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Share Name | Share Symbol | Market | Type |
---|---|---|---|
ERHC Energy Inc (CE) | USOTC:ERHE | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0001 | 0.00 | 01:00:00 |
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Colorado
|
|
88-0218499
|
(State of Incorporation)
|
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer
o
|
Accelerated filer
o
|
Non-accelerated filer
x
|
Smaller reporting company
o
|
Part I. Financial Information
|
Page
|
|
|
|
|
Item 1.
|
5
|
|
|
|
|
|
5
|
|
|
|
|
|
6
|
|
|
|
|
|
7
|
|
|
|
|
|
8
|
|
|
|
|
|
10
|
|
|
|
|
Item 2.
|
17
|
|
|
|
|
Item 3.
|
26
|
|
|
|
|
Item 4.
|
26
|
|
|
|
|
Part II. Other Information
|
|
|
|
|
|
Item 1.
|
27
|
|
|
|
|
Item 6.
|
29
|
|
|
|
|
|
30
|
● | business strategy; |
● | growth opportunities; |
● | future development of concessions, exploitation of assets and other business operations; |
● | future market conditions and the effect of such conditions on the Company's future activities or results of operations; |
● | future uses of and requirements for financial resources; |
● | interest rate and foreign exchange risk; |
● | future contractual obligations; |
● | outcomes of legal proceedings including; |
● | future operations outside the United States; |
● | competitive position; |
● | expected financial position; |
● | future cash flows; |
● | future liquidity and sufficiency of capital resources; |
● | future dividends; |
● | financing plans; |
● | tax planning; |
● | budgets for capital and other expenditures; |
● | plans and objectives of management; |
● | compliance with applicable laws; and, |
● | adequacy of insurance or indemnification. |
● | general economic and business conditions; |
● | worldwide demand for oil and natural gas; |
● | changes in foreign and domestic oil and gas exploration, development and production activity; |
● | oil and natural gas price fluctuations and related market expectations; |
● | termination, renegotiation or modification of existing contracts; |
● | the ability of the Organization of Petroleum Exporting Countries, commonly referred to as "OPEC", to set and maintain production levels and pricing, and the level of production in non-OPEC countries; |
● | policies of the various governments regarding exploration and development of oil and gas reserves; |
● | advances in exploration and development technology; |
● | the political environment of oil-producing regions; |
● |
political instability in the Democratic Republic of Săo Tomé and Príncipe ("DRSTP"), the Federal Republic of Nigeria, Republic of Kenya, and the Republic of Chad;
|
● | casualty losses; |
● | competition; |
● | changes in foreign, political, social and economic conditions; |
● | risks of international operations, compliance with foreign laws and taxation policies and expropriation or nationalization of equipment and assets; |
● | risks of potential contractual liabilities; |
● | foreign exchange and currency fluctuations and regulations, and the inability to repatriate income or capital; |
● | risks of war, military operations, other armed hostilities, terrorist acts and embargoes; |
● | regulatory initiatives and compliance with governmental regulations; |
● | compliance with tax laws and regulations; |
● | customer preferences; |
● | effects of litigation and governmental proceedings; |
● | cost, availability and adequacy of insurance; |
● | adequacy of the Company's sources of liquidity; |
● | labor conditions and the availability of qualified personnel; and, |
● | various other matters, many of which are beyond the Company's control. |
|
June
30, 2014
|
September
30, 2013
|
||||||
|
|
|
||||||
ASSETS
|
|
|
||||||
|
|
|
||||||
Current assets:
|
|
|
||||||
Cash and cash equivalents
|
$
|
2,729,828
|
$
|
1,184,204
|
||||
Investment in Oando Energy Resources
|
759,779
|
563,525
|
||||||
Deferred debt origination cost – short term
|
61,532
|
-
|
||||||
Prepaid expenses and other
|
431,517
|
228,881
|
||||||
|
||||||||
Total current assets
|
3,982,656
|
1,976,610
|
||||||
|
||||||||
Oil and gas concession fees
|
6,062,730
|
6,037,803
|
||||||
Furniture and equipment, net of accumulated depreciation of $353,137 and $300,303 at June 30, 2014 and September 30, 2013, respectively
|
149,531
|
202,364
|
||||||
Restricted certificate of deposit
|
-
|
2,186,182
|
||||||
Deferred debt origination cost – long term
|
30,580
|
-
|
||||||
Income tax receivable
|
2,018,533
|
2,018,533
|
||||||
Other assets
|
72,916
|
51,108
|
||||||
|
||||||||
Total assets
|
$
|
12,316,946
|
$
|
12,472,600
|
||||
|
||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued liabilities
|
$
|
401,868
|
$
|
983,293
|
||||
Convertible note payable, net of discount – short term
|
365,667
|
-
|
||||||
Derivative liability – short term
|
166,161
|
-
|
||||||
|
||||||||
Total current liabilities
|
933,696
|
983,293
|
||||||
|
||||||||
Convertible note payable, net of discount – long term
|
32,200
|
-
|
||||||
Derivative liability – long term
|
225,191
|
-
|
||||||
|
||||||||
Total liabilities
|
1,191,087
|
983,293
|
||||||
|
||||||||
Commitments and contingencies
|
||||||||
|
||||||||
Shareholders' equity:
|
||||||||
Preferred stock, par value $0.0001; authorized 10,000,000 shares; none issued and outstanding
|
-
|
-
|
||||||
Common stock, par value $0.0001; authorized 3,000,000,000 shares; issued and outstanding 765,194,088 shares
|
76,520
|
76,485
|
||||||
Additional paid-in capital
|
101,080,306
|
101,067,084
|
||||||
Accumulated other comprehensive loss
|
(590,220
|
)
|
(786,475
|
)
|
||||
Losses accumulated in the development stage
|
(89,440,747
|
)
|
(88,867,787
|
)
|
||||
|
||||||||
Total shareholders' equity
|
11,125,859
|
11,489,307
|
||||||
Total liabilities and shareholders' equity
|
$
|
12,316,946
|
$
|
12,472,600
|
|
Three Months Ended June 30,
|
Nine Months Ended June 30,
|
September 5,
1995 (Inception)
to June 30,
2014
|
|||||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
Costs and expenses:
|
|
|
|
|
|
|||||||||||||||
General and administrative
|
$
|
719,943
|
$
|
945,670
|
$
|
2,634,430
|
$
|
2,802,983
|
$
|
92,857,216
|
||||||||||
Exploration expenses
|
|
242,179
|
|
-
|
|
461,933
|
|
-
|
1,684,332
|
|||||||||||
Depreciation
|
14,275
|
21,319
|
52,834
|
85,567
|
1,701,448
|
|||||||||||||||
Gain on sale of partial interest on sale of concessions
|
-
|
-
|
(2,724,793
|
)
|
-
|
(32,827,043
|
) | |||||||||||||
Write-offs and abandonments
|
-
|
-
|
-
|
-
|
7,742,128
|
|||||||||||||||
|
||||||||||||||||||||
Total costs and expenses
|
(976,397
|
)
|
(966,989
|
)
|
(424,404
|
)
|
(2,888,550
|
) |
(71,158,081
|
) | ||||||||||
|
||||||||||||||||||||
Other income and (expenses):
|
||||||||||||||||||||
Interest income
|
1,592
|
854
|
3,804
|
1,752
|
4,857,892
|
|||||||||||||||
Loss on change in fair value of derivatives
|
(16,496
|
)
|
-
|
(16,496
|
)
|
-
|
(16,496
|
) | ||||||||||||
Gain from settlements
|
-
|
-
|
-
|
-
|
130,178
|
|||||||||||||||
Other income
|
-
|
-
|
-
|
439,827
|
||||||||||||||||
Interest expense
|
(24,708
|
)
|
(18
|
)
|
(24,708
|
)
|
(24
|
) |
(12,170,080
|
) | ||||||||||
Loss on embedded derivative
|
(111,156
|
)
|
-
|
(111,156
|
)
|
-
|
(111,156
|
) | ||||||||||||
Provision for loss on deposits
|
-
|
-
|
-
|
-
|
(5,292,896
|
) | ||||||||||||||
Loss on extinguishment of debt
|
-
|
-
|
-
|
-
|
(5,749,575
|
) | ||||||||||||||
Total other income and (expense)
|
(150,768
|
)
|
836
|
(148,556
|
)
|
1,728
|
(17,912,306
|
) | ||||||||||||
|
||||||||||||||||||||
Loss before benefit (provision) for income taxes
|
(1,127,165
|
)
|
(966,153
|
)
|
(572,960
|
)
|
(2,886,822
|
) |
(89,070,387
|
) | ||||||||||
|
||||||||||||||||||||
Benefit (provision) for income taxes:
|
||||||||||||||||||||
Current
|
-
|
-
|
-
|
-
|
(1,330,360
|
) | ||||||||||||||
Deferred
|
-
|
-
|
-
|
-
|
960,000
|
|||||||||||||||
|
||||||||||||||||||||
Total benefit (provision) for income taxes
|
-
|
-
|
-
|
-
|
(370,360
|
) | ||||||||||||||
|
||||||||||||||||||||
Net loss
|
$
|
(1,127,165
|
)
|
(966,153
|
)
|
$
|
(572,960
|
)
|
$
|
(2,886,822
|
) | $ |
(89,440,747
|
) | ||||||
|
||||||||||||||||||||
Net loss per common share -basic and diluted
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.00
|
) | ||||||||
|
||||||||||||||||||||
Weighted average number of common shares outstanding basic and diluted
|
764,917,468
|
764,429,260
|
764,871,996
|
747,782,323
|
|
Three Months Ended June 30,
|
Nine Months Ended June 30,
|
September 5,
1995 (Inception)
2014
|
|||||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|||||||||||||||
Net loss
|
$
|
(1,127,165
|
)
|
$
|
(966,153
|
)
|
$
|
(572,960
|
)
|
$
|
(2,886,822
|
)
|
$
|
(89,440,747
|
)
|
|||||
Other comprehensive income (loss) on available for sale securities
|
251,088
|
(66,905
|
)
|
196,254
|
(37,625
|
)
|
(590,221
|
)
|
||||||||||||
Other comprehensive loss
|
$
|
(876,077
|
)
|
$
|
(1,033,058
|
)
|
$
|
(376,706)
|
$
|
(2,924,447
|
)
|
$
|
(90,030,968
|
)
|
|
Nine Months Ended June 30,
|
September 5,
1995 (Inception)
to June 30,
2014
|
||||||||||
|
2014
|
2013
|
||||||||||
Cash Flows From Operating Activities:
|
|
|
|
|||||||||
Net loss
|
$
|
(572,960
|
)
|
$
|
(2,886,822
|
)
|
$
|
(89,440,747
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
||||||||||||
Depreciation and depletion expense
|
52,834
|
85,567
|
1,701,447
|
|||||||||
Change in derivative liabilities
|
127,652
|
-
|
127,651
|
|||||||||
Provision for loss on deposits
|
-
|
-
|
5,292,896
|
|||||||||
Write-offs and abandonments
|
-
|
-
|
7,742,128
|
|||||||||
Deferred income taxes
|
-
|
-
|
(2,018,398
|
)
|
||||||||
Compensatory stock options
|
6,957
|
17,856
|
1,363,902
|
|||||||||
Gain from settlement
|
-
|
-
|
(617,310
|
)
|
||||||||
Gain on sale of partial interest in Kenya concession
|
(4,175,966
|
)
|
-
|
(4,175,966
|
)
|
|||||||
Gain on sale of partial interest in DRSTP concession
|
-
|
-
|
(30,102,250
|
)
|
||||||||
Amortization of beneficial conversion feature associated with convertible debt
|
-
|
-
|
2,793,929
|
|||||||||
Amortization of convertible debt discount
|
7,307
|
-
|
7,307
|
|||||||||
Amortization of debt issuance costs
|
10,955
|
-
|
10,955
|
|||||||||
Amortization of deferred compensation
|
-
|
-
|
1,257,863
|
|||||||||
Loss on extinguishment of debt
|
-
|
-
|
5,669,500
|
|||||||||
Stock issued for services
|
20,001
|
-
|
20,917,079
|
|||||||||
Stock issued for settlements
|
-
|
-
|
225,989
|
|||||||||
Stock issued for officer bonuses
|
-
|
-
|
5,221,638
|
|||||||||
Stock issued for interest and penalties on convertible debt
|
-
|
-
|
10,631,768
|
|||||||||
Stock issued for board compensation
|
-
|
-
|
2,751,149
|
|||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Prepaid expenses and other current assets
|
(174,444
|
)
|
57,233
|
(454,567
|
)
|
|||||||
Accounts payable and other accrued liabilities
|
(569,033
|
)
|
(216,847
|
)
|
(2,677,872
|
)
|
||||||
Accrued retirement obligation
|
-
|
-
|
365,000
|
|||||||||
|
||||||||||||
Net cash used in operating activities
|
(5,266,697
|
)
|
(2,943,013
|
)
|
(63,406,909
|
)
|
|
Nine Months Ended June 30,
|
September 5,
1995 (Inception)
to June 30,
2014
|
||||||||||
|
2014
|
2013
|
||||||||||
Cash Flows From Investing Activities:
|
|
|
|
|||||||||
Purchase of long-term investment
|
-
|
-
|
(5,292,896
|
)
|
||||||||
Purchase of oil and gas concessions
|
(580,569
|
)
|
(1,410,708
|
)
|
(9,352,872
|
)
|
||||||
Proceeds from sale of partial interest in Kenya concession
|
4,731,608
|
-
|
4,731,608
|
|||||||||
Proceeds from sale of partial interest in DRSTP concession
|
-
|
-
|
45,900,000
|
|||||||||
Proceeds from U.S. Treasury bills
|
-
|
-
|
5,011,000
|
|||||||||
Purchase of U.S. Treasury bills and accrued interest
|
-
|
-
|
(5,011,000
|
)
|
||||||||
Purchase of marketable equity securities
|
-
|
-
|
(1,350,000
|
)
|
||||||||
Purchase of restricted certificate of deposit, and accrued interest
|
-
|
-
|
(2,317,182
|
)
|
||||||||
Proceeds from sale of restricted certificate of deposit
|
2,186,182
|
-
|
2,317,182
|
|||||||||
Purchase of furniture and equipment
|
-
|
(236,382
|
)
|
(1,277,754
|
)
|
|||||||
|
||||||||||||
Net cash provided by (used in) investing activities
|
6,337,221
|
(1,647,090
|
)
|
33,358,086
|
||||||||
|
||||||||||||
Cash Flows From Financing Activities:
|
||||||||||||
Debt origination costs
|
(86,400
|
)
|
-
|
(86,400
|
)
|
|||||||
Proceeds from warrants exercised
|
-
|
-
|
160,000
|
|||||||||
Proceeds from common stock, net of expenses
|
-
|
1,540,178
|
10,316,727
|
|||||||||
Proceeds from line of credit, related party
|
-
|
-
|
2,750,000
|
|||||||||
Proceeds from non-convertible debt related party
|
-
|
-
|
158,700
|
|||||||||
Proceeds from convertible debt, related party
|
-
|
-
|
8,207,706
|
|||||||||
Proceeds from sale of convertible debt
|
561,500
|
-
|
9,581,437
|
|||||||||
Proceeds from bank borrowing
|
-
|
-
|
175,000
|
|||||||||
Proceeds from stockholder loans
|
-
|
-
|
1,845,809
|
|||||||||
Proceeds from stock subscription receivable
|
-
|
-
|
913,300
|
|||||||||
Repayment of shareholder loans
|
-
|
-
|
(1,020,607
|
)
|
||||||||
Repayment of long-term debt
|
-
|
-
|
(223,021
|
)
|
||||||||
|
||||||||||||
Net cash provided by financing activities
|
475,100
|
1,540,178
|
32,778,651
|
|||||||||
Net increase (decrease) in cash and cash equivalents
|
1,545,624
|
(3,049,925
|
)
|
2,729,828
|
||||||||
Cash and cash equivalents, beginning of period
|
1,184,204
|
7,665,990
|
-
|
|||||||||
Cash and cash equivalents, end of period
|
$
|
2,729,828
|
$
|
4,616,065
|
$
|
2,729,828
|
||||||
Non-cash investing and financing activities:
|
||||||||||||
Unrealized gain (loss) on investment in Exile Resources
|
$
|
196,255
|
$
|
(37,625
|
)
|
$
|
(590,220
|
)
|
||||
Non-cash debt origination costs
|
$
|
(16,667
|
)
|
$
|
-
|
$
|
(16,667
|
)
|
●
|
Level 1 — Quoted prices in active markets for identical assets or liabilities.
|
●
|
Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or, other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
●
|
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
|
Derivative
Liability
|
|||
|
|
|||
Balance, September 30, 2013
|
$
|
-
|
||
Increase in derivative value due to issuances of convertible promissory notes
|
361,155
|
|||
Increase in derivative value attributable to tainted warrants
|
13,701
|
|||
Change in fair market value of derivative liabilities on convertible notes due to the mark to market adjustment
|
7,730
|
|||
Change in fair market value of derivative liabilities on tainted warrants due to the mark to market adjustment
|
8,766
|
|||
|
||||
Balance, June 30, 2014
|
$
|
391,352
|
|
June 30, 2014
|
September 30, 2013
|
||||||
|
|
|
||||||
DRSTP concession
|
$
|
3,061,672
|
$
|
2,839,500
|
||||
Chad concession
|
2,916,719
|
2,800,600
|
||||||
Kenya concession
|
-
|
326,073
|
||||||
Pending concessions in other African countries
|
84,339
|
71,630
|
||||||
|
||||||||
|
$
|
6,062,730
|
$
|
6,037,803
|
Lender
|
Date of Agreement
|
|
Term (Months)
|
Annual Interest Rate
|
|
Face Value
|
Accrued Interest
|
Discount (c)
|
Deferred Debt Origination Costs Due at Maturity (d)
|
Net Convertible Note Payable
|
Note Derivative Liability (e)
|
|||||||||||||||||||||||||
JMJ Financial
|
4/15/2014
|
(f)
|
24
|
5.83
|
%
|
(a)
|
$
|
100,000
|
$
|
607
|
$
|
97,194
|
$
|
11,111
|
$
|
14,524
|
$
|
133,955
|
||||||||||||||||||
KBM Worldwide
|
4/24/2014
|
|
9
|
8.00
|
%
|
|
103,500
|
2,027
|
-
|
-
|
105,527
|
-
|
||||||||||||||||||||||||
KBM Worldwide
|
6/26/2014
|
|
9
|
8.00
|
%
|
|
53,000
|
62
|
-
|
-
|
53,062
|
-
|
||||||||||||||||||||||||
JSJ Investments
|
4/29/2014
|
|
6
|
12.00
|
%
|
|
100,000
|
2,038
|
-
|
-
|
102,038
|
-
|
||||||||||||||||||||||||
Adar Bays
|
5/20/2014
|
|
12
|
8.00
|
%
|
|
52,500
|
472
|
50,782
|
-
|
2,190
|
90,224
|
||||||||||||||||||||||||
LG Capital
|
5/20/2014
|
|
12
|
8.00
|
%
|
|
52,500
|
472
|
50,781
|
-
|
2,191
|
75,937
|
||||||||||||||||||||||||
Redwood Fund III
|
5/15/2014
|
|
6
|
7.85
|
%
|
(b)
|
100,000
|
659
|
-
|
-
|
100,659
|
-
|
||||||||||||||||||||||||
Vista Capital Investments
|
6/16/2014
|
(f)
|
24
|
5.83
|
%
|
(b)
|
50,000
|
6,056
|
43,936
|
5,556
|
17,676
|
68,769
|
||||||||||||||||||||||||
|
|
|
|
$
|
611,500
|
$
|
12,393
|
$
|
242,693
|
$
|
16,667
|
$
|
397,867
|
$
|
368,885
|
(a)
|
Implied interest rate. The note is subject to a one time 12% interest charge unless repaid within 90 days
|
(b)
|
Implied interest rate. The note is subject to a one time 12% interest charge regardless of how long it has been outstanding
|
(c)
|
Net of amortization through June 30, 2014 of $7,307, charged to the period’s interest expense. Initial discounts, as based on the fair value of derivatives up to the settlement amount, were as follows: JMJ Financial - $100,000, Adar Bays - $52,500, LG Capital - $52,500, and Vista Capital - $45,000
|
(d)
|
Original Issue Discount due at maturity of the note
|
(e)
|
Includes a mark-to-market adjustment from inception through June 30, 2014 of $7,730, charged to the period’s interest expense. Fair values at inception were as follows: JMJ Financial - $128,008, Adar Bay - $92,164, LG Capital - $74,445, and Vista Capital - $66,538. See Notes 2 and 5 for more information
|
(f)
|
At June 30, 2014, convertible notes payable in the amount of $32,200 and associated derivatives in the amount of $202,724 had remaining maturities exceeding twelve months, and were accordingly classified as long term. Principal and original issue discount on these notes in the amount of $166,667 is due in 2016.
|
Lender
|
Date of Agreement
|
Gross Proceeds
|
|
Transaction Cost
|
Net Proceeds
|
||||||||||
JMJ Financial
|
4/15/2014
|
$
|
100,000
|
|
$
|
10,000
|
$
|
90,000
|
|||||||
KBM Worldwide
|
4/24/2014
|
100,000
|
|
10,000
|
90,000
|
||||||||||
KBM Worldwide
|
6/26/2014
|
50,000
|
(a)
|
5,000
|
45,000
|
||||||||||
JSJ Investments
|
4/29/2014
|
100,000
|
|
10,000
|
90,000
|
||||||||||
Adar Bays
|
5/20/2014
|
50,000
|
|
5,000
|
45,000
|
||||||||||
LG Capital
|
5/20/2014
|
50,000
|
|
5,000
|
45,000
|
||||||||||
Redwood Fund III
|
5/15/2014
|
100,000
|
|
10,000
|
90,000
|
||||||||||
Vista Capital Investments
|
6/16/2014
|
50,000
|
|
5,000
|
45,000
|
||||||||||
|
|
|
|||||||||||||
|
|
$
|
600,000
|
|
$
|
60,000
|
$
|
540,000
|
(a)
|
Funds received in July 2014, but accrued at June 30, 2014 due to the terms of the note payable agreement
|
Lender
|
|
Date of Agreement
|
|
Conversion Rate
|
|
Calculation Period
|
|
Eligible for Conversion
|
JMJ Financial
|
|
April 15, 2014
|
|
Lesser of $0.06 or 60%
|
|
25 trading days prior to conversion
|
|
Immediately
|
KBM Worldwide
|
|
April 24 and June 26, 2014
|
|
61%
|
|
10 trading days prior to conversion
|
|
180 after the effective date
|
JSJ Investments
|
|
April 29, 2014
|
|
60%
|
|
20 trading days prior to conversion
|
|
180 after the effective date
|
Adar Bay
|
|
May 20, 2014
|
|
61%
|
|
10 trading days prior to conversion
|
|
Immediately
|
LG Capital
|
|
May 20, 2014
|
|
50%
|
|
20 trading days prior to conversion
|
|
Immediately
|
Redwood Fund III
|
|
May 15, 2014
|
|
50%
|
|
20 trading days prior to conversion
|
|
180 after the effective date
|
Vista Capital Investments
|
|
June 16, 2014
|
|
Lesser of $0.075 or 60%
|
|
25 trading days prior to conversion
|
|
Immediately
|
Issue Name and Date
|
|
Derivative(s) Identified and Accounting Treatment Implemented
|
JMJ Financial
April 15, 2014 |
|
Variable conversion feature and reset provision. Recorded at fair value as of the inception date of note and as of each subsequent reporting date.
|
|
|
|
KBM Worldwide
April 24, 2014 and June 26, 2014 |
|
Variable conversion feature and reset provision. To be reported at fair value after 180 days since the date of the notes and of each subsequent reporting date, starting in the first quarter of fiscal 2015.
|
JSJ Investments
April 29, 2014 |
|
Variable conversion feature and reset provision. To be reported at fair value after 180 days since the date of the note and of each subsequent reporting date, starting in the first quarter of fiscal 2015.
|
|
|
|
Adar Bays
May 20, 2014 |
|
Variable conversion feature and reset provision. Recorded at fair value as of the inception date of note and as of each subsequent reporting date.
|
|
|
|
LG Capital
May 20, 2014 |
|
Variable conversion feature and reset provision. Recorded at fair value as of the inception date of note and as of each subsequent reporting date.
|
|
|
|
Redwood Fund III
May 15, 2014 |
|
Variable conversion feature and reset provision. To be reported at fair value after 180 days since the date of the note and of each subsequent reporting date, starting in the first quarter of fiscal 2015.
|
|
|
|
Vista Capital Investments
June 16, 2014 |
|
Variable conversion feature. Recorded at fair value as of the inception date of note and as of each subsequent reporting date.
|
Lender
|
Date of Agreement
|
Transaction Costs
|
Deferred Debt Origination Costs Due at Maturity (b)
|
Legal and Other Debt Origination Costs
|
Initial Deferred Origination Costs
|
Amortization (c)
|
Net Deferred Debt Origination Costs
|
|||||||||||||||||||
JMJ Financial
|
4/15/2014
|
$
|
10,000
|
$
|
11,111
|
$
|
-
|
$
|
21,111
|
$
|
996
|
$
|
20,115
|
|||||||||||||
KBM Worldwide
|
4/24/2014
|
10,000
|
-
|
3,500
|
13,500
|
2,447
|
11,053
|
|||||||||||||||||||
KBM Worldwide
|
6/26/2014
|
5,000
|
-
|
3,000
|
8,000
|
73
|
7,927
|
|||||||||||||||||||
JSJ Investments
|
4/29/2014
|
10,000
|
-
|
-
|
10,000
|
3,397
|
6,603
|
|||||||||||||||||||
Adar Bays
|
5/20/2014
|
5,000
|
-
|
2,500
|
7,500
|
787
|
6,713
|
|||||||||||||||||||
LG Capital
|
5/20/2014
|
5,000
|
-
|
2,500
|
7,500
|
787
|
6,713
|
|||||||||||||||||||
Redwood Fund III
|
5/15/2014
|
10,000
|
-
|
-
|
10,000
|
840
|
9,160
|
|||||||||||||||||||
Vista Capital Investments
|
6/16/2014
|
5,000
|
5,556
|
-
|
10,556
|
91
|
10,465
|
|||||||||||||||||||
Various
|
(a) |
Various
|
-
|
-
|
14,900
|
14,900
|
1,537
|
13,363
|
||||||||||||||||||
|
|
$
|
60,000
|
$
|
16,667
|
$
|
26,400
|
$
|
103,067
|
$
|
10,955
|
$
|
92,112
|
(a)
|
An aggregate of lesser deferred debt origination costs
|
(b)
|
Original Issue Discount due at maturity of the note
|
(c)
|
Charged to the period's interest expense
|
(d)
|
At June 30, 2014, Net Deferred Origination Costs in the amount of $30,580 had remaining useful lives exceeding twelve months, and were accordingly classified as long term.
|
· | The stock price would fluctuate with the Company projected volatility; |
· | Derivative convertible notes convert at 60% of the market prices; |
· | An event of default would occur initially 0% of the time, increasing 1.00% per month until it reaches 10%; |
· | The projected volatility curve for each valuation period was based on the historical volatility of the Company, ranging between 103% and 105%; |
· | The Company would redeem the notes initially at 0% of the time, and increase monthly by 1.00% to a maximum of 5.00%; |
· | The holders of the notes would automatically convert the notes at the maximum of two times the conversion price if the Company is not in default, with the target conversion price dropping as maturity approaches; and |
· | The Holder would convert the note early after 0-90-180 days and at maturity if the registration was effective and the Company was not in default. |
· | The stock price would fluctuate with the Company projected volatility; |
· | The stock price would fluctuate with an annual volatility. The projected volatility curve for each valuation period was based on the historical volatility of the Company, ranging between 103% and 105%; |
· | The Holder would exercise the warrant as they become exercisable at target prices of two times the higher of the projected reset price or stock price; |
· | The Warrants with the $0.355; $0.28; and $0.275 exercise prices are fixed and not projected to adjust; and |
· | No warrants have expired in this period ending June 30, 2014. |
a.
|
$310,000 as the entire signature bonus
|
b.
|
$2,175,966 as costs of airborne geophysical survey and quality control associated with it
|
c.
|
$459,138 as training and surface fees, as provided in the PSC
|
d.
|
$74,111 in advisers' and ancillary costs related to the PSC
|
a.
|
$2,480,000 as the entire signature bonus along with related legal fees
|
b.
|
$260,872 as costs of seismic data and environmental impact study
|
c.
|
$446,979 as training, surface, meeting, and other fees, as provided in the PSC
|
d.
|
$210,000 as finders fee
|
e.
|
$3,749 in advisers' and ancillary costs related to the PSC
|
a.
|
spend at least $15,000,000 over the first five years on a minimum work program and at least an additional $1,000,000 over a further period of up to three years
|
b.
|
pay training and surface fees of approximately $250,000 per calendar year during the first validity period, and lasting for up to eight years. Fees for subsequent periods will depend on the exploration progress, the acreage retained by ERHC, and total payroll related to the production of oil and gas, should production commence.
|
Lender
|
Face
Value
|
Interest
Rate
|
Date of
Agreement
|
Conversion
Rate
|
|||||||
Tonaquint, Inc.
|
$
|
115,000
|
12%
|
|
July 10, 2014
|
65%
|
|
||||
Union Capital, LLC
|
69,000
|
8%
|
|
July 15, 2014
|
55%
|
|
|||||
Iconic Holdings, LLC
|
75,000
|
10%
|
|
July 16, 2014
|
60%
|
|
|||||
58,750
|
8%
|
|
July 29, 2014
|
55%
|
|
||||||
|
|
||||||||||
|
$ |
317,750
|
|
(A)
|
During the Initial Exploration Period of Two (2) Contract Years – Minimum Work and Expenditure Obligations:
|
•
|
Acquire and interpret 1,000 km2 of gravity and magnetic data (at a minimum cost of US $250,000) and
|
•
|
Acquire and interpret 1,000 Km/line of 2D seismic data (at a minimum cost of US $10,000,000)
|
(B)
|
During the First Additional Exploration Period of Two (2) Contract Years: Minimum Work and Expenditure Obligations to:
|
•
|
Acquire 750 km2 high density of 3D seismic data (at a minimum cost of US $30,000,000), or
|
•
|
Drill one (1) well to a minimum depth of 3,000 m (at a minimum cost of US $30,000,000)
|
(C)
|
During the Second Additional Exploration Period of Two (2) Contract Years: Minimum Work and Expenditure Obligation to drill one (1) well to a minimum depth of 3,000m (with minimum expenditure of US $30,000,000).
|
JDZ Block
|
|
|
ERHC Original
Participating Interest
|
|
|
ERHC Joint Bid
Participating Interest
|
|
|
Participating
Interest(s) Assigned
|
|
|
Current ERHC
Retained Participating
Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
30.00%
|
|
|
35.00%
|
|
|
43.00%
|
|
|
22.00%
|
|
3
|
|
|
20.00%
|
|
|
5.00%
|
|
|
15.00%
|
|
|
10.00%
|
|
4
|
|
|
25.00%
|
|
|
35.00%
|
|
|
40.50%
|
|
|
19.50%
|
|
5
|
|
|
15.00%
|
|
|
-
|
|
|
-
|
|
|
15.00% (in arbitration)
|
|
6
|
|
|
15.00%
|
|
|
-
|
|
|
-
|
|
|
15.00% (in arbitration )
|
|
9
|
|
|
20.00%
|
|
|
-
|
|
|
-
|
|
|
20.00%
|
|
●
|
JDZ Block 2: 22.0%
|
●
|
JDZ Block 3: 10.0%
|
●
|
JDZ Block 4: 19.5%
|
●
|
JDZ Block 5: 15.0% (in arbitration)
|
●
|
JDZ Block 6: 15.0% (in arbitration)
|
●
|
JDZ Block 9: 20.0%
|
·
|
$100,500 in accrued executive bonuses related to acquisition of Chadian Blocks, deferred until the Blocks are monetized,
|
·
|
$180,476 of accounts payable,
|
·
|
$38,938 in accrued directors’ compensation,
|
· | $24,454 in deferred office rent, |
·
|
$33,500 in accrued professional fees,
|
·
|
$24,000 in accrued officer vacation,
|
·
|
$365,667 in convertible note payables, net of discount and
|
·
|
$166,161 in derivative liability.
|
Signatures
|
|
|
|
10.1*
|
Kenya Farm-out agreement, related to Block 11A, Kenya, dated October 7, 2013, by and between ERHC Energy Kenya Limited and CEPSA Kenya Limited (incorporated herein by reference to Exhibit 10.1 of Form 10-Q/A filed May 14, 2014)
|
|
|
31.1
*
|
Rule 13a-14(a) Certification of the Chief Executive Officer
|
|
|
31.2
*
|
Rule 13a-14(a) Certification of the Principal Accounting Officer
|
|
|
32.1
*
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer
|
|
|
32.2
*
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Principal Accounting Officer
|
|
|
101.INS*
|
Instance Document
|
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
* Filed or furnished herewith.
|
Name
|
Title
|
Date
|
|
|
|
/s/ Peter Ntephe
|
President
|
August 14, 2014
|
Peter Ntephe
|
Chief Executive Officer
|
|
|
|
|
/s/ Sylvan Odobulu
|
Vice President (Admin) and Controller
|
August 14, 2014
|
Sylvan Odobulu
|
Principal Accounting Officer
|
|
1 Year ERHC Energy (CE) Chart |
1 Month ERHC Energy (CE) Chart |
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