---

---

The information in this Form 10-K includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical or current facts, that address activities, events, outcomes and other matters that we plan, expect, intend, assume, believe, budget, predict, forecast, project, estimate or anticipate (and other similar expressions) will, should, could or may occur in the future are forward-looking statements. These forward-looking statements are based on management’s current expectations and belief, based on currently available information, as to the outcome and timing of future events and their effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All statements concerning our expectations for future operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties, many of which are beyond our control, and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those described in (1) Part I, “Item 1A - Risk Factors” and other cautionary statements in this Form 10-K, (2) our reports and registration statements filed from time to time with the Securities and Exchange Commission (“SEC”), and (3) other announcements we make from time to time.  In this Form 10-K, references to "we," "our," "us," “Registrant,” the "Company," or "Regent" refer to Regent Technologies, Inc., a Colorado corporation.

---

---

---

---

---

---

---

---

---

---

---

---

REGENT TECHNOLOGIES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

 

		December 31,				December 31,
		2016				2015
ASSETS
CURRENT ASSETS:
Cash		$	4,967			$	4,411
Prepaid expenses and other			77,107				75,730
Investments (Note 4)			81,769				110,513
Total current assets			163,843				190,654
Property, plant and equipment, net			185,780				185,780
Intangible assets, net			4,614,220				4,614,220
Oil and natural gas properties, net			-				102,100
Investments, restricted (Note 4)			-				207,422
Total assets		$	4,963,843			$	5,300,176
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	16,212			$	11,651
Notes payable - stockholder			25,000				25,000
Notes payable - related parties			18,000				8,000
Accrued interest payable			1,630				1,074
Accrued liabilities - related parties			40,197				12,230
Total current liabilities			101,039				57,955
Accrued liabilities - related parties			6,000				17,000
Asset retirement obligation			10,660				10,660
Total liabilities			117,699				85,615
Stockholders' equity:
Convertible Preferred stock, $.10 par value, 1,000,000 shares authorized,
zero and 99,500 shares issued and outstanding, respectively,  Subsidiary			-				9,950
Series A Convertible Preferred stock, $.10 par value, 10,000,000 shares authorized,
175,000 and 150,000 shares issued and outstanding, respectively, Registrant			17,500				15,000
Series B Convertible Preferred stock, $.10 par value, 10,000,000 shares authorized,
1,500,000 shares issued and outstanding, Registrant			150,000				150,000
Common stock, $.01 par value, 100,000,000 shares authorized, 23,914,610
and 23,249,355 shares issued and outstanding, respectively			239,145				232,493
Paid-in capital in excess of par			8,148,532				8,329,271
Accumulated deficit			(3,709,033	)			(3,522,153	)
Total stockholders' equity			4,846,144				5,214,561
Total Liabilities and Stockholders' Equity		$	4,963,843			$	5,300,176

         

The accompanying notes are an integral part of the consolidated financial statements.

 

 

REGENT TECHNOLOGIES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

 

		For the Year Ended
		December 31,
		2016				2015
Operating revenues:		$	-			$	-
Operating expenses:
Lease operating expense			6,355				17,054
Production and other taxes			-				1,000
Depreciation, depletion and amortization			-				224
Full cost ceiling impairment			102,100				114,518
General and administrative			75,267				92,767
Loss from operations			(183,722	)			(225,563	)
Other income (expense):
Net change in fair value measurement			-				20,629
Gain on debt extinguishment			283				6,968
Interest expense			(2,556	)			(2,513	)
Total other income (expense)			(2,273	)			25,084
Loss before income taxes			(185,995	)			(200,479	)
Income tax provision			-				-
Net loss			(185,995	)			(200,479	)
Series A preferred dividends			885				1,191
Net loss available to common stockholders		$	(186,880	)		$	(201,670	)
Net loss per basic common share		$	(0.01	)		$	(0.01	)
Weighted average shares outstanding (basic)			23,569,917				23,179,628

     

The accompanying notes are an integral part of the consolidated financial statements.

 

 

REGENT TECHNOLOGIES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

 

																																		Total
		Series A Preferred Stock								Series B Preferred Stock								Common Stock								Additional								Stockholders'
		Issued				Par				Issued				Par				Issued				Par				Paid-in				Accumulated				Equity
		Shares				Value				Shares				Value				Shares				Value				Capital				Deficit				(Deficit)
Balance at December 31, 2014			249,500			$	24,950				-			$	-				23,130,233			$	231,302			$	3,709,271			$	(3,320,483	)		$	645,040
Common stock issued for preferred stock dividend																			119,122				1,191												1,191
Issuance of convertible Series B preferred stock for asset acquisition											1,500,000				150,000												4,620,000								4,770,000
Net loss for 2015																															(201,670	)			(201,670	)
Balance at December 31, 2015			249,500			$	24,950				1,500,000			$	150,000				23,249,355			$	232,493			$	8,329,271			$	(3,522,153	)		$	5,214,561
Common stock for net profits interest																			200,000				2,000				(2,000	)							-
Common stock issued for preferred stock dividend																			88,548				885												885
Preferred stock sale			25,000				2,500																				22,500								25,000
Convertible preferred stock redemption			(99,500	)			(9,950	)																			(197,472	)							(207,422	)
Common stock for convertible preferred stock redemption																			376,707				3,767				(3,767	)							-
Net loss for 2016																															(186,880	)			(186,880	)
Balance at December 31, 2016			175,000			$	17,500				1,500,000			$	150,000				23,914,610			$	239,145			$	8,148,532			$	(3,709,033	)		$	4,846,144

     

The accompanying notes are an integral part of the consolidated financial statements.

 

 

REGENT TECHNOLOGIES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		For the Year
		Ended December 31,
		2016				2015
Operating activities:
Net loss before non-cash operating activities		$	(185,995	)		$	(200,479	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion and amortization			-				224
Full cost ceiling impairment			102,100				114,518
Net change in fair value measurement			-				(20,629	)
Gain from extinguishment of debt			(283	)			(6,968	)
Increase in prepaid expense and other			(1,377	)			(35,730	)
Changes in assets and liabilities:
Increase (decrease) in accounts payable			4,561				(19,576	)
Increase in accrued liabilities - related parties			17,250				5,818
Increase in accrued interest payable			556				451
Net Cash Used In Operating Activities:			(63,188	)			(162,371	)
Investing activities:
Proceeds from sale of MacuCLEAR stock investment			28,744				-
Capital expenditures for oil and gas interests			-				(10,350	)
Net Cash Provided By (Used In) Investing Activities:			28,744				(10,350	)
Financing activities:
Proceeds from sale of preferred stock			25,000				-
Borrowings, notes payable - related parties			10,000				-
Repayments - related parties			-				(10,900	)
Net Cash Provided By (Used In) Financing Activities:			35,000				(10,900	)
Net Increase (Decrease) in Cash:			556				(183,621	)
Cash at beginning of period			4,411				188,032
Cash at end of period		$	4,967			$	4,411
Supplemental disclosures of cash flow information:
Cash paid for:
Interest		$	2,000			$	1,140
Taxes		$	-			$	1,000
Non-cash investing and financing activities:
Series A preferred dividends paid in common stock		$	885			$	1,191
Common stock issued in exchange for assets		$	2,000			$	-
Preferred stock redeemed with asset exchange		$	207,422			$	-
Common stock issued in preferred stock redemption		$	3,767			$	-
Series B preferred stock issued for Solar Logic assets		$	-			$	4,800,000

    

The accompanying notes are an integral part of the consolidated financial statements.

 

 

REGENT TECHNOLOGIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  Description of Business and Significant Accounting Policies

Regent Technologies, Inc., formerly Regent Petroleum Corporation, was incorporated under the laws of the State of Colorado on January 18, 1980.  During 1999, the Company had re-entered the development stage pursuant to ASC No. 915, "Development Stage Activities" ("ASC 915") of the "Accounting Standards Codification ("Codification" or "ASC") and the Hierarchy of Generally Accepted Accounting Principles." Regent NRCo is a Texas corporation and is engaged in testing oil and gas production enhancement technologies and the acquisition and development of oil and natural gas properties.  In 2013, the Company organized a second subsidiary REGENT SPV LLC, doing business as Solar Logic LLC, as a Texas limited liability company.  It is referred to herein as “RSPV” and it will operate as an unregulated company and will invest in, own and operate distributed solar power ventures, including commercial and residential solar thermal installations.

 

The consolidated financial statements of the Company included in this report have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and in accordance with accounting principles generally accepted in the United States (“US GAAP”).  The consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiary and include all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation.  Intercompany balances and transactions have been eliminated in consolidation. Certain data in the prior period’s financial statements have been adjusted to conform to the presentation of the current period.

The preparation of financial statements in conformity with US GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. The accounting policies most affected by management’s estimates and assumptions are provisions for depreciation, depletion and amortization, estimates of proved reserves, impairment of long-lived assets based on estimates of future net cash flows, and asset retirement obligations based on estimates regarding timing and cost of future asset retirements.

The Company follows the full-cost method of accounting under which all costs associated with property acquisition, exploration and development activities are capitalized.  We capitalize internal costs that can be directly identified with our acquisition, exploration and development activities and do not include any costs related to production, general corporate overhead or similar activities. The internal costs that are capitalized do not include any costs related to production, general corporate overhead, or similar activities. The Company does not recognize any gain or loss on the sale or other disposition of oil and gas properties unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost center. Estimates of proved reserves are prepared by a third party engineering firm.  The costs of unproved properties are excluded from amortization until the properties are evaluated.   The Company reviews its equipment and other operating assets for impairment in accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”).  ASC 360 requires the Company to evaluate equipment and other operating assets for impairment as events occur or circumstances change that would more likely than not reduce the fair value below the carrying amount.  If the carrying amount is not recoverable from its undiscounted cash flows, then the Company would recognize an impairment loss for the difference between the carrying amount and the current fair value. Further, the Company evaluates the remaining useful lives of its equipment and other operating assets at each reporting period to determine whether events and circumstances warrant a revision to the remaining depreciation periods. We review the carrying value of our properties under the full-cost accounting rules of the Securities and Exchange Commission on a quarterly basis.  This quarterly review is referred to as a ceiling test.  Under the ceiling test, capitalized costs, less accumulated amortization and related deferred income taxes, may not exceed an amount equal to the sum of the present value of estimated future net revenues (adjusted for hedges) less estimated future costs to be incurred in developing and producing the proved reserves, less any related income tax effects.

 

 

Estimates of economically recoverable oil and natural gas reserves and future net cash flows necessarily depend upon a number of variable factors and assumptions, such as historical production from the area compared with production from other producing areas, the assumed effects of regulations by governmental agencies and assumptions governing future oil and natural gas prices, future operating costs, severance taxes, development costs and workover costs, all of which may in fact vary considerably from actual results. For these reasons, estimates of the economically recoverable quantities of oil and natural gas attributable to any particular group of properties may vary substantially.  Furniture and equipment are stated at cost.

Depreciation and depletion of producing oil and natural gas properties are calculated using the units-of-production method. Proved developed reserves are used to compute unit rates for unamortized tangible and intangible development costs, and proved reserves are used for unamortized leasehold costs.  Gains and losses on disposals or retirements that are significant or include an entire depreciable or depletable property unit are included in operating income.  Depreciation of furniture, fixtures and equipment, consisting of office furniture, computer hardware and software, leasehold improvements, and solar power equipment is computed using the straight-line method over their estimated useful lives, which vary from three to ten years.

We account for business acquisitions using the acquisition method of accounting and record intangible assets separate from goodwill. Intangible assets are recorded at fair value based on estimates as of the date of acquisition. Goodwill is recorded as the residual amount of the purchase price consideration less the fair value assigned to the individual assets acquired and liabilities assumed as of the date of acquisition. We charge acquisition related costs that are not part of the purchase price consideration to general and administrative expense as they are incurred. These costs typically include transaction and integration costs, such as legal, accounting, and other professional fees. Contingent consideration, which represents an obligation of the acquirer to transfer additional assets or equity interests to the former owner as part of the exchange if specified future events occur or conditions are met, is accounted for at fair value either as a liability or as equity depending on the terms of the acquisition agreement.

Acquired intangible assets are amortized over their estimated useful lives. We evaluate the recoverability of our intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If such review indicates that the carrying amount of property and equipment and intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value as impairment.  We would record any impairment in accordance with ASC No. 350, “Intangibles – Goodwill and Other” (“ASC 350”).  Pursuant to ASC 350, we perform impairment tests between scheduled annual tests in the fourth quarter if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value.

Revenues generally, including for oil and gas, are recognized when production is sold to a purchaser at a fixed or determinable price, when delivery has occurred and title has transferred, and if collectability of the revenue is probable. Revenues from the production of crude oil and natural gas properties in which we have an interest with other producers are recognized using the entitlements method.  Differences between actual production and net working interest volumes are routinely adjusted.

 

Our asset retirement obligation primarily represents the estimated present value of the amount we will incur to plug, abandon and remediate our producing properties at the end of their productive lives, in accordance with federal, state and local laws. We account for asset retirement obligations based on the guidance of ASC No. 410, "Asset Retirement and Environmental Obligations" ("ASC 410"), which addresses the required accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. ASC 410 requires that the fair value of an asset's retirement obligation be recorded as a liability in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying amount of the related long-lived asset.  Periodic accretion of the discount of the estimated liability is treated as accretion expense included in depreciation, depletion and amortization on our Consolidated Statements of Operations.

 

 

We utilize the asset and liability method to account for income taxes.  Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured currently enacted tax rates expected to apply to taxable income in the years in which those differences are expected to reverse.

We account for equity based compensation under the provisions of ASC No. 718, "Compensation - Stock Compensation" ("ASC 718").  ASC 718 requires the recognition of the fair value of equity-based compensation in operations. The fair value of our stock option awards are estimated using a Black-Scholes option valuation model. This model requires the input of subjective assumptions and elections including expected stock price volatility and the estimated life of each award. In addition, the calculation of equity-based compensation costs requires that we estimate the number of awards that will be forfeited during the vesting period. The fair value of equity-based awards is amortized over the vesting period of the award and we elected to use the straight-line method for awards granted after the adoption of ASC 718 with no forfeitures.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, whether in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of nonperformance, which includes, among other things, the Company’s credit risk.  In accordance with the requirements of ASC No. 820, "Fair Value Measurement" ("ASC 820"), the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under ASC 820 and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments. The estimated fair value of cash and accounts payable approximate their carrying value due to the short term nature of these instruments. The carrying value of the notes payable also approximate fair value based on the terms of these instruments.  Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities are as follows:

Earnings per common share are determined under the provisions of ASC No. 260, "Earnings per Share" ("ASC 260"), which requires the Company to report both basic earnings per share, which is based on the weighted-average number of common shares outstanding, and diluted earnings per share, which is based on the weighted-average number of the common shares outstanding plus all potentially dilutive shares outstanding.  At December 31, 2016 and 2015, there are no exercisable common stock equivalents. Accordingly, no common stock equivalents are included in the earnings per share calculations and basic and diluted earnings per share are the same for all periods presented.

 

NOTE 2. Going Concern Uncertainties

As of the date of this 2016 annual report, there is substantial doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our business operations and material commitments. Our future success and viability, therefore, are dependent upon our ability to generate capital financing. We are optimistic that we will be successful in our new business operations and capital raising efforts; however, there can be no assurance that we will be successful in generating revenue or raising additional capital. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon the Company and our shareholders.  These consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.

 NOTE 3.  Intangible Assets and Solar Logic Acquisition

Effective December 1, 2015, Regent Technologies, Inc. entered into the Regent-Solar Logic IP Rights Agreement (the “SL Agreement”) with Solar Logic Incorporated (“Solar Logic”) which includes an exclusive license of Solar Logic’s intellectual property (the “SL Intellectual Property License” or “License”) to the Company. Under the Agreement and License, Solar Logic transferred all of its equipment to Regent and granted the exclusive rights to all intellectual property which includes two issued patents and its trade secrets, technology, business and technical information and know-how, databases, and other confidential and proprietary information as well as solar manufacturing processes and protocols. All acquired assets were appraised with a combined tangible and intangible asset valuation of $4.8 million by a third-party appraiser engaged by Solar Logic. In connection with applying the acquisition method of accounting, the asset value acquired by Regent resulted in $4,614,220 assigned to intangible assets, and $185,780 assigned to property, plant and equipment.   Substantially all of the intangible assets recorded for this acquisition are deductible for tax purposes.  Please read Note 3 of the consolidated financial statements for the year ended December 31, 2015 which is incorporated herein from the Registrant's Form 10-K for the year ended December 31, 2015

Intangible assets currently include those assets acquired as part of our Solar Logic Acquisition described above.  In the future, this will include our internally-generated intangible assets, which will represent patents on technologies related to our products and production processes. We will record an asset for patents, after the patent has been issued, based on the legal, filing, and other costs incurred to secure them. We amortize intangible assets on a straight-line basis over their estimated useful lives beginning with the use of the asset which we expect will begin in mid-2017. We estimate the useful life of our intangible assets to be 15 years and the estimated amortization expense to be approximately $307,000 per year.

NOTE 4.  Investments

The Company’s Subsidiary has been holding 76,590 shares of MacuCLEAR Series A Preferred Stock (“MacuCLEAR”) and 19,268 shares of MacuCLEAR common stock for the partial redemption of the Subsidiary’s outstanding 99,500 shares of Series A Preferred Stock.   The MacuCLEAR preferred and common stock being held for the partial redemption of Subsidiary preferred stock has been carried at cost or basis whichever is less. During April 2016, the Boards of the Company and the Company’s Subsidiary voted to initiate the redemption process with the conversion of each unit of 5,000 shares of the Subsidiary preferred stock in exchange for 4,817 shares of MacuCLEAR stock plus the issuance of 18,930 shares of newly issued restricted common stock of Regent Technologies, Inc.    Effective September 30, 2016, the exchange was completed and resulted in the delivery of the MacuCLEAR stock described above and the delivery of 376,707 newly issued shares of Regent Technologies, Inc. (“Regent”) restricted common stock.  Concurrent with the exchange, the 99,500 shares of Subsidiary preferred stock were cancelled.  In addition, the book value of the MacuCLEAR stock of $207,422 was deducted from the Subsidiary’s capitalization and the Regent common stock was issued and booked at $.01 per share.  Since related parties were participants in the exchange, the total par value of $3,767 was deducted from the Regent Paid-in capital in excess of par value.

As of this filing, the Company’s Subsidiary is holding 4,361 shares of MacuCLEAR Preferred Stock which are being marketed for capital reallocation as a current asset.  During the second quarter, the Subsidiary sold 533 shares for $18.75 per share and during the third quarter, the Subsidiary sold 1,000 shares for $18.75 per share.  The carrying value for the shares being marketed receive Level 3 Fair Value Measurement under ASC 820 of $18.75 per share based on sales by MacuCLEAR of new issues of preferred stock during December 2015 and January 2016 with the same designations.  MacuCLEAR discontinued Phase 2 clinical trials in February 2017 following indications that the new drug had the potential to positively effect visual acuity.  Management has engaged a national merger and acquisition firm to help market the assets of MacuCLEAR.

 

 

NOTE 5.   Property, Plant and Equipment

 

 

NOTE 6.  Asset Retirement Obligation

We have included estimated future costs of abandonment and dismantlement in our amortization base and amortize these costs as a component of our depreciation, depletion, and accretion expense.  The Company has not increased the asset retirement obligation for the years ended December 31, 2016 and 2015 due to only nominal impact.

NOTE 7.  Income Taxes

 

The Company recognizes deferred tax assets and liabilities based on estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, future tax benefits, such as those from net operating loss carry forwards, are recognized to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At December 31, 2016 and 2015, the Company had net deferred tax assets which relate to the Company's net operating loss carry forwards less deferred tax liabilities related to unrealized gains on its MacuCLEAR investment shares.  At December 31, 2016, the remaining net operating loss totaled approximately $454,324 which will expire through 2036.  This deferred tax asset has been fully offset by a valuation reserve.   The Company does not have any other deferred tax assets or liabilities.

The Tax Reform Act of 1986 imposed substantial restrictions of the utilization of net operating loss and tax credit carry forwards in the event of an "ownership change" as defined by the Section 382 of the Internal Revenue Code of 1986. If the Company has an "ownership change" as defined by the Internal Revenue Code of 1986, the Company's ability to utilize the net operating losses could be reduced.  A reconciliation of income tax expense at the statutory federal rate of 34% to income tax expense at the Company's effective tax rate for the years ended December 31, 2016 and 2015 is as follows:

 

 

The Company uses the accrual method of accounting for income tax reporting purposes. At December 31, 2016 and 2015, the significant components of the Company's deferred tax assets (benefits) and liabilities are summarized as follows:

 

NOTE 8.  Stockholders’ Equity

The Company's capital structure is complex and consists of preferred stock and a general class of common stock. The Company is authorized to issue 130,000,000 shares of stock, of which 30,000,000 have been designated as preferred shares with a par value per share of $.10, and 100,000,000 have been designated as common shares with a par value per share of $.01.   The Board of Directors has established a Series A Preferred Stock and a Series B Preferred Stock as a series of Company preferred stock.  As of the date of this filing, there are outstanding 175,000 shares of Series A Preferred Stock, 1,500,000 shares of Series B Preferred Stock, and 23,914,610 shares of common stock outstanding.  Please see further discussion below regarding preferred stock series and further information which is incorporated herein from the Registrant's Form 10-K for the year ended December 31, 2015.

Common Stock

Holders of Regent's common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors.  Holders of the Regent's common stock representing a majority of the voting power of Regent's capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of stockholders. A vote by the holders of a majority of Regent's outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to Regent's articles of incorporation.  Holders of Regent's common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. Regent's common stock has no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to Regent's common stock.

The Company’s common stock outstanding increased 376,707 shares effective September 30, 2016, with the redemption of the Subsidiary Preferred Stock (see Subsidiary Preferred Stock below and Note 4).  Also, effective January 1, 2016, the Company’s common stock outstanding increased 200,000 shares with the acquisition of the 40% net profits interest.  Since one of the three sellers was a related party, there was no increase in the asset value and the stock was booked at par value of $2,000 with an equivalent offset to paid-in capital in excess of par due to the related party (see Note 9).  In addition, the Company’s common stock was increased 119,122 shares in 2015 and 88,548 shares in 2016 from common stock dividends for the preferred stock (see description below).

Series A Preferred Stock

The Series A Preferred Stock ranks in priority to any other preferred stock currently issued or to be issued.  Our common stock and any other class or series of preferred stock issued hereafter is or will be junior to the Series A Preferred Stock, in each case as to distributions upon liquidation, dissolution or winding up of the Company and payment of dividends on shares of equity securities.  We have completed the sale of three and one-half units of Series A Preferred Stock  for $50,000 per unit.  Each Unit consists of 50,000 shares of Series A Preferred Stock and 50,000 Warrants. Each share of the Series A Preferred Stock bears an eight percent (8%) dividend (the “Dividend”) payable upon the declaration of a dividend by the Board. Dividends may be paid in cash or in common stock at issuer’s option for the first two years following closing, thereafter the issuer shall pay the Dividend in cash.  Dividends paid in common stock shall be paid based on the previous 90 day moving average price but not less than $.10 per share.   Dividends paid in 2016 and 2015 totaled 207,670 shares of common stock valued at $2,077.

 

 

Every share of the Series A Convertible Preferred Stock purchased possesses one warrant to purchase one share each of the Company’s common stock at a fixed exercise price of $1.50 per share which may be exercised by the holder any time during the three years from the date of issue.  The holders of the Series A Preferred Stock have the right, at any time, to convert each Series A Preferred Share into ten (10) shares of common stock.  Each share of Series A Preferred Stock shall be converted into ten (10) fully paid and nonassessable shares of common stock at the request of the Corporation.  This automatic conversion is conditioned upon the passing of a minimum of two years from the date of issuance and subject to the previous 30 day moving average price of the Company’s common stock be at least $1.50 per share and a previous 30 day average volume of 50,000 common shares or more per day.   No transfer of Series A Preferred Shares may be made to any holder who, at the time of the transfer, would not be an “Accredited Investor” pursuant to Rules promulgated under the Securities Act of 1933. In the event of the death of an Investor whose beneficiaries would not qualify, the estate of the investor may remain the holder until conversion, or elect to convert the Preferred Stock to common stock. Unless otherwise approved by the Company a holder may not transfer a portion of his holding to more than one person who is not already a holder of common stock or preferred stock or all of his holdings to more than two persons who are so situated.

 

Series B Preferred Stock

 

In December 2015, the Board of Directors established the Series B Convertible Preferred Stock as a series of Company preferred stock designating 1,500,000 shares with a par value of $.10 per share.  The Series B Preferred Stock is junior to the Company’s Series A Preferred Stock but ranks ahead of our common stock and any other class or series of preferred stock issued hereafter as to distributions upon liquidation, dissolution or winding up or the Company.  The Series B Preferred Stock was issued as partial consideration in conjunction with the Solar Logic Incorporated acquisition (see Note 3) and $150,000 was added to Convertible Preferred Stock on the Company’s balance sheet plus $4,620,000 of paid-in capital in excess of par.  The Series B Preferred Stock does not possess dividend rights or warrants.  The shares may be redeemed by the Company at any time, in whole or in part, for $1.00 per share and the stockholder may convert each preferred share at any time into one (1) fully paid and nonassessable share of common stock of the Company.   Each share of Series B Preferred Stock shall be converted into one (1) fully paid and nonassessable share of common stock, as provided herein at the request of the Corporation conditioned upon one of two events, either (1) the passing of a minimum of two years from the date of issuance of the Series B Preferred Stock shares subject to the previous 30 day moving average price of the Company's common stock be at least $1.50 per share and a previous 30 day average volume of 50,000 common shares or more per day, or (2) the election by Solar Logic to terminate the Patent License Agreement (see Note 3).

The foregoing summary of the Series A Preferred Stock and Series B Preferred Stock designations is not complete and is qualified in its entirety by reference to the copy of the Certificate of Designation for each series which is incorporated by reference herein and available upon request.  The Company is not obligated to register any shares under the preferred series or any shares of common stock into which the preferred shares may be converted except upon a secondary offering.

No options, warrants or similar rights are outstanding as of the date of this report except the warrants attached to the outstanding Series A Preferred Shares.

Effective September 30, 2016, our subsidiary, Regent NRCo, redeemed all 99,950 shares of its Series A Convertible Preferred Stock outstanding (“Subsidiary Preferred Stock”).   The Subsidiary Preferred Stock was sold under a private placement offering for $50,000 per unit of 10,000 shares each and were convertible into 10,000 shares of common stock of the Subsidiary plus 4,800 shares of common stock of MacuCLEAR common stock.  Under a special redemption agreement, the Subsidiary Preferred Stock was converted into restricted common stock of the Parent and MacuCLEAR stock.  Since several of the parties participating in the redemption were related parties, the book value of the MacuCLEAR stock of $207,422 was deducted from the Subsidiary’s capitalization and the total par value of $3,767 was deducted from the Company’s Paid-in capital in excess of par value. Concurrent with the redemption, the 99,500 shares of Subsidiary preferred stock were cancelled (see Note 4).

 

 

NOTE 9.  Related Party Transactions

During 2016 and 2015, the Company borrowed various amounts for general corporate purposes under an agreement with NR Partners, a partnership comprised of the President and a director.  During 2016 and 2015, we borrowed $40,816 and $21,127, respectively, from NR Partners to help cover operating expenses.  We made payments to NR Partners in 2016 and 2015 in total amounts of 29,280 and $37,055, respectively.  As of December 31, 2016, the amount owed to NR Partners is $11,571 and the amount owed to the President for operating expense advances is $16,431.   In addition, during the first quarter of 2016, Regent NRCo acquired a 10% net profits interest in oil and gas properties from a director of the Regent NRCo in exchange for 50,000 shares of restricted common stock of the Company.  During the third quarter, the President, a director and several Company shareholders participated in the Subsidiary preferred stock redemption.  NR Partners is a partnership comprised of the President and a director of the Company, and SIG Operating, LC is an entity owned by the President which serves as the operator of our oil and gas leasehold assets.

As of December 31, 2016, the Company has two promissory notes outstanding in the amounts of $8,000 and $10,000 due and payable to directors of the Company and the Subsidiary.  The $8,000 note is interest free and the $10,000 note has interest payable of $622 which accrues at a rate of 10% per annum.  For the successful negotiation in April 2015 of the carried-interest in the South Texas exploration opportunity, the Company granted the President a $10,000 bonus in the second quarter and $5,000 in the third quarter.  For fiscal 2016 and 2015, the Company paid the President $4,800 and $6,000, respectively as compensation for negotiations and meetings during travel based on $400 per diem, which efforts resulted in the Solar Logic acquisition.  Also for fiscal 2016 and 2015, Regent NRCo paid $6,355 and $17,054 respectively to SIG Operating, LC for lease operating costs consisting primarily of operator insurance and leasehold overhead and maintenance.

NOTE 10.  Convertible Debentures

 

On December 5, 2014, we issued a convertible debenture for monies totaling $25,000 with interest at 8% per annum.  The debenture is convertible into shares of the Company’s Series A Preferred Stock at the conversion rate of $25,000 for 25,000 shares of preferred stock. During 2016 and 2015, the Company paid $2,000 and $1,140 respectively for debenture interest expense.  At December 31, 2016, the debenture has accrued interest of $1,008.

Supplemental Oil and Natural Gas Producing Activities (Unaudited)

The estimates of proved oil and natural gas reserves utilized in the preparation of the consolidated financial statements were prepared by an independent petroleum engineer.  Such estimates are in accordance with guidelines established by the SEC and the FASB.

The following table sets forth estimated proved oil and natural gas reserves together with the changes therein for the three years ended December 31, 2016 which reflect the uneconomic conditions and impairment for 2016 (see Note 5 above).

(1)

Downward revisions of previous proven estimates were eliminated as uneconomic.

(2)

Downward revisions of previous proven estimates were eliminated as uneconomic.

 

 

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Reserves (Unaudited):

The standardized measure of discounted future net cash flows relating to estimated proved reserves as of December 31, 2016 and 2015, which reflect the uneconomic conditions and impairment for 2016, were as follows:

The Standardized Measure of Discounted Future Net Cash Flows and Changes Therein Relating to Proved Oil and Natural Gas Reserves ("Standardized Measures") do not purport to present the fair market value of a company's oil and natural gas properties.  An estimate of such value should consider, among other factors, anticipated oil and natural gas future prices, the probability of recoveries in excess of the existing proved reserves, the value of probable reserves and acreage prospects, and perhaps different discount rates.  It should be noted that estimates of reserve quantities, especially from new discoveries, are inherently imprecise and subject to substantial revision.  The estimated future cash flows above were determined by using the reserve quantities of proved reserves and the periods in which they are expected to be developed and produced based on prevailing economic conditions. Future income tax expenses are calculated by applying appropriate year-end tax rates to future pretax net cash flows relating to proved oil and natural gas reserves, less the tax basis of properties involved. The future income tax costs give effect to permanent differences, tax credits and loss carryforwards relating to the proved oil and natural gas reserves. The estimated present value of future cash flows relating to estimated proved reserves is extremely sensitive to prices used at any measurement period. Prices we used to value our reserves were based on the twelve-month un-weighted arithmetic average of the first-day-of-the-month price.  The price used for oil for the year ended December 31, 2015 was $44.60 per barrel, adjusted by lease for quality, transportation fees, and regional price differentials.

The changes in standardized measure of discounted future net cash flows relating to estimated proved reserves as of December 31, 2016 and 2015, which reflect the uneconomic conditions and impairment for 2016, were as follows:

 

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

Item 9A. Controls and Procedures

---

Management's report on Internal Control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15f under the Securities Exchange Act of 1934.  Regent's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our executives, we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2016.  The assessment was based on criteria established in the framework Internal Control-Integrated.  Based on the framework issued by the Committee of Sponsoring Organizations of the Treadway Commission on this assessment, management concluded that our internal control over financial reporting was not effective as of December 31, 2016.

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting which were identified in connection with the evaluation required by Rule 13a-15(d) and Rule 15d-15(d) of the Exchange Act that occurred during the period covered by this report that have materially affected, or reasonably likely to materially affect, the Company's internal control over financial reporting.

Inherent Limitations of Internal Controls

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Management is aware that there is a lack of accounting personnel at the Company due to the small number of employees dealing with general administrative and financial matters.  While this constitutes a material weakness in the internal controls, management periodically reevaluates this situation and upon an increase of significant activity, the Company intends to increase staffing to mitigate the current lack of accounting personnel and resulting segregation of duties within the general administrative and financial functions.

None

 

 

Name		Age		Director Since		Position
David A. Nelson		69		June, 2003		Chairman, CEO
David L. Ramsour		76		June, 2007		Secretary, Director

OFFICER SUMMARY COMPENSATION TABLE
																								Change
																								in Pension
																								Value and
																				Non-Equity				Nonqualified
																				Incentive				Deferred
												Stock				Option				Plan				Compensation				All Other
Name and				Salary				Bonus				Awards				Awards				Compensation				Earnings				Compensation				Total
Principal Position		Year		($)				($)				($) (1)				($)				($)				($)				($)				($)
David A. Nelson		2016			-				-				-				-				-				-				-				-
Chairman and Chief		2015			-				15,000				-				-				-				-				-				15,000
Executive Officer
David L. Ramsour		2016			-				-				-				-				-				-				-				-
Secretary		2015			-				-				-				-				-				-				-				-

DIRECTORS' COMPENSATION TABLE
				Fees
				Earned or								Non-equity				Incentive
				Paid in				Stock				Option				Plan				All Other
Name and				Cash				Awards				Awards				Compensation				Compensation				Total
Principal Position		Year		($)				($)				($)				($)				($)				($)
David A. Nelson		2016			-				-				N/A				N/A				N/A				-
		2015			-				-				N/A				N/A				N/A				-
David L. Ramsour		2016			-				-				N/A				N/A				N/A				-
		2015			-				-				N/A				N/A				N/A				-
Douglas R. Baum		2016			-				-				N/A				N/A				N/A				-
		2015			-				-				N/A				N/A				N/A				-

		Name of		Beneficial Ownership		Percent
Title		Beneficial Owner (1)		Number of shares (2)		of Class
Chairman/CEO		David A. Nelson		17,965,798		75.1%
Secretary/Director		David L. Ramsour		500,000		2.1%
Director-Subsidiary		Douglas R. Baum		550,000		2.3%
All Officers and Directors
As a group (3)				19,015,798		79.5%	(4)

		2016				2015
1. Audit fees		$	31,775			$	26,220
2. Audit-related fees		$	8,228			$	2,221
3. Tax fees			-				-
4. All other fees			-				-

 

 

---