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Liquidity and Going Concern
12 Months Ended
Dec. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Liquidity and Going Concern

2. LIQUIDITY AND GOING CONCERN

 

The Consolidated Financial Statements of the Company have been prepared on a “going concern” basis, which means that the continuation of the Company is presumed even though events and conditions exist that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern because it is possible that the Company will be unable to meet its obligations as they become due within one year after the date that these financial statements were issued.

 

Following completion of the Anatolia Transaction, the Company faced liquidity challenges as it encountered difficulty raising sufficient capital as a result of weakening capital markets, particularly in the commodities sector. In addition, the Company incurred higher than expected transaction costs and assumed significant unpaid trade payables from Anatolia Energy. At December 31, 2015 the Company’s cash balances were $0.9 million and the Company had a working capital deficit of $8.9 million. Contributing to the working capital deficit was the reclassification of the RCF Loan (defined in Note 6, below) from long-term to short-term liabilities as the RCF Loan matures on December 31, 2016. On February 4, 2016, the Company completed a registered direct offering whereby it sold 296,667 shares of common stock at a price of $2.82 per share. Net proceeds to the Company, after deducting offering expenses, were $0.8 million. The ending cash balance of $0.9 million along with the proceeds received from the registered direct offering of $0.8 million provided the Company with sufficient capital to fund its critical operations through March 31, 2016. Subsequent to March 31, 2016, the Company expects to receive funding from the following sources:

 

  Laramide Asset Sale

 

On November 9, 2015, the Company entered into a letter of intent (“LOI”) with Laramide Resources for the sale of its Churchrock and Crownpoint properties in New Mexico. Under the terms of the binding LOI, the Company expects to receive a cash payment of $5.25 million upon closing, currently anticipated to occur in Q2 2016.

 

  Option Agreement with Aspire Capital

 

On February 3, 2016, the Company and Aspire Capital entered into an option agreement by which Aspire Capital granted it the right at any time or times prior to April 30, 2017 to require Aspire Capital to enter into up to two SPAs, each having a term of up to 24 months and collectively requiring Aspire Capital to purchase up to $10 million in the aggregate of its common stock on an ongoing basis when required by the Company. 

 

  At-the-Market Sales Agreement

 

The Company has an existing ATM Sales Agreement that allows it to sell, from time-to-time, shares of its common stock in at-the-market offerings having an aggregate offering amount up to $15.0 million of which we have approximately $5.6 million available for future sales as of March 12, 2016.

 

While the Company believes the sources of capital above may provide sufficient liquidity to fund ongoing operations through December 31, 2016 and settle the RCF Loan upon maturity, the Company’s market capitalization, low trading volume and potential to fall below the reference price under the SPAs may make it difficult for the Company to fully utilize the $10.0 million and $5.6 million available under the SPAs and ATM Sales Agreement, respectively. Therefore the Company believes that it will need to raise additional funding or renegotiate the terms of the RCF Loan in order to continue as a going concern. The Company is currently evaluating its options with respect to the RCF Loan and also continues to explore opportunities to raise additional funds, further monetize its non-core assets and look for ways to reduce its monthly cash expenditures.

 

The Company has been successful at raising capital in the past, most recently with the completion of the registered direct offering on February 4, 2016 for gross proceeds of $0.8 million and two registered direct offerings during 2015 which occurred on December 18, 2015 and March 6, 2015 for aggregate net proceeds of $6.1 million. In addition, the Company was able to successfully raise capital in 2013 and 2014 through debt and equity fundraising efforts. Specifically, the completion of a registered direct offering in February 2014 for net proceeds of $9.3 million as well as procuring a convertible secured debt facility in November 2013 that provided us with $8.0 million in cash, which debt matures in December 2016. While the Company has been successful in the past raising funds through equity and debt financings as well as through the sale of non-core assets, no assurance can be given that additional financing will be available to it in amounts sufficient to meet its needs, including upon the maturity of our outstanding debt, or on terms acceptable to the Company. In the event funds are not available, the Company may be required to change its planned business strategies or it could default under its secured debt facility.