TN-K ENERGY GROUP INC.

13 Mar 2006business combination● NeutralMajor

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.

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14 Dec 2005capital raising announcement▲ GoodMajor

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.

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4 Oct 2005capital raising announcement▲ GoodMajor

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.

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15 Sept 2005business combination● NeutralMajor

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.

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11 Aug 2005material agreement● NeutralMajor

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.

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11 May 2005debt financing▼ BadMajor

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.

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12 Apr 2005debt financing▼ BadMajor

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.

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7 Apr 2005capital raising announcement▼ BadMajor

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.

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2 Dec 2004capital raising announcement▼ BadMajor

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).

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