Washington, D.C. 20549
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Item 1.01. Entry into a Material Definitive Agreement.
The information included in Item 2.03 of this Current Report on Form 8-K is also incorporated by reference into this Item 1.01 of this Current Report on Form 8-K.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On May 22, 2008, the Company completed a $2,300,000 financing pursuant to a Securities Purchase Agreement dated effective May 21, 2008 with Trafalgar
Capital Specialized Fund, Luxembourg (“Trafalgar”) for Trafalgar to loan $2,300,000 to the Company (the “Loan”) pursuant to a secured Convertible Promissory
Note (the “Note”) dated May 21, 2008 with interest at 10% due in monthly payments of interest only commencing one (1) month from the date of the Note, with all
principal and accrued but unpaid interest due on or before August 21, 2011. when the Company’s Common Stock is trading at $0.30 above, Trafalgar may convert
all or any part of the principal plus accrued interest into shares of the Company’s Common Stock at the fixed price of $0.081 per share, subject to various adjustments.
The material default provisions include non payment of principal or interest when due. As part of this transaction, the Company issued 2,300,000 restricted
shares of its Common Stock to Trafalgar and pledged 57,500 shares of its Series E preferred Stock to Trafalgar to secure the Note. The Note is further secured
with all of the Company’s assets. The funds from the Loan will be used to develop the Company’s oil and gas prospects.
Item 3.02. Unregistered Sales of Equity Securities.
The information included in Item 2.03 of this Current Report on Form 8-K is also incorporated by reference into this Item 3.02 of this Current Report on Form 8-K.
We believe that the Note issued to Trafalgar effective as of May 21, 2008 for the $2,300,000 Loan and the 2,300,000 restricted shares of the Company’s Common
Stock issued in conjunction with the Loan will be exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2)
and/or Regulation D. The recipient of Note and the 2,300,000 restricted shares of Common Stock was afforded an opportunity for effective access to files and records of
our company that contained the relevant information needed to make its investment decision. We reasonably believe that the recipient, immediately prior to its investment
decision, had such knowledge and experience in our financial and business matters that it was capable of evaluating the merits and risks of its investment. The recipient
had the opportunity to speak with our management on several occasions prior to their investment decision.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements: Not applicable.
(b) Pro Forma Financial Information: Not applicable.
(c) Exhibits
| | 4.1 | Designation of Rights and Preferences of Series E Preferred Stock |
| | 10.1 | Securities Purchase Agreement |
| | 10.2 | Convertible Promissory Note |
| | 10.3 | Pledge Agreement |
| | 10.4 | Security Agreement |
duly authorized.
