2014-11-05 SEC Press pdf 26 KB 8,994 chars

In re Worthington Energy

Exhibit of SEC Sanctions 10 Companies for Disclosure Failures Surrounding Financing Deals and Stock Dilution

summary

Worthington Energy, Inc. violated securities reporting rules by failing to disclose over 2.1 billion unregistered share issuances and a material financing agreement between January and June 2014, leading to a settled SEC cease-and-desist order and a $25,000 civil penalty.

paragraph

Worthington Energy, Inc., a Nevada-based reporting company quoted on OTC Link, failed to file required Form 8-K disclosures for a material financing agreement entered on April 24, 2014, and for unregistered sales of over 2.1 billion shares between January and June 2014. These unregistered issuances exceeded 340% of its outstanding shares as reported in its January 24, 2014 Form 10-Q and 170% of its April 16, 2014 Form 10-K, violating Items 1.01 and 3.02 of Form 8-K. The SEC accepted a settlement in which Worthington Energy consented to a cease-and-desist order and agreed to pay a $25,000 civil penalty in nine installments through July 15, 2015, without admitting or denying the findings.

narrative

Worthington Energy, Inc., a Nevada corporation registered with the SEC and quoted on OTC Link under the symbol WGAS, violated Section 13(a) of the Securities Exchange Act and Rule 13a-11 by failing to file timely Form 8-K disclosures for material events. Between January 27 and June 10, 2014, the company issued over 2.1 billion unregistered shares of common stock in multiple transactions, exceeding 340% of its outstanding shares as of January 24, 2014, and later surpassing 170% and 13% of outstanding shares as reported in subsequent filings. On April 24, 2014, Worthington Energy entered into a material financing agreement involving the issuance of shares under Section 3(a)(10) of the Securities Act but failed to disclose it within the required four-business-day window. The company also neglected to report multiple large-scale unregistered offerings occurring between February and May 2014, despite clear regulatory thresholds being exceeded. The SEC initiated cease-and-desist proceedings, and Worthington Energy consented to an order without admitting or denying the findings, agreeing to pay a $25,000 civil penalty in nine installments through July 15, 2015. The company was also required to pay all accrued interest under 31 U.S.C. § 3717 via certified payment methods to the SEC’s designated offices. This case underscores the severity of repeated and substantial failures in reporting obligations by smaller reporting companies operating on over-the-counter markets.

Enriched metadata

Scheme: unregistered-securities (100%)
Outcome: settled
Civil penalty: $25,000

Classified unregistered-securities(confidence 100%). EDGAR detection: forms Form D/S-1· recall 41% / precision 30%. detection rule →

Extracted insights

Dollar amounts 4

$25K $25,000 $10K–$100K
$10K $10,000 $10K–$100K
$2K $2,000 <$10K
$1K $1,000 <$10K

Entities 2

agency the securities and exchange commission
person worthington energy

Triples 7

The Securities and Exchange Commission deems appropriate cease-and-desist proceedings
Respondent submitted an Offer of Settlement
Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings
Worthington Energy is a Nevada corporation headquartered in San Francisco, California
Worthington Energy has been registered with the Commission under Section 12(g) of the Exchange Act
Worthington Energy failed to file a Form 8-K with the Commission
Worthington Energy sold more than 210 million shares of its common stock

PDF

In re Worthington Energy · Source

Text layers

Extracted body text (8,994c)

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 73526 / November 5, 2014

ADMINISTRATIVE PROCEEDING
File No. 3-16257

In the Matter of

Worthington Energy, Inc.

Respondent.

ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO
SECTION 21C OF THE SECURITIES
EXCHANGE ACT OF 1934, MAKING
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER

The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities
Exchange Act of 1934 (“Exchange Act”), against Worthington Energy, Inc. (“Worthington
Energy” or “Respondent”).

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the
purpose of these proceedings and any other proceedings brought by or on behalf of the
Commission, or to which the Commission is a party, and without admitting or denying the findings
herein, except as to the Commission’s jurisdiction over Worthington Energy and the subject matter
of these proceedings, which are admitted, Respondent consents to the entry of this Order Instituting
Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934,
Making F indings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds
1
that:

Company Background

1. Worthington Energy is a Nevada corporation headquartered in San Francisco,
California. Worthington Energy is a smaller reporting company under Rule 12b-2 of the Exchange
Act and has been registered with the Commission under Section 12(g) of the Exchange Act since
April 27, 2007. Worthington Energy’s last-filed periodic report was the Form 10-Q for the period
ended March 31, 2014. Its shares are quoted on OTC Link (formerly “pink sheets”) operated by
OTC Markets Group Inc. under the symbol WGAS.
Applicable Reporting Requirements Concerning the Issuance of Unregistered Shares

2. Under Item 1.01 of Form 8-K, a registrant must disclose its entry into a material
definitive agreement that provides for obligations that are material to and enforceable against the
registrant. Under Item 3.02 of Form 8-K, a smaller reporting company must disclose the
unregistered sales of equity securities unless such sales, in aggregate since its last report filed under
Item 3.02 or its last periodic report, whichever is more recent, constitute less than five percent of
the number of shares outstanding of the class of equity securities sold. For both items, the
registrant must file within four business days of the date of the occurrence or when such agreement
becomes enforceable against the registrant.

Worthington Energy Failed to Disclose the Issuance of Unregistered Shares
and the Existence of the Related Financing Agreement

3. On April 24, 2014, Worthington Energy entered into an agreement with a financing
company (“financing agreement”) pursuant to which Worthington Energy issued shares of
common stock to the financing company purportedly in reliance on a registration exemption found
in Section 3(a)(10) of the Securities Act of 1933 (“Securities Act”). The financing agreement
provided for obligations that were material to and enforceable against Worthington Energy.

4. Worthington Energy failed to file a Form 8-K with the Commission, on or before
April 30, 2014, or thereafter, disclosing the financing agreement.

5. Between January 27, 2014 and April 9, 2014, Worthington Energy sold more than
210 million shares of its common stock in transactions that were not registered under the Securities
Act. By January 28, 2014, the common stock sold, in the aggregate, exceeded five percent of the
number of shares of common stock outstanding reported on Worthington Energy’s January 24,

1
The findings herein are made pursuant to Respondent’s Offer of Settlement and are not
binding on any other person or entity in this or any other proceeding.

3
2014, Form 10-Q. Ultimately, the common stock sold exceeded 340 percent of the number of
shares of common stock outstanding reported on Worthington Energy’s January 24, 2014 Form 10-
Q.

6. Worthington Energy failed to file a Form 8-K with the Commission between
February 3 , 2014 and April 15, 2014, disclosing the unregistered sales of equity securities.

7. Between April 17, 2014 and May 13, 2014, Worthington Energy sold more than
700 million shares of its common stock to the financing company and other parties in transactions
that were not registered under the Securities Act. By April 21, 2014, the common stock sold, in the
aggregate, exceeded five percent of the number of shares of common stock outstanding reported on
Worthington Energy’s April 16, 2014 Form 10-K, and ultimately, the common stock sold exceeded
170 percent of the number of shares of common stock outstanding reported on Worthington
Energy’s April 16, 2014 Form 10-K.

8. Worthington Energy failed to file a Form 8-K with the Commission between April
23, 2014 and May 19, 2014, disclosing the unregistered sales of equity securities.

9. Between May 21, 2014 and June 10, 2014, Worthington Energy sold more than 1.1
billion shares of its common stock to the financing company and other parties in transactions that
were not registered under the Securities Act. On May 21, 2014, the common stock sold, in the
aggregate, exceeded five percent of the number of shares of common stock outstanding reported on
Worthington Energy’s May 20, 2014 Form 10-Q, and ultimately, the common stock sold exceeded
13 percent of the number of shares of common stock outstanding reported on Worthington
Energy’s May 20, 2014 Form 10-Q.

10. Worthington Energy failed to file a Form 8-K with the Commission between May
27, 2014 and June 19, 2014, disclosing the unregistered sales of equity securities.

11. As a result of the conduct described above, Worthington Energy violated Section
13(a) of the Exchange Act and Rule 13a-11 thereunder, which require every issuer of a security
registered pursuant to Section 12 of the Exchange Act to file with the Commission information
as the Commission may require, including current reports on Form 8-K to disclose the
occurrence of certain events.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent Worthington Energy’s Offer.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 21C of the Exchange Act, Respondent Worthington Energy
cease and desist from committing or causing any violations and any future violations of Section
13(a) of the Exchange Act and Rule 13a-11 thereunder.

B. Respondent shall pay civil penalties of $25,000 to the Securities and Exchange
Commission. Payment shall be made in the following installments: $10,000 on or before
November 15, 2014; $2,000 on or before December 15, 2014; $2,000 on or before January 1 5,
2015; $2,000 on or before February 15, 2015; $2,000 on or before March 15, 2015; $2,000 on or
before April 15, 2015; $2,000 on or before May 15, 2015; $2,000 on or before June 15, 2015; and
$1,000 on or before July 15, 2015. I f any payment is not made by the date the payment is required
by this Order, the entire outstanding balance of civil penalties, plus any additional interest accrued
pursuant to 31 U.S.C. 3717, shall be due and payable immediately, without further application.
Payment must be made in one of the following ways:

(1) Respondent may transmit payment electronically to the Commission, which
will provide detailed ACH transfer/Fedwire instructions upon request;

(2) Respondent may make direct payment from a bank account via Pay.gov
through the SEC website at http://www.sec.gov/about/offices/ofm.htm
; or

(3) Respondent may pay by certified check, bank cashier’s check, or United
States postal money order, made payable to the Securities and Exchange
Commission and hand-delivered or mailed to:

Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying
Worthington Energy as a Respondent in these proceedings, and the file number of these
proceedings; a copy of the cover letter and check or money order must be sent to William P. Hicks,
Division of Enforcement, Securities and Exchange Commission, 950 East Paces Ferry Rd. N.E.,
Suite 900, Atlanta, Georgia 30326.

By the Commission.

Brent J. Fields
Secretary

OCR text (9,002c · tika · 95% conf)

UNITED STATES OF AMERICA

Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 73526 / November 5, 2014

ADMINISTRATIVE PROCEEDING
File No. 3-16257

In the Matter of

Worthington Energy, Inc.

Respondent.

ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO
SECTION 21C OF THE SECURITIES
EXCHANGE ACT OF 1934, MAKING
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the
purpose of these proceedings and any other proceedings brought by or on behalf of the
Commission, or to which the Commission is a party, and without admitting or denying the findings
herein, except as to the Commission’s jurisdiction over Worthington Energy and the subject matter
of these proceedings, which are admitted, Respondent consents to the entry of this Order Instituting
Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934,
Making Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds1 that:

Company Background

Applicable Reporting Requirements Concerning the Issuance of Unregistered Shares

Worthington Energy Failed to Disclose the Issuance of Unregistered Shares
and the Existence of the Related Financing Agreement

4. Worthington Energy failed to file a Form 8-K with the Commission, on or before
April 30, 2014, or thereafter, disclosing the financing agreement.

1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not
binding on any other person or entity in this or any other proceeding.

2014, Form 10-Q. Ultimately, the common stock sold exceeded 340 percent of the number of
shares of common stock outstanding reported on Worthington Energy’s January 24, 2014 Form 10-
Q.

6. Worthington Energy failed to file a Form 8-K with the Commission between
February 3, 2014 and April 15, 2014, disclosing the unregistered sales of equity securities.

8. Worthington Energy failed to file a Form 8-K with the Commission between April
23, 2014 and May 19, 2014, disclosing the unregistered sales of equity securities.

10. Worthington Energy failed to file a Form 8-K with the Commission between May
27, 2014 and June 19, 2014, disclosing the unregistered sales of equity securities.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent Worthington Energy’s Offer.

Accordingly, it is hereby ORDERED that:

B. Respondent shall pay civil penalties of $25,000 to the Securities and Exchange
Commission. Payment shall be made in the following installments: $10,000 on or before
November 15, 2014; $2,000 on or before December 15, 2014; $2,000 on or before January 15,
2015; $2,000 on or before February 15, 2015; $2,000 on or before March 15, 2015; $2,000 on or
before April 15, 2015; $2,000 on or before May 15, 2015; $2,000 on or before June 15, 2015; and
$1,000 on or before July 15, 2015. If any payment is not made by the date the payment is required
by this Order, the entire outstanding balance of civil penalties, plus any additional interest accrued
pursuant to 31 U.S.C. 3717, shall be due and payable immediately, without further application.
Payment must be made in one of the following ways:

(1) Respondent may transmit payment electronically to the Commission, which
will provide detailed ACH transfer/Fedwire instructions upon request;

(2) Respondent may make direct payment from a bank account via Pay.gov

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or

(3) Respondent may pay by certified check, bank cashier’s check, or United

States postal money order, made payable to the Securities and Exchange
Commission and hand-delivered or mailed to:

Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying

Worthington Energy as a Respondent in these proceedings, and the file number of these
proceedings; a copy of the cover letter and check or money order must be sent to William P. Hicks,
Division of Enforcement, Securities and Exchange Commission, 950 East Paces Ferry Rd. N.E.,
Suite 900, Atlanta, Georgia 30326.

By the Commission.

Brent J. Fields
Secretary