TN-K ENERGY GROUP INC.

On April 17, 2012 the company sold its 27.5% working and operating interests in the 738-acre J.R. and Pansy Clark lease in Green County, Kentucky (42 oil wells plus the checkerboard rights it built up in 2009 and 2010) to Texas Mineral Properties, LLC (BSAG Properties). It received $716,666.68 cash including commission, 5% overriding royalties on the Clark lease and on four other Green County leases (Simmons, Blaydes, Ervin, Hickerson), and 30% drilling participation rights. The company's press release calls it part of a $4.8 million two-part transaction. This disposes of the Kentucky interest the company paid for with shares, leaving it with royalty and drilling rights there.

asset acquisition disposition

On December 6, 2011 the company sold its working interest in the Charles and Lynda Anderson lease to K & K Acquisitions, LLC for $910,000 cash. The filing places this lease in Clinton County, Kentucky, whereas the September 2010 filing placed it in Overton County, Tennessee. The company keeps small interests (5% of the lease, with more in certain wells) and expects to remain operator. Of the proceeds, $510,500 paid off the September 2010 Guaranteed Contract with King's Oil in full, $60,000 went to legal and finder's fees, and the balance goes to working capital. This resolves the guarantee obligation, including Ken Page's personal guarantee, and ends the company's majority position in that lease.

asset acquisition disposition

On September 17, 2010 the company bought an 85% interest in the roughly 200-acre Charles and Lynda Anderson Lease in Overton County, Tennessee from Overton Oil & Gas Corp. for $1 million. The lease has three existing oil wells and one more well location, and the company will operate it. It then sold King's Oil, LLC an interest for $1.2 million under a Guaranteed Contract: King's Oil gets the royalty on the three wells (up to 50 barrels a day) until it has recovered the $1.2 million, plus 15% of the company's interest in the rest of the lease. The company guarantees repayment within 18 months and must cover any shortfall, and CEO Ken Page has personally guaranteed it. This creates a new financial obligation for the company.

asset acquisition disposition

On April 12, 2010 the board said the 2008 financial statements in the company's earlier annual report can no longer be relied on. Correcting a liquidated damages calculation adds a $604,652 expense, so the 2008 net loss restates from $93,703 to $698,355 (loss per share $0.02). The filing also reports the share count at December 31, 2008 was overstated by 1,000,000 shares (restated to 32,223,975) and the warrant count by 9,775,992. The restated figures will appear in the 2009 annual report, and Sherb & Co. is re-auditing 2008. This adds to the earlier concerns about the company's reporting record and relates to the unpaid registration rights penalties noted before.

financial restatement

On February 2, 2010 the company signed two assignments in Green County, Kentucky. The first gives it a 27.5% net interest in each well location across the full 738-acre J.R. and Pansy Clark lease, for 425,000 shares valued at about $297,500, extending the December 2009 eight-location deal. The second gives it an 81.25% working interest in about 27 acres with one existing producing well and 100% of the equipment, for 175,000 shares valued at about $122,500. The company will operate the wells and the Coomers provide drilling services. Both deals are paid in stock, which dilutes existing holders.

asset acquisition disposition

On December 4, 2009 the company acquired a 27.5% net working interest in eight drilling locations on about 738 acres of the J.R. and Pansy Clark leases in Green County, Kentucky, the same leases where it bought a 27.5% revenue interest in 18 producing wells in November 2009. It paid with 800,000 restricted shares valued at $192,000 and will bear 32% of drilling, completion and operating costs; drilling has begun. This extends the November purchase from existing wells to new ones not yet drilled, and the share issue dilutes existing holders. Sellers are Mitchell and Travis Coomer, and one of the assignees is to operate the wells.

asset acquisition disposition

On November 6, 2009 the company acquired a 27.5% revenue interest in 18 producing oil wells in Green County, Kentucky, plus a 27.5% share of the equipment. It paid with 4,000,000 restricted shares valued at $1 million and is responsible for 32% of operating costs. The filing estimates current production on the wells at about 100 barrels per day, with no reserve report yet. This is the company's first producing interest, beyond the earlier undeveloped leases, and the share issue dilutes existing holders. The company also said it began drilling the David Irwin Well #1 on November 9.

asset acquisition disposition

Between October 13 and 15, 2009 the company sold 196,154 shares for $51,000 in total, with warrants on 39,231 more shares at $0.31, for general working capital. Effective October 19, 2009 it renamed itself TN-K Energy Group Inc. through a short-form merger approved by the board without a shareholder vote, with a new CUSIP number and a new trading symbol still to be assigned. This explains the name that earlier filings used without explanation. The new shares and warrants dilute existing holders.

capital raising announcement

On October 2 and 5, 2009 the company (then still named Digital Lifestyles Group) signed oil and gas leases for about 10.5 acres in Overton County, Tennessee and about 32.7 acres in Clinton County, Kentucky, both undeveloped. The filing says this is the start of its energy operations and that it is no longer a shell company, with no change of control. This is the first oil and gas activity in the company's history, which had previously reported no operations. The company says its plan is to keep about a 25% working interest in wells it drills and sell the rest to third parties, and it lists Ken Page as its only employee. The filing also repeats the Laurus history and says unpaid registration rights penalties of about $2,165,625 were on the balance sheet at June 30, 2009.

asset acquisition disposition

On April 2, 2008 the company made its final payment to Laurus in full satisfaction of the April 2007 settlement, after paying $10,000 a month since the August 2007 schedule. This closes out the Laurus debt that was in default and accelerated in 2005. Under the settlement a warrant for one million shares at $0.40 was also part of the consideration, so that dilution remains (inference from the earlier terms).

material agreement termination

On April 23, 2007 the company agreed with Laurus to settle the remaining $2.1 million of debt for $200,000 cash ($50,000 immediately, $150,000 by August 1, 2007) plus a warrant for 1,000,000 shares at $0.40, and cut the exercise price of Laurus's earlier warrant from $0.44 to $0.40. This resolves the debt that was accelerated in May 2005 and replaces the Protron-linked terms from December 2005. The company also raised $250,000 from one investor via a 7.5% note convertible at $0.35, due April 23, 2008, with warrants on 20% of the conversion shares at $0.25, which could dilute shareholders. Its office moved to Crossville, Tennessee, in space controlled by its CEO at no charge. The filing is signed by L.E. Smith as Chairman and CEO, not Andy Teng.

capital raising announcement

The company terminated the March 2006 Protron merger agreement, effective September 11, 2006, after giving notice on September 6 and saying Protron breached covenants, including failing to deliver audited financial statements on time. Protron disputed this on September 7 and said it also wanted to terminate. The company says it incurred no material penalties. Director Leo Chen, a Protron owner, resigned from the board on August 29, 2006. This ends the Protron deal that would have given Protron's owners 70% of the company, and the planned Laurus settlement tied to the merger loses its trigger (inference).

business combination

On March 8, 2006 the company signed a definitive merger agreement with Protron Digital, replacing the September 2005 non-binding letter of intent. At closing it would issue 74,353,942 shares to Protron's stockholders, representing 70% of the company, giving them voting control. Closing needs shareholder approval, the company being current on its SEC reports, and regulatory approvals, and must happen by December 31, 2006. The filing says the company currently has no operations, is restructuring its debt, and its last audited financial statements on file are for the period ended September 30, 2004. Completion is not assured.

business combination

On December 8, 2005 the company agreed terms with Laurus, its largest secured creditor: interest-only payments at prime plus 2% until the Protron merger, which it expects in February 2006. On completion it would pay Laurus 50% in cash, about $950,000, and expects to issue common stock for the balance at the 30-day average trading price before the merger, with registration rights. Laurus also released accounts receivable funds held in a lock box. This builds on the May 2005 default and acceleration and ties the debt settlement to the Protron merger.

capital raising announcement

On September 29, 2005 the company received $250,000 from one investor through a 7% note convertible at $0.25, with warrants on 20% of the conversion shares at $0.25; the investor committed another $250,000 if milestones are met. The board had authorized up to $1,000,000 of such financing. Separately, CEO Andy Teng agreed to exchange about $1 million he is owed for 1,000,000 restricted shares at $1.00, which the filing says is well above the current market price, and to release his claims. The note conversion and warrants could dilute existing shareholders.

capital raising announcement

On September 9, 2005 the company signed a non-binding letter of intent to merge with Protron Digital Corporation, a privately held consumer electronics maker whose principal owners include Leo Chen, a Digital Lifestyles director. The press release says Protron's owners would keep majority control of the company, and the deal needs shareholder approval, equity and debt financing, and settlement of the current debt to Protron's satisfaction. The terms could change and completion is not assured. The company's address is now Walnut, California.

business combination

On August 10, 2005 Andy Teng, who led the company as Chairman and CEO from March 2002 until January 2004, returned as CEO and Chairman on a one-year renewing contract at $72,000 a year plus $1,000 a month. He received options on 3,000,000 shares at $0.20, the right to future options on 600,000 shares at $0.50, and the right to appoint a director. The filing says future success depends on obtaining financing and addressing existing financial obligations, with no certainty of either.

material agreement

On May 4, 2005 Laurus declared events of default under the November 2004 security agreement, accelerated everything owed and demanded about $3.3 million the same day, threatening foreclosure on all assets. The company says it did not pay and does not expect to, except from proceeds of selling the assets securing the Laurus debt. This is the escalation of the April recapitalization plan.

debt financing

The company announced a recapitalization plan: sell off the discontinued Northgate assets (estimated liquidation value $1.0-2.0 million, mostly pledged) to repay Laurus, to whom it owes about $2.5 million, and cut costs. It also has about $9.5 million of mostly past-due unsecured debt, which it is offering to swap for equity or settle at five cents on the dollar, but only if new equity financing is obtained. It says that if the plan fails it will likely have to cease operations and liquidate. This follows the April 7 liquidity warning and the November 2004 Laurus facility; it also says it is talking with Circuit City and its contract manufacturer about rescheduling a hip-e order to June 1, 2005.

debt financing

Digital Lifestyles gave Alloy Marketing and Promotions a roughly $600,000 unsecured note, repayable on demand, in payment for Alloy's 2004 services; Alloy can convert it to stock at 75% of market value. The company also said it had about $120,000 in cash as of March 23, 2005, is seeking $15-20 million of new financing (it says $20 million is the minimum it needs), has no agreement with investors, and warned it may have to cut operations, sell assets, cease business or seek bankruptcy protection. It expects its 2004 net loss to be about $11.0 million versus about $4.8 million in 2003, and the late 10-K (flagged on April 1) awaits a goodwill impairment test on about $3.5 million of goodwill that could add to the loss.

capital raising announcement

On November 30, 2004 Digital Lifestyles closed a $7,500,000 credit facility with Laurus Master Fund: a $2,750,000 convertible minimum borrowing note and a $4,750,000 convertible revolving note, both maturing November 29, 2007 at prime plus 2%. Laurus can convert into stock at $0.39 per share and received a warrant for 3,846,154 shares at $0.44. Borrowing depends on inventory and receivables, and the loan is secured by substantially all assets other than intellectual property, with the Northgate Operating Company and hip-e Operating Company subsidiaries as guarantors. Conversion and the warrant could dilute shareholders, and a default could cost the company its assets (per the filing).

capital raising announcement

The company, now named Digital Lifestyles Group, Inc. and based in Austin, Texas (the filing does not explain the rename or move), raised about $5 million in a private placement completed September 14, 2004. It sold 14,450,858 common shares at $0.346 each with warrants for 7,225,426 more shares at $0.475, to 19 investors. A further 1,000,000-share warrant at $0.475 went to Westech Capital as a fee. Insiders, including CFO Theodore Muftic, CEO Kent Savage's affiliate and director Suhail Rizvi's affiliate, took part. The company must register the shares for resale, with penalty warrants for outside investors if it files late. For existing shareholders this means dilution (the filing states the share and warrant numbers).

capital raising announcement

On May 15, 2002 Northgate dismissed its auditor BDO Seidman, which it had proposed to ratify earlier, and hired Corbin & Wertz for fiscal 2002. BDO was dismissed (it did not resign) and the filing reports no disagreements. BDO's report for the past two years included an explanatory paragraph expressing substantial doubt about the company's ability to continue as a going concern.

auditor change

The merger the earlier Mcglen filings described closed on March 20, 2002: Lan Plus became a wholly owned subsidiary of the registrant, which renamed itself Northgate Innovations, Inc. (formerly Mcglen Internet Group). Each Lan Plus common share became about 3.12828 Northgate common shares after a 1-for-10 reverse split approved on February 28, 2002. About 9,854,091 common and 1,350,000 preferred shares were issued to former Lan Plus holders, leaving about 18,961,162 common stock equivalents. Andy Teng became Chairman and CEO and Richard Shyu became President. The filing does not explain how TN-K ENERGY GROUP's name relates to this company; the issuer's filings are now under the Northgate name. Lan Plus financial statements and pro forma figures were not yet filed (to follow within 60 days).

asset acquisition disposition

Amendment No. 2 to the Mcglen/Lan Plus merger registration statement refers to the merger agreement as amended on November 19, 2001. It replaces the authorized-share increase with a proposed ten-for-one reverse split of Mcglen common stock, contingent on the merger closing, and raises the registered shares to 75,000,000 (before the reverse split). Auditor ratification returns, for the year ending December 31, 2001, so there are again five proposals. The filing text does not state TN-K's role.

business combination

The filing is a Form S-4 registration statement by Mcglen Internet Group, Inc., not TN-K itself, covering up to 44,000,000 Mcglen shares to be issued to Lan Plus Corporation shareholders in a proposed merger of a Mcglen subsidiary into Lan Plus. Mcglen holders are asked to vote on raising authorized shares to 90,000,000, renaming the company Northgate Innovations, Inc., a 2000 stock option plan, auditor ratification and directors. The filing text does not say how TN-K is connected to Mcglen or Lan Plus, so its effect on TN-K shareholders is not stated; the meeting dates and share counts are blank.

business combination