Attached files
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q/A
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 2014
OR
/_/ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _____________ to ___________________.
Commission file number: 000-51425
T-REX OIL, INC.
(FORMERLY RANCHER ENERGY CORP)
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(Exact name of registrant as specified in its charter)
Colorado 98-0422451
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
520 Zang Street Suite 250
Broomfield, CO 80021
(Address of principal executive offices)
(720) 502-4483
(Registrant's telephone number, including area code)
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this Chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [ X ]
(Do not check if a smaller
reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [X] No [ ]
As of February 9, 2015, T-Rex Oil, Inc. has 7,809,857 shares of $0.001 par value
common stock outstanding.
EXPLANATORY NOTE
T-Rex Oil, Inc. (the "Company") is filing this Amendment to its Report on Form
10-Q for the Quarter ended December 31, 2014 filed with the Securities and
Exchange Commission on February 17, 2015 for the sole purpose of disclosing a
change in accounting principle and its related affects under ASC Topic 250 as
well as revisions so to be consistent in its disclosures that the Company is
filing its financial statements on a consolidated basis..
As disclosed in the Company's filing of Form 8-K with the SEC on April 1, 2015,
the Company acquired effective March 28, 2015, 83% of the outstanding common
stock of Western Interiors Oil and Gas, Inc. ("WIOG") in a stock for stock
Exchange Agreement with the right to acquire within 6 months the remaining 17%
of WIOG's outstanding common stock. As such, WIOG is an oil and gas company that
follows the successful efforts method of accounting for its oil and gas
operations. As noted in its filing of Form 10-Q for the Quarter ended December
31, 2014, the Company currently follows the full cost method of accounting for
its oil and gas operations. Thus, management believes it is in the best interest
of the Company that, as a result of the acquisition of WIOG, the Company changes
the accounting for its oil and gas operations to the successful efforts method
of accounting. Therefore, as a result of this change in accounting principle,
the Company has revised its enclosed Consolidated Financial Statements under
Part 1, Item 1 and Management's Discussion and Analysis under Part 1, Item 2.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet - December 31, 2014 (Unaudited)
and Balance Sheet - March 31, 2014 (Audited)...................... 5
Consolidated Statements of Operations (Unaudited) for the Three
and Nine Months Ended December 31, 2014 and Statements of
Operations (Unaudited) for the Three and Nine Months Ended
December 31, 2013 .................................................6
Consolidated Statement of Cash Flows (Unaudited) for the Nine
Months Ended and Statement of Cash Flows (Unaudited) for the
Nine Months Ended December 31, 2013................................8
Consolidated Statement of Changes in Stockholders' Equity
(Unaudited) for the Nine Months Ended December 31, 2014 and
(Audited) period from February 11, 2014 (inception) through
March 31, 2014.................................................... 9
Notes to Consolidated Financial Statements (Unaudited).............10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.........................................18
Item 3. Quantitative and Qualitative Disclosures About Market Risk.........20
Item 4. Controls and Procedures............................................20
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..................................................21
Item 1A. Risk Factors.......................................................21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds........22
Item 3. Defaults Upon Senior Securities....................................22
Item 4. Mine and Safety Disclosures........................................22
Item 5. Other Information..................................................22
Item 6. Exhibits...........................................................23
SIGNATURES..................................................................24
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ITEM 1. FINANCIAL STATEMENTS
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-4-
BALANCE SHEET
T-Rex Oil, Inc. and Subsidiary
(Formerly Rancher Energy Corp)(Explanatory Note)
Consolidated
Balance Sheet Balance Sheet
December 31, March 31,
2014 2014
(Unaudited) (Audited)
------------------ ------------------
ASSETS
Current assets
Cash and cash equivalents $ 1,064,935 $ 165,715
Prepaids 20,365 -
------------------ ------------------
Total current assets 1,085,300 165,715
------------------ ------------------
Property and equipment
Oil and gas properties, successful efforts method of accounting
Unproved 1,770,164 19,564
Furniture and equipment, net of accumulated depreciation and
impairment of $31,812 and $0, respectively 68,837 -
------------------ ------------------
Net property and equipment 1,839,001 19,564
------------------ ------------------
Other assets
Deposits and other assets 111,585 -
------------------ ------------------
Total other assets 111,585 -
------------------ ------------------
Total assets $ 3,035,886 $ 185,279
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 38,049 $ 19,695
Note payable other 8,728 -
------------------ ------------------
Total current liabilities 46,777 19,695
------------------ ------------------
Total liabilities 46,777 19,695
================== ==================
Commitments and Contingencies - -
STOCKHOLDERS' EQUITY
Preferred shares, $.001 par value, 50,000,000 shares authorized;
no shares issued and outstanding - -
Common shares, $0.001 par value, 275,000,000 shares authorized;
7,809,857 and 342,465 shares issued and outstanding at
December 31, 2014 and March 31, 2014, respectively 7,810 342
Additional paid in capital 4,516,664 178,673
Accumulated deficit (1,535,365) (13,431)
------------------ ------------------
Total stockholders' equity 2,989,109 165,584
================== ==================
Total liabilities and stockholders' equity $ 3,035,886 $ 185,279
================== ==================
The accompanying notes are an integral part of these financial statements.
-5-
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended
December 31, 2014
T-Rex Oil, Inc. and Subsidiary
(Formerly Rancher Energy Corp) (Explanatory Note)
Consolidated Statement
of Operations Statement of Operations
For the Three Months Ended For the Three Months Ended
December 31, 2014 December 31, 2013
(Unaudited) (Unaudited)
--------------------------- ---------------------------
Operating expenses:
Geological and geophysical costs $ 26,031 $ -
General and administrative expense 200,835 -
Depreciation 2,452 -
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Total operating expenses 229,318 -
--------------------------- ---------------------------
Loss from operations (229,318) -
--------------------------- ---------------------------
Income taxes - -
--------------------------- ---------------------------
Net loss $ (229,318) $ -
=========================== ===========================
Net loss per common share
Basic and diluted $ (0.12) $ -
=========================== ===========================
Weighted average number
of common shares 1,870,488 342,465
=========================== ===========================
The accompanying notes are an integral part of these financial statements.
-6-
CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended
December 31, 2014
T-Rex Oil, Inc. and Subsidiary
(Formerly Rancher Energy Corp)(Explanatory Note)
Consolidated Statement
of Operations Statement of Operations
For the Nine Months Ended For the Nine Months Ended
December 31, 2014 December 31, 2013
(Unaudited) (Unaudited)
------------------------- -----------------------
Operating expenses:
Geological & geophysical costs $ 91,898 $ -
General and administrative expense 1,398,949 -
Asset impairment 27,368 -
Depreciation 3,719 -
------------------------- -----------------------
Total operating expenses 1,521,934 -
------------------------- -----------------------
Loss from operations (1,521,934) -
------------------------- -----------------------
Income taxes - -
------------------------- -----------------------
Net loss $ (1,521,934) $ -
========================= =======================
Net loss per common share
Basic and diluted $ (1.66) $ -
========================= =======================
Weighted average number
of common shares 914,368 342,465
========================= =======================
The accompanying notes are an integral part of these financial statements.
-7-
CONSOLIDATED STATEMENT OF CASH FLOWS
T-Rex Oil, Inc. and Subsidiary
(Formerly Rancher Energy Corp)(Explanatory Note)
Consolidated Statement
of Cash Flows Statement of Cash Flows
For the Nine Months Ended For the Nine Months Ended
December 31, 2014 December 31, 2013
(Unaudited) (Unaudited)
-------------------------- --------------------------
OPERATING ACTIVITIES
Net loss attributable to common stockholders $ (1,521,934) $ -
Adjustments to reconcile net loss to net cash
flows used in operating activities:
Depreciation 3,719 -
Impairment of asset 27,368 -
Shareholder's non-cash contribution 200,000 -
Shareholder's non-cash contribution, related party 750,000 -
Equity based compensation 173 -
Changes in:
Prepaids 4,932 -
Accounts payable and accrued liabilities 18,354 -
-------------------------- --------------------------
Net cash (used in) operating activities (517,388) -
-------------------------- --------------------------
INVESTING ACTIVITIES
Additions to oil and gas properties (1,663,575) -
Additions to non oil and gas properties (9,103) -
Acquisition of T-Rex Oil Inc, cash acquired 905,171 -
Additions to other assets (11,585) -
-------------------------- --------------------------
Net cash (used in) investing activities (779,092) -
-------------------------- --------------------------
FINANCING ACTIVITIES
Shareholders' cash contributions 2,195,700 -
-------------------------- --------------------------
Net cash provided by financing activities 2,195,700 -
-------------------------- --------------------------
NET CHANGE IN CASH
CASH, Beginning 165,715 -
-------------------------- --------------------------
CASH, Ending $ 1,064,935 $ -
========================== ==========================
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Issuance of equity for property $ 94,740 $ -
========================== ==========================
Interest paid $ - $ -
========================== ==========================
Income taxes paid $ - $ -
========================== ==========================
The accompanying notes are an integral part of these financial statements.
-8-
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
T-Rex Oil, Inc. and Subsidiary
(Formerly Rancher Energy Corp)(Explanatory Note)
Preferred Shares Common Shares Additional Total
$.001 Par Value $.001 Par Value Paid-in Accumulated Stockholders'
Shares Amount Shares Amount Capital (Deficit) Equity
------------------------------------------------------------------------------------------------
BALANCES, February 11, 2014
- Audited - $ - - $ - $ - $ - $ -
Shareholders' cash
contributions - - - - 175,020 - 175,020
Shareholders' cash
contributions,
related party - - - - 285 - 285
Shareholders' non-cash
contributions - - - - 845 - 845
Shareholders' non-cash
contributions,
related party - - - - 2,865 - 2,865
Recapitalization of shares - - 342,465 342 (342) - -
Net loss for the period - - - - - (13,431) (13,431)
------------------------------------------------------------------------------------------------
BALANCES, March 31, 2014
- Audited - - 342,465 342 178,673 (13,431) 165,584
Shareholders' cash
contributions - - - - 2,195,700 - 2,195,700
Shareholders' non-cash
contributions - - - - 250,000 - 250,000
Shareholder's non-cash
contributions,
related party - - - - 750,000 - 750,000
Equity based compensation - - - - 45,913 - 45,913
Fair value of T-Rex Oil Inc
net assets
at exchange date - - - - 1,103,846 - 1,103,846
Recapitalization of shares - - 7,467,392 7,468 (7,468) - -
Net loss for the period - - - - - (1,521,934) (1,521,934)
------------------------------------------------------------------------------------------------
BALANCES, December 31, 2014
- Unaudited - $ - 7,809,857 $ 7,810 $ 4,516,664 $(1,535,365) $ 2,989,109
================================================================================================
The accompanying notes are an integral part of these financial statements.
-9-
NOTE 1 - BUSINESS ORGANIZATION
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ORGANIZATION AND HISTORY
T-Rex Oil, Inc. (the "Company") was incorporated in Colorado on September 2,
2014. Rancher Energy Corp was incorporated in Nevada on February 2, 2004.
Effective October 20, 2014 T-Rex Oil, Inc. and Rancher Energy Corp were merged
under the laws of the State of Colorado and T-Rex Oil, Inc. became the surviving
entity. Effective October 29, 2014 the Company authorized 50,000,000 shares of
preferred stock in addition to its common stock and completed a reverse split of
its common stock, issued and outstanding, on a one (1) new share for three
hundred fifty (350) old shares basis.
The Company is currently engaged in the acquisition, exploration, and if
warranted, development of oil and gas prospects in the Rocky Mountain and Mid
Continent regions. Prior to August 2014, the Company had minimal operations that
were focused mainly on administrative activities, the identification of
potential oil and gas prospects, and one prospect participation in Colorado that
was rescinded in June 2014.
On December 22, 2014, the Company acquired 100% of the issued and outstanding
common stock of Terex Energy Corporation ("Terex") pursuant to Exchange
Agreements with the shareholders of Terex. Pursuant to the Exchange Agreements,
the Company issued 7,385,700 shares of its restricted common stock for 100% of
the issued and outstanding common stock of Terex. The shares were exchanged on a
one for one basis. As a result, Terex has become a wholly-owned subsidiary of
the Company.
T-Rex Oil, Inc. is the legal acquirer and Terex is the legal acquiree. However
under accounting rules, since the Company is a public company, which had nominal
activity, the acquisition is treated as a recapitalization of Terex. Therefore,
Terex is the accounting acquirer in the transaction since Terex's shareholders
and management gained control of T-Rex and T-Rex is the accounting acquiree. See
Note 2 - Summary of Significant Accounting Policies - Principles of
Consolidation.
On August 19, 2014, prior to entering into the Agreement, Terex had purchased
371,004 shares from the Company. After such purchase, Terex owned approximately
52% of the issued and outstanding common stock of the Company. As part of the
December 22, 2014 transaction, Terex surrendered its ownership of the 371,004
shares of T-Rex Oil Inc. common stock and as a result such shares have been
canceled.
Terex was incorporated in the State of Colorado in February 2014 and is
headquartered in Broomfield, Colorado. Terex has interests in oil and gas
properties that are discussed hereafter and intends to strive to be a low cost
and effective producer of hydrocarbons and to develop the business model and
corporate strategy as discussed herein.
The Company's approach to lease acquisition, development and production is
founded on the discipline of acquiring leases in areas of proven production. In
most cases the leases that are under consideration have at one time contained
producing oil or gas wells and have had offset production. Currently, the leases
have production or shut-in wells that are viable for work over and or
re-completion. This managed risk approach greatly reduces the risk normally
associated with oil and gas development. There are hundreds of wells in the
Company's area of interest that meet these criteria. In many instances, the
wells were shut-in during a period of declining oil and gas prices and in most
cases are ideal for our business model. Our business model is simple; strict
adherence to lease acquisition surrounded by proven production, offering well
workovers, re-completion, and enhanced oil recovery opportunities in the known
producing formations, with long term production potential at a low cost of
development, maintenance, and operation. The Company is not an exploration
company per se but rather it seeks leases with discovered oil and gas current or
prior production.
The Company's strategy that has grown in prominence and application with respect
to petroleum is to use a development program approach. The Company describes its
development plan approach as a set of techniques utilizing the injection of
specific fluids such as: water, steam, natural gas, carbon dioxide, nitrogen,
and various chemicals and surfactants intended to increase the amount of oil
that can ultimately be extracted from any oil field. Many oil exploration and
production companies are using development program approaches to maximize the
potential of old oil fields.
The Company's business operations are in the development and production of oil
and gas including unconventional natural gas, in the Rocky Mountain region of
the continental United States; specifically in the Rocky Mountain areas of Utah,
Colorado, Wyoming and Kansas.
-10-
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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PRINCIPLES OF CONSOLIDATION
The accompanying balance sheet as of March 31, 2014 and the statements of
operations for the three and nine months ended December 31, 2013 and the
statement of cash flows for the nine months ended December 31, 2013 include the
accounts of Terex Energy Corporation only. The accompanying consolidated balance
sheet as of December 31, 2014 include the accounts of Terex Energy Corporation
and T-Rex Oil Inc. and the consolidated statements of operations for the three
and nine months ended December 31, 2014 and the consolidated statement of cash
flows for the nine months ended December 31, 2014 include the accounts of Terex
Energy Corporation and the accounts of T-Rex Oil Inc. for the period December
23, 2014 through December 31, 2014. All intercompany balances have been
eliminated during consolidation.
USE OF ESTIMATES IN THE PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the consolidated financial statements, and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates.
CHANGE IN ACCOUNTING PRINCIPLE
The Company disclosed in its financial statements for the three and six months
ended September 30 2014 as filed in its Form 10Q with the Securities and
Exchange Commission on November 19, 2014 that it changed its method of
accounting from the successful efforts to the full cost method of accounting for
its oil and natural gas operations and, as such pursuant to ASC Topic 250 and
ASC Topic 932 further disclosed there was no retroactive restatement of
financial statements for the relative periods as there were no oil and natural
gas capitalized costs or operations incurred to date by the Company.
However, as disclosed in the Company's filing of Form 8-K with the SEC on April
1, 2015, the Company acquired effective March 28, 2015, 83% of the outstanding
common stock of Western Interiors Oil and Gas, Inc. ("WIOG") in a stock for
stock Exchange Agreement with the right to acquire within 6 months the remaining
17% of WIOG's outstanding common stock. As such, WIOG is an oil and gas company
that follows the successful efforts method of accounting for its oil and gas
operations.
Therefore, management believes it is in the best interest of the Company that,
as a result of the acquisition of WIOG, the Company changes the accounting for
its oil and gas operations back to the successful efforts from the full cost
method of accounting. As a result of this change in accounting principle, the
Company's carrying value of its unproved oil and gas properties on its
consolidated balance sheet at December 31, 2014 decreased by $91,898 due to its
geological and geophysical costs being expensed in its consolidated statement of
operations for the nine months ended December 31, 2014. See Note 2 - Oil and Gas
Producing Activities. Therefore please note the following other changes as a
result of the change in accounting principle:
BEFORE THE CHANGE AFTER THE CHANGE
----------------- ----------------
At December 31, 2014:
Oil and gas properties - unproved $1,862,062 $1,770,164
Total assets $3,127,784 $3,035,886
Accumulated deficit $(1,443,467) $(1,535,365)
Total stockholders' equity $3,081,007 $2,989,109
For the Three Months Ended
December 31, 2014:
Net loss $203,287 $229,318
Net loss per common share -
Basic and diluted $(0.11) $(0.12)
-11-
For the Nine Months Ended
December 31, 2014:
Net loss $(1,430,036) $(1,521,934)
Net loss per common share -
Basic and diluted $(1.56) $(1.66)
CASH AND CASH EQUIVALENTS
The Company considers all liquid investments purchased with an initial maturity
of three months or less to be cash equivalents. Cash and cash equivalents
include demand deposits and money market funds carried at cost which
approximates fair value. The Company maintains its cash in institutions insured
by the Federal Deposit Insurance Corporation ("FDIC"), although such deposits
are in excess of the insurance coverage. At December 31, 2014, the Company had
$564,935 of cash deposits in excess of FDIC insured limits.
OIL AND GAS PRODUCING ACTIVITIES
The Company follows the successful efforts method of accounting for its oil and
gas properties. Under this method of accounting, all property acquisition costs
and costs of exploratory and development wells are capitalized when incurred,
pending determination of whether the well has found proved reserves. If an
exploratory well does not find proved reserves, the costs of drilling the well
are charged to expense. Exploratory dry hole costs are included in cash flows
from investing activities as part of capital expenditures within the
consolidated statements of cash flows. The costs of development wells are
capitalized whether or not proved reserves are found. Costs of unproved leases,
which may become productive, are reclassified to proved properties when proved
reserves are discovered on the property. Unproved oil and gas interests are
carried at the lower of cost or estimated fair value and are not subject to
amortization.
Geological and geophysical costs and the costs of carrying and retaining
unproved properties are expensed as incurred. DD&A of capitalized costs related
to proved oil and gas properties is calculated on a property-by-property basis
using the units-of-production method based upon proved reserves. The computation
of DD&A takes into consideration restoration, dismantlement, and abandonment
costs and the anticipated proceeds from salvaging equipment.
The Company complies with ASC 932, "Extractive Activities - Oil and Gas". The
Company currently does not have any existing capitalized exploratory well costs,
and has therefore determined that there are no suspended well costs that should
be impaired. There were unproved capitalized costs at December 31, 2014 and
March 31, 2014 of $1,770,164 and $19,564, respectively and the Company expensed
geological and geophysical costs for the three and nine months ended December
31,, 2014 and 2013of $26,031 and $91,898, respectively. There were no proved
properties at December 31, 2014 and March 31, 2014, respectively.
PROPERTY AND EQUIPMENT
Other property and equipment, such as computer hardware and software, are
recorded at cost. Costs of renewals and improvements that substantially extend
the useful lives of the assets are capitalized. Maintenance and repair costs are
expensed when incurred. When other property and equipment is sold or retired,
the capitalized costs and related accumulated depreciation are removed from
their respective accounts.
DEPRECIATION, DEPLETION & AMORTIZATION
Depreciation of other property and equipment is calculated using the
straight-line method over the estimated useful lives of the assets of five
years.
Depreciation, depletion and amortization of capitalized acquisition, exploration
and development costs incurred in oil and gas producing activities are computed
using the units-of-production method by individual fields on the basis of the
total estimated units of proved reserves as the related proved reserves are
produced.
-12-
Depreciation expense of other property and equipment for the three and nine
months ended December 31, 2014 and 2013 was $2,452 and $0 and $3,719 and $0,
respectively.
IMPAIRMENT OF LONG-LIVED ASSETS
In accordance with authoritative guidance on accounting for the impairment or
disposal of long-lived assets, as set forth in Topic 360 of the ASC, the Company
assesses the recoverability of the carrying value of its non-oil and gas
long-lived assets when events occur that indicate an impairment in value may
exist. An impairment loss is indicated if the sum of the expected undiscounted
future net cash flows is less than the carrying amount of the assets. If this
occurs, an impairment loss is recognized for the amount by which the carrying
amount of the assets exceeds the estimated fair value of the assets. No events
occurred during the three and nine months ended December 31, 2014 and 2013,
respectively that would be indicative of possible impairment.
REVENUE RECOGNITION
The Company had no revenue from operations during the three and nine months
ended December 31, 2014 and 2013, respectively.
OTHER COMPREHENSIVE LOSS
The Company has no material components of other comprehensive loss and
accordingly, net loss is equal to comprehensive loss for the period.
INCOME TAXES
The Company uses the liability method of accounting for income taxes under which
deferred tax assets and liabilities are recognized for the future tax
consequences of temporary differences between the accounting bases and the tax
bases of the Company's assets and liabilities. The deferred tax assets and
liabilities are computed using enacted tax rates in effect for the year in which
the temporary differences are expected to reverse.
The Company assessed the likelihood of utilization of the deferred tax asset, in
light of the recent losses. As a result of this review, the deferred tax asset
in the amount of $174,520 has been fully reserved at December 31, 2014. At
December 31, 2014, Terex has incurred net operating losses for income tax
purposes of approximately $450,000. Such losses may be carried forward and are
scheduled to expire in the year 2034, if not utilized, and may be subject to
certain limitations as provided by the Internal Revenue Code.
The Company has adopted ASC guidance regarding accounting for uncertainty in
income taxes. This guidance clarifies the accounting for income taxes by
prescribing the minimum recognition threshold an income tax position is required
to meet before being recognized in the consoliated financial statements and
applies to all income tax positions. Each income tax position is assessed using
a two-step process. A determination is first made as to whether it is more
likely than not that the income tax position will be sustained, based upon
technical merits, upon examination by the taxing authorities. If the income tax
position is expected to meet the more likely than not criteria, the benefit
recorded in the consolidated financial statements equals the largest amount that
is greater than 50% likely to be realized upon its ultimate settlement. At
December 31, 2014, there were no uncertain tax positions that required accrual.
NET LOSS PER SHARE
Basic net loss per common share of stock is calculated by dividing net loss
available to common stockholders by the weighted-average number of common shares
outstanding during each period.
Diluted net loss per common share is calculated by dividing net loss by the
weighted-average number of common shares outstanding, including the effect of
other dilutive securities. The Company's potentially dilutive securities consist
of in-the-money outstanding options and warrants to purchase the Company's
common stock. Diluted net loss per common share does not give effect to dilutive
securities as their effect would be anti-dilutive.
-13-
The treasury stock method is used to measure the dilutive impact of stock
options and warrants. The following table details the weighted-average dilutive
and anti-dilutive securities related to stock options and warrants for the
periods presented:
For the Nine Months Ended
December 31,
-------------------------------------
2014 2013
----------------- ----------------
Dilutive - -
Anti-dilutive 878,545 -
EQUITY BASED PAYMENTS
The Company recognizes compensation cost for equity based awards based on
estimated fair value of the award and records capitalized cost or compensation
expense over the requisite service period. See Note 5 - Equity Based Payments.
MAJOR CUSTOMERS
The Company has no operations during the three and nine months ended December
31, 2014 and 2013 and as a result there are no customers or billings.
OFF-BALANCE SHEET ARRANGEMENTS
As part of its ongoing business, the Company has not participated in
transactions that generate relationships with unconsolidated entities or
financial partnerships, such as entities often referred to as structured finance
or special purpose entities (SPEs), which would have been established for the
purpose of facilitating off-balance sheet arrangements or other contractually
narrow or limited purposes. From its incorporation on February 11, 2014 through
December 31, 2014, the Company has not been involved in any unconsolidated SPE
transactions.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities
(Topic915) - Elimination of Certain Financial Reporting Requirements, Including
an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation.
This standard update is to improve financial reporting by reducing the cost and
complexity associated with the incremental reporting requirements for
development stage entities, and as a result removes all incremental financial
reporting requirements. This standard update also eliminates an exception
provided to development stage entities in Topic 810, Consolidation, for
determining whether an entity is a variable interest entity on the basis of the
amount of the investment equity that is at risk. ASU 2014-10 is effective for
annual reporting periods beginning after December 15, 2016, and interim
reporting periods beginning after December 15, 2017. Entities are allowed to
apply the guidance early for any annual reporting period or interim period for
which the entity's financial statements have not yet been issued or made
available for issuance. The Company adopted these standards and they did not
have a material impact on the Company's consolidated financial statements.
There were other accounting standards and interpretations issued during the nine
months ended December 31, 2014, none of which are expected to have a material
impact on the Company's financial position, operations or cash flows.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
--------------------------------------
OPERATING LEASE
The Company leases an office space in Colorado at the rate of $4,572 per month
and the lease expires in August 2017. Total rent expense under this lease for
the three and nine months ended December 31, 2014 was $13,717 and $19,290,
respectively.
-14-
The following is a schedule of minimum future rental annual payments under the
operating lease for the stated fiscal year ends:
AMOUNT
---------
3/31/15 $13,716
3/31/16 31,904
3/31/17 33.454
3/31/18 11,367
---------
$90,441
EMPLOYMENT AGREEMENT
The Company entered into a three year employment agreement in January 2015 with
its Chief Executive Officer and President that includes compensation of a base
salary of $204,000 per year under certain terms and conditions along with an
auto allowance of $600 per month.
CONSULTING AGREEMENT
The Company entered into a three year agreement effective September 1, 2014 with
a consultant to perform services at the base rate of $150,000 per year under
certain terms and conditions including with an auto allowance of $600 per month.
In addition, the consultant has been granted cashless options to acquire up to
500,000 shares of Terex's common stock at an option price of $0.10 per share for
a period of three years from April 1, 2014. The options vest ratably over the
year ending March 31, 2015. See Note 5 - Equity Based Payments.
NOTE 4 - STOCKHOLDERS' EQUITY
-----------------------------
The Company's capital stock at December 31, 2014 consists of 325,000,000
authorized shares of which 50,000,000 shares are $0.001 par value preferred
stock and 275,000,000 shares are $0.001 par value common stock.
PREFERRED SHARES
At December 31, 2014 there are no shares of preferred stock issuance and
outstanding.
COMMON SHARES
At December 31, 2014 and March 31, 2014, a total of 7,809,857 and 342,465 shares
of common stock were issued and outstanding, respectively.
During the nine months ended December 31, 2014, the Company issued 7,385,700
shares of its common stock to the shareholders of Terex as part of an Exchange
Agreement. See Note 6 - Exchange Agreements. In addition, the Company issued
81,692 shares as part of the recapitalization of the Company.
SHAREHOLDERS CONTRIBUTED CAPITAL
During the nine months ended December 31, 2014, shareholders of Terex as part of
a private placement contributed cash in the amount of $2,195,700 in exchange for
2,195,700 shares of Terex common stock valued at $1.00 per share. In addition,
shareholders of Terex contributed services valued at $950,000 in exchange for
950,000 shares of Terex that were expensed. Further, a shareholder of Terex
contributed property valued at $50,000 in exchange for 50,000 shares of Terex
that was capitalized under equipment.
During the three and nine months ended December 31, 2014, Terex realized
additional paid in capital relative to the fair value of equity based payments
in the amount of $41,061 and $45,913, respectively. See Note 5 - Equity Based
Payments.
-15-
NOTE 5 - EQUITY BASED PAYMENTS
------------------------------
The Company accounts for equity based payment accruals under authoritative
guidance on stock compensation as set forth in the Topics of the ASC. The
guidance requires all equity based payments to employees and non-employees,
including grants of employee and non-employee stock options and warrants, to be
recognized in the consolidated financial statements based on their fair values.
The Black-Scholes option-pricing model is used to estimate the option fair
values. The option-pricing model requires a number of assumptions, of which the
most significant are the stock price at the valuation date that ranged from
$0.01 to $1.00 per share as well as the following assumptions:
Volatility 88.553%
Expected Option Term 3 years
Risk-free interest rate 12% - 13%
Expected dividend yield 0.00%
The expected term of the options and warrants granted were estimated to be the
contractual term. The expected volatility was based on an average of the
volatility disclosed based upon comparable companies who had similar expected
option terms. The risk-free rate was based on the one-year U.S. Treasury bond
rate.
The following table summarizes the non-qualified stock option and warrant
activity for the nine months ended December 31, 2014.
Number of Weighted Average
Options/Warrants Exercise Price
---------------------- -------------------
Outstanding at March 31, 2014 - $ -
Granted - Number of Shares
Options 900,000 $ 0.100
Warrants 800,000 $ 0.625
Vested
Options 675,000 $ 0.100
Warrants 800,000 $ 0.625
Exercised
Options - $ -
Warrants - $ -
Cancelled
Options - $ -
Warrants - $ -
Outstanding at December 31, 2014
Options 900,000 $ 0.100
Warrants 800,000 $ 0.625
Exercisable at December 31, 2014
Options 675,000 $ 0.100
Warrants 800,000 $ 0.625
Weighted average remaining Life Aggregate
Contractual Life Intrinsic Value
---------------------- -------------------
Options 2.75 $ 864
Warrants 2.92 $ 503,145
-16-
The aggregate intrinsic value of outstanding securities is the amount by which
the fair value of underlying (common) shares exceeds the amount paid for and the
exercise price of the options issued and outstanding. During the nine months
ended December 31, 2014, Terex granted options and warrants that had a total
fair value of $549,922 and reported $45,913 for the nine months ended December
31, 2014 of which $45,740 was capitalized as costs of unproved properties and
$173 was expensed as compensation expense in the consolidated statement of
operations.
NOTE 6 - EXCHANGE AGREEMENTS
----------------------------
On December 22, 2014, the Company acquired 100% of the issued and outstanding
common stock of Terex pursuant to Exchange Agreements with the shareholders of
Terex. As part of the Exchange Agreements, the Company issued 7,385,700 shares
of its restricted common stock for 100% of the issued and outstanding common
stock of Terex. The shares were exchanged on a one for one basis. As a result,
Terex has become a wholly-owned subsidiary of the Company.
NOTE 7 - RELATED PARTY TRANSACTIONS
-----------------------------------
EQUITY FOR SERVICES
During the period February 11, 2014 (inception) through March 31, 2014,
shareholders of Terex that are officers and directors of the Company contributed
cash in the amount of $285 in exchange for 285,000 shares of Terex common stock
valued at $0.001 per share. In addition, these same shareholders of Terex during
the period February 11, 2014 (inception) through March 31, 2014 contributed
services valued at $2,865 that were expensed in exchange for 2,865,000 shares of
common stock of Terex valued at $0.001 per share.
On April 1, 2014, an officer and director of the Company was granted 100,000
options of Terex in exchange for services valued at $115 or $0.0015 per share.
On August 25, 2014 a shareholder of Terex that is a director of the Company
contributed services valued at $750,000 that were expensed in the consolidated
statement of operations in exchange for 750,000 shares of common stock of Terex
valued at $1.00 per share.
During September 2014, an officer of the Company sold unproved oil and gas
property to the Company in exchange for $25,000 in cash and 200,000 warrants of
the Company valued at $200,000 or $1.00 per share.
CONSULTING SERVICES
During the three months ended December 31, 2014, the Company paid its officers
and directors $8,178 in fees that were expensed in the consolidated statement of
operations.
During the nine months ended December 31, 2014, the Company paid its officers
and directors $193,149 in fees that were expensed in the consolidated statement
of operations.
NOTE 8 - NOTE PAYABLE
---------------------
In November 2014, the Company borrowed $17,228 from an unrelated party to
finance its insurance policy. The unsecured note is repaid at $872 per month
beginning in January 2015 including interest at the rate of 5.81% per annum. The
Company owes $8,728 at December 31, 2014.
-17-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS
--------------------------------------------------------------------------------
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR CONSOLIDATED
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN. IN CONNECTION WITH, AND
BECAUSE WE DESIRE TO TAKE ADVANTAGE OF, THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, WE CAUTION READERS REGARDING
CERTAIN FORWARD LOOKING STATEMENTS IN THE FOLLOWING DISCUSSION AND ELSEWHERE IN
THIS REPORT AND IN ANY OTHER STATEMENT MADE BY, OR ON OUR BEHALF, WHETHER OR NOT
IN FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. FORWARD-LOOKING
STATEMENTS ARE STATEMENTS NOT BASED ON HISTORICAL INFORMATION AND WHICH RELATE
TO FUTURE OPERATIONS, STRATEGIES, FINANCIAL RESULTS OR OTHER DEVELOPMENTS.
FORWARD LOOKING STATEMENTS ARE NECESSARILY BASED UPON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND OUR CONTROL AND MANY
OF WHICH, WITH RESPECT TO FUTURE BUSINESS DECISIONS, ARE SUBJECT TO CHANGE.
THESE UNCERTAINTIES AND CONTINGENCIES CAN AFFECT ACTUAL RESULTS AND COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD LOOKING
STATEMENTS MADE BY, OR ON OUR BEHALF. WE DISCLAIM ANY OBLIGATION TO UPDATE
FORWARD-LOOKING STATEMENTS.
UNLESS THE CONTEXT REQUIRES OTHERWISE, REFERENCES IN THIS DOCUMENT TO "T-REX
OIL", "TEREX", "WE", "OUR", "US" OR THE "COMPANY" ARE TO T-REX OIL, INC..
TEREX IS CONSIDERED THE ACCOUNTING ACQUIRER ON DECEMBER 22, 2014 AND THEREFORE
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2014 THE HISTORICAL
CONSOLIDATED FINANCIAL INFORMATION IS THAT OF TEREX AND T-REX OIL FOR THE PERIOD
DECEMBER 23, 2014 THROUGH DECEMBER 31, 2014. AS SUCH, SINCE TEREX WAS
INCORPORATED ON FEBRUARY 11, 2014, THERE IS NO COMPARISON OF RESULTS FOR THE
THREE AND NINE MONTHS ENDED DECEMBER 31, 2013.
ORGANIZATION AND HISTORY
T-Rex Oil, Inc. was incorporated in Colorado on September 2, 2014. Rancher
Energy Corp was incorporated in Nevada on February 2, 2004. Effective October
20, 2014 T-Rex Oil, Inc. and Rancher Energy Corp were merged under the laws of
the State of Colorado and T-Rex Oil, Inc. became the surviving entity. Effective
October 29, 2014 the Company authorized 50,000,000 shares of preferred stock in
addition to its common stock and completed a reverse split of its common stock,
issued and outstanding, on a one (1) new share for three hundred fifty (350) old
shares basis.
The Company is currently engaged in the acquisition, exploration, and if
warranted, development of oil and gas prospects in the Rocky Mountain and Mid
Continent regions. Prior to August 2014, the Company had minimal operations that
were focused mainly on administrative activities, the identification of
potential oil and gas prospects, and one prospect participation in Colorado that
was rescinded in June 2014.
On December 22, 2014, the Company acquired 100% of the issued and outstanding
common stock of Terex pursuant to Exchange Agreements with the shareholders of
Terex. Pursuant to the Exchange Agreements, the Company issued 7,385,700 shares
of its restricted common stock for 100% of the issued and outstanding common
stock of Terex. The shares were exchanged on a one for one basis. As a result,
Terex has become a wholly-owned subsidiary of the Company.
T-Rex Oil, Inc. is the legal acquirer and Terex is the legal acquiree. However
under accounting rules, since the Company is a public company, which had nominal
activity, the acquisition is treated as a recapitalization of Terex. Therefore,
Terex is the accounting acquirer in the transaction since Terex's shareholders
and management attained control of T-Rex and T-Rex is the accounting acquiree.
On August 19, 2014, prior to entering into the Agreement, Terex had purchased
371,004 shares from the Company. After such purchase, Terex owned approximately
52% of the issued and outstanding common stock of the Company. As part of the
December 22, 2014 transaction Terex surrendered its ownership of the 371,004
shares of T-Rex Oil Inc. common stock and as a result such shares have been
canceled.
The Company's approach to lease acquisition, development and production is
founded on the discipline of acquiring leases in areas of proven production. In
most cases the leases that are under consideration have at one time contained
producing oil or gas wells and have had offset production. Currently, the leases
have production or shut-in wells that are viable for work over and or
re-completion. This managed risk approach greatly reduces the risk normally
associated with oil and gas development. There are hundreds of wells in the
Company's area of interest that meet these criteria. In many instances, the
wells were shut-in during a period of declining oil and gas prices and in most
cases are ideal for our business model. Our business model is simple; strict
-18-
adherence to lease acquisition surrounded by proven production, offering well
workovers, re-completion, and enhanced oil recovery opportunities in the known
producing formations, with long term production potential at a low cost of
development, maintenance, and operation. The Company is not an exploration
company per se but rather it seeks leases with discovered oil and gas current or
prior production.
The Company's strategy that has grown in prominence and application with respect
to petroleum is to use a development program approach. The Company describes its
development plan approach as a set of techniques utilizing the injection of
specific fluids such as: water, steam, natural gas, carbon dioxide, nitrogen,
and various chemicals and surfactants intended to increase the amount of oil
that can ultimately be extracted from any oil field. Many oil exploration and
production companies are using development program approaches to maximize the
potential of old oil fields.
The Company's business operations are in the development and production of oil
and gas including unconventional natural gas, in the Rocky Mountain region of
the continental United States; specifically in the Rocky Mountain areas of Utah,
Colorado, Wyoming and Kansas.
We plan to spend up to $10,000,000 on acquisition, drilling, re-completion, and
development programs in 2015. We plan to raise these funds in private placements
of common stock, preferred stock and/or convertible debt or through industry
participation in working interests. Many of our targeted prospects are in
reservoirs that have demonstrated predictable geologic attributes and consistent
reservoir characteristics, which typically lead to more repeatable drilling and
re-completion results than those achieved through wildcats.
We will likely need substantial additional capital to support our operations. We
have no revenues at the present time other than a nominal amount of interest
income on our funds on deposit. We have no committed source for any funds as of
the date of this filing. No representation is made that any funds will be
available when needed. In the event funds cannot be raised when needed, we may
not be able to carry out our business plan, may never achieve sales or royalty
income, and could fail in business as a result of these uncertainties.
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014
OVERVIEW. For the three months ended December 31, 2014, we reported a net loss
of $229,318 or $(0.12) per basic and fully-diluted share. Discussions of
individually significant line items follow:
REVENUES. The Company had no revenues from operations during the three months
ended December 31, 2014.
GEOLOGICAL AND GEOPHYSICAL COSTS: For the three months ended December 31, 2014,
we incurred geological and geophysical costs of $26,031. We anticipate these
geological and geophysical costs to increase in the first quarter of 2015 due to
increased activity of operations.
GENERAL AND ADMINISTRATIVE EXPENSES. For the three months ended December 31,
2014, we incurred general and administrative expenses of $200,385. We anticipate
these general and administrative expenses to increase in the first quarter of
2015 due to increased activity of operations.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31, 2014
OVERVIEW. For the nine months ended December 31, 2014, we reported a net loss of
$1,521,934 or $(1.66) per basic and fully-diluted share. Discussions of
individually significant line items follow:
REVENUES. The Company had no revenues from operations during the nine months
ended December 31, 2014.
GEOLOGICAL AND GEOPHYSICAL COSTS: For the nine months ended December 31, 2014,
we incurred geological and geophysical costs of $81,898.
-19-
GENERAL AND ADMINISTRATIVE EXPENSES. For the nine months ended December 31,
2014, we incurred general and administrative expenses of $1,398,949.
LIQUIDITY AND CAPITAL RESOURCES
We have incurred a cumulative net loss of approximately $1,535,000 for the
period from February 11, 2014 (inception) to December 31, 2014. The Company will
need substantial additional capital to support its proposed future energy
operations. We have NO revenues. The Company has no committed source for any
funds but as of December 31, 2014 we have $1,064,935 in cash. No representation
is made that any funds will be available when needed. In the event funds cannot
be raised when needed, we may not be able to carry out our business plan or may
never achieve sales.
The Company used cash flows in operations of $517,388 during the nine months
ended December 31, 2014 that was adjusted by non-cash items including:
depreciation of $3,719, impairment of asset of $27,368, shareholders'
contributions of $950,000 and equity based compensation of $173.
The Company used cash flows in investing activities of $779,092 during the nine
months ended December 31, 2014 that was primarily comprised of: additions to oil
and gas properties of $1,663,575, additions to non oil and gas properties of
$9,103 and additions to other assets of $11,585 net of cash acquired from T-Rex
in the amount of $905,171.
The Company was provided cash flows from financing activities of $2,195,700
during the nine months ended December 31, 2014 due to shareholders' cash
contributions.
Decisions regarding future participation in oil and gas development or
geophysical studies or other activities will be made on a case-by-case basis. We
may, in any particular case, decide to participate or decline participation. If
participating, we may pay our proportionate share of costs to maintain our
proportionate interest through cash flow or debt or equity financing. If
participation is declined, we may elect to farmout, non-consent, sell or
otherwise negotiate a method of cost sharing in order to maintain some
continuing interest in the prospect.
OFF-BALANCE SHEET ARRANGEMENTS
We have no material off-balance sheet arrangements nor do we have any
unconsolidated subsidiaries.
CRITICAL ACCOUNTING POLICIES
Critical accounting policies and estimates are provided in our Annual Report on
Form 10-K for the fiscal year ended March 31, 2014, in Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of Operations, and
Item 8 - Financial Statements and Supplementary Data. Additional disclosures are
provided in Notes to Consolidated Financial Statements (unaudited) which are
included in Item 1 - Consolidated Financial Statements to this Quarterly Report
on Form 10-Q/A for the three months ended December 31, 2014.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
-----------------------------------------------------------------
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are
not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
--------------------------------
We conducted an evaluation under the supervision and with the participation of
our management, including our Chief Executive Officer and Acting Chief
Accounting Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures. The term "disclosure controls and
procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (Exchange Act), means controls and other
procedures of a company that are designed to ensure that information required to
be disclosed by the company in the reports it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures also include, without limitation, controls
-20-
and procedures designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the company's management, including its
principal executive and principal financial officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure. We identified multiple material weaknesses in our internal control
over financial reporting and, as a result of this material weakness, we
concluded as of September 30, 2014, that our disclosure controls and procedures
were not effective.
INTERNAL CONTROL-INTEGRATED FRAMEWORK
A material weakness is a control deficiency, or combination of control
deficiencies, that result in more than a remote likelihood that a material
misstatement of annual or interim financial statements will not be prevented or
detected. As of December 31, 2014 and as determined in the fiscal year ended
March 31, 2014 the Company identified the following material weakness:
THE COMPANY DID NOT ADEQUATELY SEGREGATE THE DUTIES OF DIFFERENT PERSONNEL
WITHIN OUR ACCOUNTING DEPARTMENT DUE TO AN INSUFFICIENT COMPLEMENT OF STAFF AND
INADEQUATE MANAGEMENT OVERSIGHT.
We have limited accounting personnel with sufficient expertise in generally
accepted accounting principles to enable effective segregation of duties with
respect to recording journal entries and to allow for appropriate monitoring of
financial reporting matters and internal control over financial reporting.
Specifically, the Acting Chief Accounting Officer has involvement in the
creation and review of journal entries and note disclosures without adequate
independent review and authorization. This control deficiency is pervasive in
nature and impacts all significant accounts. This control deficiency also
affects the financial reporting process including financial statement
preparation and the related note disclosures. Other significant control
deficiencies at this time are lack of independent review and approval of journal
entries before they are entered into the general ledger, not effectively
implementing comprehensive entity-level controls, and the Company has not
implemented procedures for timely review and approval of bank reconciliations.
As a result of the aforementioned material weakness, management concluded that
the Company's internal control over financial reporting as of December 31, 2014
was not effective.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal control over financial reporting
during the most recently completed fiscal quarter that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-------------------------
There is no ongoing litigation to which the Company is subject.
ITEM 1A. RISK FACTORS
---------------------
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are
not required to provide information required by this Item. However, our current
risk factors are set forth in our Annual Report on Form 10-K for the period
ended March 31, 2014, which risk factors are incorporated herein by this
reference.
-21-
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
--------------------------------------------------------------------
During the period of October 1, 2014 through December 31, 2014, the Company made
the following issuances of its equity securities.
----------------- --------------------- --------------- ----------------------- -----------------------
DATE OF SALE TITLE OF SECURITIES NO. OF SHARES CONSIDERATION CLASS OF PURCHASER
----------------- --------------------- --------------- ----------------------- -----------------------
December 4, 2014 Common Shares 80,000 $240,000 in cash Business Associates
----------------- --------------------- --------------- ----------------------- -----------------------
December 22, 2014 Common Shares 7,385,700 7,385,700 common shares Business Associates
of Terex
----------------- --------------------- --------------- ----------------------- -----------------------
Exemption from Registration Claimed
The above sale by the Company of its unregistered security was made by the
Company in reliance upon Rule 506 of Regulation D and Section 4(2) of the
Securities Act of 1933, as amended (the "1933 Act"). The entity that purchased
the unregistered security was known to the Company and its management, through
pre-existing business relationships and as a long standing business associate.
The purchaser was provided access to all material information, which they
requested, and all information necessary to verify such information and was a
forded access to management of the Company in connection with their purchase.
The purchaser of the unregistered security acquired such security for investment
and not with a view toward distribution, acknowledging such intent to the
Company. The certificate or agreement representing such security that was issued
contained a restrictive legend, prohibiting further transfer of the certificate
or agreement representing such security, without such security either being
first registered or otherwise exempt from registration in any further resale or
disposition.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
----------------------------------------
NONE.
ITEM 4. MINE AND SAFETY DISCLOSURE
-----------------------------------
NOT APPLICABLE.
ITEM 5. OTHER INFORMATION
--------------------------
NONE.
(REMAINDER OF PAGE LEFT BLANK INTENTIONALLY)
-22-
ITEM 6. EXHIBITS
-----------------
The following is a complete list of exhibits filed as part of this Form 10-Q/A.
Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of
Regulation S-K.
EXHIBIT NO. DESCRIPTION OF EXHIBITS
---------- -----------------------------------------------------------------
3.1 Amended and Restated Articles of Incorporation(1)
3.2 Certificate of Correction (2)
3.3 Amended and Restated Bylaws(3)
3.4 Amended Bylaws(8)
3.5 Articles of Amendment(9)
3.6 Articles of Merger(9)
3.7 Articles of Merger - Nevada(9)
3.8 Statement of Merger - Colorado(9)
3.9 Articles of Incorporation (T-Rex Oil, Inc.)(9)
31.1 Certification of Chief Executive Officer and Acting Chief
Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act.*
32.1 Certification of Chief Executive Officer and Acting Chief
Financial Officer pursuant to 18 U.S. C.ss.1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act.*
101.INS XBRL Instance Document(7)
101.SCH XBRL Taxonomy Extension Schema Document(7)
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document(7)
101.DEF XBRL Taxonomy Extension Definition Linkbase Document(7)
101.LAB XBRL Taxonomy Extension Label Linkbase Document(7)
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document(7)
-----------
* Filed herewith.
(1) Incorporated by reference from the Company's Current Report on Form 8-K
dated April 3, 2007.
(2) Incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 2007.
(3) Incorporated by reference from the Company's Current Report on Form 8-K
dated December 28, 2006.
(4) Pursuant to Rule 406T of Regulation S-T, this interactive data file is
deemed not filed or part of a registration statement or prospectus for
purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not
filed for purposes of Section 18 of the Securities Exchange Act of 1934,
and otherwise is not subject to liability under these sections.
(5) Incorporated by reference from the Company's Current Report on Form 8-K
dated August 26, 2014.
(6) Incorporated by reference from the Company's Current Report on Form 8-K
dated October 29, 2014.
-23-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
T-REX OIL, INC.
Dated: May 11, 2015 By /s/ Donald Walford
----------------------------------
Donald Walford, Chief Executive Officer,
and Acting Chief Accounting Officer
-24
