UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of
1934
Date of
Report (Date of earliest event reported)
September 29, 2016
NATION ENERGY INC.
(Exact name of registrant as specified in its charter)
Wyoming
(State or other jurisdiction of incorporation)
000-30193
(Commission File Number)
59-2887569
(IRS Employer Identification No.)
Suite F – 1500 West 16th Avenue, Vancouver, BC V6J 2L6
Canada
(Address of principal executive offices and Zip Code)
604.331.3399
Registrant's telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
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))
Item 2.01 Completion of Acquisition or Disposition of Assets
See Item 3.02, “Unregistered
Sales of Equity Securities” and Item 5.01, “Changes in Control of Registrant”
for further detail concerning the disposition of securities under this Item
2.01.
Item 3.02 Unregistered
Sales of Equity Securities.
On September 29, 2016, as
contemplated under the third amended and restated agreement between the Company
and Paltar Petroleum Limited (“Paltar”) dated August 30, 2015, and as further
amended (the “Third Agreement”), we issued 900,000,000 shares of common stock
to Paltar at a value of US$0.03 and one-third cent per share (“The Paltar
Common Stock Issuance”), subject to the restrictions on the transfer of shares
as set forth in the Third Agreement.
These common shares, with a total
value of US$30,000,000, were issued to Paltar as part of the consideration for
the Australian oil and gas exploration and development permits and related
assets that Paltar will transfer to the Company’s subsidiary Nation Energy
(Australia) Pty. Ltd. (“Nation Australia”) pursuant to the seven Earning
Agreements, as amended. In addition to the share issuance, Nation Energy
(Australia) Pty. Ltd. issued to Paltar a promissory note in the principal
amount of AUD$24,322,501 (US$18,078,915).
For further detail regarding the
Earning Agreements and the transaction(s) with Paltar, please refer to our most
recent 10-Q report for the period ending June 30, 2016, filed with the
Securities and Exchange Commission on August 22, 2016.
This issuance of common stock to
Paltar from the Company did not involve any public offering and the shares are
therefore exempt from registration under Section 4(a)(2) of the Securities Act
of 1933. Said shares are not convertible or exchangeable and no warrants or
options were issued in this transaction.
Item 5.01 Changes in Control of
Registrant.
Description of the Transaction
The information regarding the issuance of 900,000,000 shares of
common stock to Paltar set forth in Item 3.02, “Unregistered Sales of Equity
Securities,” is incorporated herein by reference.
Upon the issuance to Paltar, it acquired control of the Company,
as it now holds 85.7% of the issued and outstanding voting common stock of the
Company. The consideration used by Paltar was its agreement, under the Third
Agreement and the Earning Agreements, to transfer certain Australian oil and
gas exploration and development permits and related assets to Nation Australia
pursuant to the terms of the Earning Agreements. As the source of its
consideration, Paltar has received certain exploration permits from the
Northern Territory of Australia and has subjected those permits, and certain
other applications for exploration permits, to the terms of the Earning
Agreements.
Prior to The Paltar Common Stock Issuance, Mr. John Hislop held
control of the Company by virtue of his then-ownership of 96.8% of the
then-issued-and-outstanding voting common stock of the Company.
The Company is not aware of
any arrangements among members of both the
former and new control groups and their associates with respect to election of
directors. Regarding other matters, the terms of the Third Agreement provide
restrictions on resale of the common stock of the Company held by Mr. Hislop
and by Paltar.
The following information in response
to Item 5.01(a)(8) is keyed to the item numbers of Form 10 as would be required
if the Company was filing a general form for registration of securities on Form
10.
Description of the Business (Form
10, Item 1)
We were formed under the laws of the State of Florida on April 19,
1988 under the name Excalibur Contracting, Inc. and from that date until
September 1998, we conducted no business and existed as a shell corporation.
After the restatement of our Articles of Incorporation on September 16, 1998,
our main focus was the procurement of mineral leasehold interests, primarily
for oil and gas exploitation rights. We reincorporated as a Delaware
corporation on February 2, 2000 and changed our name to Nation Energy, Inc. on
February 15, 2000. Following the change in our focus, we commenced corporate
strategic development and explored potential oil and gas projects. On June 13,
2003 we moved our state of domicile from the state of Delaware to the State of
Wyoming. We accomplished this re-domicile by merging with our wholly-owned
Wyoming subsidiary.
Our Current Business
Following the sale of all of our
oil and gas operations effective June 1, 2008, we began to actively seek new
oil and gas opportunities. On October 11, 2013, we entered into a letter
agreement with Paltar Petroleum Limited, an Australian company, pursuant to
which we agreed to acquire four exploration and development permits and
twenty-nine applications for exploration and development permits in respect of
prospective acreage located in northern Australia. On March 31, 2014, we
amended this letter agreement and, on November 27, 2014, we amended and
restated the letter agreement to add additional exploration properties and
provide for new closing terms.
On June 13, 2015, we entered into
a second amended and restated agreement, replacing in its entirety the amended
and restated agreement dated November 27, 2014. On August 28, 2015, we entered
into a third amended and restated agreement, replacing in its entirety the
second amended restated agreement dated June 13, 2015.
Also on August 30, 2015, and
pursuant to the terms of the third amended and restated letter agreement (the
“Agreement”), Paltar or its wholly-owned subsidiary, Officer Petroleum Pty Ltd
(“Officer”), and our wholly-owned subsidiary, Nation Energy (Australia) Pty
Ltd., entered into seven separate earning agreements and an option agreement.
Effective December 17, 2015, the
Company entered into a first amendment to the third amended and restated
agreement to extend the time allowed for certain actions contemplated in the
third amended and restated agreement and to provide further information
concerning the additional earning agreements as such term is defined in the
third amended and restated agreement. Also effective December 17, 2015, the
seven earning agreements were amended to make compatible extensions of time for
actions contemplated by the third amended and restated agreement and to extend
the deadline for cash payments under the earning agreements.
Effective February 8, 2016, the
Company entered into a second amendment to the third amended and restated
agreement to extend again the time allowed for certain actions contemplated in
the third amended and restated agreement. Also effective February 8, 2016, the
seven earning agreements were amended to make compatible extensions of time for
actions contemplated by the third amended and restated
agreement. Effective February 12, 2016, the Company entered into an amendment
to the option agreement to change the purchase price for the assets subject to
the option.
Effective May 31, 2016, the
Company entered into a third amendment to the third amended and restated
agreement to revise the payment of consideration by Nation contemplated in the
third amended and restated agreement. Also effective May 31, 2016, the seven
earning agreements were amended to make compatible changes in consideration
payable by Nation Australia and Nation contemplated by the third amended and
restated agreement, and the option agreement was terminated.
Also effective May 31, 2016, the
Company entered into a fourth amendment to the Third Agreement to correct the per
share value of the share consideration to be paid by Nation under in the Third
Agreement.
On June 19, 2015, we registered a wholly-owned subsidiary in Australia,
Nation Energy (Australia) PTY Ltd. (“Nation Australia”).
On July 6, 2015, we registered a wholly-owned subsidiary in
Delaware, USA, Nation GP, LLC (“Nation GP”), a Delaware limited liability
company.
On July 6, 2015, we registered a wholly-owned subsidiary in
Delaware, USA, Nation SLP, LLC (“Nation SLP”), a Delaware limited liability
company.
On July 8, 2015, we formed Paltar Nation Limited Partnership
(“Paltar Nation”), a Delaware limited partnership between Nation GP, as the
general partner of the partnership and Nation SL as the limited partner.
Paltar Nation is a Delaware limited partnership with Nation GP,
LLC, a Delaware limited liability company, as the general partner, and Nation
SLP, LLC, a Delaware limited liability company, as a limited partner (which is
currently a sole limited partner of Paltar Nation). Nation Energy Inc. owns
100% of the membership interests in Nation GP, LLC and Nation SLP, LLC.
Nation Energy Inc. formed Paltar Nation for the purpose of funding
exploration expenditures required to be provided by the wholly-owned subsidiary
of Nation Energy Inc., Nation Energy (Australia) Pty Ltd., which is expected to
become a wholly-owned subsidiary of Paltar Nation, to explore and develop all
or a portion of 775,292 acres of certain Australian exploration permits.
Pursuant to the first amendment
of the third amended and restated agreement, Paltar farmed out three specific
graticular blocks in each of the six petroleum exploration permits identified
in the Agreement and it caused Officer Petroleum Pty Ltd., a wholly-owned
Australian subsidiary of Paltar, to farm out forty blocks in Exploration Permit
468 (“EP 468”). In addition, Paltar agreed to enter into additional earning
agreements with Nation Australia on December 31, 2015 (or such other date as
the parties mutually agree), in which it will farm out to Nation Australia six
additional graticular blocks selected by Nation in EP136, three additional
blocks in each of EP143 and EP231, eight additional blocks in EP234 and seven
additional blocks in EP237 in exchange for the consideration specified in each
additional earning agreement.
Each of the seven initial earning agreements, all of which are
dated August 30, 2015, (six of which are further amended by the Master
Amendment to Six Earning Agreements dated
December 28,
2015 but effective as of December 17, 2015 and by the Second Master Amendment
to Six Earning Agreements dated February 9, 2016 but effective as of February
8, 2016, and one of which is amended by the First Amendment to EP 468 Earning
Agreement dated December 28, 2015 but effective as of December 17, 2015 and by
the Second Amendment to EP 468 Earning Agreement dated February 9, 2016 but
effective as of February 8, 2016) granted certain rights and imposed certain
obligations on Nation Australia in respect of the blocks of land described. In
the aggregate, these blocks of land comprise 1,003,400 acres of the 8,936,800
acres covered by the seven Exploration Permits.
Each of the seven earning agreements follows one of two negotiated
templates (depending on whether the underlying interest in the Exploration
Permit is 100% owned by Paltar), with variations in the applicable standard
form driven by the specific circumstances affecting each Exploration Permit.
Each earning agreement contains general terms and conditions, a description of
the area covered a list of the encumbrances affecting the area, an amount of
money to be paid by Nation Australia on or before March 31, 2016 (since amended
to a later date), and a commitment to pay 100% of the costs under applicable
work programs and budgets.
Paltar will act as the operator subject to overall supervision by
an Operating Committee comprised of one representative from each of Paltar and
Nation Australia. With respect to the earning agreements covering the
Exploration Permits for which Paltar does not own a 100% interest, ownership of
the Exploration Permits remains with Paltar during the term of the earning
agreements, but if Paltar discovers a commercially exploitable accumulation of
petroleum on any affected block it must transfer any production license granted
in respect of that discovery to Nation Australia, insofar as it covers blocks
subject to the earning agreement. In connection with such transfer, Paltar is
permitted to retain for itself an overriding royalty equal to the difference
between 25% and all existing royalty burdens applicable to the production
license.
With respect to the earning agreements covering the Exploration
Permits for which Paltar owns a 100% interest, upon Nation Australia spending
at least the Earning Amount specified therein in expenditure before the end of
the Earning Period also specified therein, Nation Australia will acquire a
beneficial interest of 25% in the underlying Exploration Permit and any
production license granted in connection therewith. If a 25% interest in a
production license is acquired by Nation Australia pursuant to these earning
agreements, Nation Australia may, at its option for a period of ninety days
thereafter, acquire the remaining 75% interest held by Paltar in exchange for
the grant of an overriding royalty equal to the difference between 25% and all
existing royalty burdens applicable to the production license.
Effective May 31, 2016, all of the earning agreements were amended
and revised to consolidate and clarify terms of consideration thereunder (the
“May 31, 2016 Earning Agreements”). Upon execution, Nation Australia issued to
Paltar a promissory note in the principal amount of AUD$24,322,501, with
payment guaranteed by Nation. As additional consideration, seven days after
delivery to Nation of Paltar’s audited financial statements for the three most
recent fiscal years, together with such additional fiscal period financial
statements as may be required for reporting by Nation under applicable SEC
regulations, Nation would issue 900,000,000 of its common shares to Paltar,
subject to the same restrictions on the transfer of such shares as set forth in
the third restated letter agreement dated August 30, 2015, as subsequently
amended. That issuance of shares is The Paltar Common Stock Issuance. The May
31, 2016 Earning Agreements have the same terms as stated above regarding work
programs, overriding royalty, and the option to acquire more interest.
In
addition to the seven initial earning agreements, the parties entered into an
option agreement dated August 30, 2015, pursuant to which Paltar granted to
Nation an option to purchase, exercisable until August 30, 2016, interests in
Exploration Permits EP136, EP143, EP231, EP232, EP 234 and EP237, all related
business, financial, technical, geophysical, geological, geochemical and
environmental information and data that Paltar has the legal right to convey,
certain Applications for exploration permits, and all of the issued and
outstanding shares of Officer (collectively, the “Assets”) for a purchase price
of AUD$10,000,000 (approximately $7,223,844 at current exchange rates). The
option agreement was amended effective February 12, 2016, to change the
purchase price to 300,000,000 shares of common stock of the Company. Upon the
execution of the May 31, 2016 Earning Agreements, the option agreement was
terminated and released by Nation.
The third amended and restated agreement contemplates that, as
stated in the May 31, 2016 Earning Agreements, Nation has agreed to issue to
Paltar, from the Company’s treasury 900,000,000 common shares at an agreed
value of $0.03 and one-third cents per share as consideration for the other
transactions described in the third amended and restated agreement. All of
Nation Energy’s common shares to be issued pursuant to the third amended and
restated agreement are to be held in escrow for at least three years. The
escrow agent is to be a newly-formed Delaware limited liability company with a
board of four managers. David Siegel, and John Hislop are each currently a
director of the Company; each have certain rights to appoint managers to the
escrow agent’s board of managers, as more specifically set forth in the third
amended and restated agreement. Marc Bruner also has rights to appoint
managers to the escrow agent’s board of managers, as more specifically set
forth in the third amended and restated agreement. Each of Messrs. Siegel and
Bruner currently own Paltar equity, while Mr. Hislop has the right to acquire
Paltar equity. A fourth director of the Company, who has yet to be identified
and appointed and who will not own any Paltar equity, is to serve as the fourth
manager of the escrow agent’s board of managers. Each of the four managers
will hold one vote and Mr. Bruner, or the manager elected by the board of
managers in the event Mr. Bruner no longer serves on the board of managers,
will hold a tie-breaking vote in the event of deadlock.
The Agreement also provides that Paltar, which will be the
operator under the earning agreements, will have the right of first offer to
provide goods, services and work to the blocks subject to the earning
agreements on terms that are competitive with and comparable to those
customarily available in the open market from arms-length third parties.
On September 15, 2015, Mr. Hislop resigned from the offices of
President and Chief Executive Officer of our Company, and he also resigned the
position of Chairman of our Board of Directors. Mr. Hislop remains a member of
our Board of Directors and our Chief Financial Officer. Also on September 15,
2015, our Board of Directors appointed David N. Siegel as its Chairman and it
appointed Marc A. Bruner, one of our Directors, to the office of President and
Chief Executive Officer of our Company.
On June 24, 2016, Mr. Bruner resigned effective as of March, 15,
2016, as a member of the Company’s Board of Directors, President and Chief
Executive Officer. Also on June 24, 2016, effective as of March 15, 2016, Mr.
Hislop resumed the duties of President and Chief Executive Officer on an
interim basis.
We
currently have no business and operate as a shell company. In addition to our
efforts to complete the transactions contemplated in the Third Agreement with
Paltar, we continue to evaluate the merits of other opportunities in the
resource sector.
Competition
The oil and gas industry is
intensely competitive. Conducting our business in an environment that is
highly competitive and unpredictable we may become involved in an acquisition
with more risk or obtain financing on less favorable terms. In seeking out
prospective properties, we have encountered intense competition in all aspects
of our proposed business as we compete directly with other development
companies as well as established international companies. Many of our
competitors are national or international companies with far greater resources,
capital and access to information than us. Accordingly, these competitors may
be able to spend greater amounts on the acquisition of prospective properties
and on the exploration and development of such properties. In addition, they
may be able to afford greater geological expertise in the exploration and
exploitation of mineral and oil and gas properties. This competition could result
in our competitors having resource properties of greater quality and attracting
prospective investors to finance the development of such properties on more
favorable terms.
Compliance with Governmental Regulations
Oil and gas operations are subject to various governmental
regulations. Matters subject to regulations include discharge permits for
drilling operations, drilling and abandonment bonds, reports concerning
operations, the spacing of wells and pooling of properties and taxation. From
time to time, regulatory agencies have imposed price controls and limitations
on production by restricting the rate of flow of oil and gas wells below actual
production capacity in order to conserve supplies of oil and gas. The
production, handling, storage, transportation and disposal of oil and gas,
by-products thereof, and other substances and materials produced or used in
connection with oil and gas operations are also subject to regulation under
federal and local laws and regulations relating primarily to the protection of
human health and the environment. Expenditures related to complying with these
laws, and for remediation of existing environmental contamination have not been
significant in relation to the results of operations of our company. The requirements
imposed by such laws and regulations are frequently changed and subject to
various interpretations. We are unable to predict the ultimate cost of
compliance or its effect on any future operations. Currently, an executive
order from the Northern Territory of Australia has been issued to require that
a study on the impacts of hydraulic fracturing be conducted.
Employees
We anticipate that we will be conducting most of our business
through agreements with consultants and third parties. On January 1, 2009, we
entered into a written contract with Caravel Management Corp., to provide
office rent, reception, compliance and accounting services for $7,865 per
month. The agreement commenced on January 1, 2009 and continues on a month to
month basis unless terminated by the parties. The agreement may be terminated
by either party upon 30 days’ notice. One year following the effective date of
the agreement, the monthly fee increased by 3% subject to any required
regulatory or stock exchange approval.
The agreement
was amended effective November 1, 2010 to reduce the fees for administrative
services to $3,500 per month. There have been no further amendments entered
into since November 2010.
Nation Australia currently has a compensation arrangement with
Carmen J. Lotito, the Company’s Vice President, to provide operational and
management services for $20,000 per month, on a month-to-month agreement. Nation
Australia also has an arrangement with Andrew Logan, the president and a
director of Nation Australia, to provide operational and business development
services for $25,000 per month, on a month-to-month agreement. We presently
have no other employment or consulting agreements.
Environment
Our prior oil and gas business
was subject to laws and regulations that controlled the discharge of materials
into the environment and the proper handling and disposal of waste materials.
In operating and owning petroleum interests, we may be liable for damages and
the costs of removing hydrocarbon spills for which we are held responsible.
Laws relating to the protection of the environment have in many jurisdictions
become more stringent in recent years and may, in certain circumstances, impose
strict liability, rendering our company liable for environmental damage without
regard to actual negligence or fault. Such laws and regulations may expose us
to liability for the conduct of, or conditions caused by, others or for acts of
our company. We believe that we have complied in all material respects with
applicable environmental laws and regulations. For future activities, we
anticipate incurring expenses relating to environmental studies and plans
required by the Northern Territory of Australia for drilling permits.
Financial Information (Form 10,
Item 2)
Management Discussion and
Analysis of Financial Condition and Results of Operations
The information regarding the Company’s history and plan of
operations set forth above (“Description of the Business – Form 10, Item 1”) is
hereby incorporated by reference.
Cash Requirements
Over the next twelve months, we intend to use funds to evaluate
new business acquisitions, as follows:
Estimated
Funding Required During the Next Twelve Months
Planned Work Permit Expenditures $30,000,000
General and Administrative $2,000,000
Professional Fees $1,500,000
Total $33,500,000
We have suffered recurring losses from operations. The
continuation of our company as a going concern is dependent upon our company
attaining and maintaining profitable operations and raising additional capital
as needed. Management's plan in this regard is to raise additional
capital through a debt or an equity offering. The
financial statements do not include any adjustment relating to the recovery and
classification of recorded asset amounts or the amount and classification of
liabilities that might be necessary should our company discontinue operations.
Due to the uncertainty of our
ability to meet our current operating expenses noted above, in their report on
the annual financial statements for the year ended March 31, 2016, our
independent auditors included an explanatory paragraph regarding concerns about
our ability to continue as a going concern. Our financial statements contain
additional note disclosures describing the circumstances that lead to this
disclosure by our independent auditors.
The continuation of our business is dependent upon obtaining
further financing, a successful program of exploration, and, finally achieving
a profitable level of operations. The issuance of additional equity securities
by us could result in a significant dilution in the equity interests of our
current stockholders. Obtaining commercial loans, assuming those loans would
be available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further
funds required for our continued operations. We are pursuing various financing
alternatives to meet our immediate and long-term financial requirements. There
can be no assurance that additional financing will be available to us when
needed or, if available, that it can be obtained on commercially reasonable
terms. If we are not able to obtain the additional financing on a timely
basis, we will be unable to conduct our operations as planned, and we will not
be able to meet our other obligations as they become due. In such event, we
will be forced to scale down or perhaps even cease our operations.
Disclosure of Outstanding Share Data
As of the date of this report, we
had 1,050,020,000 shares of common stock issued and outstanding. We do not
have any warrants, options or shares of any other class issued and outstanding
as of the date of this report.
Results of Operations – Fiscal Years Ended
March 31, 2016 and 2015
The following summary of our results of operations should be read
in conjunction with our financial statements for the year ended March 31, 2016,
which are included herein.
Our operating results for the
year ended March 31, 2016 and 2015 and the changes between those periods for
the respective items are summarized as follows:
|
Year
Ended
March
31, 2016
|
Year
Ended
March
31, 2015
|
Difference
Increase / Decrease (%)
|
General
and administrative
|
$1,157,753
|
$136,803
|
746%
|
Interest
Expense
|
$105,468
|
$182,961
|
(42%)
|
(Loss)
on extinguishment of debt
|
($3,350,000)
|
$Nil
|
(100%)
|
Net
(loss)
|
($4,613,220)
|
($319,764)
|
(1,343%)
|
We
generated a net (loss) of $(4,613,220) for the year ended March 31, 2016
compared to a net (loss) of $(319,764) for the year ended March 31, 2015. The
increase in net loss was primarily due to the loss on the extinguishment of
debt of $3,350,000 resulting from the closing of the debt settlement agreement
and the issuance of 134,000,000 shares to Mr. Hislop. The debt settlement and
subscription agreement settled a debt to Mr. Hislop equal to $1,340,000. The
shares were valued at $4,690,000 ($0.035 per share based upon market price).
The Company recorded a loss on extinguishment of debt of $3,350,000. Net (loss)
per common share for the year ended March 31, 2016 was ($0.030) compared to
($0.009) per common share for the year ended March 31, 2015. General and
administrative expenses increased to $1,157,753 during the year ended March 31,
2016 from $136,803 during the year ended March 31, 2015.
The increase was primarily due to increased legal fees associated
with the Paltar Letter Agreement and the subsequent amendments and for travel
expenses related to promoting the Company. The Company also accrued $180,000 in
consulting and management fees for Mr. Lotito in the year ended March 31, 2016
compared to $Nil in the previous year.
Interest expense for fiscal 2016 totaled $105,468 compared to
$182,961 for fiscal 2015. The decrease was partially due to the debt
settlement agreement described above, which reduced the related party debt.
We reported a foreign currency translation gain of $45,713 in
fiscal 2016 compared to a gain of $172,132 in fiscal 2015. Our loan and
accrued interest are incurred and calculated in Canadian dollars while the
reporting currency is the US dollar. The value of the Canadian dollar in the
fiscal year ended March 31, 2016 decreased resulting in a smaller gain on
translation compared to consistent and higher values of the Canadian dollar
during the prior fiscal periods.
The major components of our
general and administrative expenses for the year are outlined in the table
below:
|
Year
Ended
March
31, 2016
|
Year
Ended
March
31, 2015
|
Difference
Increase / Decrease (%)
|
Administration
fees
|
$42,000
|
$42,000
|
0%
|
Office
& MIS
|
$62,915
|
$710
|
8,757%
|
Consulting
fees
|
$302,970
|
$0
|
100%
|
Legal
fees
|
$694,757
|
$47,759
|
1,355%
|
Transfer
Agent &
Filing
Fees
|
$15,511
|
$17,624
|
(12%)
|
Accounting
|
$39,600
|
$28,710
|
38%
|
Total
Expenses
|
$1,157,753
|
$136,803
|
746%
|
General and administrative
expenses increased to $1,157,753 in fiscal 2016 from $136,803 in fiscal 2015.
This was primarily due to increased legal fees and consulting fees incurred in
2016 in regards to our agreement with Paltar and fund raising activities of the
Company. General and administrative expenses included administration fees of
$42,000 in fiscal 2016 and fiscal 2015. Office expenses and management
information system fees increased to $62,915 in fiscal 2016 from $710. The
increase was primarily due to travel expenses incurred promoting the Company of
$14,316 compared to $Nil in 2015 and rent for the Denver office of $45,000 in
fiscal 2016 compared to $Nil in 2015. The Company incurred consulting fees of
$302,970 in 2016 relating to investment bankers and the transaction with Paltar
totaling $122,970 compared to $Nil in
2015. The
Company also accrued $180,000 in consulting and management fees for Mr. Lotito
in the year ended March 31, 2016 compared to $Nil in the previous year. Legal
fees increased to $694,757 in fiscal 2016 from $47,759 in the prior fiscal year
mainly due to legal fees associated with the Paltar agreement. Transfer agent
fees decreased to $15,511 in fiscal 2016 from $17,624 in fiscal 2015.
Accounting fees increased to $39,600 for the year ended March 31, 2016 from
$28,710 in the prior year ended March 31, 2015. The increase in fiscal 2016 is
primarily due to increased activity in the Company.
Results of Operations – Three Months Ended
June 30, 2016 and 2015
The following summary of our results of operations should be read
in conjunction with our financial statements for the period ended June 30,
2016, which are included herein.
Our operating results for the
three months ended June 30, 2016, for the three months ended June 30, 2015 and
the changes between those periods for the respective items are summarized as
follows:
|
Three
Months Ended
June 30,
2016
|
Three
Months Ended
June 30,
2015
|
Difference
Increase / Decrease (%)
|
General
and administrative
|
$
328,225
|
$49,170
|
568%
|
Interest
Expense
|
$102,772
|
$48,393
|
112%
|
(Loss)
on extinguishment of debt
|
$6,193
|
$Nil
|
100%
|
Net
(loss)
|
($424,804)
|
($97,563)
|
335%
|
We generated a net (loss) of ($424,804) for the three months ended
June 30, 2016 compared to a net (loss) of ($97,563) for the three months ended
June 30, 2015. This increased loss is primarily due to increased legal fees,
consulting fees and office expenses pertaining to the Paltar Agreements. Net
(loss) per common share for the three months ended June 30, 2016 was ($0.003)
compared to ($0.007) per common share for the three months ended June 30,
2015. General and administrative expenses increased to $328,225 during the
three months ended June 30, 2016 from $49,170 during the three months ended
June 30, 2015. This increase is primarily due to increased legal fees of
$67,789, consulting and management fees of $160,735 and rent of $30,000 pertaining
to the Paltar Agreements in the three months ended June 30, 2016 compared to
legal fees of $24,387, $nil consulting fees and $nil rent in 2015.
Interest expense for the three months ended June 30, 2016 totaled
$102,772 compared to $48,393 for the three months ended June 30, 2015. The
increase was primarily due to the new promissory note issued to Paltar
Petroleum Limited in May 2016 described above under the heading “Plan of
Operation”.
We reported a foreign currency translation gain of $6,193 for the
three months ended June 30, 2016 compared to a $nil for the three months ended
June 30, 2015. This is due to transaction gains resulting from loans
denominated in CAD. There were no transaction gains during the three months
ended June 30, 2015.
The major components of our general and administrative expenses
for the period are outlined in the table below:
|
Three
Months Ended
June 30,
2016
|
Three
Months Ended
June 30,
2016
|
Difference
Increase / Decrease (%)
|
Administration
fees
|
$10,500
|
$10,500
|
0%
|
Office &
MIS
|
$6,811
|
$238
|
27,617%
|
Management
fees
|
$60,000
|
$0
|
100%
|
Consulting
fees
|
$100,735
|
$0
|
100%
|
Legal
fees
|
$67,789
|
$24,387
|
178%
|
Rent
|
$30,000
|
$0
|
100%
|
Transfer
Agent &
Filing
Fees
|
$10,390
|
$7,545
|
38%
|
Accounting
|
$42,000
|
$6,500
|
546%
|
Total
Expenses
|
$328,225
|
$49,170
|
568%
|
General and administrative
expenses increased to $328,225 in the three month period ended June 30, 2016
from $49,170 in the three month period ended June 30, 2015. General expenses
include administration fees which remained the same as the comparative three
month period. Office expenses and Management Information System fees increased
to $6,811 in the three month period ended June 30, 2016 from $238. This
increase is primarily due to travel and entertainment expenses of $5,574 in the
three month period ended June 30, 2016 compared to $nil in 2015. Management
fees were $60,000 in the three month period ended June 30, 2016 compared to
$nil in 2015. This is due to a Management Services Agreement between the
Company and Carmen J. Lotito. Legal fees increased to $67,789 in the three
month period ended June 30, 2015 from $24,387 during the prior fiscal year due
to increased legal fees relating to the Paltar Agreement and subsequent
amendments. Rent was $30,000 for the Denver office in the three month period
ended June 30, 2016 compared to $nil in 2015. Filing fees and transfer agent
fees increased to $10,390 in the three month period ended June 30, 2016
compared to $7,545 in the three month period ended June 30, 2015. Accounting
fees increased to $42,000 from $6,500 in the comparative three month period.
The increase is primarily due to accounting fees incurred as a result of the
Paltar transaction.
Liquidity and Financial Condition
– Fiscal Years Ended March 31, 2016 and 2015
Working
Capital
|
Year Ended March 31, 2016
|
Year Ended March 31, 2015
|
Current Assets
|
$1,334
|
$47,479
|
Current Liabilities
|
$11,178,944
|
$1,659,674
|
Working Capital (Deficiency)
|
$(11,177,610)
|
$(1,612,195)
|
Cash Flows
|
Year Ended March 31, 2016
|
Year Ended March 31, 2015
|
Cash flows (used in) Operating
Activities
|
$(795,601)
|
$(239,915)
|
Cash flows provided by Investing
Activities
|
$Nil
|
$Nil
|
Cash flows provided by Financing
Activities
|
$719,111
|
$112,513
|
Effect of exchange rate changes on
cash
|
$30,346
|
$172,132
|
Net Increase (decrease) in cash
|
$(46,145)
|
$44,730
|
Operating Activities
Net
cash (used in) operating activities was $(795,601) in the year ended March 31,
2016 compared with net cash (used in) operating activities of $(239,915) in the
same period in 2015. The increase in cash (used in) operating activities is
mainly attributed to an increase in the net (loss) for the current year of
($4,613,220) from a net loss of $(319,764) in fiscal 2015.
Investing Activities
Net
cash provided by investing activities amounted to $Nil for both years.
Financing Activities
Net
cash provided by financing activities was $719,111 in the year ended March 31,
2016 compared to net cash provided by financing activities of $112,513 in the
year ended March 31, 2015. All activities derive from loan proceeds from
related parties. The effect of exchange rate changes on cash was a gain of
$30,346 in the year ended March 31, 2016 compared to $172,132 for the year
ended March 31, 2015. Some of our loans and accrued interest are incurred and
calculated in Canadian dollars while the reporting currency is the US dollar.
The value of the Canadian dollar in the fiscal year ended March 31, 2016
decreased resulting in a smaller gain on translation compared to consistent and
higher values of the Canadian dollar during the prior fiscal periods.
Liquidity and Financial Condition
– Three Months Ended June 30, 2016
Working
Capital
|
June 30, 2016
|
March 31, 2016
|
Current Assets
|
$
427,349
|
$1,334
|
Current Liabilities
|
$7,634,388
|
$11,140,733
|
Working Capital (Deficiency)
|
$(7,207,039)
|
$(11,139,399)
|
Cash Flows
|
Three Months Ended
June 30, 2016
|
Three Months Ended
June 30, 2015
|
Cash flows (used in) Operating
Activities
|
$(397,867)
|
$(14,839)
|
Cash flows provided by Investing
Activities
|
$750,000
|
$Nil
|
Cash flows provided by Financing Activities
|
$82,100
|
$Nil
|
Effect of exchange rate changes on
cash
|
($8,218)
|
($22,060)
|
Net Increase (decrease) in cash
|
$426,015
|
($36,899)
|
Operating Activities
Net cash (used in) operating activities was ($397,867) for the
three months ended June 30, 2016 compared with net cash (used in) operating
activities of ($14,839) for the same period in 2015. The increase in cash
(used in) operating activities is attributed to the increased loss of
($424,804) in the three months ended June 30, 2016 compared to a loss of
($97,563) in 2015.
Investing Activities
Net cash provided by investing activities was $750,000 for the
three months ended June 30, 2016 and $nil for the three months ended June 30,
2015. The $750,000 was received from membership purchase agreements in the
subsidiary, Nation SLP, LLC.
Financing Activities
Net cash provided by financing activities was $82,100 in the three
month period ended June 30, 2016 compared to $nil in the three month period
ended June 30, 2015. This increase in financing activities is due to the new
loans entered into during the three months ended June 30, 2016.
Loans Payable
We entered into loan
agreements with Caravel and John Hislop in 2003 and 2004 to fund operations.
Caravel is a private
management company that is wholly-owned by John Hislop, our chief financial
officer and director.
The terms of these loan agreements
provided that any principal amount outstanding is payable upon demand and bears
interest at 15% per annum, payable quarterly. On March 31, 2006, we
consolidated and restructured the loans. As part of the restructuring, we
borrowed an additional C$250,000 (US $203,932). The new loan bore interest at
15% per annum, calculated and compounded monthly and payable quarterly. Any
principal amount outstanding under the loan was payable upon demand. The loan
was payable in Canadian dollars and was secured by a Promissory Note.
As
of July 28, 2015, the principal balance of the loan and accrued interest
payable totaling $1,108,165 were settled in full as part of the debt settlement
agreement described below.
On July 18, 2014, we entered into a
promissory note with an officer and director, John Hislop for US$50,000. The
loan bore interest calculated quarterly, not in advance, at a rate of 15% per
annum. The note was payable upon demand by Mr. Hislop, both before and after
each of maturity, default and judgment commencing effective July 18, 2014. As
of July 28, 2015, the
principal balance of the loan
and accrued interest payable totaling $ 57,726 were settled in full as part of
the debt settlement agreement described below.
On September 2, 2014, we entered into a
promissory note with an officer and director, John Hislop for C$20,000
(US$16,012). The loan bore interest calculated quarterly, not in advance, at a
rate of 15% per annum. The note was payable upon demand by Mr. Hislop, both
before and after each of maturity, default and judgment commencing effective
September 2, 2014. As of July 28 2015, the principal balance of the loan and
accrued interest payable totaling $17,690 were settled in full as part of the
debt settlement agreement described below.
On January 29, 2015, we entered into a
promissory note with an officer and director, John Hislop (“Lender”) for
C$50,000 (US$40,030). The loan bore interest calculated quarterly, not in
advance, at a rate of 15% per annum. The note was payable upon demand by the
Lender, both before and after each of maturity, default and judgment commencing
effective January 29, 2015. As of July 28, 2015, the principal balance of the
loan and accrued interest payable totaling $41,612 were settled in full as part
of the debt settlement agreement described below.
On April 21, 2015, we entered into a debt
settlement and subscription agreement with our chief financial officer and
director, John Hislop whereby we agreed to settle a portion of the
indebtedness, in the amount of $1,340,000, by allotting and issuing to John
Hislop 134,000,000 shares of our common stock at a deemed price of $0.01 per
share. On April 24, 2015, we announced that we had issued 134,000,000 shares
of our common stock at a deemed price of $0.01 per share to Mr. Hislop.
However, due to a technical flaw in the process of adopting the amendment to
our Articles of Incorporation (announced on February 3, 2014), we were only
authorized to issue 100,000,000 shares of our common stock on April 23, 2015,
and the issuance to Mr. Hislop on April 23, 2015, was therefore void. On June
29, 2015, we sent to our shareholders a proxy statement for a shareholder
meeting to be held July 22, 2015, at which meeting we proposed to rectify the
technical flaw in our earlier effort to increase our authorized capital. On
July 28, 2015, we closed the debt settlement agreement and reissued the
134,000,000 shares to Mr. Hislop pursuant to the debt settlement and
subscription agreement which settled a debt to Mr. Hislop equal to $1,340,000
immediately following shareholder approval of the increase in our authorized
capital on July 23, 2015. The shares were valued at $4,690,000 ($0.035 per
share based upon market price). The Company recorded a loss on extinguishment
of debt of $3,350,000.
As
of August 4, 2015, Paltar Nation Limited Partnership (“Paltar Nation”) entered
into a secured convertible note purchase agreement with David N. Siegel Dynasty
Trust (the “2015 Secured Note Purchase Agreement”), pursuant to which Paltar
Nation issued a secured convertible promissory note in the principal amount of
$584,000 in consideration for $584,000. The secured convertible promissory
note bears interest at the rate of 10% per annum (15% per annum on and after
the maturity date or an Event of Default (as defined below)) and matures on
August 4, 2016. The entire unpaid principal sum of the secured convertible
promissory note will become immediately due and payable upon a material breach
by (a) Paltar Nation of the note, another note or the 2015 Secured Note
Purchase Agreement, or (b) Wotan Group Limited, an Australian limited company,
of the Wotan Pledge, described below, in each case that is not cured within 30
days of such breach (referred to as an “Event of Default”).
The
2015 Secured Note Purchase Agreement also contemplates sales of additional
secured convertible promissory notes up to an aggregate maximum of $5,000,000
(including the initial $584,000 sale to David N. Siegel Dynasty Trust). The
secured convertible promissory note
issued to Michael
B. Cox, described below, has been issued pursuant to the 2015 Secured Note
Purchase Agreement.
Upon
a sale of Paltar Nation’s limited partnership interests (“Interests”) in a
single transaction or a series of related transactions yielding gross cash
proceeds to Paltar Nation of at least $20,000,000 (including $584,000 from the
sale of the secured convertible promissory note to David N. Siegel Dynasty
Trust and including $100,000 from the sale of the secured convertible
promissory note to Michael B. Cox) on or before the maturity dates of the notes
(the “Qualified Financing”), the principal and any accrued but unpaid interest
under the notes will automatically be converted into Interests. The Interests
to be issued to David N. Siegel Dynasty Trust upon conversion will be equal to
the quotient obtained by dividing (i) the entire principal amount of the note
plus any accrued but unpaid interest under the note by (ii) 80.00% of the
per-Interest price of the Interests sold to persons other than David N. Siegel Dynasty
Trust and other holders of the notes, if any, in the Qualified Financing.
In
connection with the secured convertible note purchase agreement, Paltar Nation
entered into a pledge agreement dated as of August 4, 2015 with Wotan Group
Limited (the “Wotan Pledge”), pursuant to which Wotan Group Limited pledged to
each of David N. Siegel Dynasty Trust and any future secured noteholders
pursuant to the 2015 Secured Note Purchase Agreement (of which Michael B. Cox
is one) a continuing first priority security interest in a number of Wotan
Group Limited’s shares of Paltar Petroleum Limited equal to five multiplied by
the sum of the aggregate outstanding principal amounts owed under each
noteholder’s respective note and Paltar Nation agreed to pay a commitment fee
to Wotan Group Limited equal to $250,000 from the proceeds of the secured
convertible promissory notes upon the receipt by Paltar Nation of proceeds from
the sale of such notes equal to or greater than $2,500,000 in the aggregate and
an additional commitment fee of $250,000 upon conversion of all of such notes.
As of June 30, 2016, the principal balance of the loan was
$584,000 and accrued interest payable of $52,960. The loan was not repaid on
August 4, 2016 and continues to accrue interest at a rate of 15% per annum.
On August 5, 2015, we entered into a promissory note with an
officer and director, John Hislop for C$10,000 (US$7,742). The loan bears
interest calculated quarterly, not in advance, at a rate of 15% per annum. The
note is payable upon demand by Mr. Hislop, both before and after each of
maturity, default and judgement commencing effective August 5, 2015. The
principal sum and all accrued and unpaid interest will become due and payable
on August 5, 2017. As of June 30, 2016, the principal balance of the loan was
$7,742 and accrued interest payable of $1,050.
On August 25, 2015, we entered into a promissory note with an
officer and director, John Hislop for $10,000. The loan bears interest
calculated quarterly, not in advance, at a rate of 15% per annum. The note is
payable upon demand by Mr. Hislop, both before and after each of maturity,
default and judgement commencing effective August 25, 2015. The principal sum
and all accrued and unpaid interest will become due and payable on August 25,
2017. As of June 30, 2016, the principal balance of the loan was $10,000 and
accrued interest payable of $1,270.
On September 10, 2015, we entered into a promissory note with an
officer and director, John Hislop for C$6,000 (US$4,645). The loan bears
interest calculated quarterly, not in advance, at a rate of 15% per annum. The
note is payable upon demand by Mr. Hislop, both before and after each of
maturity, default and judgement commencing effective September 10, 2015. The
principal sum and all accrued and unpaid interest will
become due and payable on September 10, 2017. As of June 30, 2016, the
principal balance of the loan was $4,645 and accrued interest payable of $561.
On September 24, 2015, we entered into a promissory note with an
officer and director, John Hislop for $5,000. The loan bears interest
calculated quarterly, not in advance, at a rate of 15% per annum. The note is
payable upon demand by Mr. Hislop, both before and after each of maturity,
default and judgement commencing effective September 24, 2015. The principal
sum and all accrued and unpaid interest will become due and payable on
September 24, 2017. As of June 30, 2016, the principal balance of the loan was $5,000
and accrued interest payable of $573.
On September 30, 2015, Paltar Nation entered into a promissory
note with a director, David N. Siegel Dynasty Trust dated November 16, 2015 for
$14,210. The loan bears interest at a rate of 10% per annum from the
disbursement date of the funds. The principal sum and all accrued and unpaid
interest will become due and payable on September 30, 2016. As of June 30,
2016, the principal balance of the loan was $14,210 and accrued interest
payable of $1,266.
On October 29, 2015, the Company entered into a promissory note
with a related party, John Hislop for $7,960. The loan bears interest
calculated quarterly, not in advance, at a rate of 15% per annum. The note is
payable upon demand by Mr. Hislop, both before and after each of maturity,
default and judgement commencing effective October 29, 2015. The principal sum
and all accrued and unpaid interest will become due and payable on October 29,
2022. As of June 30, 2016, the principal balance of the loan was $7,960 and accrued
interest payable of $805.
On November 27, 2015, pursuant to the 2015 Secured Note Purchase
Agreement, Paltar Nation issued a secured convertible promissory note to
Michael B. Cox in the principal amount of $100,000 in consideration for
$100,000. The secured convertible promissory note bears interest at the rate
of 10% per annum (15% per annum on and after the maturity date or an Event of
Default) and matures on November 30, 2016. The entire unpaid principal sum of
the secured convertible promissory note will become immediately due and payable
upon an Event of Default. The Interests to be issued to Michael B. Cox upon
conversion will be equal to the quotient obtained by dividing (i) the entire
principal amount of the note plus any accrued but unpaid interest under the
note by (ii) 80.00% of the per-Interest price of the Interests sold to persons
other than Michael B. Cox and other holders of the notes, if any, in the
Qualified Financing. The note is secured by the Wotan Pledge.
As of June 30, 2016, the principal balance of the loan was
$100,000 and accrued interest payable of $7,562.
On March 31, 2016, Paltar Nation entered into a promissory note
with a director, David N. Siegel Revocable Trust 2009 for $188,483. The loan
bears interest at a rate of 10% per annum from the disbursement date of the
funds. The principal sum and all accrued and unpaid interest will become due
and payable on March 31, 2017. As of June 30, 2016, the principal balance of
the loan was $188,483 and accrued interest payable of $6,463.
On April 8, 2016, Paltar Nation entered into a promissory note
with a director, David N. Siegel Revocable Trust 2009 for $25,000. The loan
will bear interest at a rate of 10% per annum. The principal sum and all
accrued and unpaid interest will become due and payable on April 8, 2017.
As of June 30, 2016, the principal balance of the loan
was $25,000 and accrued interest payable of $576.
On May 3, 2016, Paltar Nation entered into a promissory note with
a director, David N. Siegel Revocable Trust 2009 for $34,000. The loan will
bear interest at a rate of 10% per annum. The principal sum and all accrued and
unpaid interest will become due and payable on May 3, 2017. As of June 30,
2016, the principal balance of the loan was $34,000 and accrued interest payable
of $548.
On May 31, 2016, we entered into a promissory note with an officer
and director, John Hislop for $23,100. The loan bears interest calculated
quarterly, not in advance, at a rate of 15% per annum both before and after
each of maturity, default and judgement commencing effective May 31, 2016. The
principal sum and all accrued and unpaid interest will become due and payable
on May 31, 2023. As of June 30, 2016, the principal balance of the loan was
$23,100 and accrued interest payable of $285.
On May 31, 2016, Nation Australia entered into a promissory note
with Paltar Petroleum Limited for AUD$24,322,501 (US$18,078,915). Interest
shall accrue from the date of this promissory note on the unpaid principal
amount hereunder at a rate equal to 5.00% per annum; provided, that on and
after the maturity date of May 31, 2019 or an event of default, interest shall
accrue from and after such date on the unpaid principal and all accrued but
unpaid interest of this note at a rate equal to 10.00% per annum. As of June
30, 2016, the principal balance of the loan was $18,078,945 and accrued
interest payable was $76,773.
Going Concern
The unaudited financial statements for the three months ended June
30, 2016 contained this report have been prepared on a going concern basis,
which implies that our company will continue to realize its assets and
discharge its liabilities and commitments in the normal course of business.
Our company has incurred losses since inception in excess of $13 million and
has only generated modest profitable operations when we commenced gas
production in fiscal 2006. We have relied solely on shareholder advances to
participate and continue operations.
Our company’s ability to continue as a going concern is contingent
upon being able to secure financing and attain profitable operations. Our
company is currently evaluating business opportunities and will require
financing for acquisition of any new business venture.
Net cash (used in) operating activities in the three months ended
June 30, 2016 totaled ($397,867) versus cash (used in) operating activities of
($14,839) in the three months ended June 30, 2015. Cash balances were $427,349
and $1,334 as of June 30, 2016 and March 31, 2016, respectively. Our company’s
ability to continue as a going concern is contingent upon being able to secure
financing and attain profitable operations.
We have a limited operating history. We can only estimate the
future needs for capital based on the current status of our operations, our
current plans and current economic condition. Due to the uncertainties
regarding our future activities, we are unable to predict precisely what amount
will be used for any particular purpose.
Future Financings
As of
June 30, 2016, we had cash of $427,349. We currently do not have sufficient
funds to acquire and develop any opportunities, including the opportunity
presented by the Third Agreement. Paltar Nation was formed for the purpose of
funding exploration expenditures required to be provided by the wholly-owned
subsidiary of Nation Energy Inc., Nation Energy (Australia) Pty Ltd., which is
expected to become a wholly-owned subsidiary of Paltar Nation, to explore and
develop all or a portion of 775,292 acres of certain Australian exploration
permits. We also anticipate continuing to rely on shareholder loans or equity
sales of our common stock in order to fund our business operations. Issuances
of additional shares will result in dilution to our existing stockholders.
There is no assurance that we will achieve any additional sales of our equity
or arrange for more debt or other financing to fund any future activities.
Off-Balance Sheet Arrangements
We
currently have no off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes
in financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to stockholders. We
anticipate that in the future we will utilize off-balance sheet arrangements in
the form of limited partnerships or joint ventures to finance future
activities.
Properties (Form 10, Item 3)
Our
principal mailing address is RPO Box 60610 Granville Park, Vancouver, British
Columbia, Canada, V6H 4B9. Our executive office is located at 1500 West 16
th
Avenue, Vancouver, British Columbia, Canada V6J 2L6. We occupy the
Vancouver premises on a proportional cost basis for office rent and
administration services and expenses, on a month to month basis. We currently
have a management services agreement in effect that among other administration
and office services and supplies provides for office space. Effective November
1, 2010, the monthly fee was, and continues to be, $3,500 per month.
In addition to the Vancouver, British Columbia,
Canada offices, we maintain offices in Colorado, at 1555 Blake Street, Suite
1002, Denver, Colorado 80202. We occupy the Denver premises on a month to
month basis. Effective July 1, 2015 the monthly fee was, and continues to be,
$5,000 per month.
As the Company is still in the
exploration and development phase under the exploration permits related to the
Earning Agreements, the Company has no other material physical properties.
Security Ownership of Beneficial
Owners and Management (Form 10, Item 4)
(a)
Security
Ownership of Certain Beneficial Owners
Title
of Class
|
Name
and Address of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership
[1]
|
Percent
of Class
[2]
|
Common
Stock
|
John R.
Hislop
P.O.
Box 7814
Ringwood,
UK
BH24
9FF
|
145,175,500
|
Direct
|
13.8%
|
Common
Stock
|
Paltar
Petroleum Ltd.
32
Martin Place, Level 10
Sydney,
Australia 2000
|
900,000,000
|
Direct
|
85.7%
|
[1]
The
listed beneficial owner has no right to acquire any shares within 60 days of
the date of this Form 8-K from options, warrants, rights, conversion privileges
or similar obligations except as otherwise noted.
[2]
Based on
1,050,020,000 shares of common stock issued and outstanding as of September 29,
2016.
(b)
Security
Ownership of Management
Nation Energy, Inc. (Registrant)
Title of
Class
|
Name
and Address of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership
|
Percent
of Class
[1]
|
Common
Stock
|
John R.
Hislop
P.O.
Box 7814
Ringwood,
UK
BH24
9FF
|
145,175,500
|
Direct
|
13.826%
|
Common
Stock
|
Directors
and Executive Officers (as a group)
|
145,175,500
|
Direct
|
13.826%
|
[1]
Based on
1,050,020,000 shares of common stock issued and outstanding as of September 29,
2016.
(c)
Changes in Control
Other than the issuance of
900,000,000 shares of the Company’s common stock issued to Paltar being the basis
of this report, management of the Company is not aware of any arrangement that
might result in a change of control of the Company.
Directors and Executive Officers
(Form 10, Item 5)
(a)
Identification
of Directors and Executive Officers
Name
|
Position
|
Age
|
Date
First Elected or Appointed
|
John R.
Hislop
|
Interim
President and Chief Executive Officer, Chief Financial Officer, Secretary and
Director
|
63
|
June 4,
1999 and
March
15, 2016
|
David
N. Siegel
|
Chairman
of the Board and Director
|
54
|
July
22, 2015
|
Darrel
J. Causbrook
|
Director
|
60
|
July
22, 2015
|
(b)
Identification
of Significant Employees
The Company has no significant
employees other than its directors and executive officers.
(c)
Family
Relationships
There are no family relationships
among the directors, executive officers or persons nominated or chosen by the
Company to become directors or executive officers.
(d)
Business
Experience
The
following is a brief account of the education and business experience during
the past five years of each director and executive officer, indicating the
principal occupation during that period, and the name and principal business of
the organization in which such occupation and employment were carried out.
John R. Hislop, Interim President
and Chief Executive Officer, Chief Financial Officer, Secretary and Director
Mr. Hislop was the President and
Chief Executive Officer of the Company since October 22, 2003 and the Chairman,
Chief Financial Officer, Secretary and a Director of the Company since June
1999. On September 21, 2015, Mr. Hislop resigned from the positions of
President, Chief Executive Officer and Chairman of the Board of Directors and,
effective as of March 15, 2016, resumed his duties as our President and Chief
Executive Officer on an interim basis. Mr. Hislop remains as the Company’s
Chief Financial Officer and Director. Since 1990, Mr. Hislop has been working
as an independent financial consultant and has served as an officer and
director of various emerging growth companies. Mr. Hislop is currently serving
as a Director and/or Officer on the following company: Director of XXL Energy
Corp. (formerly Exxel Energy Corp.) since October 15, 2001, Chairman of the
Board of XXL Energy Corp. (formerly Exxel Energy Corp.) since July 27, 2006,
President and Chief Executive Officer of XXL Energy Corp. (formerly Exxel
Energy Corp.) since December 31, 2008.
In the past five years, Mr.
Hislop has also served as a director of the following companies: formerly a
Director of Patriot Petroleum Corp. from April 7, 1999 to February 16, 2011 (Mr.
Hislop also served as President and Chief Executive Officer of Patriot
Petroleum Corp. from October 22, 2003 to November 26, 2010); and formerly a
Director of Q Investments Ltd., (formerly Cubix Investments Ltd.), an
investment holding company for various public oil and gas companies, from
February 1994 to December 2014.
Mr. Hislop trained as a Chartered
Accountant with Ernst & Young and has a bachelor of Commerce in Finance
from the University of British Columbia.
David N. Siegel, Director
Mr. Siegel has been a Director of the Company since 2015. Mr.
Siegel was CEO of Frontier Airlines, headquartered in Denver, Colorado, from
January 2012 to May of 2015. From June 2010 until December 2011, Mr. Siegel
was managing partner of Hyannis Port Capital, Inc. Mr. Siegel served as
chairman and chief executive officer of XOJET, Inc., a TPG Growth backed
private aviation company, from October 2008 to May 2010. From June 2004 to
September 2008, Mr. Siegel served as chairman and chief executive officer of
Gategroup, A.G., a Zurich based global company, which Mr. Siegel transformed
from its core airline catering business to become a complete above-the-wing
solutions provider. At Gategroup, Mr. Siegel stepped down as Chairman in April
2009, and remained an ordinary board member until April 2014.
Mr. Siegel recently served as a board member of URS Corporation
(NYSE: URS) and for the past eight years has served on the Advisory Board of
Trilantic Capital Partners, formerly Lehman Brothers Private Equity.
Mr. Siegel earned a master’s degree in business administration
from Harvard Business School, with first-year honors, and a Bachelor of Science
degree, magna cum laude, in applied mathematics-economics from Brown
University.
Darrel J.
Causbrook, Director
Mr. Causbrook has been a Director of the Company since 2015.
Darrel Causbrook is a Chartered Accountant with over 30 years of experience in
the accountancy profession, having worked for both large and mid-sized
accounting firms. Over 10 years ago, Darrel established his own accounting
practice (Causbrook and Associates), providing business and strategic advice to
a variety of industries. Darrel’s professional interest includes financial
reporting and corporate governance.
He holds a Bachelor of Commerce Degree from the University of
Wollongong (1982), is a Fellow of Institute of Chartered Accountants in
Australia, Fellow of CPA Australia and Fellow of the Taxation Institute of
Australia and a member of Australian Institute of Company Directors.
(e)
Involvement
in Certain Legal Proceedings
Except as may be set forth above, our directors and executive
officers have not been involved in any of the following events during the past
ten years:
1. any bankruptcy petition
filed by or against any business of which such person was a general partner or
executive officer either at the time of the bankruptcy or within two years
prior to that time;
2. any conviction in a
criminal proceeding or being subject to a pending criminal proceeding
(excluding traffic violations and other minor offenses);
3. being subject to any
order, judgment, or decree, not subsequently reversed, suspended or vacated, of
any court of competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any type of
business, securities or banking activities;
4. being found by a court of
competent jurisdiction (in a civil action), the Securities and Exchange
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated;
5. being the subject of, or
party to, any federal or state judicial or administrative order, judgment,
decree, or finding not subsequently reversed, suspended or vacated relating to
an alleged violation of: (i) any federal or state securities or commodities law
or regulation; or (ii) any law or regulation respecting financial institutions
or insurance companies including, but not limited to, a temporary or permanent
injunction, order of disgorgement or restitution, civil money penalty or
temporary or permanent cease-and-desist order, or removal or prohibition order,
or (iii) any law or regulation prohibiting mail or wire fraud or fraud in
connection with any business entity; or
6. being the subject of, or a
party to, any sanction or order, not subsequently reversed, suspended or
vacated, of any self-regulatory organization (as defined in Section 3(a) (26)
of the Securities Exchange Act of 1934), any registered entity (as defined in
Section 1(a) (29) of the Commodity Exchange Act), or any equivalent exchange,
association, entity or organization that has disciplinary authority over its
members or persons associated with a member.
(f)
Promoters
and Control Persons
The Company has been subject to
the reporting requirements of Section 13(a) or 15(d) of the Exchange Act at all
times during the twelve months immediately preceding this report and therefore
the information requested by this item not applicable.
Executive Compensation (Form 10,
Item 6)
The following table summarizes
the compensation paid to our chief financial officer and director during the
last two fiscal years. No other officers or directors received annual
compensation in excess of $100,000 during the last complete fiscal year.
SUMMARY COMPENSATION TABLE - YEARS ENDED
MARCH 31, 2016 AND 2015
|
Name and Principal
Position
|
Year
|
Salary
|
Bonus
|
Stock Awards
|
Option Awards
|
Non-Equity
Incentive Plan Compensation
|
Nonqualified
Deferred Compensation Earnings
|
All Other
Compensation
|
Total
|
John R. Hislop
Interim President and Chief Executive Officer,
Secretary, Chief Financial Officer and Director
|
2016
2015
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
$42,000
(1)
$42,000
(1)
|
$42,000
$42,000
|
Carmen J. Lotito
Vice-President
|
2016
2015
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
$180,000
(2)
Nil
|
$180,000
Nil
|
Andrew Logan
(3)
President and Director of Nation Australia
|
2016
2015
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
(1) Effective November 1, 2010 the Company signed a management
agreement for $3,500 per month. This arrangement was between our company and
Caravel Management Corp., a private management company owned by Mr. Hislop.
(2) Our
subsidiary Nation Australia currently has a compensation arrangement with
Carmen J. Lotito, our Vice President, to provide operational and management
services for $20,000 per month, on a month-to-month agreement.
(3) Our subsidiary Nation
Australia currently has a compensation arrangement with Andrew Logan, its President
and Director, to provide operational and business development services for $25,000
per month, on a month-to-month agreement.
(a)
Employment
or Consulting Agreements
Other than as described below, we have not entered into any
employment or consulting agreements with any of our current officers or
directors.
On January 1, 2009, we entered into a written contract with
Caravel Management Corp., to provide office rent, reception, compliance and
accounting services for $7,865 per month. The agreement commenced on January
1, 2009 and continues on a month to month basis unless terminated by the
parties. The agreement may be terminated by either party upon 30 days’ notice.
Subsequently, we amended our agreement with Caravel Management Corp. to provide
administrative services for $3,500 per month, effective November 1, 2010.
Our subsidiary Nation Australia currently has a compensation
arrangement with Carmen J. Lotito, our Vice President, to provide operational
and management services for $20,000 per month, on a month-to-month agreement.
Our subsidiary Nation Australia currently has a compensation
arrangement with Andrew Logan, its President and Director, to provide
operational and business development services for $25,000 per month, on a
month-to-month agreement.
(b)
Long-Term
Incentive Plans
There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers, except that
our directors and executive officers may receive stock options at the
discretion of our board of directors. We do not have any material bonus or
profit sharing plans pursuant to which cash or non-cash compensation is or may
be paid to our directors or executive officers, except that stock options may
be granted at the discretion of our board of directors.
We have no compensatory plan or arrangement with respect to any
officer that results or will result in the payment of compensation in any form
from the resignation, retirement or any other termination of employment of such
officer's employment with our company, from a change in control of our company
or a change in such officer's responsibilities following a change in control.
(c)
Outstanding
Equity Awards at Fiscal Year-End
None of our named executive officers held any unexercised options
or stock awards that had not vested or equity incentive plan awards as of March
31, 2016.
(d)
Director
Compensation
We reimburse our directors
for expenses incurred in connection with attending board meetings but did not
pay director's fees or other cash compensation for services rendered as a
director in the year ended March 31, 2016.
We have no standard arrangement
pursuant to which our directors are compensated for their services in their
capacity as directors except for the granting from time to time of incentive
stock options. The board of directors may award special remuneration to any
director undertaking any special services on behalf of our company other than
services ordinarily required of a director.
(e)
Compensation
Committee
The compensation of the Company’s
directors and executive officers is set by the Board of Directors and the
Company does not have a standing compensation committee or a committee
performing similar functions.
Certain Relationships and Related
Transactions; Director Independence (Form 10, Item 7)
Except as otherwise indicated below, since April 1, 2013, there
has been no transaction, or currently proposed transaction, in which our
company was or is to be a participant and the amount involved exceeds the
lesser of $120,000 or one percent of the average of our total assets at
year-end for the last two completed fiscal years and in which any of the
following persons had or will have a direct or indirect material interest:
(i)
Any of our directors or officers;
(ii)
Any person who beneficially owns, directly or indirectly, shares
carrying more than 5% of the voting rights attached to our outstanding shares
of common stock; and
(iii)
Any member of the immediate family (including spouse, parents,
children, siblings and in- laws) of any of the foregoing persons.
We receive administrative services and back office support under a
formal written management services agreement with Caravel Management Corp.
Caravel is a private management company that is wholly-owned by John Hislop,
our chairman, president, chief executive officer, secretary and chief financial
officer. Effective November 1, 2010, the company revised its agreement with
Caravel to provide management services for $3,500 per month. The agreement
with Caravel is on a month to month basis. In addition to administrative
services, the agreement also provides for office rent and supplies. Total
expenses recognized under this agreement for the years ended March 31, 2016 and
2015 were $42,000 both years.
We entered into loan agreements with Caravel and John Hislop in
2003 and 2004 to fund operations. Caravel is a private management company that
is wholly-owned by John Hislop, our chief financial officer and director. The
terms of these loan agreements provided that any principal amount outstanding
is payable upon demand and bears interest at 15% per annum, payable quarterly.
On March 31, 2006, we consolidated and restructured the loans. As part of the
restructuring, we borrowed an additional C$250,000 (US $203,932). The new loan
bore interest at 15% per annum, calculated and compounded monthly and payable
quarterly. Any principal amount outstanding under the loan was payable upon
demand. The loan was payable in Canadian dollars and was secured by a
Promissory Note. As of July 28, 2015, the principal balance of the loan and
accrued interest payable totaling $1,108,165 were settled in full as part of
the debt settlement agreement described below.
On July 18, 2014, we
entered into a promissory note with an officer and director, John Hislop for
US$50,000. The loan bore interest calculated quarterly, not in advance, at a
rate of 15% per annum. The note was payable upon demand by Mr. Hislop, both
before and after each of maturity, default and judgment commencing effective
July 18, 2014. As of July 28, 2015, the principal balance of the loan and
accrued interest payable totaling $ 57,726 were settled in full as part of the
debt settlement agreement described below.
On September 2, 2014, we entered into a promissory note with an
officer and director, John Hislop for C$20,000 (US$16,012). The loan bore
interest calculated quarterly, not in advance, at a rate of 15% per annum. The
note was payable upon demand by Mr. Hislop, both before and after each of
maturity, default and judgment commencing effective September 2, 2014. As of
July 28 2015, the principal balance of the loan and accrued interest payable
totaling $17,690 were settled in full as part of the debt settlement agreement
described below.
On January 29, 2015, we entered into a promissory note with an
officer and director, John Hislop (“Lender”) for C$50,000 (US$40,030). The loan
bore interest calculated quarterly, not in advance, at a rate of 15% per annum.
The note was payable upon demand by the Lender, both before and after each of
maturity, default and judgment commencing effective January 29, 2015. As of
July 28, 2015, the principal balance of the loan and accrued interest payable
totaling $41,612 were settled in full as part of the debt settlement agreement
described below.
On April 21, 2015, we entered into a debt settlement and
subscription agreement with our chief financial officer and director, John
Hislop whereby we agreed to settle a portion of the indebtedness, in the amount
of $1,340,000, by allotting and issuing to John Hislop 134,000,000 shares of
our common stock at a deemed price of $0.01 per share. On April 24, 2015, we
announced that we had issued 134,000,000 shares of our common stock at a deemed
price of $0.01 per share to Mr. Hislop. However, due to a technical flaw in
the process of adopting the amendment to our Articles of Incorporation
(announced on February 3, 2014), we were only authorized to issue 100,000,000
shares of our common stock on April 23, 2015, and the issuance to Mr. Hislop on
April 23, 2015, was therefore void. On June 29, 2015, we sent to our
shareholders a proxy statement for a shareholder meeting to be held July 22,
2015, at which meeting we proposed to rectify the technical flaw in our earlier
effort to increase our authorized capital. On July 28, 2015, we closed the
debt settlement agreement and reissued the 134,000,000 shares to Mr. Hislop
pursuant to the debt settlement and subscription agreement which settled a debt
to Mr. Hislop equal to $1,340,000 immediately following shareholder approval of
the increase in our authorized capital on July 23, 2015. The shares were valued
at $4,690,000 ($0.035 per share based upon market price). The Company recorded
a loss on extinguishment of debt of $3,350,000.
As of August 4, 2015, Paltar Nation Limited Partnership (“Paltar
Nation”) entered into a secured convertible note purchase agreement with David
N. Siegel Dynasty Trust dated November 16, 2015 (the “2015 Secured Note
Purchase Agreement”), pursuant to which Paltar Nation issued a secured
convertible promissory note in the principal amount of $584,000 in
consideration for $584,000. The secured convertible promissory note bears
interest at the rate of 10% per annum (15% per annum on and after the maturity
date or an Event of Default (as defined below)) and matures on August 4, 2016.
The entire unpaid principal sum of the secured convertible promissory note will
become immediately due and payable upon a material breach by (a) Paltar Nation
of the note, another note or the 2015 Secured Note Purchase Agreement, or (b)
Wotan Group Limited, an Australian limited company, of the Wotan Pledge,
described
below, in each case that is not cured within
30 days of such breach (referred to as an “Event of Default”).
The 2015 Secured Note Purchase Agreement also contemplates sales
of additional secured convertible promissory notes up to an aggregate maximum
of $5,000,000 (including the initial $584,000 sale to David N. Siegel Dynasty
Trust dated November 16, 2015).
Upon a sale of Paltar Nation’s limited partnership interests
(“Interests”) in a single transaction or a series of related transactions
yielding gross cash proceeds to Paltar Nation of at least $20,000,000
(including $584,000 from the sale of the secured convertible promissory note to
David N. Siegel Dynasty Trust dated November 16, 2015 and including $100,000
from the sale of the secured convertible promissory note to Michael B. Cox) on
or before the maturity dates of the notes (the “Qualified Financing”), the
principal and any accrued but unpaid interest under the notes will automatically
be converted into Interests. The Interests to be issued to David N. Siegel
Dynasty Trust dated November 16, 2015 upon conversion will be equal to the
quotient obtained by dividing (i) the entire principal amount of the note plus
any accrued but unpaid interest under the note by (ii) 80.00% of the
per-Interest price of the Interests sold to persons other than David N. Siegel
Dynasty Trust dated November 16, 2015 and other holders of the notes, if any,
in the Qualified Financing.
In connection with the secured convertible note purchase
agreement, Paltar Nation entered into a pledge agreement dated as of August 4,
2015 with Wotan Group Limited (the “Wotan Pledge”), pursuant to which Wotan
Group Limited pledged to each of David N. Siegel Dynasty Trust dated November
16, 2015 and any future secured noteholders pursuant to the 2015 Secured Note
Purchase Agreement a continuing first priority security interest in a number of
Wotan Group Limited’s shares of Paltar Petroleum Limited equal to five
multiplied by the sum of the aggregate outstanding principal amounts owed under
each noteholder’s respective note and Paltar Nation agreed to pay a commitment
fee to Wotan Group Limited equal to $250,000 from the proceeds of the secured
convertible promissory notes upon the receipt by Paltar Nation of proceeds from
the sale of such notes equal to or greater than $2,500,000 in the aggregate and
an additional commitment fee of $250,000 upon conversion of all of such notes.
As of March 31, 2016, the principal balance of the loan was
$584,000 and accrued interest payable of $38,400.
On August 5, 2015, we entered into a promissory note with an
officer and director, John Hislop for C$10,000 (US$7,623). The loan bears
interest calculated quarterly, not in advance, at a rate of 15% per annum. The
note is payable upon demand by Mr. Hislop, both before and after each of
maturity, default and judgment commencing effective August 5, 2015. The
principal sum and all accrued and unpaid interest will become due and payable
on August 5, 2017. As of March 31, 2016, the principal balance of the loan was
$7,700 and accrued interest payable of $8,456.
On August 25, 2015, we entered into a promissory note with an
officer and director, John Hislop for $10,000. The loan bears interest
calculated quarterly, not in advance, at a rate of 15% per annum. The note is
payable upon demand by Mr. Hislop, both before and after each of maturity,
default and judgment commencing effective August 25, 2015. The principal sum
and all accrued and unpaid interest will become due and payable on August 25,
2017. As of March 31, 2016, the principal balance of the loan was $10,000 and
accrued interest payable of $896.
On September 10, 2015, we
entered into a promissory note with an officer and director, John Hislop for C$6,000
(US$4,528). The loan bears interest calculated quarterly, not in advance, at a
rate of 15% per annum. The note is payable upon demand by Mr. Hislop, both
before and after each of maturity, default and judgment commencing effective
September 10, 2015. The principal sum and all accrued and unpaid interest will
become due and payable on September 10, 2017. As of March 31, 2016, the
principal balance of the loan was $4,620 and accrued interest payable of $385.
On September 24, 2015, we entered into a promissory note with an
officer and director, John Hislop for $5,000. The loan bears interest
calculated quarterly, not in advance, at a rate of 15% per annum. The note is
payable upon demand by Mr. Hislop, both before and after each of maturity,
default and judgment commencing effective September 24, 2015. The principal sum
and all accrued and unpaid interest will become due and payable on September
24, 2017. As of March 31, 2016, the principal balance of the loan was $5,000
and accrued interest payable of $386.
On September 30, 2015, Paltar Nation entered into a promissory
note with a director, David N. Siegel Dynasty Trust dated November 16, 2015 for
$14,210. The loan bears interest at a rate of 10% per annum from the
disbursement date of the funds. The principal sum and all accrued and unpaid
interest will become due and payable on September 30, 2016. As of March 31,
2016, the principal balance of the loan was $14,210 and accrued interest
payable of $907.
On October 29, 2015, the Company entered into a promissory note
with a related party, John Hislop for $7,960. The loan bears interest
calculated quarterly, not in advance, at a rate of 15% per annum. The note is
payable upon demand by Mr. Hislop, both before and after each of maturity,
default and judgment commencing effective October 29, 2015. The principal sum
and all accrued and unpaid interest will become due and payable on October 29,
2022. As of March 31, 2016, the principal balance of the loan was $7,960 and
accrued interest payable of $507.
On March 31, 2016, Paltar Nation entered into a promissory note
with a director, David N. Siegel Revocable Trust 2009 for $188,483. The loan
bears interest at a rate of 10% per annum from the disbursement date of the
funds. The principal sum and all accrued and unpaid interest will become due
and payable on March 31, 2017. As of March 31, 2016, the principal balance of
the loan was $188,483 and accrued interest payable of $1,698.
On April 8, 2016, Paltar Nation entered into a promissory note
with a director, David N. Siegel Revocable Trust 2009 for $25,000. The loan
will bear interest at a rate of 10% per annum. The principal sum and all
accrued and unpaid interest will become due and payable on April 8, 2017.
On May 3, 2016, Paltar Nation entered into a promissory note with
a director, David N. Siegel Revocable Trust 2009 for $34,000. The loan will
bear interest at a rate of 10% per annum. The principal sum and all accrued and
unpaid interest will become due and payable on May 3, 2017.
On May 31, 2016, the Company entered into a promissory note with a
related party, John Hislop for $23,100. The loan bears interest calculated
quarterly, not in advance, at a rate of 15% per annum, both before and after
each of maturity, default and judgment commencing effective May 31, 2016. The
principal sum and all accrued and unpaid interest will become due and payable
on May 31, 2023.
Our subsidiary Nation
Australia currently has a compensation arrangement with Carmen J. Lotito, our
Vice President, to provide operational and management services for $20,000 per
month, on a month-to-month agreement.
Legal Proceedings (Form 10, Item
8)
The Company is not a party to any
pending legal proceedings and, to the best of the Company’s knowledge, none of
the Company’s property or assets are the subject of any pending legal
proceedings. The Company is not aware of any legal proceedings that are
contemplated by any governmental authority.
Market Price of Dividends on
Registrant’s Common Equity and Related Shareholder Matters (Form 10, Item 9)
(a)
Market
Information
The Company’s common stock has
been quoted on the NASD/FINRA OTC Bulletin Board under the symbol “NEGY.” The
following table gives the high and low bid information for each fiscal quarter
Madison’s stock has been quoted for the last two fiscal years and for the
interim periods ending on June 30, 2016 and September 30, 2016. The bid
information was obtained from OTC Markets Group Inc. and reflects inter-dealer
prices, without retail mark-up, mark-down or commission, and may not represent
actual transactions.
High
and Low Bids
Period Ended
|
High
|
Low
|
Source
|
September 30, 2016
|
$0.25
|
$0.12
|
OTC Markets Group
Inc.
|
June 30, 2016
|
$0.25
|
$0.15
|
OTC Markets Group
Inc.
|
March 31, 2016
|
$0.50
|
$0.20
|
OTC Markets Group
Inc.
|
December 31, 2015
|
$0.51
|
$0.275
|
OTC Markets Group
Inc.
|
September 30, 2015
|
$0.60
|
$0.35
|
OTC Markets Group
Inc.
|
June 30, 2015
|
$0.35
|
$0.11
|
OTC Markets Group
Inc.
|
March 31, 2015
|
$0.35
|
$0.015
|
OTC Markets Group
Inc.
|
December 31, 2014
|
$0.022
|
$0.02
|
OTC Markets Group
Inc.
|
September 30, 2014
|
$0.02
|
$0.015
|
OTC Markets Group
Inc.
|
June 30, 2014
|
$0.015
|
$0.015
|
OTC Markets Group
Inc.
|
(b)
Share Purchase Warrants
As of the date of this report,
there are no outstanding warrants to purchase the Company’s common stock. The
Company may, however, issue warrants to purchase its securities in the future.
(c)
Options
As of the date of this report,
there are no options to purchase the Company’s common stock. The Company may,
however, in the future grant such options and/or establish an incentive stock
option plan for its directors, employees and consultants.
(d)
Convertible Securities
As of the
date of this report, the Company has no promissory notes or other agreements or
obligations outstanding that are convertible into shares of the Company’s
common stock.
(e)
Registration Obligations
Pursuant to the Third Agreement,
within sixty (60) days after September 29, 2016 the Company is required to file
a registration statement with the SEC seeking registration under the Securities
Act of as many of the shares of common stock of the Company held by Mr. John
Hislop and Paltar as permitted by the SEC.
(f)
Holders
The Company has approximately 21
stockholders of record of the Company’s common stock as of September 29, 2016
according to a shareholders list provided by the Company’s transfer agent as of
that date. The number of registered shareholders does not include any estimate
by the Company of the number of beneficial owners of common stock held in
street name. The transfer agent for the Company’s common stock is Interwest
Transfer Co., Inc., 1981 Murray Holliday Road, Suite 100, Salt Lake City, Utah
84117 and their telephone number is (801) 272-9294.
(g)
Dividends
The Company has declared no
dividends on its common stock and is not subject to any restrictions that limit
its ability to pay dividends on its shares of common stock. Dividends are
declared at the sole discretion of the Company’s board of directors.
(h)
Securities Authorized for Issuance under Equity Compensation Plans
We adopted our
current stock option plan, entitled the 1999 Stock Option and Incentive Plan
(“The Plan”), on May 6, 1999 which was subsequently approved by over 50% of the
shares of common stock held by stockholders of our company. The Plan
authorized up to 2,500,000 shares of our common stock to be granted as incentive
stock options to employees, consultants, directors, and others providing
service of special significance to our company. The Plan is administered by
the Board of Directors. The exercise price of each option shall be determined
by the Board or by the CEO with reference to such factors as current fair
market value of the common stock, net book value per share, other remuneration
already being received by the optionee. No option may be exercised more than
five years from the date of grant and they vest on the date granted. The Plan
does not have an expiry date. The following table provides a summary of the
number of options granted
under
our stock option plan, the weighted average exercise price and the number of
options remaining available for issuance as of March 31, 2016.
Equity
Compensation Plan Information
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options, warrants and
rights
|
Weighted-average
exercise price of outstanding options, warrants and rights
|
Number
of securities remaining available for future issuance under equity
compensation plans
|
1999
Stock Option and Incentive Plan (approved by security holders)
|
Nil
|
Nil
|
2,500,000
|
Recent Sales of Unregistered
Securities (Form 10, Item 10)
On April 21, 2015, we entered
into a debt settlement and subscription agreement with Mr. John Hislop, who was
at that time our chief financial officer and director, whereby we agreed to
settle a portion of the indebtedness, in the amount of $1,340,000, by allotting
and issuing to Mr. Hislop 134,000,000 shares of our common stock at a deemed
price of $0.01 per share. On April 24, 2015, we announced that we had issued
134,000,000 shares of our common stock at a deemed price of $0.01 per share to
Mr. Hislop. However, due to a technical flaw in the process of adopting the
amendment to our Articles of Incorporation (announced on February 3, 2014), we
were only authorized to issue 100,000,000 shares of our common stock on April
23, 2015, and the issuance to Mr. Hislop on April 23, 2015, was therefore
void. On June 29, 2015, we sent to our shareholders a proxy statement for a
shareholder meeting to be held July 22, 2015, at which meeting we proposed to
rectify the technical flaw in our earlier effort to increase our authorized
capital. On July 28, 2015, we closed the debt settlement agreement and
reissued the 134,000,000 shares to Mr. Hislop pursuant to the debt settlement
and subscription agreement which settled a debt to Mr. Hislop equal to
$1,340,000 immediately following shareholder approval of the increase in our
authorized capital on July 23, 2015. The shares were valued at $4,690,000
($0.035 per share based upon market price). The Company recorded a loss on
extinguishment of debt of $3,350,000. This issuance of shares to Mr. Hislop was
exempt from registration under Section 4(a)(2) of the Securities Act of 1933,
as the issuance by the Company did not involve any public offering and was made
to an insider of the Company who is a sophisticated investor.
Other than as disclosed above and
the issuance of 900,000,000 shares of the Company’s common stock that is the
subject of this report, there have been no sales of unregistered securities by
the Company within the last three years that would be required to be disclosed
pursuant to Item 701 of Regulation S-K.
Description of Registrant’s
Securities to be Registered (Form 10, Item 11)
There are no securities of the
Company being registered pursuant to this report nor are any securities being
registered as of the date of this report. See “Market Price of Dividends on
Registrant’s Common Equity and Related Shareholder Matters” above for a general
description of the common stock of the Company.
Indemnification of Directors and
Officers (Form 10, Item 12)
The Wyoming Business Corporation
Act (“Corporation Act”) allows us to indemnify our officers and directors from
certain liabilities and our By-Laws specifically authorize the Company, subject
to the parameters of the Corporation Act, to indemnify directors and former
directors of the Company, or of another entity of which the Company is or was a
shareholder, and said director(s) heirs and personal representatives, against
all costs, charges and expenses, including any amount paid to settle an action
or satisfy a judgment in a civil, criminal or administrative action or
proceeding to which said director is made a party by reason of being or having
been a director of the Company.
Subject to the provisions of the
Corporation Act, our directors may cause the Company to indemnify any officer,
employee or agent of the Company or of an entity of which the Company is or was
a shareholder against all costs, charges and expenses whatsoever incurred by
such officer, employee or agent and resulting from such person’s acting as an
officer, employee or
agent of the Company. In
addition, the Company shall indemnify the Secretary or an Assistant Secretary
of the Company (if such person is not a full time employee of the Company and
notwithstanding that such person is also a director) against all costs, charges
and expenses whatsoever incurred by such person and arising out of the
functions assigned to the Secretary by the Corporation Act or our By-Laws.
We have not entered into separate
indemnification agreements with individual directors or officers. As stated in
our By-Laws, each director of the Company, and the Secretary or Assistant
Secretary, upon election or appointment to such position shall be deemed to
have contracted with the Company on the terms of the indemnity stated above.
Financial Statements and Data
(Form 10, Item 13)
Reference is made to the filings
by the Company on Forms 10-K and 10-Q for the Company’s financial statements
referenced in this report.
There are no financial statements
or pro forma financial information required to be filed with this Form 8-K as
The Paltar Common Stock Issuance does not represent a reverse merger or similar
transaction or a business combination transaction. Instead, The Paltar Common
Stock Issuance represents a transaction outside the Company’s ordinary course
of business and one that represents a deemed disposition of more than 10% of
the Company’s total assets under Item 2.01 of Form 8-K.
Changes in and Disagreements with
Accountants and Financial Disclosure (Form 10, Item 14)
One June 24, 2015 the Company’s
independent accountant resigned from its engagement to audit the Company. The
principal accountant’s report on the financial statements for the past two
fiscal years did not contain an adverse opinion or a disclaimer of an opinion,
nor were such reports qualified or modified as to uncertainty, audit scope, or
accounting principles. The decision to change accountants was approved by the
Company’s board of directors by written consent dated June 24, 2015. For the
two most recent fiscal years there were not, and for the subsequent interim
period there has not, been any disagreements with the former accountant on any
matter of accounting principles or practices, financial statement disclosure,
or auditing scope or procedure, which disagreement(s), if not resolved to the
satisfaction of the former accountant, would have caused it to make reference
to the subject matter of the disagreement(s) in connection with this report.
Financial Statements and Exhibits
(Form 10, Item 15)
There are no financial statements
or pro forma financial information required to be filed with this Form 8-K as
The Paltar Common Stock Issuance does not represent a reverse merger or similar
transaction or a business combination transaction. Instead, The Paltar Common
Stock Issuance represents a transaction outside the Company’s ordinary course
of business and one that represents a deemed disposition of more than 10% of
the Company’s total assets under Item 2.01 of Form 8-K.
The exhibits to this report are
listed and described below in Item 9.01 to this Form 8-K.
Item 9.01 Financial
Statements and Exhibits.
Exhibits
Required by Item 601 of Regulation S-K
(3) Articles of Incorporation/Bylaws
3.1 Certificate of Merger (Delaware) effective June 12,
2003 (incorporated by reference from our Quarterly Report on Form 10-QSB filed
with the Securities and Exchange Commission on August 19, 2003).
3.2 Certificate of Merger (Wyoming) effective June 13, 2003
(incorporated by reference from our Quarterly Report on Form 10-QSB filed with
the Securities and Exchange Commission on August 19, 2003).
3.3 Amended & Restated Bylaws (Wyoming) (incorporated
by reference from our Quarterly Report on Form 10-QSB filed with the Securities
and Exchange Commission on November 14, 2003).
3.4 Certificate of Incorporation (incorporated by reference
from our Annual Report on Form 10K filed with the Securities and Exchange
Commission on August 13, 2010).
3.5 Amended and Restated Articles of Incorporation filed
with the Secretary of State of the State of Wyoming on August 3, 2015
(incorporated by reference from our Current Report on Form 8-K filed with the
Securities and Exchange Commission on August 12, 2015).
(10) Material Contracts
10.1 1999 Stock Option Plan (incorporated by reference from
our Registration Statement on Form 10-SB filed with the Securities and Exchange
Commission on March 31, 2000).
10.2 Demand Promissory Note issued to Caravel Management
Corp. and John Hislop, dated March 31, 2006 (incorporated by reference from our
Annual Report on Form 10-K filed with the Securities and Exchange Commission on
August 13, 2010).
10.3 Management Services Agreement dated November 1, 2010
between Nation Energy Inc. and Caravel Management Corp. (incorporated by
reference from our Annual Report on Form 10-K filed with the Securities and
Exchange Commission on December 2, 2010).
10.4 Letter Agreement with Paltar Petroleum Limited
(incorporated by reference from our Current Report on Form 8-K filed with the
Securities and Exchange Commission on October 18, 2013).
10.5 First Amendment to Letter Agreement dated October 11,
2013 with Paltar Petroleum Limited (incorporated by reference from our Current
Report on Form 8-K filed with the Securities and Exchange Commission on April
8, 2014).
10.6 Promissory Note issued to John Hislop, dated July 18,
2014 (incorporated by reference from our Annual Report on Form 10-K filed with
the Securities and Exchange Commission on June 4, 2015).
10.7
Promissory Note issued to John Hislop, dated September 2, 2014 (incorporated by
reference from our Annual Report on Form 10-K filed with the Securities and
Exchange Commission on June 4, 2015).
10.8 Amended and Restated Agreement with Paltar Petroleum
Limited (incorporated by reference from our Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 1, 2014).
10.9 Debt Settlement Agreement with John Hislop dated April
21, 2015 (incorporated by reference from our Current Report on Form 8-K filed
with the Securities and Exchange Commission on April 24, 2015).
10.10 Promissory Note issued to John Hislop, dated January 29,
2015 (incorporated by reference from our Annual Report on Form 10-K filed with
the Securities and Exchange Commission on June 4, 2015).
10.11 Second Amended and Restated Agreement with Paltar
Petroleum Limited dated June 13, 2015 (incorporated by reference from our
Current Report on Form 8-K filed with the Securities and Exchange Commission on
June 18, 2015).
10.12 Third Amended and Restated Agreement with Paltar
Petroleum Limited dated August 30, 2015 (incorporated by reference from our
Current Report on Form 8-K filed with the Securities and Exchange Commission on
September 3, 2015).
10.13 Option Agreement dated August 30, 2015 Agreement with
Paltar Petroleum Limited (ACN 149 987 459) dated August 30, 2015 (incorporated
by reference from our Current Report on Form 8-K filed with the Securities and
Exchange Commission on September 3, 2015).
10.14 EP 136 Earning Agreement dated August 30, 2015 between
Nation Energy (Australia) Pty Ltd. (ACN 606 533 046) and Paltar Petroleum
Limited (ACN 149 987 459) (incorporated by reference from our Current Report on
Form 8-K filed with the Securities and Exchange Commission on September 3,
2015).
10.15 EP 143 Earning Agreement dated August 30, 2015 between
Nation Energy (Australia) Pty Ltd. (ACN 606 533 046) and Paltar Petroleum
Limited (ACN 149 987 459) (incorporated by reference from our Current Report on
Form 8-K filed with the Securities and Exchange Commission on September 3,
2015).
10.16 EP 231 Earning Agreement dated August 30, 2015 between
Nation Energy (Australia) Pty Ltd. (ACN 606 533 046) and Paltar Petroleum
Limited (ACN 149 987 459) (incorporated by reference from our Current Report on
Form 8-K filed with the Securities and Exchange Commission on September 3,
2015).
10.17 EP 232 Earning Agreement dated August 30, 2015 between
Nation Energy (Australia) Pty Ltd. (ACN 606 533 046) and Paltar Petroleum Limited
(ACN 149 987 459) (incorporated by reference from our Current Report on Form
8-K filed with the Securities and Exchange Commission on September 3, 2015).
10.18 EP 234 Earning Agreement dated August 30, 2015 between
Nation Energy (Australia) Pty Ltd. (ACN 606 533 046) and Paltar Petroleum
Limited (ACN 149 987 459) (incorporated by
reference
from our Current Report on Form 8-K filed with the Securities and Exchange
Commission on September 3, 2015).
10.19 EP 237 Earning Agreement
dated August 30, 2015 between Nation Energy (Australia) Pty Ltd. (ACN 606 533
046) and Paltar Petroleum Limited (ACN 149 987 459) (incorporated by reference
from our Current Report on Form 8-K filed with the Securities and Exchange
Commission on September 3, 2015).
10.20 EP 468 Earning Agreement dated August 30, 2015 between
Nation Energy (Australia) Pty Ltd. (ACN 606 533 046) and Officer Petroleum Pty
Ltd. (ACN 142 330 738) (incorporated by reference from our Current Report on
Form 8-K filed with the Securities and Exchange Commission on September 3,
2015).
10.21 Secured Convertible Promissory Note issued to David N.
Siegel Dynasty Trust dated November 16, 2015 dated August 4, 2015 (incorporated
by reference from our Current Report on Form 8-K filed with the Securities and
Exchange Commission on November 10, 2015).
10.22 Promissory Note issued to John Hislop, dated August 5,
2015 (incorporated by reference from our Quarterly Report on Form 10-Q filed
with the Securities and Exchange Commission on November 13, 2015).
10.23 Promissory Note issued to John Hislop, dated August 25,
2015 (incorporated by reference from our Quarterly Report on Form 10-Q filed
with the Securities and Exchange Commission on November 13, 2015).
10.24 Promissory Note issued to John Hislop, dated September
10, 2015 (incorporated by reference from our Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission on November 13, 2015).
10.25 Promissory Note issued to John Hislop, dated September
24, 2015 (incorporated by reference from our Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission on November 13, 2015).
10.26 First Amendment to Third Amended and Restated Agreement
with Paltar Petroleum Limited (ACN 149 987 459) effective December 17, 2015
(incorporated by reference from our Current Report on Form 8-K filed with the
Securities and Exchange Commission on January 28, 2016).
10.27 Master Amendment to Six Earning Agreements dated
effective December 17, 2015 between Paltar Petroleum Limited (ACN 149 987 459)
and Nation Energy (Australia) Pty Ltd. (ACN 606 533 046) (incorporated by
reference from our Current Report on Form 8-K filed with the Securities and
Exchange Commission on January 28, 2016).
10.28 First Amendment to EP 468 Earning Agreement dated
effective December 17, 2015 between Officer Petroleum Pty Ltd (ACN 142 330 738)
and Nation Energy (Australia) Pty Ltd. (ACN 606 533 046) (incorporated by
reference from our Current Report on Form 8-K filed with the Securities and
Exchange Commission on January 28, 2016).
10.29 Second Amendment to Third Amended and Restated Agreement
with Paltar Petroleum Limited (ACN 149 987 459) effective February 8, 2016
(incorporated by reference from our
Current Report on
Form 8-K filed with the Securities and Exchange Commission on February 16,
2016).
10.30 Second Master Amendment to Six Earning Agreements dated
effective February 8, 2016 between Paltar Petroleum Limited (ACN 149 987 459)
and Nation Energy (Australia) Pty Ltd. (ACN 606 533 046) (incorporated by
reference from our Current Report on Form 8-K filed with the Securities and
Exchange Commission on February 16, 2016).
10.31 Second Amendment to EP
468 Earning Agreement dated effective February 8, 2016 between Officer
Petroleum Pty Ltd (ACN 142 330 738) and Nation Energy (Australia) Pty Ltd. (ACN
606 533 046) (incorporated by reference from our Current Report on Form 8-K
filed with the Securities and Exchange Commission on February 16, 2016).
10.32 Amendment to Option Agreement with Paltar Petroleum
Limited (ACN 149 987 459) effective February 12, 2016 (incorporated by
reference from our Current Report on Form 8-K filed with the Securities and
Exchange Commission on February 16, 2016).
10.33 Promissory Note issued to John Hislop, dated October 29,
2015 (incorporated by reference from our Quarterly Report on Form 10-Q filed
with the Securities and Exchange Commission on February 16, 2016).
10.34 Promissory Note issued to Michael B. Cox, dated November
27, 2015 (incorporated by reference from our Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission on February 16, 2016).
10.35 Promissory Note issued to David N. Siegel Dynasty Trust
dated November 16, 2015, dated September 30, 2015 (incorporated by reference
from our Annual Report on Form 10-K filed with the Securities and Exchange
Commission on July 1, 2016).
10.36 Promissory Note issued to David N. Siegel Revocable Trust
2009, dated March 31, 2016 (incorporated by reference from our Annual Report on
Form 10-K filed with the Securities and Exchange Commission on July 1, 2016).
10.37 Promissory Note issued to David N. Siegel Revocable Trust
2009, dated April 8, 2016 (incorporated by reference from our Annual Report on
Form 10-K filed with the Securities and Exchange Commission on July 1, 2016).
10.38 Promissory Note issued to David N. Siegel Revocable Trust
2009, dated May 3, 2016 (incorporated by reference from our Annual Report on
Form 10-K filed with the Securities and Exchange Commission on July 1, 2016).
10.39 Promissory Note issued to John Hislop, dated May 31, 2016 (incorporated
by reference from our Annual Report on Form 10-K filed with the Securities and
Exchange Commission on July 1, 2016).
10.40 EP 136 Final Earning Agreement dated May 31, 2016 between
Nation Energy (Australia) Pty Ltd. (ACN 606 533 046) and Paltar Petroleum
Limited (ACN 149 987 459) (incorporated by reference from our Annual Report on
Form 10-K filed with the Securities and Exchange Commission on July 1, 2016).
10.41 EP 143 Final
Earning Agreement dated May 31, 2016 between Nation Energy (Australia) Pty Ltd.
(ACN 606 533 046) and Paltar Petroleum Limited (ACN 149 987 459) (incorporated
by reference from our Annual Report on Form 10-K filed with the Securities and
Exchange Commission on July 1, 2016).
10.42 EP 231 Final Earning Agreement dated May 31, 2016 between
Nation Energy (Australia) Pty Ltd. (ACN 606 533 046) and Paltar Petroleum
Limited (ACN 149 987 459) (incorporated by reference from our Annual Report on
Form 10-K filed with the Securities and Exchange Commission on July 1, 2016).
10.43 EP 232 Final Earning Agreement dated May 31, 2016 between
Nation Energy (Australia) Pty Ltd. (ACN 606 533 046) and Paltar Petroleum
Limited (ACN 149 987 459) (incorporated by reference from our Annual Report on
Form 10-K filed with the Securities and Exchange Commission on July 1, 2016).
10.44 EP 234 Final Earning Agreement dated May 31, 2016 between
Nation Energy (Australia) Pty Ltd. (ACN 606 533 046) and Paltar Petroleum
Limited (ACN 149 987 459) (incorporated by reference from our Annual Report on
Form 10-K filed with the Securities and Exchange Commission on July 1, 2016).
10.45 EP 237 Final Earning Agreement dated May 31, 2016 between
Nation Energy (Australia) Pty Ltd. (ACN 606 533 046) and Paltar Petroleum
Limited (ACN 149 987 459) (incorporated by reference from our Annual Report on
Form 10-K filed with the Securities and Exchange Commission on July 1, 2016).
10.46 EP 468 Final Earning Agreement dated effective May 31, 2016
between Officer Petroleum Pty Ltd (ACN 142 330 738) and Nation Energy
(Australia) Pty Ltd. (ACN 606 533 046) (incorporated by reference from our Annual
Report on Form 10-K filed with the Securities and Exchange Commission on July 1,
2016).
10.47 Third Amendment to Third Amended and Restated Agreement
with Paltar Petroleum Limited (ACN 149 987 459), effective May 31, 2016 (incorporated
by reference from our Annual Report on Form 10-K filed with the Securities and
Exchange Commission on July 1, 2016).
10.48 Promissory Note issued from Nation Australia to Paltar
Petroleum dated May 31, 2016 (incorporated by reference from our Annual Report
on Form 10-K filed with the Securities and Exchange Commission on July 1, 2016).
10.49 Management Services
Agreement dated June 25, 2016, but effective July 22, 2015, between Nation
Energy (Australia) Pty Ltd. and Carmen J. Lotito (incorporated by reference
from our Annual Report on Form 10-K filed with the Securities and Exchange
Commission on July 1, 2016).
(14) Code of Ethics
14.1 Code of Business Conduct and Ethics (incorporated by
reference from our Annual Report on Form 10-KSB filed with the Securities and
Exchange Commission on July 15, 2004).
(99) Additional Exhibits
99.1 Audit Committee
Charter (incorporated by reference from our Annual Report on Form 10K filed
with the Securities and Exchange Commission on February 9, 2011).
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.
NATION ENERGY INC.
/s/ Carmen J. Lotito
By: Carmen J. Lotito
Vice President
Date: October 5, 2016