Annual report pursuant to Section 13 and 15(d)

Acquisition

v3.10.0.1
Acquisition
12 Months Ended
Dec. 31, 2017
Business Combinations [Abstract]  
Acquisition

Note 3 – Acquisition

 

On December 30, 2016, the Company entered into a Purchase and Sale Agreement (“PSA”) with Total Belief Limited (“TBL”), a British Virgin Islands limited liability company. Under the PSA, the Company purchased membership interests in the companies listed below, constituting all of the ownership interest and claims that TBL has or may have in these companies, as defined below.

 

Based on the closing of its agreement with TBL, the Company acquired:

 

Clear Elite Holdings Limited (“CEH”), a British Virgin Islands limited liability company, which is the owner of 100% of the membership interests of Golden Giants Limited, a British Virgin Islands limited liability company (“GGL”), which owns:

 

  100% of the membership interests of NTE-Utah, LLC, a Delaware limited liability company (“NTE-Utah”), which in turn owns 100% of the membership interests of Tiger Energy Operating, LLC (“TEO”), a Nevada limited liability company, which in turn owns 100% of the membership interests of Tiger Energy Mineral Leasing, LLC (“TEML”), a Nevada limited liability company, with owned oil and gas leases, wells, related oil and gas bonds, and oil and gas lease rights and options, found in approximately 280 acres in Uintah County, Utah, and cash assets held by the entities; and
     
  750 units of membership interests (representing 75% total equity ownership) of Tiger Energy Partners International, LLC (“TEPI”), a Nevada limited liability company with owned assets including:

 

  All rights and interests pertaining to the Global Settlement Agreement (“GSA”) for the Uintah and Ouray Reservation between Mountain Oil & Gas, Inc. and certain entities affiliated with it and the Ute Indian Tribe of the Uintah and Ouray Reservation, dated December 22, 2014;
     
  All rights and interests acquired in the Purchase and Sale Agreements between TEPI and Mountain Oil & Gas, Inc. dated April 16, 2012, and December 18, 2012
     
  All cash held in an attorney trust account earmarked for payments to certain vendors and other creditors;
     
  $240,000 cash held in escrow for State of Utah Department of Natural Resources Division of Oil, Gas and Mining (DOGM); and
     
  Cash balances in all company bank accounts

 

Prominent Sino Holdings Limited (“PSH”) and Value Train Investments Limited (“VTI”), each a British Virgin Islands limited liability company, and each a direct wholly-owned subsidiary of TBL, and that together own 55.63% of the shares of Grey Hawk Exploration, Inc. (“Grey Hawk”), a British Columbia, Canada company, constituting ownership of 13,166,667 Grey Hawk common shares. Grey Hawk owns a non-operated working interest in two non-producing wells in the southern portion of the Natural Buttes Field.

  

Pursuant to the PSA the parties agreed to determine and pay the purchase price of $10.75 million for these assets and ownership interests as follows:

 

A cash payment of $75,000 in connection with closing;
   
Additional cash payment of $675,000 payable within 10 business days following execution of the agreement;
   
2,083,334 shares of restricted common stock of the Company valued for accounting purposes at $3,812,500, or at price per share of $1.83 (valued by the parties at $4,000,000 at an agreed upon price per share of $1.92); and
   
A promissory note delivered at closing in the principal amount of $6,000,000 that:

 

  has a term of 18 months from the Closing Date;
     
  accrues no interest during its term; and
     
  requires the entire principal amount to be due and payable upon maturity.

 

The acquisition price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.

 

Assets      
Cash   $ 358,130  
Cash in escrow     240,000  
Oil and gas properties     10,016,990  
Drilling equipment     265,578  
Investment     100  
Bond deposits     295,000  
Liabilities        
Accounts payable     (389,325 )
Contingent liabilities     (213,372 )
Related party payable     (10,600 )
Net assets acquired     10,562,501  

 

TBL had no operating activities during the year ended December 31, 2016; hence no pro forma information is included for this acquisition.

 

Concurrently with the foregoing, the Company also acquired the remaining 25% membership interests in TEPI from Green Stone Capital Partners Limited, a Cayman Islands limited liability company, in exchange for assumption of Greenstone’s proportionate share of TEPI obligations and liabilities. Kevin Sylla, who beneficially owns approximately 53% of Wilshire Energy Partners, LLC, a principal stockholder of the Company, and who has served as Managing Director of TEPI and of TEO introduced the Company to TBL. Subsequently, Mr. Sylla was appointed director and Chief Executive Officer of FPI effective March 1, 2017.