U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
August 28, 2006
Date of report (Date of earliest reported event)
Commission File Number 0-51414
LUCAS ENERGY, INC.
(Name of small business issuer in its charter)
Nevada 98-0417780
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3000 Richmond Avenue, Suite 400
Houston, TX 77040
(Address of principal executive offices)
(713) 528-1881
(Telephone number, including area code)
James J. Cerna, Jr.
520 S. El Camino Real
Suite #432
San Mateo, CA 94402
Phone: (650) 343-4535 Fax: (650) 240-0259
(Name, address and telephone number of agent for service)
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 (see General Instruction A.2. below):
[ ] 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-4(c))
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934, as amended. These forward-looking statements are based on current
expectations, estimates and projections about our industry, management's
beliefs, and assumptions made by management. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," variations of
such words and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict. Accordingly, actual results may differ materially from those expressed
or forecasted in any such forward-looking statements. Such risks and
uncertainties include those risk factors set forth in this report. We assume no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.
INFORMATION TO BE INCLUDED IN THE REPORT
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On August 8, 2006, Lucas Energy, Inc. (the "Company" or "Lucas Energy") entered
into a series of agreements entitled "Asset Backed Medium Term Note, 14.5%
Coupon, Payable Quarterly"; "Securities Purchase Agreement"; "Security
Agreement"; and "Borrower's Affidavit"; (collectively referred to hereafter as
the "Loan Documents") with two non-affiliate lenders which have previously
invested funds into the Company. The loan proceeds were used to acquire nine oil
& gas properties owned by an independent operator in Gonzales and Karnes
counties Texas, which are also collateral for the loan transaction. The seller
of the oil properties is a non-affiliate of the Company and the transaction was
negotiated at arms' length.
The Loan Documents required that the lenders provide an aggregate minimum loan
amount of $2,300,000.00 up to a maximum of $3,000,000.00. The minimum loan
amount was funded and paid to Lucas Energy through escrow on August 8, 2006, and
was subsequently used to acquire the nine oil properties. The lenders are
secured creditors under the terms of the Loan Documents and have senior
mortgages on the oil leases acquired with the loan proceeds. In addition, the
lenders have a security interest in all of the Company's assets as additional
collateral for the loans. The Company issued a total of 720,000 shares of its
restricted common stock as additional consideration to the lenders and the
seller of the oil leases.
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The loan is repayable by the Company on a quarterly basis, with interest
accruing and calculated quarterly, with interest due and payable as a quarterly
"coupon". The term of the loan matures on February 3, 2008, when all principal
is due and payable. The Loan Documents provide for numerous contingencies and
terms relating to events of default. The Loan documents provide that upon an
event of default, as defined therein, the lenders shall have various remedies,
including increased interest rates, foreclosure on the Company's assets,
collectively or individually which collateralize the loan and payment of
expenses.
SECTION 2 - FINANCIAL INFORMATION
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
Effective on August 8, 2006, the Company acquired leases, wells and equipment on
nine oil properties in Texas. The oil leases were acquired from the Wilson Oil &
Gas company, in Texas for $2,750,000.00. Lucas Energy paid $2,200,000 in cash
and 220,000 shares of the Company's restricted common stock valued at $2.50 a
share. Wilson Oil & Gas is a non-affiliate to the Company and will retain a
small royalty interest averaging 2% in the well production.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
On August 8, 2006, the Company became obligated on a direct financial obligation
material to the Registrant in the form of the Loan Documents. The Loan Documents
require that the Company pay quarterly interest payments and require that the
principal balance of $2,300,000.00 be paid on or before February 3, 2008.
Pursuant to the terms of the Loan Documents, all of the Company's assets
including the leases themselves, are collateral for the loan. Upon an event of
default and failure to cure within the prescribed time, the lenders may
foreclose upon the collateral and seek to recover the full amount of any unpaid
interest, principal and costs.
SECTION 3 - SECURITIES AND TRADING MARKETS
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
In connection with the loan transaction, the Company issued 720,000 shares of
its restricted common stock to the lenders and the seller of the oil leases.
These shares are restricted securities as defined by Rule 144 of the Securities
Act of 1933, as amended and must be held for a minimum of one year, unless
registered with the Commission.
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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 thereunto duly authorized.
Date: August 28, 2006 LUCAS ENERGY, INC.
By: /s/ James J. Cerna, Jr.
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James J. Cerna, Jr., President
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