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Mesa Energy Holdings, Inc. Now Eligible and Trading on OTCBB |
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MESA ENERGY HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
| December 31, 2011 | December 31, 2010 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 3,182,392 | $ | 6,096 | ||||
| Accounts receivable - oil and gas | 2,460,260 | - | ||||||
| Accounts receivable - other | 58,818 | 8,348 | ||||||
| Derivative assets, commodity contracts - current | 656,413 | - | ||||||
| Deferred financing costs - current | 51,507 | 135,552 | ||||||
| Prepaid expenses | 3,971 | 3,750 | ||||||
| TOTAL CURRENT ASSETS | 6,413,361 | 153,746 | ||||||
| Oil and gas properties, successful efforts accounting: | ||||||||
| Properties not subject to amortization less accumulated impairment of $0 and $247,500, respectively | - | - | ||||||
| Proved properties subject to amortization less accumulated depletion and impairment of $2,359,193 and $898,483, respectively | 6,727,027 | - | ||||||
| Support facilities and equipment less accumulated depreciation of $100,724 and $0, respectively | 2,076,777 | - | ||||||
| Land | 48,345 | 38,345 | ||||||
| Net oil and gas properties | 8,852,149 | 38,345 | ||||||
| Property and equipment less accumulated depreciation of $2,854 and $5,203, respectively | 31,834 | - | ||||||
| Deferred tax asset - noncurrent | 3,088,740 | - | ||||||
| Deferred financing cost - noncurrent, net of accumulated amortization of $287,943 and $147,072, respectively | 28,431 | - | ||||||
| Derivative assets, commodity contracts - noncurrent | 282,537 | - | ||||||
| Deposits on asset retirement obligations | 640,000 | 40,000 | ||||||
| Other assets | 5,000 | - | ||||||
| TOTAL ASSETS | $ | 19,342,052 | $ | 232,091 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable - trade | $ | 1,518,603 | $ | 67,409 | ||||
| Revenue payable | 796,221 | - | ||||||
| Accrued expenses | 259,808 | 778,240 | ||||||
| Accrued expenses - related parties | 54,840 | 131,832 | ||||||
| Deferred tax liability - current | 212,781 | - | ||||||
| Notes payable - related parties | - | 21,000 | ||||||
| Notes payable - current | 466,655 | 20,000 | ||||||
| Convertible notes payable - current | - | 1,480,000 | ||||||
| TOTAL CURRENT LIABILITIES | 3,308,908 | 2,498,481 | ||||||
| Non-current liabilities: | ||||||||
| Long term debt - related parties | - | 451,400 | ||||||
| Notes payable - noncurrent | 5,162,018 | - | ||||||
| Convertible notes payable, net of discount of $4,279 and $0, respectively | 461,740 | 665,000 | ||||||
| Derivative liability, convertible debt - noncurrent | 113,083 | - | ||||||
| Asset retirement obligations | 3,450,252 | 80,217 | ||||||
| TOTAL LIABILITIES | 12,496,001 | 3,695,098 | ||||||
| Commitments and contingencies | - | - | ||||||
| Stockholders' equity (deficit): | ||||||||
| Preferred stock, par value $0.0001, 10,000,000 shares authorized, -0- shares issued and outstanding | - | - | ||||||
| Common stock, par value $0.0001, 300,000,000 shares authorized, 79,531,616 and 40,232,021 shares issued and outstanding, respectively | 7,953 | 4,023 | ||||||
| Additional paid-in capital (deficiency) | (633,745 | ) | (6,786,915 | ) | ||||
| Retained earnings | 7,471,843 | 3,319,885 | ||||||
| TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | 6,846,051 | (3,463,007 | ) | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 19,342,052 | $ | 232,091 | ||||
See accompanying notes to consolidated financial statements.
| F - 3 |
MESA ENERGY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Year Ended December 31, | ||||||||
| 2011 | 2010 | |||||||
| Revenues | $ | 6,941,354 | $ | 61,647 | ||||
| Operating expense: | ||||||||
| Lease operating expense | 2,830,241 | 33,407 | ||||||
| Exploration cost | 129,478 | 13,492 | ||||||
| Depletion, depreciation, amortization, accretion and impairment | 1,429,100 | 1,136,305 | ||||||
| General and administrative expense | 1,855,282 | 2,017,244 | ||||||
| Gain on sale of oil and gas properties | (22,396 | ) | - | |||||
| Total operating expense | 6,221,705 | 3,200,448 | ||||||
| Income (loss) from operations | 719,649 | (3,138,801 | ) | |||||
| Other income (expense): | ||||||||
| Interest income | 2,886 | 3,805 | ||||||
| Interest expense | (549,512 | ) | (1,077,269 | ) | ||||
| Realized gain on commodity contracts | 137,358 | - | ||||||
| Unrealized gain on change in derivatives - commodity contracts | 938,950 | - | ||||||
| Unrealized gain (loss) on change in derivatives - convertible debt | (113,083 | ) | 10,773,500 | |||||
| Gain on settlement of accounts payable with common stock | 286,041 | - | ||||||
| Loss on conversion of debt - related party | (62,306 | ) | - | |||||
| Loss on extinguishment of debt | (17,620 | ) | - | |||||
| Other income | 25,803 | - | ||||||
| Total other income | 648,517 | 9,700,036 | ||||||
| Income before income taxes | 1,368,166 | 6,561,235 | ||||||
| Income tax benefit | 2,783,792 | - | ||||||
| Net income | $ | 4,151,958 | $ | 6,561,235 | ||||
| Net income per share: | ||||||||
| Basic | $ | 0.07 | $ | 0.16 | ||||
| Diluted | $ | 0.06 | $ | 0.13 | ||||
| Weighted average number of common shares outstanding: | ||||||||
| Basic | 61,494,530 | 39,932,479 | ||||||
| Diluted | 67,905,495 | 49,190,627 | ||||||
See accompanying notes to consolidated financial statements.
| F - 4 |
MESA ENERGY HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
For the Years Ended December 31, 2011 and 2010
| Common Stock | Additional | Retained | ||||||||||||||||||
| Par | Paid-In | Earnings | ||||||||||||||||||
| Shares | Value | Capital | (Deficit) | Total | ||||||||||||||||
| Balances at December 31, 2009 | 39,385,700 | $ | 3,939 | $ | (5,457,156 | ) | $ | (3,241,350 | ) | $ | (8,694,567 | ) | ||||||||
| Share-based compensation | 372,900 | 37 | 1,131,504 | - | 1,131,541 | |||||||||||||||
| Conversion of convertible debt and accrued interest | 473,421 | 47 | 185,557 | - | 185,604 | |||||||||||||||
| Discount on convertible debt | - | - | 665,000 | - | 665,000 | |||||||||||||||
| Derivative liability on convertible debt | - | - | (3,311,820 | ) | - | (3,311,820 | ) | |||||||||||||
| Net income | - | - | - | 6,561,235 | 6,561,235 | |||||||||||||||
| Balances at December 31, 2010 | 40,232,021 | 4,023 | (6,786,915 | ) | 3,319,885 | (3,463,007 | ) | |||||||||||||
| Shares issued for cash | 320,000 | 32 | 39,968 | - | 40,000 | |||||||||||||||
| Share-based compensation | 816,967 | 83 | 324,242 | - | 324,325 | |||||||||||||||
| Shares issued to settle accounts payable | 1,250,000 | 125 | 177,195 | - | 177,320 | |||||||||||||||
| Conversion of convertible debt and accrued interest | 14,646,628 | 1,464 | 2,463,624 | - | 2,465,088 | |||||||||||||||
| Common shares issued to induce debt conversion | 1,036,000 | 103 | 111,871 | - | 111,974 | |||||||||||||||
| Shares issued for acquisition of Tchefuncte Natural Resources, LLC | 21,200,000 | 2,120 | 2,965,880 | - | 2,968,000 | |||||||||||||||
| Shares issued in exchange for personal guarantees on debt | 30,000 | 3 | 4,647 | - | 4,650 | |||||||||||||||
| Debt discount | - | - | 5,743 | - | 5,743 | |||||||||||||||
| Related party forgiveness of debt | - | - | 60,000 | - | 60,000 | |||||||||||||||
| Net income | - | - | - | 4,151,958 | 4,151,958 | |||||||||||||||
| Balances at December 31, 2011 | 79,531,616 | $ | 7,953 | $ | (633,745 | ) | $ | 7,471,843 | $ | 6,846,051 | ||||||||||
See accompanying notes to consolidated financial statements.
{C}
| F - {C}5{C} |
MESA ENERGY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2011 and 2010
| Year Ended December 31, | ||||||||
| 2011 | 2010 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 4,151,958 | $ | 6,561,235 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation, depletion, amortization, accretion and impairment expense | 1,429,100 | 1,136,305 | ||||||
| Deferred income taxes | (2,875,959 | ) | - | |||||
| Share-based compensation | 324,325 | 1,131,541 | ||||||
| Gain on sale of oil and gas assets | (22,396 | ) | - | |||||
| Amortization of debt discount charged to interest expense | 1,464 | 665,000 | ||||||
| Amortization of deferred financing cost | 140,871 | 147,072 | ||||||
| Induced debt conversion expense charged to interest expense | 111,974 | - | ||||||
| Shares issued for continuation of loan guarantees charged to interest expense | 4,650 | - | ||||||
| Unrealized gain on change in derivative values | (825,867 | ) | (10,773,500 | ) | ||||
| Gain on settlement of accounts payable with common stock | (286,041 | ) | - | |||||
| Loss on conversion of debt - related party | 62,306 | - | ||||||
| Loss on extinguishment of debt | 17,620 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable - oil and gas | (450,172 | ) | 17,546 | |||||
| Accounts receivable - other | (50,470 | ) | - | |||||
| Prepaid and other current assets | 11,669 | - | ||||||
| Accounts payable and accrued expenses | 904,849 | 670,483 | ||||||
| Revenue payable | 663,747 | - | ||||||
| Accrued expenses - related party | 50,823 | 27,373 | ||||||
| CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 3,364,451 | (416,945 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Release of restricted cash | - | 20,000 | ||||||
| Cash received for sale of oil and gas property | 17,960 | - | ||||||
| Cash paid for acquisition of Tchefuncte Natural Resources, LLC, net of cash acquired | (4,809,368 | ) | - | |||||
| Cash paid for development of oil and gas properties | (569,689 | ) | (435,462 | ) | ||||
| Cash paid for support facilities and equipment | (246,214 | ) | - | |||||
| Cash paid for furniture and fixtures | (6,319 | ) | - | |||||
| CASH USED IN INVESTING ACTIVITIES | (5,613,630 | ) | (415,462 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from issuance of stock | 40,000 | - | ||||||
| Proceeds from borrowings on debt, net of financing costs | 5,713,086 | 20,000 | ||||||
| Proceeds from borrowings on convertible debt, net of financing costs | - | 573,362 | ||||||
| Proceeds from borrowings on debt - related party | 72,000 | 21,000 | ||||||
| Principal payments on long-term notes payable | (306,611 | ) | - | |||||
| Principal payments on debt - related party | (93,000 | ) | (43,000 | ) | ||||
| CASH PROVIDED BY FINANCING ACTIVITIES | 5,425,475 | 571,362 | ||||||
| NET CHANGE IN CASH | 3,176,296 | (261,045 | ) | |||||
| CASH AT BEGINNING OF YEAR | 6,096 | 267,141 | ||||||
| CASH AT END OF YEAR | $ | 3,182,392 | $ | 6,096 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
| Cash paid for interest | $ | 210,495 | $ | 578 | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| NON-CASH INVESTING AND FINACING TRANSACTIONS | ||||||||
| Accrued oil and gas development cost | $ | 36,364 | $ | (30,000 | ) | |||
| Common stock issued for purchase of Tchefuncte Natural Resources, LLC | $ | 2,968,000 | $ | - | ||||
| Derivative liability | $ | - | $ | 3,311,820 | ||||
| Common stock issued for the conversion of notes payable and accrued interest | $ | 2,465,088 | $ | 185,604 | ||||
| Promissory note and accrued interest exchanged for convertible note | $ | 41,019 | $ | - | ||||
| Debt discount on convertible note | $ | 5,743 | $ | - | ||||
| Common stock issued to settle accounts payable | $ | 177,320 | $ | - | ||||
| Forgiveness of accrued salary by CEO recorded as contributed capital | $ | 60,000 | $ | - | ||||
See accompanying notes to consolidated financial statements.
{C}
| F - {C}6{C} |
MESA ENERGY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization
Mesa Energy, Inc. ("MEI") is a wholly owned subsidiary of Mesa Energy Holdings, Inc. (the "Company"). MEI's predecessor entity, Mesa Energy, LLC, was formed in April 2003 as an exploration and production company in the oil and gas industry. MEI's oil and gas operations are conducted through itself and its wholly owned subsidiaries. MEI is a qualified operator in the State of New York and operates the Java Field. Mesa Gulf Coast, LLC, a wholly owned subsidiary, operates all properties in Louisiana. Mesa Energy Operating, LLC is a qualified operator in the states of Texas, Oklahoma, and Wyoming.
On July 22, 2011, MEI acquired Tchefuncte Natural Resources, LLC ("TNR"). TNR owns interests in 80 wells and related surface production equipment in five fields located in Plaquemines and Lafourche Parishes in Louisiana. The operator of all operated properties in Louisiana is Mesa Gulf Coast, LLC. Our operating entities have historically employed, and will continue in the future to employ, on an as-needed basis, the services of drilling contractors, other drilling related vendors, field service companies and professional petroleum engineers, geologists and land men as required in connection with future drilling and production operations.
Basis of Presentation and Principles of Consolidation
The consolidated financial statements herein have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and include the accounts of the Company and those of its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.
Exploration Stage Company
The Company was previously in the exploration state in accordance with SEC guidance and Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic No 915 - Development Stage Entities. During the year ended December 31, 2011, the Company exited the exploration stage upon the acquisition of TNR.
