JUNEAU -- Troubled Polar Petroleum Corp., already facing Securities and Exchange Commission regulatory scrutiny, revealed this week that it has lost its primary financing source as well.
Polar owns North Slope oil leases near some of the state's major producers, and had appeared to want to parlay that association into stock sales that would enable it to explore for and develop its own wells.
The company is what's known as a "exploration stage" company, in this case meaning that it has no current revenues as it develops its leases. It has been issuing stock to finance its activities, spending hundreds of thousands of dollars on operations without any revenue coming in.
Earlier this year, a China-based investor, US Energy Investments, Ltd., agreed to purchase $10 million worth of Polar stock.
Also this year, an extensive promotional campaign began to pitch the company's stock to the public, including email and direct mail. The breathless sales materials urged investors to get in early, and predicted the stock price would eventually reach $27 a share. That would bring huge profits for those who were early investors in what had been a penny stock, if true.
Instead, the company's plans took a major hit earlier this summer when it was accused of being a "pump and dump" scheme in which unwary investors are misled into buying worthless stocks, which later see their share prices plummet.
The SEC warned that those promoting Polar's stock may have made "untrue statements of material fact or omitting to state material facts"and suspended trading in the company's stock. When trading resumed, it was not on a regular exchange and was only available on what's known as "grey sheets," where stocks of doubtful worth are traded only to knowledgeable investors. Polar stock is now trading around 40 cents a share, having peaked at about $6.25 before the trading suspension.
Polar claimed to be "unaware of any of the purported actions" that the SEC cited. But the SEC opened an investigation of Polar, subpoenaed company information and said it wanted to depose Polar President & CEO Daniel Walker.
Walker did not respond to phone and email messages Thursday.
This week Polar, in an SEC filing, revealed that US Energy Investments had terminated its $10 million financing agreement before that amount had been purchased.
Neither company was required to pay an early termination penalty, Polar said.
Prior to the SEC trading suspension, Polar had issued a flurry of press releases touting its exploration plans. After a period of silence, the company on Aug. 9 issued another press release, outlining its ambitious North Slope exploration plans.
That work will be dependent on Polar's being able to raise the necessary money to be able to complete the work, and it may not do so, the release said.
It didn't mention the withdrawn investment from US Energy.
In Polar's most recent quarterly report, which revealed the terminated US Energy deal, Polar warned that it might not be able to continue operations without being able to raise additional money in the short term. Polar's auditors raised similar concerns, Polar said.
"Our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing," Polar warned.
Contact Pat Forgey at pat(at)alaskadispatch.com