price at which they
may wish to sell or in the opportunity to complete a sale. Stockholders will
have no effective legal remedies for these illiquidity issues.
-22-
WE WILL PAY NO FORESEEABLE DIVIDENDS IN THE FUTURE.
We have not paid dividends on our common stock and do not ever anticipate paying
such dividends in the foreseeable future. Stockholders whose investment criteria
are dependent on dividends should not invest in our common stock.
RULE 144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE EFFECT ON OUR STOCK PRICE.
All of the outstanding shares of common stock are held by our present officers,
directors, and affiliate stockholders as "restricted securities" within the
meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted
shares, these shares may be resold only pursuant to an effective registration
statement or under the requirements of Rule 144 or other applicable exemptions
from registration under the Act and as required under applicable state
securities laws. Rule 144 provides in essence that a person who has held
restricted securities for six months may, under certain conditions, sell every
three months, in brokerage transactions, a number of shares that does not exceed
the greater of 1.0% of a company's outstanding common stock or the average
weekly trading volume during the four calendar weeks prior to the sale. There is
no limit on the amount of restricted securities that may be sold by a
non-affiliate after the owner has held the restricted securities for a period of
two years. A sale under Rule 144 or under any other exemption from the Act, if
available, or pursuant to subsequent registration of shares of common stock of
present stockholders, may have a depressive effect upon the price of the common
stock in any market that may develop.
OUR STOCKHOLDERS MAY SUFFER FUTURE DILUTION DUE TO ISSUANCES OF SHARES FOR
VARIOUS CONSIDERATIONS IN THE FUTURE.
There may be substantial dilution to T-Rex stockholders as a result of future
decisions of the Board to issue shares without shareholder approval for cash,
services, or acquisitions.
ANY NEW POTENTIAL INVESTORS WILL SUFFER A DISPROPORTIONATE RISK AND THERE WILL
BE IMMEDIATE DILUTION OF EXISTING INVESTOR'S INVESTMENTS.
Our present shareholders have acquired their securities at a cost significantly
less than that which the investors purchasing pursuant to shares will pay for
their stock holdings or at which future purchasers in the market may pay.
Therefore, any new potential investors will bear most of the risk of loss.
Pursuant to Exchange Agreements with Representations, we have exchanged
7,385,700 of shares of our restricted common stock for 100% of the issued and
outstanding shares of Terex Energy Corp., a Colorado corporation.
As a result of the acquisition of Terex, discussed in Item 2.01, there was a
resulting change in the ownership structure and control of the Company. As a
result of the acquisition, 371,003 shares of common stock of the Company owned
by Terex were cancelled by T-Rex.
BENEFICIAL OWNERSHIP
The beneficial owners of 5% or more of our stock (Table I) and the holdings of
our officers and directors (Table II) are as listed in the following tables.
-23-
TABLE I
The information in Table I is based on the number of shares of T-Rex's common
stock that we believe was beneficially owned by each person or entity as of
December 22, 2014:
AMOUNT AND PERCENT OF
NATURE OF AMOUNT AND NATURE TOTAL NUMBER COMMON STOCK
BENEFICIAL OF BENEFICIAL OWNER OF SHARES ISSUED AND
OWNER VESTED BENEFICIALLY OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER * COMMON STOCK* WARRANTS/OPTIONS HELD (1)
-------------------------------------------- --------------- --------------------- --------------- ---------------
Donald Walford, President, Chief Executive 1,250,000 0 1,250,000 13.09%
Officer, Acting Chief Financial Officer
and Director (5)
Martin Gottlob, VP of Geology 750,000 100,000 850,000 8.90%
and& Director (2)
Ed Nichols(3) 350,000 500,000 850,000 8.90%
Jon Nicolaysen, Executive VP of Terex 1,052,000 0 1,052,000 11.01%
Energy and Director
Allen Heim, VP of Operations of Terex 755,000 200,000 955,000 10.00%
Energy Corp (4)
TOTAL 4,157,000 800,000 4,957,000 51.90%
--------------------------------------------
(1) Based upon 9,552,715 shares of issued and outstanding common stock
including outstanding warrants and options of 1,742,858 as if exercised in
full.
(2) Mr. Gottlob holds 750,000 shares of common stock and has an option to
purchase an additional 100,000 shares of common stock at an exercise price
of $0.10 per share and a term of 3 years.
(3) Mr. Nichols holds 450,000 shares of common stock including shares owned by
Helion Holdings, LLC of which is owned 50% by Mr. Nichols who is deemed to
beneficially own 150,000 shares of common stock and he has an option to
purchase an additional 500,000 shares of common stock an exercise price of
$0.10 per share and a term of 3 years.
(4) Mr. Heim holds 755,000 shares of common stock including 5,000 shares owned
by his wife of which he is deemed to beneficially own. Mr. Heim has a
warrant to purchase an additional 200,000 shares of common stock at an
exercise price of $1.00 per share and a term of 3 years.
(5) Mr. Walford holds 1,250,000 shares of common stock including shares owned
by Helion Holdings, LLC of which is owned 50% by Mr. Walford who is deemed
to beneficially own 150,000 shares of common stock.
-24-
TABLE II
The following sets forth information with respect to the Company's Common Stock
beneficially owned by each Officer and Director, and by all Directors and
Officers as a group as of December 22, 2014, post share exchange.
AMOUNT AND
NATURE OF AMOUNT AND NATURE TOTAL NUMBER PERCENT OF
BENEFICIAL OF BENEFICIAL OWNER OF SHARES COMMON STOCK
OWNER VESTED BENEFICIALLY ISSUED AND
NAME AND ADDRESS OF BENEFICIAL OWNER * COMMON STOCK* WARRANTS/OPTIONS HELD OUTSTANDING (1)
------------------------------------------ --------------- --------------------- --------------- ----------------
Donald Walford, President, Chief 1,250,000 0 1,250,000 13.09%
Executive Officer, Acting Chief
Financial Officer & Director (5)
Martin Gottlob, VP of Geology 750,000 100,000 850,000 8.90%
& Director (2)
Jeff Bennett, Director (3) 8 14,286 14,294 0.15%
Allen Heim, VP of Operations of Terex 755,000 200,000 955,000 10.00%
Energy (4)
Jon Nicolaysen, Executive VP of Terex 1,052,000 0 1,052,000 11.01%
Energy and Director
All directors and executive officers as
a group (5 persons) 3,807,008 314,286 4,121,294 43.15%
------------------------------------------
*The Address for the above individuals and entities is c/o 520 Zang Street,
Suite 250, Broomfield, Colorado 80021.
(1) Based upon 9,552,715 shares of issued and outstanding common stock
including plus outstanding warrants and options of 1,742,858 as if
exercised in full.
(2) Mr. Gottlob holds 750,000 shares of common stock and an option to purchase
an additional 100,000 shares of common stock at an exercise price of $0.10
per share and a term of 3 years.
(3) Mr. Bennett holds a warrant to purchase 14,286 shares of common stock at an
exercise price of $3.50 per share and a term of 3 years.
(4) Mr. Heim holds warrants for 755,00 shares of common stock including 5,000
shares owned by his wife of which he is deemed to beneficially own. Mr.
Heim has a warrant to purchase an additional 200,000 shares of common stock
at an exercise price of $1.00 per share and a term of 3 years.
(5) Mr. Walford holds 1,250,000 shares of common stock including shares owned
by Helion Holdings, LLC of which is owned 50% by Mr. Walford who is deemed
to beneficially own 150,00 shares of common stock.
Rule 13d-3 under the Securities Exchange Act of 1934 governs the determination
of beneficial ownership of securities. That rule provides that a beneficial
owner of a security includes any person who directly or indirectly has or shares
voting power and/or investment power with respect to such security. Rule 13d-3
also provides that a beneficial owner of a security includes any person who has
the right to acquire beneficial ownership of such security within sixty days,
including through the exercise of any option, warrant or conversion of a
security. Any securities not outstanding which are subject to such options,
warrants or conversion privileges are deemed to be outstanding for the purpose
of computing the percentage of outstanding securities of the class owned by such
person. Those securities are not deemed to be outstanding for the purpose of
computing the percentage of the class owned by any other person.
-25-
CERTAIN TRANSACTIONS
On December 22, 2014, T-Rex Oil, Inc. ("the Company" or "T-Rex") acquired 100%
of the outstanding stock of Terex Energy Corp. ("Terex") after exchanging
7,385,700 shares with the Terex shareholders. The shares are exchanged on a one
for one basis. Pursuant to the Exchange Agreements, the Company agreed to issue
shares of its restricted common stock for 100% of the issued and outstanding
common stock of Terex. As a result, Terex will be a wholly owned subsidiary of
the Company.
Prior to the exchange of shares, Terex owned 371,003 shares of common stock of
the Company. These shares are surrendered and cancelled by T-Rex. The officers
and directors of the Company remain the officers and directors post-acquisition.
At the time of the acquisition, Donald Walford, and Martin Gottlob, were
officers and directors of Company, and were and are officers, directors, and
major (control) shareholders of Terex.
For shares owned by each officer and director and 5% or greater shareholders,
post transaction, see Tables I and II above.
(COMMENT #1) EXECUTIVE MANAGEMENT AND BOARD OF DIRECTORS
As a result of the business combination with Terex, the Vice President of
Operations of Terex, Allen Heim, has now become a significant employee of the
Company. The officers and directors of the Company remain the officers and
directors post-acquisition. At the time of the acquisition, Donald Walford and
Martin Gottlob, were officers and directors of Company, and were and are
officers, directors, and major (control) shareholders of Terex. The biographical
information for Mr. Heim is below.
ALLEN HEIM, 59, VP OF OPERATIONS OF TEREX
Mr. Heim has devoted most of his 30 year career to a variety of oil field
disciplines including leasing, dealing in working interests, drilling wells,
fracking, and managing hands-on all phases of post drilling including
completions and follow on operations through plug and abandon. Mr. Heim has had
control positions in more than 300 wells primarily located in western Nebraska,
eastern Colorado and southwestern Wyoming.
Mr. Heim is highly experienced in location construction of oil well properties,
pumping and long term well ops as well as directional drilling and fracking
operations planning and execution. Mr. Heim is a successful finder of oil and
gas composites in the Colorado D-J Basin, and is skilled in geologic project
budgeting and prospect design. He is also highly experienced in pipeline work
and in pipeline corrosion control as well as gas plant construction and
operations. He has worked directly for several major oil companies, and dozens
of "Junior Oils."
Most recently, Mr. Heim has been retained by Edward (Tiger) Mike Davis Oil. His
assignments previously included Bic Petroleum, Smith Oil, Petro West, Bolling
Oil, Pease Oil and Gas, Pan Western Energy, Paladin Energy, Charterhall, Haines
Oil Field Services, New Tech Energy, O'Brien Energy, Peterson Energy, Sunburst
Inc., Markus Production, Lyco Energy, Wanda Madden Oil, and numerous others. He
is also the owner of Allen's Pumping Service in Kimball, Nebraska.
EXECUTIVE COMPENSATION
The Company has issued an Employment Agreement with Donald Walford with Terex
Energy Corporation which was effective August 4, 2014. Under the Agreement, Mr.
Walford's title will act as President & Chief Executive Officer. Mr. Walford
receives $204,000 per year plus sick leave and paid vacation per the Agreement
and other normal benefits, including a car allowance of $600 per month. The
Agreement is for a three-year term and contains certain termination payment
entitlement in the event of early termination.
The Company has issued an Employment Agreement with Allen Heim with Terex Energy
Corporation, which was effective November 1, 2014. Under the Agreement, Mr.
Heim's title will be Vice President of Operations and Director. Mr. Heim
-26-
receives $150,000 per year plus sick leave and paid vacation per the Agreement
and other normal benefits. The Agreement is for a three-year term and contains
certain termination payment entitlement in the event of early termination.
The Company has issued an Employment Agreement with Jon Nicolaysen with Terex
Energy Corporation, which was effective November 1, 2014. Under the Agreement,
Mr. Nicolaysen's title will be Executive Vice President and Director. Mr.
Nicolaysen receives $150,000 per year plus sick leave and paid vacation per the
Agreement and other normal benefits. The Agreement is for a three-year term and
contains certain termination payment entitlement in the event of early
termination.
The Company has issued an Employment Agreement with Martin Gottlob with T-Rex
Oil, Inc., which was effective January 20, 2015. Under the Agreement, Mr.
Gottlob's title will be Vice President of Geology and Director. Mr. Gottlob
receives $150,000 per year plus sick leave and paid vacation per the Agreement
and other normal benefits, including $600 per month for a car allowance. The
Agreement is for a three-year term and contains certain termination payment
entitlement in the event of early termination.
The Company has issued a Consulting Agreement with W. Edward Nichols with Terex
Energy Corporation, which was effective September 1, 2014. Under the Agreement,
Mr. Nichols' will consult as in house legal counsel. Mr. Nichols receives
$150,000 per year plus sick leave and paid vacation per the Agreement and other
normal benefits, including a car allowance of $600 per month. The Agreement is
for a three-year term and contains certain termination payment entitlement in
the event of early termination.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
T-Rex officers and directors are indemnified as provided by the Colorado Revised
Statutes and the bylaws.
Under the Colorado Revised Statutes, director immunity from liability to a
company or its shareholders for monetary liabilities applies automatically
unless it is specifically limited by a company's articles of incorporation.
T-Rex's articles of incorporation do not specifically limit the directors'
immunity. Excepted from that immunity are: (a) a willful failure to deal fairly
with T-Rex or its shareholders in connection with a matter in which the director
has a material conflict of interest; (b) a violation of criminal law, unless the
director had reasonable cause to believe that his or her conduct was lawful or
no reasonable cause to believe that his or her conduct was unlawful; (c) a
transaction from which the director derived an improper personal profit; and (d)
willful misconduct.
T-Rex's bylaws provide that it will indemnify the directors to the fullest
extent not prohibited by Colorado law; provided, however, that it may modify the
extent of such indemnification by individual contracts with the directors and
officers; and, provided, further, that Colorado shall not be required to
indemnify any director or officer in connection with any proceeding, or part
thereof, initiated by such person unless such indemnification: (a) is expressly
required to be made by law, (b) the proceeding was authorized by the board of
directors, (c) is provided by T-Rex, in its sole discretion, pursuant to the
powers vested under Colorado law or (d) is required to be made pursuant to the
bylaws.
T-Rex's bylaws provide that it will advance to any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or officer of
T-Rex, or is or was serving at the request of T-Rex as a director or executive
officer of another company, partnership, joint venture, trust or other
enterprise, prior to the final disposition of the proceeding, promptly following
request therefore, all expenses incurred by any director or officer in
connection with such proceeding upon receipt of an undertaking by or on behalf
of such person to repay said amounts if it should be determined ultimately that
such person is not entitled to be indemnified under the bylaws or otherwise.
T-Rex's bylaws provide that no advance shall be made by T-Rex to an officer
except by reason of the fact that such officer is or was a director in which
event these provisions shall not apply, in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, if a determination is
reasonably and promptly made: (a) by the board of directors by a majority vote
of a quorum consisting of directors who were not parties to the proceeding, or
(b) if such quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, that the facts known to the decision-making party at the time such
-27-
determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to T-Rex's best interests.
SECTION 3 - SECURITIES AND TRADING MARKET
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
--------------------------------------------------
Pursuant to Exchange Agreements with Representations in December 2014, we have
exchanged 7,385,700 of shares of our restricted common stock for 100% of the
issued and outstanding shares of Terex Energy Corp., a Colorado corporation. We
relied upon Regulation D Rule 506(b) for the exemption from Registration of the
shares in this transaction.
SECTION 5 - CORPORATE GOVERNANCE AND MANAGEMENT
ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT.
------------------------------------------
Pursuant to Exchange Agreements with Representations, we have exchanged
7,385,700 of shares of our restricted common stock for 100% of the issued and
outstanding shares of Terex Energy Corp., a Colorado corporation.
As a result of the acquisition of Terex, discussed in Item 2.01, there was a
resulting change in the ownership structure and control of the Company. As a
result of the acquisition, 371,003 shares of common stock of the Company owned
by Terex cancelled by T-Rex.
(REMAINDER OF PAGE LEFT BLANK INTENTIONALLY)
-28-
BENEFICIAL OWNERSHIP
The beneficial owners of 5% or more of our stock (Table I) and the holdings of
our officers and directors (Table II) are as listed in the following tables.
TABLE I
The information in Table I is based on the number of shares of T-Rex's common
stock that we believe was beneficially owned by each person or entity as of
December 22, 2014:
AMOUNT AND PERCENT OF
NATURE OF AMOUNT AND NATURE TOTAL NUMBER COMMON STOCK
BENEFICIAL OF BENEFICIAL OWNER OF SHARES ISSUED AND
OWNER VESTED BENEFICIALLY OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER * COMMON STOCK* WARRANTS/OPTIONS HELD (1)
-------------------------------------------- --------------- --------------------- --------------- ---------------
Donald Walford, President, Chief Executive 1,250,000 0 1,250,000 13.09%
Officer, Acting Chief Financial Officer
and Director (5)
Martin Gottlob, VP of Geology 750,000 100,000 850,000 8.90%
and& Director (2)
Ed Nichols(3) 350,000 500,000 850,000 8.90%
Jon Nicolaysen, Executive VP of Terex 1,052,000 0 1,052,000 11.01%
Energy and Director
Allen Heim, VP of Operations of Terex 755,000 200,000 955,000 10.00%
Energy Corp (4)
TOTAL 4,157,000 800,000 4,957,000 51.90%
--------------------------------------------
(1) Based upon 9,552,715 shares of issued and outstanding common stock
including outstanding warrants and options of 1,742,858 as if exercised in
full.
(2) Mr. Gottlob holds 750,000 shares of common stock and has an option to
purchase an additional 100,000 shares of common stock at an exercise price
of $0.10 per share and a term of 3 years.
(3) Mr. Nichols holds 450,000 shares of common stock including shares owned by
Helion Holdings, LLC of which is owned 50% by Mr. Nichols who is deemed to
beneficially own 150,000 shares of common stock and he has an option to
purchase an additional 500,000 shares of common stock an exercise price of
$0.10 per share and a term of 3 years.
(4) Mr. Heim holds 755,000 shares of common stock including 5,000 shares owned
by his wife of which he is deemed to beneficially own. Mr. Heim has a
warrant to purchase an additional 200,000 shares of common stock at an
exercise price of $1.00 per share and a term of 3 years.
(5) Mr. Walford holds 1,250,000 shares of common stock including shares owned
by Helion Holdings, LLC of which is owned 50% by Mr. Walford who is deemed
to beneficially own 150,000 shares of common stock.
-29-
TABLE II
The following sets forth information with respect to the Company's Common Stock
beneficially owned by each Officer and Director, and by all Directors and
Officers as a group as of December 22, 2014, post share exchange.
AMOUNT AND
NATURE OF AMOUNT AND NATURE TOTAL NUMBER PERCENT OF
BENEFICIAL OF BENEFICIAL OWNER OF SHARES COMMON STOCK
OWNER VESTED BENEFICIALLY ISSUED AND
NAME AND ADDRESS OF BENEFICIAL OWNER * COMMON STOCK* WARRANTS/OPTIONS HELD OUTSTANDING (1)
------------------------------------------ --------------- --------------------- --------------- ----------------
Donald Walford, President, Chief 1,250,000 0 1,250,000 13.09%
Executive Officer, Acting Chief
Financial Officer & Director (5)
Martin Gottlob, VP of Geology 750,000 100,000 850,000 8.90%
& Director (2)
Jeff Bennett, Director (3) 8 14,286 14,294 0.15%
Allen Heim, VP of Operations of Terex 755,000 200,000 955,000 10.00%
Energy (4)
Jon Nicolaysen, Executive VP of Terex 1,052,000 0 1,052,000 11.01%
Energy and Director
All directors and executive officers as
a group (5 persons) 3,807,008 314,286 4,121,294 43.15%
------------------------------------------
*The Address for the above individuals and entities is c/o 520 Zang Street,
Suite 250, Broomfield, Colorado 80021.
(1) Based upon 9,552,715 shares of issued and outstanding common stock
including plus outstanding warrants and options of 1,742,858 as if
exercised in full.
(2) Mr. Gottlob holds 750,000 shares of common stock and an option to purchase
an additional 100,000 shares of common stock at an exercise price of $0.10
per share and a term of 3 years.
(3) Mr. Bennett holds a warrant to purchase 14,286 shares of common stock at an
exercise price of $3.50 per share and a term of 3 years.
(4) Mr. Heim holds warrants for 755,00 shares of common stock including 5,000
shares owned by his wife of which he is deemed to beneficially own. Mr.
Heim has a warrant to purchase an additional 200,000 shares of common stock
at an exercise price of $1.00 per share and a term of 3 years.
(5) Mr. Walford holds 1,250,000 shares of common stock including shares owned
by Helion Holdings, LLC of which is owned 50% by Mr. Walford who is deemed
to beneficially own 150,00 shares of common stock.
Rule 13d-3 under the Securities Exchange Act of 1934 governs the determination
of beneficial ownership of securities. That rule provides that a beneficial
owner of a security includes any person who directly or indirectly has or shares
voting power and/or investment power with respect to such security. Rule 13d-3
also provides that a beneficial owner of a security includes any person who has
the right to acquire beneficial ownership of such security within sixty days,
including through the exercise of any option, warrant or conversion of a
security. Any securities not outstanding which are subject to such options,
warrants or conversion privileges are deemed to be outstanding for the purpose
of computing the percentage of outstanding securities of the class owned by such
person. Those securities are not deemed to be outstanding for the purpose of
computing the percentage of the class owned by any other person.
-30-
CERTAIN TRANSACTIONS
On December 22, 2014, T-Rex Oil, Inc. ("the Company" or "T-Rex") acquired 100%
of the outstanding stock of Terex Energy Corp. ("Terex") after exchanging
7,385,700 shares with the Terex shareholders. The shares are exchanged on a one
for one basis. Pursuant to the Exchange Agreements, the Company agreed to issue
shares of its restricted common stock for 100% of the issued and outstanding
common stock of Terex. As a result, Terex will be a wholly owned subsidiary of
the Company.
Prior to the exchange of shares, Terex owned 371,003 shares of common stock of
the Company. These shares are surrendered and cancelled by T-Rex. The officers
and directors of the Company remain the officers and directors post-acquisition.
At the time of the acquisition, Donald Walford and Martin Gottlob, were officers
and directors of Company and were and are officers, directors, and major
(control) shareholders of Terex.
For shares owned by each officer and director and 5% or greater shareholders,
post transaction, see Tables I and II above.
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
--------------------------------------------------------------------------------
There were no changes to the Company's officers or Board of Directors as a
result of this transaction.
Employment Agreements. The Company has issued an Employment Agreement with
Donald Walford with Terex Energy Corporation which was effective August 4, 2014.
Under the Agreement, Mr. Walford's title will act as President & Chief Executive
Officer. Mr. Walford receives $204,000 per year plus sick leave and paid
vacation per the Agreement and other normal benefits. The Agreement is for a
three-year term and contains certain termination payment entitlement in the
event of early termination.
The Company has issued an Employment Agreement with Allen Heim with Terex Energy
Corporation, which was effective November 1, 2014. Under the Agreement, Mr.
Heim's title will be Vice President of Operations and Director. Mr. Heim
receives $150,000 per year plus sick leave and paid vacation per the Agreement
and other normal benefits. The Agreement is for a three-year term and contains
certain termination payment entitlement in the event of early termination.
The Company has issued an Employment Agreement with Jon Nicolaysen with Terex
Energy Corporation, which was effective November 1, 2014. Under the Agreement,
Mr. Nicolaysen's title will be Executive Vice President and Director. Mr.
Nicolaysen receives $150,000 per year plus sick leave and paid vacation per the
Agreement and other normal benefits. The Agreement is for a three-year term and
contains certain termination payment entitlement in the event of early
termination.
The Company has issued an Employment Agreement with Martin Gottlob with T-Rex
Oil, Inc., which was effective January 20, 2015. Under the Agreement, Mr.
Gottlob's title will be Vice President of Geology and Director. Mr. Gottlob
receives $150,000 per year plus sick leave and paid vacation per the Agreement
and other normal benefits, including $600 per month for a car allowance. The
Agreement is for a three-year term and contains certain termination payment
entitlement in the event of early termination.
The Company has issued a Consulting Agreement with W. Edward Nichols with Terex
Energy Corporation, which was effective September 1, 2014. Under the Agreement,
Mr. Nichols' will consult as in house legal counsel. Mr. Nichols receives
$150,000 per year plus sick leave and paid vacation per the Agreement and other
normal benefits, including a car allowance of $600 per month. The Agreement is
for a three-year term and contains certain termination payment entitlement in
the event of early termination.
-31-
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
-------------------------------------------
(a) Financial Statements of Business Acquired. The following is a complete
list of financial statements filed at the end of this Report.
Terex Energy Corp., Financial Statements for the Period from February 11,
2014 (Inception) through September 30, 2014, which includes:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheet as of September 30, 2014
Consolidated Statement of Operations for the period from February 11,
2014 (Inception) through September 30, 2014
Consolidated Statement of Changes in Stockholders' Equity for the
period from February 11, 2014 (Inception) through September 30, 2014
Consolidated Statement of Cash Flows for the period from February 11,
2014 (Inception) through September 30, 2014
Notes to the Consolidated Financial Statements
(b) Pro Forma Financial Information. The following is a complete list of
the amended pro forma financial statements filed as a part of this Report.
Unaudited Pro Forma Condensed Consolidated Balance Sheet at September
30, 2014.
Unaudited Pro Forma Condensed Earnings Per Shares for the period from
February 11, 2014 (Inception) through September 30, 2014.
Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet
and Statement Earnings Per Shares for the period from February 11,
2014 (Inception) through September 30, 2014.
-32-
(d) Exhibits. The following is a complete list of exhibits filed as
part of this Report. Exhibit numbers correspond to the numbers in the exhibit
table of Item 601of Regulation S-K.
-------- -----------------------------------------------------------------------
Exhibit
No. Description
-------- -----------------------------------------------------------------------
10.1 Form of Exchange Agreement for Share Exchange (1)
-------- -----------------------------------------------------------------------
10.2 Working Interest Participation Agreement with Trans-Western Petroleum
Ltd. - Covenant Mondo
-------- -----------------------------------------------------------------------
10.3 Purchase and Sale Agreement for Sioux County, NE Leases, Well Bore,
and Equipment - Terex Energy Corp. and Allen Heim, Pamela Heim and
Marlin Heim
-------- -----------------------------------------------------------------------
10.4 Farmout Agreement for Cole Creek Unit, WY
-------- -----------------------------------------------------------------------
10.5 Registration Rights Agreement - T-Rex Oil, Inc. and Exchangor
-------- -----------------------------------------------------------------------
10.6 Purchase and Sale Agreement - Natrona County - Hot Springs Resources,
Ltd., Merschat Minerals, LLC and Terex Energy Corp. dated 9/30/14
-------- -----------------------------------------------------------------------
10.7 Assignment and Bill of Sale - Natrona County - Hot Springs Resources,
Ltd., Merschat Minerals, LLC and Terex Energy Corp. dated 11/20/14
-------- -----------------------------------------------------------------------
10.8 Letter Agreement - RV Borchert Trust and Terex Energy Corp.
-------- -----------------------------------------------------------------------
10.9 Warrant Form
-------- -----------------------------------------------------------------------
10.10 Option Form
-------- -----------------------------------------------------------------------
10.11 Employment Agreement for Donald Walford
-------- -----------------------------------------------------------------------
10.12 Employment Agreement for Martin Gottlob
-------- -----------------------------------------------------------------------
10.13 Employment Agreement for Allen Heim
-------- -----------------------------------------------------------------------
10.14 Employment Agreement for Jon Nicolaysen
-------- -----------------------------------------------------------------------
10.15 Consulting Agreement for W. Edward Nichols
-------- -----------------------------------------------------------------------
(1) Incorporated by reference from the exhibits included in the Company's Form
8K12g3 filed with the Securities and Exchange Commission (www.sec.gov),
dated December 22, 2014.
-33-
TEREX ENERGY CORP.
FINANCIAL STATEMENTS
FOR THE PERIOD FROM
FEBRUARY 11, 2014 (INCEPTION) THROUGH SEPTEMBER 30, 2014
-34-
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm 36
Consolidated Balance Sheet as of September 30, 2014 37
Consolidated Statement of Operations for the period from February 11, 2014
(Inception) through September 30, 2014 38
Consolidated Statement of Changes in Stockholders' Equity for the period
from February 11, 2014 (Inception) through September 30, 2014 39
Consolidated Statement of Cash Flows for the period from February 11, 2014
(Inception) through September 30, 2014 40
Notes to the Consolidated Financial Statements 41
-35-
INDEPENDENT AUDITOR'S REPORT
November 7, 2014
To the Board of Directors and Members
Terex Energy Corporation
Report on the Financial statements
----------------------------------
We have audited the accompanying financial statements of Terex Energy
Corporation which comprise the statements of financial position as of September
30, 2014 and as of March 31, 2014, and the related statements of activities and
cash flows for the periods then ended and the related notes to the financial
statements.
Management's Responsibility for the Financial statements
--------------------------------------------------------
Management is responsible for the preparation and fair presentation of these
financial statements in accordance with accounting principles generally accepted
in the United States of America; this includes the design, implementation, and
maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor's Responsibility
------------------------
Our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures selected
depend on the auditor's judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control
relevant to the entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. Accordingly, we express no such
opinion. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
-------
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Terex Energy Corporation as of
September 30, 2014 and as of March 31, 2014, and the results of its operations
and its cash flows for the periods then ended in accordance with accounting
principles generally accepted in the United States of America.
/s/ BF Borgers CPA PC
Certified Public Accountants
Denver, CO
-36-
TEREX ENERGY CORPORATION
BALANCE SHEET
Consolidated Balance
Balance Sheet Sheet March
September 30, 31, 2014
2014
---------------- ---------------
ASSETS
Current Assets
Cash and cash equivalents $ 2,607,886 $ 165,715
Lease deposits, oil and gas 412,500 -
Prepaids 9,193 -
---------------- --------------
Total current assets 3,029,579 165,715
---------------- --------------
Property and equipment
Oil and gas properties, full cost method of accounting
Unproved 886,417 19,564
Furniture and equipment, net of accumulated depreciation and impairment of
$28,365 and $0, respectively 47,779 -
---------------- --------------
Net property and equipment 934,196 19,564
---------------- --------------
Other assets
Goodwill 650,372 -
Deposits and other assets 111,585 -
---------------- --------------
Total other assets 761,957 -
---------------- --------------
Total assets $ 4,725,732 $ 185,279
================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 210,762 $ 19,695
---------------- --------------
Total current liabilities 210,762 19,695
---------------- --------------
Total liabilities 210,762 19,695
---------------- --------------
Commitments and Contingencies - -
STOCKHOLDERS' EQUITY
Preferred shares, $10 par value, 25,000,000 shares authorized; - -
Common shares, $0.001 par value, 100,000,000 shares authorized; 7,356 4,190
Additional paid in capital 4,021,270 174,825
Accumulated deficit (728,154) (13,431)
---------------- --------------
Stockholders' equity before non-controlling interest 3,300,472 165,584
Non-controlling interest 1,214,498 -
---------------- --------------
Total stockholders' equity 4,514,970 165,584
---------------- --------------
Total liabilities and stockholders' equity $ 4,725,732 $ 185,279
================ ==============
The accompanying notes are an integral part of these financial statements.
-37-
TEREX ENERGY CORPORATION
INCOME STATEMENT
Consolidated Statement of Statement of Operations
Operations For the Six for the Period February
Months Ended September 30, 11, 2014 (Inception)
2014 through March 31, 2014
-------------------------------------------------------------
Operating expenses:
General and administrative expense 698,076 13,431
Asset impairment 27,368 -
Depreciation 1,267 -
---------------------------- ----------------------------
Total operating expenses 726,711 13,431
---------------------------- ----------------------------
Loss from operations (726,711) (13,431)
---------------------------- ----------------------------
Other income
Interest 11 -
---------------------------- ----------------------------
Total other income 11 -
---------------------------- ----------------------------
Loss before income taxes (726,700) (13,431)
Income taxes - -
---------------------------- ----------------------------
Net loss
(726,700) (13,431)
Less: net loss attributable to
non-controlling interest 11,977 -
Net loss attributable to common
stockholders $ (714,723) $ (13,431)
============================ ============================
Net loss per common share
Basic and diluted $ (0.14) $ (0.00)
============================ ============================
Weighted average number
of common shares 5,362,708 3,735,104
============================ ============================
The accompanying notes are an integral part of these financial statements.
-38-
TEREX ENERGY CORPORATION
STOCKHOLDERS' EQUITY
Preferred Shares Common Shares
$10 Par Value $.001 Par Value Additional Non- Total
Paid-in Accumulated controlling Stockholders'
Shares Amount Shares Amount Capital (Deficit) Interest Equity
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
BALANCES,
February 11,
2014 - $ - - $ - $ - $ - $ - $ -
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
Issuance
of shares
for
services - - 560,000 560 - - - 560
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
Issuance
of shares
for
sevices,
related
party - - 3,150,000 3,150 - - - 3,150
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
Sale of
shares for
cash at
$0.001 per
share - - 20,000 20 - - - 20
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
Sale of
shares for
cash at
$0.001 per
share,
related
party - - 285,000 285 285
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
Sale of
shares for
cash at
$1.00 per
share - - 175,000 175 174,825 - - 175,000
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
Net loss
for the
period - - - - - (13,431) - (13,431)
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
BALANCES,
March 31, 2014 - - 4,190,000 4,190 174,825 (13,431) - 165,584
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
CONSOLIDATED
STATEMENT OF
STOCKHOLDERS'
EQUITY
Issuance
of shares
for
services - - 425,000 425 424,575 - - 425,000
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
Issuance
of shares
for
property - - 575,000 575 574,425 - - 575,000
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
Sale of
shares for
cash at
$1.00 per
share - - 2,165,700 2,166 2,163,534 - - 2,165,700
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
Stock -
based
compensation - - - 4,852 - - 4,852
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
Acquisition
of Rancher
Energy Corp - - - - 1,905,534 - - 1,905,534
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
Non-controlling
interest
relating to
acquisition
of Rancher
Energy Corp - - - - (1,226,475) - 1,226,475 -
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
Net loss
for the
period - - - - - (714,723) (11,977) (726,700)
--------- --------- ---------- ---------- ----------- ------------- ----------- --------------
BALANCES,
September 30,
2014 - $ - 7,355,700 $ 7,356 $4,021,270 $ (728,154) $ 1,214,498 $ 4,514,970
======== ========= ========== ========== =========== ============= ============ =============
The accompanying notes are an integral part of these financial statements.
-39-
TEREX ENERGY CORPORATION
STATEMENT OF CASH FLOWS
Consolidated Statement of Cash Statement of Cash Flows
Flows For the Period
For the Six Months Ended February 11, 2014 (Inception)
September 30, 2014 through March 31, 2014
-------------------------------- --------------------------------
OPERATING ACTIVITIES
Net loss attributable to common
stockholders $ (714,723) $ (13,431)
Adjustments to reconcile net loss to net
Non-controlling interest (11,977) -
Depreciation 1,267 -
Impairment of asset 27,368 -
Issuance of shares for services 425,000 3,995
Equity based compensation 10,728 -
Changes in:
Lease deposits, oil and gas (412,500) -
Prepaids 6,931 -
Accounts payable and accrued
liabilities 191,067 19,695
-------------------------------- --------------------------------
Net cash (used in) operating activities (476,839) 10,259
-------------------------------- --------------------------------
INVESTING ACTIVITIES
Additions to property and equipment (368,267) (19,564)
Acquisition of Rancher Energy Corp, 1,233,162 -
Additions to other assets (111,585) -
-------------------------------- --------------------------------
Net cash provided by investing activities 753,310 (19,564)
-------------------------------- --------------------------------
FINANCING ACTIVITIES
Sale of common shares 2,165,700 175,020
-------------------------------- --------------------------------
Net cash provided by financing activities 2,165,700 175,020
-------------------------------- --------------------------------
NET CHANGE IN CASH 165,715
CASH, Beginning 165,715 -
-------------------------------- --------------------------------
CASH, Ending $ 2,607,886 $ 165,715
-------------------------------- --------------------------------
SUPPLEMENTAL SCHEDULE OF CASH FLOW
INFORMATION:
Issuance of shares for property $ 575,000 $ -
-------------------------------- --------------------------------
Interest paid $ - $ -
================================ ================================
Income taxes paid $ - $ -
-------------------------------- --------------------------------
The accompanying notes are an integral part of these financial statements.
-40-
TEREX ENERGY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014
AND THE PERIOD FROM FEBRUARY 11, 2014
(INCEPTION) THROUGH MARCH 31, 2014
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------
NATURE OF OPERATIONS AND ORGANIZATION
Terex Energy Corporation was incorporated in Colorado on February 11, 2014 (the
"Company").
On August 19, 2014, the Company entered into a Securities Purchase Agreement
with T-Rex Oil Inc. (formerly Rancher Energy Corp) ("T-Rex") in which the
Company acquired 129,851,356 shares of T-Rex's restricted common stock for
$1,300,000 in cash. Concurrently, two members of the Board of Directors of T-Rex
resigned, and two new members of the Board of Directors were appointed who are
currently members of the Board of Directors and officers of the Company. As a
result of this transaction, the Company is the majority shareholder of T-Rex,
owning 52% of the issued and outstanding shares of T-Rex's common stock as well
as controlling T-Rex's operations. Prior to this Agreement, the Company owned no
shares of T-Rex's 119,862,791 issued and outstanding shares of common stock nor
was any member of the Board of Directors or officer of the Company a part of the
Board of Directors or management of T-Rex. Although the former president and
chief executive officer of T-Rex, owned 4.35% of the Company's issued shares of
common stock as of the date of the acquisition. See Note 2 - Significant
Acquisitions
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated balance sheet at September 30, 2014 and the
consolidated statement of operations and cash flows for the six months ended
September 30, 2014 include the accounts of the Company and those of T-Rex from
the date of the acquisition. All significant inter-company balances and
transactions have been eliminated during consolidation. The accompanying balance
sheet at March 31, 2014 and the statement of operations and cash flows for the
period February 11, 2014 (inception) through March 31 2014 include only the
accounts of the Company.
NON-CONTROLLING INTEREST
The non-controlling interest is related to T-Rex, which is consolidated, but not
wholly owned by the Company. At September 30, 2014, the Company owned 52% of the
equity interest of T-Rex, and therefore, the non-controlling interest of 48% was
$1,214,498.
INCOME TAXES
The Company accounts for income taxes under the liability method as prescribed
by ASC authoritative guidance. Deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted rates expected to be in effect during
the period in which the basis difference reverses. The realizability of deferred
tax assets are evaluated annually and a valuation allowance is provided if it is
more likely than not that the deferred tax assets will not give rise to future
benefits in the Company's income tax returns.
The Company has adopted ASC guidance regarding accounting for uncertainty in
income taxes. This guidance clarifies the accounting for income taxes by
prescribing the minimum recognition threshold an income tax position is required
to meet before being recognized in the financial statements and applies to all
income tax positions. Each income tax position is assessed using a two-step
process. A determination is first made as to whether it is more likely than not
that the income tax position will be sustained, based upon technical merits,
upon examination by the taxing authorities. If the income tax position is
expected to meet the more likely than not criteria, the benefit recorded in the
financial statements equals the largest amount that is greater than 50% likely
to be realized upon its ultimate settlement. At September 30, 2014 and March 31,
2014 there were no uncertain tax positions that required accrual.
-41-
TEREX ENERGY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014
AND THE PERIOD FROM FEBRUARY 11, 2014
(INCEPTION) THROUGH MARCH 31, 2014
BUSINESS COMBINATIONS
The Company accounts for acquisitions in accordance with guidance found in ASC
805, Business Combinations. The guidance, effective January 1, 2009, requires
consideration given, including contingent consideration, assets acquired and
liabilities assumed to be valued at their fair market values at the acquisition
date.
ASC 805 requires that any excess of purchase price over fair value of assets
acquired, including identifiable intangibles and liabilities assumed be
recognized as goodwill. In accordance with ASC 805, any excess of fair value of
acquired net assets, including identifiable intangible assets, over the
acquisition consideration results in a bargain purchase gain. Prior to recording
a gain, the acquiring entity must reassess whether all acquired assets and
assumed liabilities have been identified and recognized and perform
re-measurements to verify that the consideration paid, assets acquired and
liabilities assumed have been properly valued.
LOSS PER SHARE
Loss per share requires presentation of both basic and diluted loss per common
share. Common share equivalents, if used, would consist of any options and would
not be included in the weighted average calculation since their effect would be
anti-dilutive due to the net losses. At September 30, 2014 and March 31, 2014,
the Company had outstanding 400,000 and no options, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates,
and such differences may be material to the financial statements.
CASH AND CASH EQUIVALENTS
The Company considers all liquid investments purchased with an initial maturity
of three months or less to be cash equivalents. Cash and cash equivalents
include demand deposits and money market funds carried at cost which
approximates fair value. The Company maintains its cash in institutions insured
by the Federal Deposit Insurance Corporation ("FDIC"), although such deposits
are in excess of the insurance coverage. At September 30, 2014, the Company had
$1,857,886 in cash deposits in excess of FDIC insured limits.
OIL AND GAS PRODUCING ACTIVITIES
The Company follows the full cost method of accounting for oil and natural gas
operations. Under this method all productive and nonproductive costs incurred in
connection with the acquisition, exploration, and development of oil and natural
gas reserves are capitalized. No gains or losses are recognized upon the sale or
other disposition of oil and natural gas properties except in transactions that
would significantly alter the relationship between capitalized costs and proved
reserves. Unproved properties with significant acquisition costs are assessed
annually on a property-by-property basis and any impairment in value is charged
to expense. If the unproved properties are determined to be productive, the
related costs are transferred to proved oil and natural gas properties and are
depleted. Proceeds from sales of partial interests in unproved leases are
accounted for as a recovery of cost without recognizing any gain or loss until
all costs have been recovered. The costs of unproved oil and natural gas
properties are excluded from the amortizable base until the time that either
proven reserves are found or it has been determined that such properties are
impaired. As properties become proved, the related costs transfer to proved oil
and natural gas properties using full cost accounting. There were unproved
capitalized costs of $886,417 and $19,564 not included in the amortization base
at September 30, 2014 and March 31, 2014, respectively and the Company did not
-42-
TEREX ENERGY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014
AND THE PERIOD FROM FEBRUARY 11, 2014
(INCEPTION) THROUGH MARCH 31, 2014
expense any capitalized costs for the six months ended September 30, 2014 and
the period February 11, 2014 (inception) through March 31, 2014.
The Company performs a quarterly "ceiling test" calculation to test its oil and
gas properties for possible impairment. The primary components impacting this
calculation are commodity prices, reserve quantities added and produced, overall
exploration and development costs, depletion expense, and tax effects. If the
net capitalized cost of the Company's oil and gas properties subject to
amortization (the carrying value) exceeds the ceiling limitation, the excess
would be charged to expense. The ceiling limitation is equal to the sum of the
present value discounted at 10% of estimated future net cash flows from proved
reserves, the cost of properties not being amortized, the lower of cost or
estimated fair value of unproved properties included in the costs being
amortized, and all related tax effects. At September 30, 2014 and March 31,
2014, there were no oil and gas properties subject to the test, and no
impairment was necessary.
PROPERTY AND EQUIPMENT
Management capitalizes additions to property and equipment. Expenditures for
repairs and maintenance are charged to expense. Property and equipment are
carried at cost. Adjustment of the asset and the related accumulated
depreciation accounts are made for property and equipment retirements and
disposals, with the resulting gain or loss included in the statement of
operations. The Company has not capitalized any internal costs for the six
months ended September 30, 2014 and the period February 11, 2014 (inception)
through March 31, 2014. Other property and equipment, such as office furniture,
equipment and vehicles, are recorded at cost. Costs of renewals and improvements
that substantially extend the useful lives of the assets are capitalized.
Maintenance and repair costs are expensed when incurred.
DEPRECIATION
For financial reporting purposes, depreciation and amortization of other
property and equipment is computed using the straight-line method over the
estimated useful lives of assets at acquisition. For income tax reporting
purposes, depreciation of other equipment is computed using the straight-line
and accelerated methods over the estimated useful lives of assets at
acquisition.
Depreciation, depletion and amortization of capitalized acquisition, exploration
and development costs are computed on the units-of-production method by
individual fields on the basis of the total estimated units of proved reserves
as the related proved reserves are produced.
There was no depreciation, depletion and amortization of oil and gas properties
for the six months ended September 30, 2014 and the period February 11, 2014
(inception) through March 31, 2014. Other property and equipment for the six
months ended September 30, 2014 and the period February 11, 2014 (inception)
through March 31, 2014 is $1,267 and $0, respectively.
IMPAIRMENT OF LONG-LIVED ASSETS
In accordance with authoritative guidance on accounting for the impairment or
disposal of long-lived assets, as set forth in Topic 360 of the ASC, the Company
assesses the recoverability of the carrying value of its non-oil and gas
long-lived assets when events occur that indicate an impairment in value may
exist. An impairment loss is indicated if the sum of the expected undiscounted
future net cash flows is less than the carrying amount of the assets. If this
occurs, an impairment loss is recognized for the amount by which the carrying
amount of the assets exceeds the estimated fair value of the assets. No events
occurred during the period February 11, 2014 (inception) through March 31, 2014
that would be indicative of possible impairment. However, during the six months
ended September 30, 2014, an event occurred that resulted in an impairment of
other property and equipment (the carrying value of a vehicle was less than its
cost) in the amount of $27,368.
-43-
TEREX ENERGY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014
AND THE PERIOD FROM FEBRUARY 11, 2014
(INCEPTION) THROUGH MARCH 31, 2014
GOODWILL
In accordance with generally accepted accounting principles, goodwill cannot be
amortized, however, it must be tested annually for impairment. This impairment
test is calculated at the reporting unit level. The goodwill impairment test has
two steps. The first identifies potential impairments by comparing the fair
value of a reporting unit with its book value, including goodwill. If the fair
value of the reporting unit exceeds the carrying amount, goodwill is not
impaired and the second step is not necessary. If the carrying value exceeds the
fair value, the second step calculates the possible impairment loss by comparing
the implied fair value of goodwill with the carrying amount. If the implied
goodwill is less than the carrying amount, a write-down is recorded. Management
tests goodwill each year for impairment, or when facts or circumstances indicate
impairment has occurred. No facts or circumstances were noted during the six
months ended September 30, 2014, which would be indicative of possible
impairment.
OTHER COMPREHENSIVE LOSS
The Company has no material components of other comprehensive income and
accordingly, net loss is equal to comprehensive loss in all periods.
OFF-BALANCE SHEET ARRANGEMENTS
As part of its ongoing business, the Company has not participated in
transactions that generate relationships with unconsolidated entities or
financial partnerships, such as entities often referred to as structured finance
or special purpose entities (SPEs), which would have been established for the
purpose of facilitating off-balance sheet arrangements or other contractually
narrow or limited purposes. From its incorporation on February 11, 2014 through
September 30, 2014, the Company has not been involved in any unconsolidated SPE
transactions.
EQUITY-BASED PAYMENTS
The Company accounts for equity-based payment accruals under authoritative
guidance as set forth in Topic 505 of the Codification. The guidance requires
all equity-based payments to non-employees to be recognized in the financial
statements based on their fair values.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities
(Topic915) - Elimination of Certain Financial Reporting Requirements, Including
an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation.
This standard update is to improve financial reporting by reducing the cost and
complexity associated with the incremental reporting requirements for
development stage entities, and as a result removes all incremental financial
reporting requirements. This standard update also eliminates an exception
provided to development stage entities in Topic 810, Consolidation, for
determining whether an entity is a variable interest entity on the basis of the
amount of the investment equity that is at risk. ASU 2014-10 is effective for
annual reporting periods beginning after December 15, 2016, and interim
reporting periods beginning after December 15, 2017. Entities are allowed to
apply the guidance early for any annual reporting period or interim period for
which the entity's financial statements have not yet been issued or made
available for issuance. The Company adopted these standards and they did not
have a material impact on the Company's consolidated financial statements.
SUBSEQUENT EVENTS
The Company evaluates events and transactions after the balance sheet date but
before the financial statements are issued.
-44-
TEREX ENERGY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014
AND THE PERIOD FROM FEBRUARY 11, 2014
(INCEPTION) THROUGH MARCH 31, 2014
NOTE 2 - SIGNIFICANT ACQUISITIONS
---------------------------------
On August 19, 2014, the Company entered into a Securities Purchase Agreement
with T-Rex Oil Inc. (formerly Rancher Energy Corp) ("T-Rex") in which the
Company acquired 129,851,356 shares of T-Rex's restricted common stock for
$1,300,000 in cash. As a result of this transaction, the Company is the majority
shareholder of T-Rex, owning 52% of the issued and outstanding shares of T-Rex's
common stock as well as controlling T-Rex's operations and the Company files its
financial statements on a consolidated basis that include the accounts of the
T-Rex from the date of the acquisition. The acquisition was accounted for using
the acquisition method in accordance with guidance provided in Topic 805 of the
Codification.
The following table presents the allocation of the purchase price to the assets
acquired and liabilities assumed, based on their fair values at August 19, 2014:
Consideration paid $ 1,300,000
Assets acquired:
Cash $ 1,133,162
Prepaids 16,122
Bond deposit 100,000
-------------
Total assets acquired 1,249,284
Liabilities assumed -
Less non-controlling interest 599,656
-------------
Net assets acquired 649,628
-------------
Goodwill $ 650,372
-------------
Goodwill associated with the above transaction is not amortizable for income tax
purposes.
Subsequent to August 19, 2014, T-Rex had no revenues but expenses totaling
$24,952 are included in the consolidated statement of operations for the six
months ended September 30, 2014.
NOTE 3 - RELATED PARTY TRANSACTIONS
-----------------------------------
SHARES FOR SERVICES
During the period February 11, 2014 (inception) through March 31, 2014, the
Company issued 3,150,000 shares of its common stock to its members of the Board
of Directors and officers in exchange for services that were expensed valued at
$3,150 or at a fair value of $0.001 per share. Par value was determine to be the
value of the services since at the time the Company had no assets and had yet
begun operations.
CONSULTING SERVICES
During the six months ended September 30, 2014, the Company paid three of its
officers and directors $126,001 in fees of which $48,039 were expensed and
$77,962 were capitalized as part of unproved oil and gas properties.
During the period February 11, 2014 (inception) through March 31, 2014, the
Company paid three of its officers and directors $24,529 in fees of which
$12,465 were expensed and $12,064 were capitalized as part of unproved oil and
gas properties.
-45-
TEREX ENERGY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014
AND THE PERIOD FROM FEBRUARY 11, 2014
(INCEPTION) THROUGH MARCH 31, 2014
NOTE 4 - STOCKHOLDERS' EQUITY
-----------------------------
PREFERRED SHARES
The Company is authorized to issue 25,000,000 shares of $10 par value preferred
stock. At September 30, 2014 and March 31, 2014, the Company has no preferred
shares issued and outstanding.
COMMON SHARES
The Company is authorized to issue 100,000,000 shares of $0.001 voting common
stock. At September 30, 2014 and March 31, 2014 there were a total of 7,335,700
and 4,190,000 shares of common stock issued and outstanding, respectively.
During the six months ended September 30, 2014, the Company issued 425,000
shares of its common stock to consultants in exchange for services that were
expensed valued at $425,000 or $1.00 per share. The Company also issued 575,000
shares of its common stock for property valued at $575,000 or $1.00 per share of
which $262,500 is capitalized as an asset under lease deposit and $262,500 is
capitalized as an asset under unproved oil and gas properties. In addition and
as part of a private placement the Company sold 2,165,700 shares of its common
stock for cash in the amount of $2,165,700 or $1.00 per share.
During the period February 11, 2014 (inception) through March 31, 2014, as
described in Note 3, the Company issued and sold 3,150,000 and 285,000 shares
respectively of its common stock in exchange for services that were expensed and
cash to its officers and directors valued at $3,435,000 or $0.001 per share. The
Company also issued 560,000 shares of its common stock to consultants for
services that were expensed valued at $560 and sold 20,000 shares of its common
stock for $20 or $0.001 per share. In addition and as part of a private
placement the Company sold 175,000 shares of its common stock for cash in the
amount of $175,000.
NOTE 5 - DRILLING COSTS
-----------------------
PARTICIPATION AGREEMENT
On March 1, 2014, the Company entered into a Participation Agreement with
Trans-Western Petroleum Ltd., a Wyoming corporation not affiliated with the
Company ("TWP"), for the purposes of drilling at least two oil and/or natural
gas wells located in the State of Utah in exchange for a 10% working interest
(7.7000% net revenue interest) and a 8.333% working interest after completion
(6.4166% net revenue interest) in each well. TWP is the operator of the wells.
The estimated cost for drilling the two wells is $471,070 of which the Company
has paid $327,394 in costs and an additional $143,676 is owed and recorded as a
liability at September 30, 2014.
NOTE 6 - EQUITY BASED PAYMENTS
------------------------------
Equity-based awards to non-employees are accounted for under ASC 505
"equity-based payments". ASC 505 requires companies to recognize equity-based
payments to non-employees as costs using a fair value method. Under the fair
value recognition provisions of ASC 505, equity-based cost is measured at the
vesting date based on the fair value of the award and is recognized as a cost
over the service period on a straight-line basis. The Company did not recognize
a tax benefit from the equity-based payment because it is more likely than not
that the related deferred tax assets, which have been reduced by a full
valuation allowance, will not be realized.
The Black-Scholes option-pricing model is used to estimate the option fair
values. The option-pricing model requires a number of assumptions, of which the
most significant are the stock price at the valuation date, the expected stock
price volatility, and the expected option term (the amount of time from the
vesting date until the options are exercised or expire).
-46-
TEREX ENERGY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014
AND THE PERIOD FROM FEBRUARY 11, 2014
(INCEPTION) THROUGH MARCH 31, 2014
The following table summarizes non-qualified stock option activity for the six
months ended September 30, 2014.
Number of Weighted Average
Options Exercise Price
------------ --------------------
Outstanding at April 1, 2014 - $ -
Vested 400,000 $ 0.250
Exercised - $ -
Cancelled - $ -
Outstanding at September 30, 2014 400,000 $ 0.250
Exercisable at September 30, 2014 400,000 $ 0.250
The following table summarizes information for the outstanding and vested
non-qualified stock options at September 30, 2014:
Options
-------------------------
Number of shares 400,000
Weighted average remaining contractual life 3.00
Weighted average exercise price $ 0.25
Aggregate intrinsic value $ 344,488
-47-
TEREX ENERGY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014
AND THE PERIOD FROM FEBRUARY 11, 2014
(INCEPTION) THROUGH MARCH 31, 2014
NOTE 7- INCOME TAXES
--------------------
The Company assessed the likelihood of utilization of the deferred tax asset, in
light of the recent losses. As a result of this review, the deferred tax asset
of $247,000 has been fully reserved at September 30, 2014. At September 30,
2014, the Company has incurred net operating losses for income tax purposes of
approximately $13,000.Such losses may be carried forward and are scheduled to
expire in the year 2034, if not utilized, and may be subject to certain
limitations as provided by the Internal Revenue Code.
The effective income tax rate at September 30, 2014 differs from the U.S Federal
statutory income tax rate due to the following:
Federal statutory income rate $ 218,000
State income tax, net of federal benefit 29,000
Change in valuation allowance (247,000)
------------------
-
==================
The components of the deferred tax assets and liabilities at September 30, 2014
are as follows:
Long-term deferred tax assets:
Federal net operating loss $ 247,000
Long-term deferred tax liabilities: (247,000)
-------------------
Net long-term deferred tax assets $ -
===================
NOTE 8 - COMMITMENTS AND CONTINGENCIES
--------------------------------------
OPERATING LEASES
The Company leases an office space in Colorado at the rate of $4,572 per month
and the lease expires in August 2017. Total rent expense under this lease was
$5,572 for the six months ended September 30, 2014.
The following is a schedule of minimum future rental annual payments under the
operating lease for the stated fiscal year ends:
Amount
-----------
3/31/15 $ 15,500
3/31/16 31,904
3/31/17 33.454
3/31/18 11,367
-----------
$ 92,225
===========
EMPLOYMENT AGREEMENTS
The Company entered into a three year employment agreement effective August 4,
2014 with its Chief Executive Officer and President that includes compensation
of a base salary of $204,000 per year under certain terms and conditions
including an auto allowance of $600 per month.
-48-
TEREX ENERGY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014
AND THE PERIOD FROM FEBRUARY 11, 2014
(INCEPTION) THROUGH MARCH 31, 2014
NOTE 9 - SUBSEQUENT EVENTS
--------------------------
No material subsequent events occurred through the date of the report.
-49-
AMENDED
T-REX OIL, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
T-Rex Oil Inc., a public reporting company without any business or operating
activities acquired 100% of the stock of Terex Energy Corporation, a private
operating company after agreeing to exchange 7,385,700 shares with the Terex
Energy Corporation shareholders. Therefore, the unaudited pro forma condensed
combined financial statements as of September 30, 2014, for the six months ended
September 30, 2014 and for the year ended March 31, 2014 have been prepared
based on certain pro forma adjustments to: (i) the historical financial
statements of T-Rex Oil Inc. set forth in T-Rex Oil Inc.'s Annual Report on Form
10-K for the year ended March 31, 2014 and Quarterly Report on Form 10-Q for the
six-month period ended September 30, 2014; and (ii) The historical financial
statements of Terex Energy Corporation derived from audited financial statements
as of and for the six months ended September 30, 2014 and for the period
February 11, 2014 (inception) through March 31, 2014. The unaudited pro forma
condensed combined financial statements should be read in conjunction with the
accompanying notes and with the historical financial statements and adjustments
related thereto.
The unaudited pro forma condensed combined balance sheet has been prepared as if
the stock split and Acquisition had occurred as of September 30, 2014 and the
unaudited pro forma condensed combined statements of operations have been
prepared as if the stock split and the Acquisition had occurred as of April 1,
2013.
The unaudited pro forma condensed combined financial statements are presented
for illustrative purposes only and are not necessarily indicative of the
financial condition or results of operations of future periods or the financial
condition or results of operations that actually would have been realized had
the transaction been completed during the periods presented.
This attached revised Pro Forma financial information reflects the following
changes to the original Pro Forma financial information:
1. The original Pro Forma financial information reflected the transaction
between T-Rex Oil, Inc. and Terex Energy Corporation as an Acquition
whereas the transaction was consummated as a Stock for Stock exchange.
2. The attached revised Pro Forma financial information includes the direct
costs associated with the transaction in the amount of $76,138.
3. The attached revised Pro Forma financial information appropriately reflects
the transaction under ASC 805 and therefore reports the amount of Goodwill.
-50-
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF SEPTEMBER 30, 2014
Historical
------------------------------------
Terex Energy Pro forma Pro forma
Corporation T-Rex Oil Inc. Adjustments Notes Combined
--------------- ------------------ --------------- ------ ---------------
ASSETS
Current Assets
Cash $ 2,607,886 $ 2,421,016 $ (2,421,016) 1 $ 2,607,886
Lease deposits, oil and gas 412,500 - - 412,500
Prepaid expenses 9,193 9,193 (9,193) 1 9,193
--------------- ------------------ --------------- ---------------
Total Current Assets 3,029,579 2,430,209 (2,430,209) 3,029,579
Oil and Gas Properties-using full cost method
Unproven oil and gas properties 886,417 - - 886,417
Equipment, net 47,779 - - 47,779
Investment in subsidiary, T-Rex Oil Inc. - - 1,287,025 1 -
(1,287,025) 4
Goodwill 650,372 - (650,372) 1, 1B 213,900
213,900
Deposits and other assets 111,585 100,000 (100,000) 1 111,585
--------------- ------------------ --------------- ---------------
Total Assets $ 4,725,732 $ 2,530,209 $ (2,966,681) $ 4,289,260
=============== ================== =============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Total Current Liabilities $ 210,762 $ - $ - $ 210,762
--------------- ------------------ --------------- ---------------
Total Liabilities 210,762 - - 210,762
--------------- ------------------ --------------- ---------------
Shareholders' Equity:
Preferred stock, par value of $0.001 - - - -
Common stock, par value of $0.001 7,356 2,498 (6,643) 3 7,728
7,015 3
(2,498) 4
Additional paid-in capital 4,021,270 94,520,061 (679,058) 1 4,798,924
6,643 3
(7,015) 3
(91,778,450) 4
2,498 4
(1,287,025) 4
Accumulated deficit (728,154) (91,992,350) 91,992,350 4 (728,154)
--------------- ------------------ --------------- ---------------
3,300,472 2,530,209 (1,752,183) 4,078,498
Non-controlling interest 1,214,498 - (1,214,498) 1 -
--------------- ------------------ --------------- ---------------
Total stockholders' equity 4,514,970 2,530,209 (2,966,681) 4,078,498
--------------- ------------------ --------------- ---------------
Total Liabilities and Shareholders' Equity $ 4,725,732 $ 2,530,209 $ (2,966,681) $ 4,289,260
=============== ================== =============== ===============
See accompanying notes to unaudited pro forma
condensed consolidated financial information.
-51-
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2014
Historical
----------------------------
Terex Pro
Energy T-Rex Oil Pro forma forma
Corporation Inc. Adjustments Notes Combined
------------- ------------ ------------- ------ ----------
Revenue
Oil and gas revenue $ - $ - $ - $ -
------------- ------------ ------------- ----------
Total Revenue - - - -
------------- ------------ ------------- ----------
Costs and Expenses
General and administrative expense 13,431 733,788 76,138 2 823,357
Depreciation, depletion, amortization and accretion - 33,264 (33,264) 5 -
------------- ------------ ------------- ----------
Total Costs and Expenses 13,431 767,052 42,874 823,357
------------- ------------ ------------- ----------
Operating Loss
(13,431) (767,052) (42,874) (823,357)
------------- ------------ ------------- ----------
Other Income
Interest income - 2,913 - 2,913
------------- ------------ ------------- ----------
Total Other Income - 2,913 - 2,913
------------- ------------ ------------- ----------
Net Loss
$ (13,431) $ (764,139) $ 42,874 $(820,444)
============= ============ ============= ==========
Net Loss per Common Share - Basic and Diluted $ (0.00) $(0.01) N/A 8 $ (0.11)
============= ============ ============= ==========
Weighted Average Number of Shares Outstanding -
Basic and Diluted 3,735,104 119,862,791 (115,869,730) 8 7,728,165
============= ============ ============= ==========
See accompanying notes to unaudited pro forma
condensed consolidated financial information.
-52-
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014
Historical
--------------------------
Terex
Energy T-Rex Oil Pro forma Pro forma
Corporation Inc. Adjustments Notes Combined
------------- ------------ ------------- -------- -----------
Revenue
Oil and gas revenue $ - $ - $ - $ -
------------- ------------ ------------- -----------
Total Revenue - - - -
------------- ------------ ------------- -----------
Costs and Expenses
General and administrative expense 698,076 355,206 76,138 2 1,129,420
Asset impairment 27,368 - - 27,368
Depreciation, depletion, amortization and accretion 1,267 12,502 (12,502) 5 1,267
------------- ------------ ------------- -----------
Total Costs and Expenses
726,711 367,708 63,636 1,158,055
------------- ------------ ------------- -----------
Operating Loss
(726,711) (367,708) (63,636) (1,158,055)
------------- ------------ ------------- -----------
Other Income (Expense)
Interest income 11 477 - 488
Loss on disposition of assets - (93,071) 93,071 5 -
------------- ------------ ------------- -----------
Total Other Income (Expense) 11 (92,594) 93,071 488
------------- ------------ ------------- -----------
Net loss attributable to non-controlling interest 11,977 - (11,977) 1 -
------------- ------------ ------------- -----------
Net Loss
$ (714,723) $ (460,302) $ 17,458 $(1,157,567)
============= ============ ============= ===========
Net Loss per Common Share - Basic and Diluted $ (0.13) $ (0.00) N/A 8 $ (1.15)
============= ============ ============= ===========
Weighted Average Number of Shares Outstanding -
Basic and Diluted 5,362,708 152,503,023 (156,855,033) 8 1,010,698
============= ============ ============= ===========
See accompanying notes to unaudited pro forma
condensed consolidated financial information.
-53-
NOTE 1:
-------
This pro forma adjustment reflects the elimination of Terex Energy Corporation
reporting its historical investment in T-Rex Oil Inc. as of September 30, 2014
on a consolidated basis method of accounting under ASC 810 since the pro forma
condensed combined financial statements assumes that Terex Energy Corporation
and T-Rex Oil Inc. as of September 30, 2014 will have completed a capital
transaction, rather than a business combination whereby Terex Energy Corporation
will be the acquirer and T-Rex Oil Inc. will be the acquired company. Also, the
consolidation is the result of Terex Energy Corporation having acquired control
of T-Rex Oil Inc. as of August 19, 2014.
As of
September 30,
2014
----------------
Elimination of Consolidated Basis of Accounting -
Terex Energy Corporation
Cash $ (2,421,016)
Prepaid expenses (9,193)
Deposits and other assets (100,000)
Investment in subsidiary, T-Rex Oil Inc. 1,287,025
Goodwill (650,372)
Additional paid-in capital 679,058
Non-controlling interest 1,214,498
----------------
$ -
================
For the Six
Months Ended
September 30,
2014
----------------
Net loss attributable to non-controlling interest $ (11,977)
================
-54-
NOTE 1(A):
----------
In accordance with the accounting treatment of the Acquisition as a reverse
acquisition, the fair value of the outstanding equity of the accounting acquiree
immediately prior to the Acquisition is used to calculate the purchase price of
the net assets by the combined company. The purchase price is allocated to the
fair value of the acquired company's assets and liabilities on the date of the
Acquisition, with any remainder assigned to goodwill. Pursuant to ASC 805, when
the fair value of the identifiable assets exceeds the fair value of the purchase
price, a Gain on Bargain Purchase is recognized.
The pro forma unaudited balance sheet as of August 19, 2014 reflects the
allocation of the preliminary estimated purchase price of approximately $1.6M
which is the expected estimated fair value of T-Rex Oil Inc.'s common stock,
adjusted for the stock-split, on the assumed date of the Acquisition, August 19,
2014.
The expected estimated fair value of T-Rex Oil Inc.'s common stock reflects the
total shares outstanding on the date of the Acquisition, adjusted for the stock
split, and the closing share price of $2.30 on the date of the Acquisition, as
adjusted for the stock-split.
The pro forma adjustment represents the estimated Gain on Bargain Purchase
realized as a result of the Acquisition. The Gain on Bargain Purchase adjustment
represents the excess of the fair value of the tangible and intangible assets
acquired less liabilities assumed over the purchase price.
The final purchase price allocation will depend significantly on T-Rex Oil
Inc.'s future share price and the final estimate of the fair value of the
intangible assets acquired, and consequently, might significantly differ from
the values presented in these pro forma statements.
Preliminary Purchase Price Allocation
As of
August 19, 2014
---------------------
Current assets, net of current liabilities $ 2,405,257
Property, plant and equipment -
Deposits and other assets 100,000
---------------------
Total identifiable assets $ 2,505,257
---------------------
Total fair value of T-Rex Oil Inc. common
stock as of August 19, 2014 $ 1,641,621
---------------------
Goodwill -
Gain on Bargain Purchase 863,636
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NOTE 1(B):
----------
In accordance with the accounting treatment of the Acquisition as a reverse
acquisition, the fair value of the outstanding equity of the accounting acquiree
immediately prior to the Acquisition is used to calculate the purchase price of
the net assets by the combined company. The purchase price is allocated to the
fair value of the acquired company's assets and liabilities on the date of the
Acquisition, with any remainder assigned to goodwill. Pursuant to ASC 805, when
the fair value of the identifiable assets exceeds the fair value of the purchase
price, a Gain on Bargain Purchase is recognized.
The pro forma unaudited balance sheet as of September 30, 2014 presented above
reflects the allocation of the preliminary estimated purchase price of
approximately $ which is the expected estimated fair value of T-Rex's common
stock, adjusted for the stock-split, on the assumed date of the Acquisition,
September 30, 2014.
The expected estimated fair value of T-Rex's common stock reflects the total
shares outstanding on the date of the Acquisition, adjusted for the stock split,
and the closing share price of $.01 on the date of the Acquisition, as adjusted
for the stock-split.
The pro forma adjustment represents the estimated Gain on Bargain Purchase
realized as a result of the Acquisition. The Gain on Bargain Purchase adjustment
represents the excess of the fair value of the tangible and intangible assets
acquired less liabilities assumed over the purchase price.
The final purchase price allocation will depend significantly on T-Rex's future
share price and the final estimate of the fair value of the intangible assets
acquired, and consequently, might significantly differ from the values presented
in these pro forma statements.
Preliminary Purchase Price Allocation
As of
September 30, 2014
-----------------------
Current assets, net of current liabilities $ 2,430,209
Property, plant and equipment -
Deposits and other assets 100,000
-----------------------
Total identifiable assets $ 2,530,209
-----------------------
Total fair value of T-Rex Oil Inc. common stock
as of September 30, 2014 $ 2,744,109
-----------------------
Goodwill 213,900
Gain on Bargain Purchase -
NOTE 2:
-------
Direct costs associated with the Acquisition.
Professional Fees of legal, accounting and share services $ 76,138
========
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NOTE 3:
-------
This pro forma adjustment presents the effect on the common stock and preferred
stock, at par, of the combined company that reflects T-Rex Oil Inc. as the legal
acquirer and Terex Energy Corporation as the legal acquiree in the Acquisition.
As a result, the common stock and preferred stock share number are adjusted to
include the shares issued to the shareholders of Terex Energy Corporation on the
date of the Acquisition. The following illustrates the shares outstanding after
the Acquisition:
AS OF
SEPTEMBER 30, 2014
------------------
T-Rex Oil Inc. shareholders,
excluding ownership by Terex Energy Corporation 119,862,791
Effect of Stock Split at 350:1 342,465
T-Rex Oil Inc. Post-Split Shares Issued
to Terex Energy Corporation 371,003
T-Rex Oil Inc. Post-Split Shares assumed to be
surrendered by Terex Energy Corporation at the
date of the Acquisition (371,003)
T-Rex Oil Inc. Shares assumed to be issued to former
Terex Energy Corporation Shareholders upon the Acquisition 7,385,700
------------------
Total common stock outstanding, pursuant to Acquisition,
post stock-split 7,728,165
==================
Par value of common stock $ 0.001
Common stock, at par $ 7,728
==================
AS OF
SEPTEMBER 30, 2014
------------------
COMMON STOCK
Terex Energy Corporation common stock $ 7,356
Recapitalization of par value as a result of change
in par value to $.001 per share and the stock split
of 350:1 (6,643)
T-Rex Oil Inc. par value of shares assumed to be issued
to former Terex Energy Corporation Shareholders upon
the Acquisition 7,015
------------------
Pro Forma Combined common stock $ 7,728
==================
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NOTE 4:
-------
This pro forma adjustment presents the effect of capital transaction accounting
on common stock, additional paid-in capital and accumulated deficit of the
combined company that reflect Terex Energy Corporation as the accounting
acquirer and T-Rex Oil Inc. as the accounting acquiree in the Acquisition.
ADDITIONAL PAID IN CAPITAL AS OF
SEPTEMBER 30,
2014
-------------
Terex Energy Corporation additional paid in capital $ 4,021,270
Eliminate paid-in capital reported by Terex Energy
Corporation as a result of the consolidation of
T-Rex Oil Inc. (679,058) Note 1
Fair value of T-Rex Oil Inc.'s net assets as of the
assumed date of the Acquisition, September 30, 2014 2,744,107 Note 1B
Less value of T-Rex Oil Inc. common stock owned by
Terex Energy Corporation as of September 30, 2014 (1,287,025) Note 1
Recapitalization of Terex Energy Corporation as a
result of change in par value to $.001 par value
& stock split of 350:1 6,643 Note 4
T-Rex Oil Inc. adjustment to par value of shares
assumed to be issued to former Terex Energy
Corporation Shareholders upon the Acquisition (7,015)
-------------
Pro forma Combined additional paid-in capital $ 4,798,922
=============
ACCUMULATED DEFICIT AS OF
SEPTEMBER 30,
2014
-------------
Pro forma Combined accumulated deficit $ (728,154)
=============
NOTE 5:
-------
This pro forma adjustment represents the write-off of a software program,
purchased by T-Rex Oil Inc. in 2007 and customized for T-Rex Oil Inc., to meet
the specific operating needs of T-Rex Oil Inc. As this software was customized
for T-Rex Oil Inc. and its operations, the combined entity will not realize any
benefit from the software, and the asset is deemed written off as of the assumed
dates of the Acquisition.
NOTE 6:
-------
The post-combination pro forma equity will reflect T-Rex Oil Inc. Common Stock
and T-Rex Oil Inc. Preferred Stock, including Common Stock issued to Terex
Energy Corporation as T-Rex Oil Inc. is the legal acquirer. Shares used to
calculate the unaudited pro forma basic and diluted loss per share were computed
by adding the shares assumed to be issued upon the Acquisition, adjusted for the
reverse stock-split, to the weighted average number of shares outstanding of
T-Rex Oil Inc., adjusted for the stock-split, for the year ended March 31, 2014
and the six months ended September 30, 2014, respectively. For the year ended
March 31, 2014 and the six months ended September 30, 2014, potentially dilutive
securities consist of in-the-money outstanding options and warrants to purchase
T-Rex Oil Inc.'s common stock and were excluded from the calculations of diluted
earnings per share because their inclusion would have been anti-dilutive to the
combined entity's net losses.
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BASIC AND DILUTED NET LOSS PER SHARE
FOR THE YEAR
ENDED
MARCH 31, 2014
--------------
Net Loss $ (820,444)
T-Rex Oil Inc. shares of Common Stock Outstanding at
the end of the period by original T-Rex Oil Inc.
Shareholders, Pre-Stock Split 119,862,791
==============
T-Rex Oil Inc. shares of Common Stock Outstanding at
the end of the period by original T-Rex Oil Inc.
Shareholders, Pre-stock split 342,465
T-Rex Oil Inc. Post-Split Shares Issued to Terex
Energy Corporation 371,003
T-Rex Oil Inc. Post-Split Shares assumed to be
surrendered by Terex Energy Corporation at the
date of the Acquisition (371,003)
T-Rex Oil Inc. Shares assumed to be issued to
former Terex Energy Corporation Shareholders
upon the Acquisition 7,385,700
--------------
Total T-Rex Oil Inc. Shares assumed to be issued
to all Shareholders at completion of the Acquisition 7,728,165
==============
Pro forma Weighted Average Shares Outstanding for the
year ended March 31, 2014 7,728,165
==============
Basic and diluted net loss per share $ (0.11)
==============
FOR THE SIX MONTHS
ENDED
SEPTEMBER 30, 2014
-------------------
Net Loss $ (1,157,567)
T-Rex Oil Inc. shares of Common Stock Outstanding
at the end of the period by original T-Rex Oil Inc.
Shareholders, Pre-Stock Split 119,862,791
===================
T-Rex Oil Inc. shares of Common Stock Outstanding at
the end of the period by original T-Rex Oil Inc.
Shareholders, Pre-stock Split 342,465
T-Rex Oil Inc. Post-Split Shares Issued to Terex
Energy Corporation 371,003
T-Rex Oil Inc. Post-Split Shares assumed to be
surrendered by Terex Energy Corporation at the
date of the Acquisition (371,003)
T-Rex Oil Inc. Shares assumed to be issued to
former Terex Energy Corporation Shareholders
upon the Acquisition 7,385,700
-------------------
Total T-Rex Oil Inc. Shares assumed to be issued
to all Shareholders at completion of the Merger 7,728,165
===================
Pro forma Weighted Average Shares Outstanding for
the six months ended September 30, 2014 1,010,698
===================
Basic and diluted net loss per share $ (1.15)
===================
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
T-REX OIL, INC.
By:/s/ Donald Walford
------------------------------------------
Donald Walford
Chief Executive Officer
Date: March 12, 2015
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