CJAX 8-K/A
CoJax Oil & Gas Corp (CJAX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment Number Three)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 12, 2020 (June 16, 2020)
CoJax Oil and Gas Corporation
(Exact name of registrant as specified in its charter)
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Virginia |
| 333-232845 |
| 46-1892622 |
(State or other jurisdiction of incorporation) |
| (Commission File Number) |
| (I.R.S. Employer Identification No.) |
Jeffrey J. Guzy, Chief Executive Officer
CoJax Oil and Gas Corporation
3033 Wilson Boulevard, Suite E-605
Arlington, Virginia 22201
(703) 216-8606
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging Growth Company [X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
NoneNot applicableNot Applicable
EXPLANATORY NOTE
This Current Report on Form 8-K/A Amendment Number Three ("Amended Form 8-K") is filed by CoJax Oil and Gas Corporation, a Virginia corporation, ("Company") to amend the Current Report on Form 8-K by the Company, as filed with the Commission on June 22, 2020, ("Original Report") by filing the financial statements listed in Item 9.01 below as exhibits to this Amended Form 8-K.
Unless stated otherwise in this Amended Form 8-K or exhibits hereto, this Amended Form 8-K does not amend any other item of the Original Report, as amended by Form 8-K/A Amendment One, filed with the Commission on June 29, 2020 ("Amendment One") and by Form 8-K/A Amendment Two, filed with the Commission on July 28, 2020 ("Amendment Two"), or purport to provide an update or a discussion of any developments at the Company or Barrister Energy, LLC, a Mississippi limited liability company, subsequent to the filing date of the Original Report and Amendment One and Amendment Two thereto.
Item 9.01. | Financial Statements and Exhibits. |
(a)Financial statements of businesses acquired.
The audited financial statements for Barrister Energy, LLC. for the years ended December 31, 2019, and December 31, 2018. These statements include the auditors' opinion letter, the Combined Statements of Oil and Gas Revenues and Direct Operating Costs along with Supplemental Information on Oil and Gas Reserves. Additionally, two tables are included: the Standardized Measure of Discounted Future Net Cash Flows and Changes to the Standardized Measure of Discounted Future Net Cash Flows.
(b) Pro forma financial information.
On June 16, 2020, the Company entered into an Acquisition Agreement ("Acquisition Agreement") with Barrister Energy, LLC, a Mississippi limited liability company, ("Barrister") to acquire all of the Membership Interests of Barrister. Consummation of the acquisition of the Barrister Membership Interests is subject to a number of conditions, which conditions have not been fully met as of the date of this Amended Form 8-K. The acquisition of Barrister under the Acquisition Agreement is a significant acquisition for purposes of Item 2.01 of the Current Report on Form 8-K. As a result, the Company prepared the accompanying unaudited pro forma condensed consolidated financial statements in accordance with Article 11 of Regulation S-X.
The accompanying unaudited pro forma financial statements give effect to the acquisition under the Acquisition Agreement as if the acquisition occurred on June 16, 2020. The pro forma financial statements and adjustments thereunder are described in the accompanying notes. They are based upon information and assumptions available at the time of the filing of this Current Report on Form 8-K/A, Amendment Number 3.
(c) Exhibits.
Exhibit Number | Description of Exhibit |
99.4 | Barrister Energy, LLC audited financial statements |
99.5 | CoJax Pro Forma financial statements |
Signature
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, hereunto duly authorized.
CoJax Oil and Gas Corporation
By: /s/Jeffrey J. Guzy
Jeffrey Guzy, Chief Executive Officer
Date: August 12, 2020
EXHIBIT INDEX
Exhibit Number | Exhibit Description |
99.4 | Barrister Energy, LLC audited financial statements |
99.5 | CoJax Pro Forma financial statements |
Exhibit 99.4 Barrister Financial Stmts
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and the Shareholders
of CoJax Oil & Gas Corporation
Opinion on the Financial Statements
We have audited the accompanying combined statements of oil and natural gas sales and direct operating costs of the oil and natural gas properties for Nall 16-6 #3, Nall 16-6 #1, and Nettles 9-12 #1 ("Barrister Properties") acquired from Barrister Energy, LLC. ("Barrister") by CoJax Oil & Gas Corporation for the years ended December 31, 2019, and 2018 (the "financial statements"). In our opinion, the combined financial statements of the Barrister Properties acquired by CoJax Oil & Gas Corporation referred to above present fairly, in all material respects, the oil and natural gas sales and direct operating costs of the Barrister properties for the year ended December 31, 2019, and 2018, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB). We are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. CoJax Oil & Gas Corporation was not required to have, nor were we engaged to perform, an audit of internal control over financial reporting for the Excel Field properties acquired. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements of the Barrister properties acquired by CoJax Oil & Gas Corporation referred to above present fairly, in all material respects, the oil and natural gas sales and direct operating costs of the Barrister properties for the year ended December 31, 2019, and 2018, in conformity with U.S. generally accepted accounting principles.
As described in the unaudited pro forma financial information, the financial statements are not a complete presentation of the operations of the Barrister properties acquired.
/s/ Haynie & Company
Haynie & Company
Salt Lake City, Utah
May 22, 2020
We have served as the Company's auditor since 2018
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Exhibit 99.4 Barrister Financial Stmts
Barrister Energy, LLC | ||
COMBINED STATEMENTS OF OIL AND GAS REVENUES AND DIRECT OPERATING COSTS | ||
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For the Years Ended December 31, | 2019 | 2018 |
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Oil and Gas Revenues | $63,534 | $160,492 |
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Direct Operating Costs |
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Oil and gas production costs | 45,216 | 146,119 |
Oil and gas production taxes | 3,050 | 7,704 |
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Total Direct Operating Costs | 48,266 | 153,823 |
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Direct Operating Income | $15,268 | $6,669 |
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For the Three Months Ended March 31, | 2020 | 2019 |
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Oil and Gas Revenues | $6,699 | $33,419 |
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Direct Operating Costs |
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Oil and gas production costs | - | 2,443 |
Oil and gas production taxes | 322 | 1,604 |
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Total Direct Operating Costs | 322 | 4,047 |
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Direct Operating Income | $6,377 | $29,372 |
Basis of Presentation – The accompanying financial statement presents only the oil and gas revenues and direct operating costs of Nall 16-6 #3, Nall 16-6 #1, and Nettles 9-12 #1 (Barrister Properties).
Oil and gas revenues are recognized when sold and delivered to third parties. Direct operating costs are recognized when incurred and include lease operating costs and production taxes directly related to the property interests acquired. Direct operating expenses exclude costs associated with acquisition, exploration, and development of oil and gas properties, geological and geophysical expenditures, and costs of drilling and equipping productive and non-productive wells. Depreciation and amortization of the oil and gas property interest, general and administrative expense, interest and accretion expense, income taxes and other indirect expenses have been excluded from direct operating profit (loss) because their historical amounts would not be comparable to those resulting from future operations; accordingly, the accompanying financial statements are not a complete presentation of the operations of the mineral leases acquired.
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Exhibit 99.4 Barrister Financial Stmts
Barrister Energy, LLC ACQUISITION
SUPPLEMENTAL INFORMATION ON OIL AND GAS RESERVES
(UNAUDITED)
The following estimates of proved reserve quantities and related standardized measure of discounted net cash flow relate only to the properties being acquired from Barrister Energy, LLC. They are estimates only and do not purport to reflect realizable values or fair market values. Reserve estimates are inherently imprecise, and estimates of discoveries are more imprecise than those of producing oil and gas properties. Accordingly, these estimates are expected to change as future information becomes available. All of the reserves are located in the United States of America.
Reserve Quantities Information – Proved reserves are estimated reserves of crude oil (including condensate and natural gas liquids) and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are those expected to be recovered through existing wells, equipment, and methods.
| For the Year Ended | |
| December 31, 2019 | |
| Oil | Gas |
| (Barrels) | (MCF) |
Proved Developed and Undeveloped Reserves |
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Beginning of year | 3,107,053 | - |
Production | (1,397) | - |
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End of Year | 3,105,656 | - |
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Proved Developed Reserve at End of Year | 127,520 | - |
Proved Undeveloped Reserves associated with the properties are still being evaluated. All disclosures contained herein are only the Proved Developed Reserves associated with the properties.
Standardized Measure of Discounted Future Net Cash Flows. The standardized measure of discounted future net cash flows is computed by applying year-end prices of oil and gas to the estimated future production of proved oil and gas reserves, less estimated future expenditures (based on year-end costs) to be incurred in developing and producing the proved reserves, less estimated future income tax expenses (based on year-end statutory tax rates) to be incurred on pretax net cash flows less the tax basis of the properties and available credits, and assuming continuation of existing economic conditions. The estimated future net cash flows are then discounted using a rate of 10 percent per year to reflect the estimated timing of the future cash flows.
December 31, | 2019 |
Future cash inflows | $147,351,333 |
Future production costs | (13,740,520) |
Future development costs | (9,000,000) |
Future income taxes | (26,168,271) |
Future net cash flows | 98,442,542 |
10% annual discount for estimated timing of cash flows | (62,486,973) |
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Standardized Measure of Discounted Future Net Cash Flows | $35,955,569 |
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Exhibit 99.4 Barrister Financial Stmts
Changes in the Standardized Measure of Discounted Future Net Cash Flows
For the Year Ended December 31, | 2019 |
Beginning of the year | $35,291,986 |
Development costs incurred during the year | - |
Sales of oil and gas produced, net of production costs | (4,379) |
Accretion of discount | 3,617,202 |
Net changes in prices and production costs | (2,949,240) |
Net changes in estimated future development costs | - |
Net changes in the timing of cash flows | - |
Net change in income taxes | - |
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Standardized Measure of Discounted Future Net Cash Flows | $35,955,569 |
The prices used were determined using an unweighted arithmetic average of the first-day-of-the month prices for the calendar year 2019, adjusted for location and quality differentials. This determination resulted in prices of $62.63 per barrel of oil and $0.00 per MCF of gas.
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Exhibit 99.5 CoJax Pro Forma
COJAX OIL AND GAS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On June 16, 2020, the Company entered into an Acquisition Agreement ("Acquisition Agreement") with Barrister Energy, LLC, a Mississippi limited liability company, ("Barrister") to acquire all of the Membership Interests of Barrister. Consummation of the acquisition of the Barrister Membership Interests is subject to a number of conditions, which conditions have not been fully met as of the date of this letter. The acquisition of Barrister under the Acquisition Agreement is a significant acquisition for purposes of Item 2.01 of Form 8-K. As a result, the Company prepared the accompanying unaudited pro forma condensed consolidated financial statements in accordance with Article 11 of Regulation S-X.
The accompanying unaudited pro forma financial statements give effect to the acquisition under the Acquisition Agreement as if the acquisition occurred on June 16, 2020. The pro forma financial statements and adjustments thereunder are described in the accompanying notes. They are based upon information and assumptions available at the time of the filing of this Current Report on Form 8-K/A, Amendment Number 3.
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Exhibit 99.5 CoJax Pro Forma
COJAX OIL AND GAS CORPORATION
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF MARCH 31, 2020
| Historical | Adjustment |
| Pro Forma |
ASSETS |
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Current Assets |
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Cash | $46,519 | $- |
| $46,519 |
Total Current Assets | 46,519 | - |
| 46,519 |
Properties and Equipment |
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Oil and natural gas properties subject to depletion and amortization | - | 10,079,235 | 1 | 10,079,235 |
Total Properties and Equipment | - | 10,079,235 |
| 10,079,235 |
Total Assets | $46,519 | $10,079,235 |
| $10,125,754 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities |
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Accounts payable | $2,090 | $- |
| $2,090 |
Accrued interest payable | 704 | - |
| 704 |
Accrued salaries and payroll taxes | 29,674 | - |
| 29,674 |
Loan payable – related party | 90,400 | - |
| 90,400 |
Loan payable - acquisition | - | 2,700,000 | 1a | 2,700,000 |
Total Current Liabilities | 122,868 | 2,700,000 |
| 2,822,868 |
Asset retirement obligations | - | 79,235 | 1b | 79,235 |
Total Liabilities | 122,868 | 2,779,235 |
| 2,902,103 |
Stockholders' Equity |
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Preferred stock - $0.01 par value; 50,000,000 shares authorized; no shares issued or outstanding, respectively. | - | - |
| - |
Common stock, $0.01 par value, 300,000,000 current shares authorized, one share issued and outstanding, respectively. | - | 36,500 | 1c | 36,500 |
Additional paid-in capital | 2 | 7,263,500 |
| 7,263,502 |
Accumulated deficit | (76,351) | - |
| (76,351) |
Total Stockholders' Equity | (76,349) | 7,300,000 |
| 7,223,651 |
Total Liabilities and Stockholders' Equity | $46,519 | $10,079,235 |
| $10,125,754 |
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Exhibit 99.5 CoJax Pro Forma
COJAX OIL AND GAS CORPORATION
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2020
| CoJax | Properties | Pro Forma |
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| Historical | Acquired | Adjustments |
| Pro Forma |
Oil and Gas Revenues | $- | $6,699 | $- |
| $6,699 |
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Costs and Operating Expenses |
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Oil and gas production taxes | - | 322 | - |
| 322 |
Depreciation, depletion, and amortization | - | - | 1,132 | (2) | 1,132 |
Asset retirement obligation accretion | - | - | 570 | (3) | 570 |
General and administrative expense | 32,444 | - | - |
| 32,444 |
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Total Costs and Operating Expenses | 32,444 | 322 | 1,702 |
| 34,468 |
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Income (Loss) from Operations | (32,444) | 6,377 | (1,702) |
| (27,769) |
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Other Expense |
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Interest expense | (375) | - | - |
| (375) |
Net Other Expense | (375) | - | - |
| (375) |
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Net Income (Loss) | $(32,819) | $6,377 | $(1,702) |
| $(28,144) |
COJAX OIL AND GAS CORPORATION
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2019
| CoJax | Properties | Pro Forma |
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| Historical | Acquired | Adjustments |
| Pro Forma |
Oil and Natural Gas Revenues | $- | $63,534 | $- |
| $63,534 |
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Costs and Operating Expenses |
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Oil and natural gas production costs | - | 45,216 | - |
| 45,216 |
Oil and natural gas production taxes | - | 3,050 | - |
| 3,050 |
Depreciation, depletion, and amortization | - | - | 8,542 | (2) | 8,542 |
Asset retirement obligation accretion | - | - | 2,347 | (3) | 2,347 |
General and administrative expense | 34,561 | - | - |
| 34,561 |
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Total Costs and Operating Expenses | 34,561 | 48,266 | 10,822 |
| 93,649 |
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Income (Loss) from Operations | (34,561) | 15,268 | (10,822) |
| (30,115) |
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Other Expense |
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Interest expense | (608) | - | - |
| (608) |
Net Other Expense | (608) | - | - |
| (608) |
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Net Income (Loss) | $(35,169) | $15,268 | $(10,822) |
| $(30,723) |
3
Exhibit 99.5 CoJax Pro Forma
The Acquisition will qualify as a business combination. As such, CoJax will recognize the assets to be acquired and liabilities to be assumed at their fair values as the date of closing. The estimated fair value of the properties to be acquired approximate the value of the consideration to be paid, and the asset retirement obligation to be assumed, which management has concluded approximates the fair value that would be paid by a typical market participant. As a result, neither goodwill nor a bargain purchase gain will be recognized related to the acquisition. While the proposed transaction is subject to purchase price adjustments, the following table summarizes estimates of the assets to be acquired and the liabilities to be assumed:
Oil and gas properties | $10,079,235 |
Asset retirement obligation | (79,235) |
Total Identifiable Net Assets | $10,000,000 |
Pro forma adjustments to the historical financial statements to reflect the acquisition of Barrister Energy are as follows:
| (1) | To record the acquisition transaction. The consideration to be paid and liabilities to be assumed consist of the following: |
| (a) | The assumption of $2,700,000 of debt. |
| (b) | The assumption of the asset retirement obligation of $79,235. The obligation relates to legal requirements associated with the retirement of long-lived assets that result from the acquisitions, construction, development, or normal use of the asset. The obligation relates primarily to the requirement to plug and abandon oil and natural gas wells and support wells at the conclusion of their useful lives. |
| (c) | To record the conditional issuance of 3,650,000 shares of common stock as partial consideration and the Acquisition liability required to be settled through equity pursuant to the Purchase Agreement; |
| (2) | To record depreciation, depletion, and amortization of the oil and gas properties acquired based on the oil and gas production occurring during the periods. |
| (3) | To record accretion of the asset retirement obligation. |
4