UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: June 28, 2013
(Date of earliest event reported)
Arête Industries, Inc.
(Exact name of registrant as specified in its charter)
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| COLORADO | | 33-16820-D | | 84-1508638 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
7260 Osceola Street
Westminster, CO 80030
(Address of principal executive offices) (Zip Code)
(303) 427-8688
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)). |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e- 14(c)). |
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT; ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT; ITEM 3.02 UNREGISTERED SALE OF EQUITY SECURITIES.
Effective June 28, 2013, a number of holders of Arête Industries, Inc.’s (the “Company”) 15% Series A1 Convertible Preferred Stock (“Series A1 Preferred Stock”) elected to convert shares of such stock into the Company’s common stock at a deemed conversion price of $0.75 per common share. In connection with those conversions, the Company agreed to reduce the deemed conversion price from $3.35 per common share to $0.75 per common share and all such holders agreed to waive all dividend rights on their shares of Series A1 Preferred Stock subsequent to March 30, 2013. Information regarding the conversions is set forth below.
| | | | | | | | |
Name of Holder | | Number of Shares of Series
A1 Preferred Stock Converted | | | Number of
Common Shares Issued | |
Burlingame Equity Investors II, LP | | | 16 | | | | 100,800 | |
Burlingame Equity Investors Master Fund, LP | | | 184 | | | | 1,159,200 | |
Charles B. Davis* | | | 100 | | | | 1,333,333 | |
Tucker Family Investments LLLP | | | 25 | | | | 333,333 | |
Mark Venjohn | | | 10 | | | | 133,333 | |
Pete Haman | | | 35 | | | | 466,667 | |
Nicholas L. Scheidt* | | | 100 | | | | 1,333,333 | |
Michael J. Finney | | | 5 | | | | 66,667 | |
William and Sara Kroske | | | 2.5 | | | | 33,333 | |
Michael A. Geller | | | 10 | | | | 133,333 | |
John H. Rosasco | | | 10 | | | | 133,333 | |
| | | | | | | | |
| | | 497.5 | | | | 5,226,665 | |
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| * | Executive Officer and Director of the Company |
The Company now has 22.5 shares of its Series A1 Preferred Stock outstanding. Because a majority of the Series A1 Preferred Stock has been converted into the Company’s common stock, the Series A1 Preferred Stock now outstanding will now vote on an as converted basis (into common stock) on all matters relating to the Company. Except as provided by law, holders of the Series A1 Preferred Stock shall vote together with the holders of the Company’s common stock.
In addition, in connection with the conversions of Series A1 Preferred Stock by Burlingame Equity Investors II, LP and Burlingame Equity Investors Master Fund, LP, the Company also entered into transactions with such entities in exchange for cash consideration, unsecured promissory notes and cancellation of certain Series A1 Preferred Shares.
| | | | | | | | | | | | |
Name of Holder | | Cash Consideration | | | Promissory
Note – Principal | | | Series A1 Preferred
Shares Cancelled | |
Burlingame Equity Investors II, LP | | $ | 4,000 | | | $ | 48,000 | | | | 16 | |
Burlingame Equity Investors Master Fund, LP | | $ | 46,000 | | | $ | 552,000 | | | | 184 | |
The above unsecured promissory notes bear interest at 7% per annum, with interest payable quarterly and all unpaid interest and principal due on July 23, 2014. If the promissory notes are not paid when due or declared due, the entire principal and interest thereon will bear interest at the rate of 12% per annum.
The Company relied upon Section 2(a)(3) of the Securities Act of 1933 (the “Act”) and the exemption from registration provided by Section 4(2) of the Act, along with Rule 506 of Regulation D, in connection with the share conversions and exchanges described in this report.
Item 9.01. Financial Statements and Exhibits.
The Exhibits listed below are furnished as Exhibits to this Current Report on Form 8-K.
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Exhibit
No. | | Description |
| |
| 10.13 | | Notice of Conversion by Burlingame Equity Investors II, LP, dated June 28, 2013 |
| |
| 10.14 | | Notice of Conversion by Burlingame Equity Investors Master Fund, LP, dated June 28, 2013 |
| |
| 10.15 | | Promissory Note - Burlingame Equity Investors II, LP, dated June 28, 2013 |
| |
| 10.16 | | Promissory Note - Burlingame Equity Investors Master Fund, LP, dated June 28, 2013 |
| |
| 10.17 | | Form of Notice of Conversion for holders of Series A1 Preferred Stock other than Burlingame Equity Investors II, LP and Burlingame Equity Investors Master Fund, LP |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | | ARÊTE INDUSTRIES, INC. |
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| Dated: July 5, 2013 | | | | | | |
| | | | By: | | /s/ Nicholas L. Scheidt |
| | | | Name: | | Nicholas L. Scheidt |
| | | | Title: | | Chief Executive Officer |
