ARKANOVA ENERGY CORP.

ARKANOVA ENERGY CORP. deregistered its securities, ending its obligation to file reports with the SEC.

listing compliance notice

Effective November 1, 2014, the Aton note maturity was extended from December 31, 2015 to December 31, 2016. Aton lent another $2,475,000 and $677,836.40 of accrued interest was added to principal, bringing the note to $14,963,861.40. The note no longer allows interest to be paid in shares, so interest will no longer be settled with new stock under that note. This continues the repeated Aton extensions and the growing debt secured against the Montana interest.

debt financing

The EPA issued an injection well permit for the MAX 1 well #2817 on the Montana unit, allowing the company to restart waterflood operations there to try to raise oil output. A $3 million budget is set, with equipment planned to be in place by August 2014 and higher production expected three to six months after injection starts; the filing says financing is in place but does not name its source. It states Provident holds a 55% working interest in the roughly 9,900-acre unit, which continues the Montana drilling and reactivation plan in earlier filings.

material agreement

Effective November 15, 2013, Aton agreed to lend a further $1,705,000, bringing the note (the amended and restated one dated February 6, 2013) to $11,811,025. Aton also converted $466,815.29 of accrued interest into 4,668,152 new shares at a deemed $0.10 each, and the maturity moved from March 31, 2014 to December 31, 2015. This continues the pattern of Aton extending the debt, and the share issue dilutes other holders.

capital raising announcement

Effective July 1, 2012 (signed August 6), Aton Select Funds agreed to lend a further $1,000,000 and roll the 2011 note plus $315,000 of accrued interest into a new $8,315,000 note at 6%, now due June 30, 2013. It is still secured by the pledge of the Provident interest and guaranteed by Arkanova, with interest payable in shares after maturity ($498,900 divided by a 15-business-day average price). This continues the Aton borrowing from the October 2011 note and pushes maturity out from September 30, 2012; the company expected to receive the new money by the end of August 2012.

debt financing

Effective October 1, 2011 (agreement October 21), Aton Select Funds agreed to convert $6,000,000 of the principal on the October 2009 note into a 10% working interest in the Montana unit and lent a further $1,000,000. The remaining balance and new loan were consolidated into a new $7,000,000 note at 6%, due September 30, 2012, secured by the pledge of the Provident interest and now guaranteed by Arkanova. Interest is payable in shares after maturity, based on $420,000 divided by a 15-day average price. This cuts debt but hands Aton a 10% stake in the Montana unit; the maturity is again extended, from the original September 2011.

debt financing

On November 22, 2010 Provident granted Knightwall Invest an option, running to March 31, 2011, to buy an additional 5% working interest in the Montana unit for $1.5 million. Knightwall paid a $100,000 non-refundable deposit that does not count toward the price. Knightwall now holds a 30% interest in the unit, so the April 2010 sale appears to have closed (inference from the filing's statement that it holds 30%). If exercised, the company would give up more of the Montana asset.

material agreement

On April 9, 2010 the Montana subsidiary Provident agreed to sell 30% of the Two Medicine Cut Bank Sand Unit leasehold interests to Knightwall Invest, Inc. for $7,000,000, paid in installments ($1,500,000 received April 9; $2,000,000 on June 8; $2,000,000 on July 8; $1,500,000 at closing on August 6, 2010). The company says there is no assurance closing will occur. Knightwall is also a lender, with a $330,000 loan (10%) that will be renewed and repaid from the July payment. Proceeds are to fund a Bakken test well (Tribal-Max 1-2817), more horizontal wells, reactivation of tank battery 29 and eight wells, and fracs on three producing wells. This gives up part of the Montana asset to raise money for its development.

material agreement

Effective October 1, 2009 the subsidiary consolidated its Aton Select Funds loans into one $12,000,000 note, replacing the $9,000,000, $600,000 and $412,500 notes in exchange for a further $1,168,729.17 loan. The new note carries 6% interest, is due September 30, 2011, and is secured by a pledge of the subsidiary's interest in Provident, owner of the Montana oil and gas assets. Interest is paid in shares after maturity, based on $720,000 divided by a 15-day average price. Aton also received 821,918 shares for half of the unpaid interest, 900,000 shares for the original $9,000,000 loan, and will receive shares worth $240,000 on the first anniversary. This pushes out the maturity but adds share dilution; the Aton lender is the same party as in the April 2009 note, while the earlier 'unaffiliated lender' for the $9 million note is now named as Aton.

debt financing

In April 2009 the company issued two 10% promissory notes: $330,000 to Global Project Finance AG (April 17, due on demand after April 17, 2010) and $600,000 to Aton Select Fund Limited (April 29, due on demand after April 29, 2010). Both may be secured on the Phillips and Monroe County, Arkansas leases, with 16% default interest. The Global note must be repaid from any financing of $5,000,000 or more before April 17, 2010. This adds more debt.

debt financing

This amended filing adds the financing behind the Prism purchase: a $9,000,000 note sold by the subsidiary to an unaffiliated lender under a Note Purchase Agreement dated September 3, 2008 at 8% interest, payable on demand after the first anniversary. It is secured by a pledge of the Prism shares and fully guaranteed by Arkanova, so the parent is liable for it. This is far larger than the earlier $600,000 and $500,000 loans.

asset acquisition disposition

The $6,000,000 Prism Corporation purchase closed on October 3, 2008, about a month later than the September 4 target, because of an oil spill from a ruptured flow line on the Montana unit. The sellers stay financially responsible for cleanup costs under an amendment to the agreement. An unaffiliated lender provided the funds, and the acquired Prism shares were pledged to secure the loan. The company now owns the Montana unit, with new secured debt behind it. This resolves the pending acquisition.

asset acquisition disposition

On August 21, 2008 the company's subsidiary Arkanova Acquisition Corporation agreed to buy all the shares of Prism Corporation (Oklahoma) from Billie J. Eustice and the Gary L. Little Trust for $6,000,000, with closing set for September 4, 2008. Prism indirectly owns the leases of the Two Medicine Cut Bank Sand Unit (~9,900 acres, Montana), where 14 of 82 wells drilled since 1959 produce oil (1,667 barrels in July 2008). This is a new oil-producing area beyond the Arkansas and Colorado acreage. (The filing's text says the agreement was dated 2001, apparently a typo for 2008; the exhibit is dated August 21, 2008.)

material agreement

The company obtained signed waivers from all 18 former Arkanova Energy, Inc. shareholders by June 18, 2008, ending an anti-dilution covenant from the 2006 merger that would have given them extra shares if the company issued shares or warrants below $0.80 within 24 months of March 1, 2007. This removes a claim that the company said could harm it, and the March 2008 $0.25 debenture conversion and $0.65 warrants would otherwise likely have triggered it (an inference). It resolves a thread from the merger terms.

material agreement termination

On March 19, 2008 the company sold a $500,000 debenture at 10% interest to the John Thomas Bridge & Opportunity Fund, due at the earliest of one year, a change of control, or a financing of $1,000,000 gross proceeds. Upon default it converts into shares at $0.25, far below earlier placements at $0.80, and the investor also received 250,000 warrants at $0.65 for five years plus a $40,000 fee. This is new debt with a conversion price that could dilute shareholders; the low prices may also bear on the anti-dilution covenant for earlier merger shareholders (an inference).

asset acquisition disposition

The company closed a private placement of 4,966,500 shares at US$0.80 for $3,973,200, with shares issued on August 21 and October 31, 2007. Finders received $187,152 in cash and 292,425 two-year warrants at $1.60. This brings in new money but adds shares, and it continues the funding of the Arkansas program.

capital raising announcement

On June 15, 2007 the company issued a $600,000 promissory note to Global Project Finance AG at 10% interest, due on demand any time after July 31, 2007 and possibly secured against its Phillips and Monroe County, Arkansas leases. It must be repaid from any financing of $5,000,000 or more completed before July 31, 2007, and default interest is 16%. This is the first debt in the company's story here.

debt financing

On May 21, 2007 the company agreed with David Griffin to issue 3,117,974 shares at $1.25 to settle the $3,897,467.75 option payment for about 14,172.61 net acres in Desha (spelled 'Deshea' in the filing) County, Arkansas, once the option is exercised and the company elects to pay in stock. A second agreement says that, after a $1,000,000 payment to Griffin, he will accept company shares at $1.25 (at the company's election) for any further payments on the roughly 50,000 acres of Phillips and Monroe County leases, for which $8,498,205 had been paid. This continues the Arkansas land buildup and lets the company pay in shares rather than cash, which would dilute shareholders if it elects to do so.

material agreement

The merger with Arkanova Delaware closed on March 1, 2007: its shareholders received 13,000,000 shares, the former president's 10,000,000 shares were cancelled without payment, and 6,312,500 shares were sold at $0.80 in a private placement. That left 30,932,500 shares outstanding, with the former Arkanova shareholders holding about 42%, well short of the $13,000,000 placement assumed earlier. The company ceased to be a shell company; it reports pro forma accumulated deficit of $128,081, working capital of $2,203,933 and no revenue to date. This resolves the merger thread and starts the company's life as an oil and gas explorer.

business combination

An information statement tied to the pending merger says the company, now named Arkanova Energy Corporation, had not been as successful as hoped with its sole asset, an option on a 160-acre mineral claim in Ontario, and entered the merger to move into oil and gas. The closing date was pushed from November 30 to December 31, 2006; the merger shares would be about 31.8% of roughly 40,870,000 shares if a full $13,000,000 private placement at $0.80 is completed and the president's 10,000,000 shares are cancelled. Board control would pass to John Legg (or an alternate) with the current directors resigning. This continues the merger thread, and share counts here are assumptions that depend on the placement.

business combination

Alton Ventures, Inc. (the company, later renamed Arkanova Energy Corp.) agreed on October 20, 2006 to merge with a private Delaware company, Arkanova Energy, Inc., whose shareholders would receive 13,000,000 post-split shares. Arkanova held leases for a 100% working interest in about 19,000 gross acres in the Fayetteville Shale trend in Phillips and Monroe Counties, Arkansas, with commitments to acquire 31,000 more acres and an option on 15,000 acres in Deshea County. Closing depended on conditions including a name change, a 2-for-1 stock split, the president returning 5,000,000 shares for cancellation, and a private placement of at least US$5,000,000; the filing says there is no assurance it will close.

business combination