History
A Nevada shell that moved from gold to lithium to oilfield water, financed by ever-cheaper convertible notes, until lenders held its debts and voting control.
2009-2011: From gold to lithium
The company began as Mariposa Resources, a small explorer with one project: 400 acres of Nevada gold claims optioned in 2006. In July 2009 it handed them back, leaving it with no property at all. Two months later it took an option on half of eight mineral claims in British Columbia, and dropped a uranium option signed only weeks earlier.
The real change came in January 2011. The company took over an option on five lithium permits covering about 46,000 hectares in Alberta, for $500,000 of staged payments through to January 2014, and took the name Lithium Exploration Group. Weeks later it added an option on brine claims in Argentina. In May 2011 it agreed to buy and license a Glottech ultrasound water-treatment machine for the Alberta project, for US$800,000 paid in stages. That month it also sold shares at $5.25, the peak, and issued 2 million shares to its sole officer, Alexander Walsh, and 450,000 each to two new directors. In July it declared itself no longer a shell company, though none of its three assets had yet produced anything.
2011-2012: Borrowing begins
Also in July 2011, the company stopped selling shares and began borrowing. A single investor agreed to buy $1.5 million of convertible debentures, which can be turned into shares, at $0.83 a share. That was the first link in a chain of such notes that lasted the rest of the company's life.
The projects began to fall away. In January 2012 it dropped the Argentine option, citing the geology, the cost and political unrest. In April 2012 it agreed a second debenture, converting at $0.45. When it closed in May, conversion became the lower of $0.45 or 65% of the lowest price in the previous twenty trading days. Under that formula, the lower the share price, the more shares the lender received. In September the lender, named as Hagen Investments, had the conversion price cut to $0.20.
The Glottech licence proved fragile too. Its US counterparty faced litigation, so the company paid $150,000 to deal directly with the Irish patent owner. In October 2012 it replaced the earlier agreements with a direct licence and Canadian sales agency, paid for with 2 million shares. That same month Walsh swapped 20 million common shares for 20 million Series A preferred shares, taking them off the common count.
2013-2014: An oilfield water business
In early 2013 two more lenders arrived, JMJ Financial and JDF Capital, each advancing money in small tranches. In June the company agreed to buy at least 51% of Blue Tap Resources, which owned a mothballed waste-water disposal site at Morinville, Alberta. In August it agreed to buy 75% of Tero Oilfield Services for $1.5 million, a promise of cash far beyond what it could easily raise. Warrant prices tell the story of its borrowing: $0.185 in February, $0.09 by September.
The Blue Tap purchase closed in October 2013 for about C$450,000 through a new subsidiary, Alta Disposal, alongside Excel Petroleum, which held the other 49%. By December the dilution was visible: Blue Citi converted $48,900 of debt into 3 million shares at 1.63 cents each. In January 2014 JDF swapped $1.13 million of notes for Series B preferred stock, which still converted at half the recent low price. Within weeks Blue Citi and Blue Hill Associates converted it into millions of common shares. In February the company withdrew its December quarter accounts, which had wrongly charged Blue Tap's pre-acquisition expenses, overstating the loss by about $138,000.
In April 2014 the Tero deal closed, but for 50%, not 75%, at C$1 million, with an option on another 25%. The company paid for it with eleven convertible loans in nine days, raising roughly $1.3 million. In August a further JDF note was secured over every asset of Alta Disposal.
2014-2017: Lenders take control
The record is quiet through 2015. In February and March 2016 the company told investors not to rely on two years of audited accounts. It had mis-valued its lenders' warrants and failed to record a liability on the conversion rights in its notes. In March 2016 it also sued Petro Chase after its subsidiary Black Box Energy paid $250,000 for a share in Pennsylvania wells that were never drilled.
By September 2016 the sums were small and the terms harsh: JDF advanced $37,000 against a $42,500 note, and the company sought to buy back notes and warrants from five holders. In April 2017 it settled a suit by Union Capital, a 2014 lender, by issuing 90 million shares. Union had sued after anti-dilution terms cut its warrant price from 53 cents to five hundredths of a cent. More notes followed, one capped at half a cent a share.
In August 2017 the company disclosed it owed $2.42 million to Blue Citi and $1.67 million to Concord. Neither was repaid; both agreed to stop enforcing in return for warrants and a smaller conversion discount. A week later it settled the $708,000 note secured on Alta Disposal by issuing 70 million Class C preferred shares with enhanced voting rights, giving a creditor voting control. That was its last substantive financing. Filings stopped in June 2018, and the US regulator revoked the company's registration in October 2019.
Written from the 37 story beats below (2009 to 24 Aug 2017), which come from the company's own announcements and filings.