UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
________________________________________
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
________________________________________
EGPI
FIRECREEK, INC.
(Exact
Name of Small Business Issuer in its Charter)
NEVADA
|
8-0345961
|
|
(State
of Incorporation)
|
(Primary
Standard Classification Code)
|
(IRS
Employer ID No.)
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3400
Peachtree Road, Suite 111
Atlanta,
Georgia 30326
(404)
421-1844
(Address
and Telephone Number of Registrant’s Principal
Executive
Offices and Principal Place of Business)
3400
Peachtree Road, Suite 111
Atlanta,
Georgia 30326
(404)
421-1844
(Name,
Address and Telephone Number of Agent for Service)
Copies of
communications to:
VINCENT
& REES, L.C.
175 S.
Main St
Suite
1530
Salt Lake
City, Utah 84111
Approximate
date of commencement of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective. If any of the securities
being registered on this Form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, check the following box.
x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act of 1933, please check the following box and list
the Securities Act registration Statement number of the earlier effective
registration statement for the same offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. o
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check the following box. o
CALCULATION
OF REGISTRATION FEE
Title of Each Class of
Securities to be
Registered
|
Amount to be
Registered
(1)
|
Proposed Maximum
Offering Price
Per Share (1)(2)
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Proposed Maximum
Aggregate
Offering Price (2)
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Amount of
Registration Fee
(3)
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||||||||||||
Common
Stock, $0.001 par value
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909,090,909 | (4) | $ | .033 | $ | 30,000,000 | $ | 2,139 | ||||||||
Common
Stock, $0.001 par value
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7,000,000 | (5) | $ | .033 | $ | 350,000 | $ | 24.96 | ||||||||
Common
Stock, $0.001 issuable on conversion of callable secured convertible
notes
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2,000,000 | (6) | $ | .06 | $ | 120,000 | $ | 8.56 | ||||||||
Total
|
918,090,909 | $ | .033 | $ | 30,470,000 | $ | 2,172.52 |
(1)
The shares of our Common Stock being registered hereunder are being registered
for (i) resale by the selling stockholders named in the prospectus and (ii)
issuance to Kodiak Capital Group, LLC in accordance with the terms of a line of
credit being provided to the Company.. The number of shares of our Common
Stock registered hereunder represents a good faith estimate by us of the number
of shares of our Common Stock issuable upon the conversion of the callable
secured convertible notes. For purposes of estimating the number of shares
of our Common Stock to be included in this registration statement, we calculated
a good faith estimate of the number of shares that we believe will be issuable
upon conversion of the callable secured convertible notes to account for market
fluctuations, anti-dilution and price protection adjustments. Should the
conversion ratio result in our having insufficient shares, we will not rely upon
Rule 416, but will file a new registration statement to cover the resale of such
additional shares should that become necessary.
(2)
Calculated pursuant to 457 (g). The fee is calculated upon the basis of the
price at which the warrants or rights may be exercised and as they may be
exercisable over a period of time at progressively higher prices, the fee has
been calculated on the basis of the highest price at which they may be
exercised.
(3) In
accordance with Rule 457(g), the registration fee for these shares is calculated
based upon a price which represents the highest of: (i) the price at which the
warrants or options may be exercised; (ii) the offering price of securities of
the same class included in this registration statement; or (iii) the price of
securities of the same class, as determined pursuant to Rule
457(c).
(4)
Represents shares of our common stock issuable under an equity line of credit.
Should a decrease in the exercise price as a result of an issuance or sale
of shares below the then current market price result in our having insufficient
shares, we will file a new registration statement to cover the resale of such
additional shares should that become necessary. In accordance with Rule 415, the
number of shares being registered pursuant to the equity line of credit
agreement with Kodiak Capital Group, LLC is 660,000,000. All funds will be
transmitted to EGPI Firecreek, Inc., not an escrow agent.
(5)
Represents shares of our common stock issuable to shareholders and advisors, and
or their nominees in accordance with Agreements: 2,000,000 shares of common
stock are issued to Don Tyner and Nancy Tyner JTWROS (DNTYNER); 3,900,000 shares
of common stock issued to Steven Antebi (“Antebi”), 600,000 shares of common
stock issued to THE ANTEBI 1995 CHILDRENS INSURANCE & OTHER TRUST, PHIL
LONDON TTE (“ACIAOT”), and 500,000 to Jesup & Lamont Securities Corp.
(“J&L”).
(6)
Represents shares of our Common Stock issuable upon the conversion of callable
secured promissory notes with mandatory registration rights held by St. George
Investments, LLC. The Conversion Price of the notes shall be determined by
dividing (a) the Conversion Amount by (b) seventy five percent (75%) of the
lower of (i) $0.08 per share, or (ii) the average volume-weighted average price
(the “VWAP”) for
the three business days with the lowest average VWAP of the twenty trading days
immediately preceding the date set forth in a Conversion Notice (the lower of
the foregoing, the Conversion
Price”).
The
information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to sell these securities, and it is not
soliciting offers to buy these securities, in any state where the offer or sale
of these securities is not permitted.
PROSPECTUS,
SUBJECT TO COMPLETION, DATED FEBRUARY 11, 2010
EGPI
FIRECREEK, INC.
918,090,909
Shares
Common
Stock
This
prospectus relates to the resale of up to 918,090,909 shares of our Common
Stock, par value $0.001 per share (“Common Stock”) of which: (i)
660,000,000 shares are
issuable to Kodiak Capital Group, LLC (“Kodiak”); (ii) 2,000,000 shares of
common stock are issued to Don Tyner and Nancy Tyner JTWROS (“DNTYNER”); (iii)
500,000 shares of common stock issued to Steven Antebi (“Antebi”) and 3,400,000
shares issued to Antebi or Galileo Partners LLC (”Antebi’s Nominee”); (iv)
600,000 shares of common stock issued to THE ANTEBI 1995 CHILDRENS INSURANCE
& OTHER TRUST, PHIL LONDON TTE (“ACIAOT”) also (“Antebi’s Nominee”); (v)
2,000,000 shares of common stock issuable to St. George Investments LLC (“St.
George”); (DNTYNER, Antebi, ACIAOT, and St. George are referred to collectively
as “Selling Securityholders”). The Selling Securityholders may sell their common
stock from time to time at prevailing market prices.
Our
Common Stock is registered under Section 12(g) of the Securities Exchange Act of
1934, as amended, and is quoted on the over-the-counter market and prices are
reported on the OTC Bulletin Board under the symbol “EFIR.” On January 15, 2010,
the closing price as reported was $0.033.
The
Selling Securityholders have informed us that they do not have any agreement or
understanding, directly or indirectly, with any person to distribute their
common stock. We agree to pay the expenses of registering the foregoing
shares of our Common Stock.
Pursuant
to registration rights granted by us to certain of the selling stockholders, we
are obligated to register the shares acquired by them. The distribution of
the shares by the selling stockholders is not subject to any underwriting
agreement. We will receive none of the proceeds from the sale of shares by
the selling stockholders. The selling stockholders identified in this
prospectus will receive the proceeds from any sale of their shares.
Upon the effective date of this
registration statement, Kodiak will commit to purchase up to $30,000,000 worth
of the Company’s common stock over the course of thirty-six (36) months (the
“Line”). The Company will be entitled to put to Kodiak such number of
shares of Common Stock as equals either (i) $250,000 or (2) 200% of the averaged
daily volume (U.S. market only) multiplied by the closing price on the date that
Kodiak receives notice of the Company’s request to draw down on the Line (the
“Put Date”).
The offering price of the securities
relative to Kodiak will equal 95% of the volume average weighted price of the
securities during the three consecutive trading days immediately after the Put
Date. There will be no underwriters discounts or commissions, so the Company
will receive all of the proceeds of the sale(s) by Kodiak.
INVESTMENT
IN THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK.
YOU MAY LOSE YOUR ENTIRE INVESTMENT. CONSIDER CAREFULLY THE “RISK FACTORS”
BEGINNING ON PAGE 2 OF THIS PROSPECTUS BEFORE INVESTING.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
EGPI
FIRECREEK, INC. IS CONSIDERED TO BE IN UNSOUND FINANCIAL CONDITION. PERSONS
SHOULD NOT INVEST UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE
INVESTMENT.
The Date of This Prospectus
is: February 11, 2010
TABLE
OF CONTENTS
PROSPECTUS
SUMMARY
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4
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RISK
FACTORS
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6
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SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
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USE
OF PROCEEDS
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12
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DIVIDEND
POLICY
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MARKET
FOR OUR COMMON STOCK
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23
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MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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35
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BUSINESS
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MANAGEMENT
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EXECUTIVE
COMPENSATION
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41
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TRANSACTIONS
WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL
PERSONS
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44
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CHANGE
IN ACCOUNTANTS
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[]
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PLAN
OF DISTRIBUTION
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14
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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42
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ABOUT
THIS PROSPECTUS
You
should only rely on the information contained in this prospectus. We have
not authorized anyone to give any information or make any representation about
this offering that differs from, or adds to, the information in this prospectus
or in its documents that are publicly filed with the SEC. Therefore, if
anyone does give you different or additional information, you should not rely on
it. The delivery of this prospectus does not mean that there have not been
any changes in our condition since the date of this prospectus. If you are
in a jurisdiction where it is unlawful to offer the securities offered by this
prospectus, or if you are a person to whom it is unlawful to direct such
activities, then the offer presented by this prospectus does not extend to
you. This prospectus speaks only as of its date except where it indicates
that another date applies.
Market
data and certain industry forecasts used in this prospectus were obtained from
market research, publicly available information and industry publications. We
believe that these sources are generally reliable, but the accuracy and
completeness of such information is not guaranteed. We have not independently
verified this information, and we do not make any representation as to the
accuracy of such information.
I
PROSPECTUS
SUMMARY
This
summary highlights some information from this prospectus, and it may not contain
all of the information that is important to you. You should read the following
summary together with the more detailed information regarding our company and
the common stock being sold in this offering, including “Risk Factors” and our
consolidated financial statements and related notes, included elsewhere in, or
incorporated by reference into, this prospectus.
ABOUT
OUR COMPANY
EGPI
Firecreek Inc. was formerly known as Energy Producers, Inc., an oil and gas
production company focusing on the recovery and development of oil and natural
gas. The Company focused on oil and gas activities for development of interests
held that were acquired in Texas and Wyoming for the production of oil and
natural gas through December 2, 2008.
In its
2005 fiscal year, the Company initiated a program to review domestic oil and gas
prospects and targets. As a result, EGPI acquired non-operating oil and
gas interests in a project titled Ten Mile Draw (“TMD”) located in Sweetwater
County, Wyoming USA for the development and production of natural gas. In July,
2007, the Company acquired and began production of oil at the 2,000 plus acre
Fant Ranch Unit in Knox County, Texas. This was followed by the acquisition and
commencement of oil and gas production at the J.B. Tubb Leasehold Estate located
in the Amoco Crawar Field in Ward County, Texas in March, 2008. Throughout 2008,
the Company sought to continue expansion and growth for oil and gas development
in its core projects. This strategy was centered on rehabilitation and
production enhancement techniques, utilizing modern management and technology
applications in upgrading certain proven reserves. The Company successfully
increased production and revenues derived from its properties and in late 2008,
the Company was able to retire over 90% of its debt through the disposition of
those improved properties.
In early
2009, based on the economic downturn, struggling financial markets and the
implementation of the federal stimulus package for infrastructure projects, the
Company embarked on a transition from an emphasis on the oil and gas focused
business to that of an acquisition strategy focused on the transportation
industry serving federal DOT and state/local DOT agencies. In addition, the
acquisition targets being reviewed by the Company also have a presence in the
telecommunications and general construction industries. The acquisition strategy
focused on vertically integrating manufacturing entities, distributors and
construction groups. In May 2009, the Company acquired M3 Lighting Inc. (M3) as
the flagship subsidiary with additional management team to begin this process,
and on November 4, 2009, the Company acquired all of the capital stock of South
Atlantic Traffic Corporation, a Florida corporation, which distributes a variety
of products geared primarily towards the transportation industry.
Through
2009 we continued to limit and wind down the pursuit of oil and gas projects
overseas in Central Asian and European countries. However, in late 2009 and in
2010, the Company began pursuing a reentry to the oil and gas industry. The
Company is currently a party to an agreement to acquire an entity that owns
approximately 2,100 miles of a pipeline system initially used as a crude oil
transportation system by Koch Industries and, on December 22, 2009, the Company,
through its wholly-owned subsidiary, Energy Producers, Inc., acquired a 50%
working interest and corresponding 32% revenue interest in certain oil and gas
leases, reserves and equipment.
The
Company has been making presentations to asset-based lenders and other financial
institutions for the purpose of (i) expanding and supporting our growth
potential by development of its new line of operations for M3, or acquisitions
by the Company that are vertically related to M3,and (ii) building new
infrastructure for its oil and gas operations in 2009and 2010. The Company’s
goal is to rebuild our revenue base and cash flow; however, the Company makes no
guarantees and can provide no assurances that it will be successful in these
endeavors.
4
THE
OFFERING
Shares
of common stock offered to Kodiak Capital Group, LLC
(“Kodiak”)
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909,090,909
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Shares
of common stock which may be sold by the selling shareholders. None of the
proceeds are to be utilized by the Company.
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A
total of 9,000,000 shares of our common stock consisting
of:
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||
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2,000,000
shares of common stock are issued to Don Tyner and Nancy Tyner JTWROS
(DNTYNER), and 500,000 shares of common stock issued to Steven Antebi
(“Antebi”) pursuant to an Agreement to acquire Sierra Pipeline,
LLC.
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||
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3,400,000
shares issued to GalileoPartners LLC (“Antebi’s nominee”); 600,000 shares
of common stock issued to THE ANTEBI 1995 CHILDRENS INSURANCE & OTHER
TRUST, PHIL LONDON TTE (“ACIAOT”), also (Antebi’s Nominee) in behalf of an
Advisory Agreement consideration; 500,000 to Jesup & Lamont Securities
Corp. in behalf of a financing Engagement Agreement
(“J&L”).
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||
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2,000,000
shares of our Common Stock issuable upon the conversion of callable
secured promissory notes with mandatory registration rights held by St.
George Investments, LLC (St. George).
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||
Use
of proceeds
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We
will not receive any proceeds from the resale of the shares of common
stock offered by the selling stockholders We will receive proceeds from
the sale of shares to Kodiak. Upon the effective date of this
registration statement, Kodiak will commit to purchase up to $30,000,000
worth of the Company’s common stock over the course of thirty-six (36)
months (the “Line”). The Company will be entitled to put to Kodiak
such number of shares of Common Stock as equals either (i) $250,000 or (2)
200% of the average daily volume (U.S. market only) multiplied by the
closing price on the date that Kodiak receives notice of the Company’s
request to draw down on the Line (the “Put Date”). The offering price of
the securities to Kodiak will equal 95% of the volume average weighted
price of the securities during the three consecutive trading days
immediately after the Put Date. There will be no underwriters discounts or
commissions, so the Company will receive all of the proceeds of the
sale(s) by Kodiak.
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||
Risk
factors
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The
purchase of our common stock involves a high degree of risk. You
should carefully review and consider the “Risk Factors” section of this
prospectus for a discussion of factors to consider before deciding to
invest in shares of our common stock.
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||
OTC
Bulletin Board market symbol
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EFIR.OB
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(1)
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These
shares represent 92% of our currently outstanding shares of common stock
based on 74,666,369 shares of common stock outstanding as of February 11,
2010.
|
5
RISK
FACTORS
The
following risk factors should be considered carefully in addition to the other
information contained in this report. This report contains forward-looking
statements. Forward-looking statements relate to future events or our future
financial performance. We generally identify forward-looking statements by
terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,”
“could,” “intends,” “target,” “projects,” “contemplates,” “believes,”
“estimates,” “predicts,” “potential” or “continue” or the negative of these
terms or other similar words. These statements are only predictions. The outcome
of the events described in these forward-looking statements is subject to known
and unknown risks, uncertainties and other factors that may cause our customers’
or our industry’s actual results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements, to
differ. “Risk Factors,” “Management’s Discussion and Analysis” and “Business,”
as well as other sections in this report, discuss some of the factors that could
contribute to these differences.
The
forward-looking statements made in this report relate only to events as of the
date on which the statements are made. We undertake no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which the statement is made or to reflect the occurrence of unanticipated
events.
An
investment in our common stock is highly speculative and involves a high degree
of risk. Therefore, you should consider all of the risk factors discussed below,
as well as the other information contained in this document. You should not
invest in our common stock unless you can afford to lose your entire investment
and you are not dependent on the funds you are investing.
We
incurred historical losses and have a working capital deficit. As a result, we
may not be able to generate profits, support our operations, or establish a
return on invested capital.
We had a
net loss on continuing operations in the fiscal year ended December 31, 2008 of
$578,717 and a net loss on continuing operation in fiscal year ended December
31, 2007 of $359,182. We incurred a net income in fiscal year ended December 31,
2008 of $3,264,439 and a net loss in fiscal year ended December 31, 2007 of
$1,474,050. As of December 31, 2008, we had a working capital deficit of
$594,702. In addition, we expect to increase our infrastructure and operating
expenses to fund our anticipated growth. As a result, we may not be able to
generate profits in 2009 or thereafter and may not be able to support our
operations or otherwise establish a return on invested capital. We cannot assure
you that any of our business strategies will be successful or that significant
revenues or profitability will ever be achieved or, if they are achieved, that
they can be consistently sustained or increased on a quarterly or annual
basis.
We
Expect Our Operating Losses To Continue
The
Company expects to incur increased operating expenses during fiscal year 2009
and 2010. The amount of net losses and the time required for the Company to
reach and sustain profitability are uncertain. The likelihood of the Company’s
success must be considered in light of the problems, expenses, difficulties, and
delays frequently encountered in connection with a new business, including, but
not limited to, uncertainty as to development and acquisitions and the time
required for the Company’s planned production to become available in the
marketplace. There can be no assurance that the Company will ever generate
increased product revenue or achieve profitability at all or on any substantial
basis.
Our
Level Of Indebtedness May Affect Our Business.
Our level
of indebtedness could have important consequences for our operations,
including:
We may
need to use a large portion of our cash flow to repay principal and pay interest
on our current and anticipated debt, which will reduce the amount of funds
available to finance our operations and other business activities;
Our debt
level may make us vulnerable to economic downturns and adverse developments in
our businesses and markets; and
Our debt
level may limit our ability to pursue other business opportunities, borrow money
for operations or capital expenditures in the future or implement our business
strategy.
We expect
to obtain the funds to pay our expenses and to pay principal and interest on our
debt by utilizing cash flow from operations. Our ability to meet these payment
obligations will depend on our future financial performance, which will be
affected by financial, business, economic and other factors. We will not be able
to control many of these factors, such as economic conditions in the markets in
which we operate. We cannot be certain that our future cash flow from operations
will be sufficient to allow us to pay principal and interest on our debt and
meet our other obligations. If cash flow from operations is insufficient, we may
be required to refinance all or part of our existing debt, sell assets, and
borrow more money or issue additional equity.
6
We
have a limited amount of cash and are likely to require additional capital to
continue our operations.
We have a
limited amount of available cash and will likely require additional capital to
successfully implement our business plan; There can be no assurance that we will
be able to obtain additional funding when needed, or that such funding, if
available, will be obtainable on terms acceptable to us. In the event that our
operations do not generate sufficient cash flow, or we cannot obtain additional
funds if and when needed, we may be forced to curtail or cease our activities,
which would likely result in the loss to investors of all or a substantial
portion of their investment.
Production
Risks
All of
the Company’s current and proposed oil and gas activities would be subject to
the risks normally incident to the exploration for, and development and
production of, natural gas and crude oil. These include, but are not limited to,
blowouts, cratering and fires, each of which could result in damage to life and
property. In accordance with customary industry practices, the Company plans to
maintain future insurance for its proposed operations against some, but not all,
of the risks. Losses and liabilities arising from such events could reduce
revenues and increase costs to the Company to the extent not covered by
insurance.
Risks
And Uncertainties Can Impact Our Growth
There are
several risks and uncertainties, including those relating to the Company’s
ability to raise money and grow its business and potential difficulties in
integrating new acquisitions. These risks and uncertainties can materially
affect the results predicted. Other risks include the Company’s limited
operating history, the limited financial resources, domestic or global economic
conditions, activities of competitors and the presence of new or additional
competition, and changes in federal or state laws and conditions of equity
markets.
The
Company’s future operating results over both the short and long term will be
subject to annual and quarterly fluctuations due to several factors, some of
which are outside the control of the Company. These factors include but are not
limited to fluctuating market demand for our services, and general economic
conditions.
Failure
to Close Acquisition Opportunities
The
Company would need to identify, locate, or address replacing current potential
acquisitions or strategic alliances with new prospects or initiate other
existing available projects that may have been planned for later stages of
growth and the Company may therefore not be ready to activate. This process can
place a strain on the Company. New acquisitions, business opportunities, and
alliances, take time for review, analysis, inspections and negotiations. The
time taken in the review activities is an unknown factor, including the business
structuring of the project and related specific due diligence
factors.
Governmental
Regulation
Effect
of Probable Governmental Regulation on the Business Domestically and in Foreign
Countries
As we
expand our efforts to develop our business, we will have to remain attentive to
relevant federal and state regulations. We intend to comply fully with all laws
and regulations, and the constraints of federal and state restrictions could
impact the success of our efforts.
Our new
business operations and services may become established in multiple states and
foreign countries. These jurisdictions may claim that we are required to qualify
to do business as a foreign corporation in each such state and foreign country.
New legislation or the application of laws and regulations from jurisdictions in
this area could have a detrimental effect upon our business. We cannot predict
the impact, if any, that future regulatory changes or developments may have on
our business, financial condition, or results of operation.
At this
time no regulatory or additional regulatory approvals are necessary and, to the
best knowledge of the officers, we have complied with all laws, rules and
regulations.
Cost
And Effects Of Compliance With Environmental Laws
Our
business will be subject to regulation under the state and federal laws
regarding environmental protection and hazardous substances control with respect
to its current and future oil and gas operations. We are unaware of any bills
currently pending in Congress that could change the application of such laws so
that they would affect us.
7
Risk
Factors Affecting Our Future Results Of Operations For The Company
Due to
the Company’s limited operating history, it is difficult to predict future
revenues accurately. This may result in one or more future quarters where the
Company’s financial results may fall below the expectation of management and
investors. However firmly management may believe in its prospects, the Company
could fail. Operating results may vary, depending upon a number of factors, many
of which are outside the Company’s control. Material factors expected to impact
the Company’s operating results include, legal costs associated with
registration of capital stock and options and other filing requirements,
expansion activities, increased interest and expenses for borrowings and
possible hiring of additional full time employees. Every investor should
evaluate the risks, uncertainties, expenses and difficulties frequently
encountered by companies in the early stage of development. The past performance
of the Company cannot be used to predict the future performance.
Lack
of Experience
Certain
of our management may only devote a small percentage of their time to Company
business. This lack of specific training, a full-time schedule (in some cases)
and experience (i) in the industries we are entering through our acquisition
strategy and (ii) with respect to our reintegration into the heavily
regulated oil and gas sector will probably cause management to miss
opportunities that more experienced managers would recognize and take advantage
of. Management’s decisions and choices may not be well thought out and
operations and earnings and ultimate financial success may suffer irreparable
harm. Additionally, these individuals have not previously worked together. If
senior executives and managers are unable to work effectively as a team,
business operations could be considerably disrupted.
Oil
And Gas Prices Fluctuate Widely, And Low Prices For An Extended Period Of Time
Are Likely To Have A Material Adverse Impact On Our Business
Our
revenues and operating results in the oil and gas sector depend substantially on
prevailing prices for natural gas and, to a lesser extent, oil. Declines in oil
and natural gas prices may materially adversely affect our financial condition,
liquidity, ability to obtain financing and operating results. Lower oil and gas
prices also may reduce the amount of oil and gas that we can produce
economically. Historically, oil and gas prices and markets have been volatile,
with prices fluctuating widely, and they are likely to continue to be
volatile.
Prices
for oil and natural gas are subject to wide fluctuations in response to
relatively minor changes in the supply of and demand for oil and gas, market
uncertainty and a variety of additional factors that are beyond our control.
These factors include:
·
|
The domestic and foreign supply
of oil and natural gas.
|
|
·
|
The level of consumer product
demand.
|
|
|
·
|
Weather
conditions.
|
|
·
|
Political conditions in oil
producing regions, including the Middle East.
|
|
·
|
The ability of the members of the
Organization of Petroleum Exporting Countries to agree to and maintain oil
price and production controls.
|
|
·
|
The price of foreign
imports.
|
|
·
|
Actions of governmental
authorities.
|
|
·
|
Domestic and foreign governmental
regulations.
|
|
·
|
The price, availability and
acceptance of alternative fuels.
|
|
·
|
Overall economic
conditions.
|
These
factors make it impossible to predict with any certainty the future prices of
oil and gas.
Drilling
natural gas and oil wells is a high-risk activity.
Our
growth is materially dependent upon the success of our drilling program.
Drilling for natural gas and oil involves numerous risks, including the risk
that no commercially productive natural gas or oil reservoirs will be
encountered. The cost of drilling, completing and operating wells is substantial
and uncertain, and drilling operations may be curtailed, delayed or cancelled as
a result of a variety of factors beyond our control, including:
8
·
unexpected drilling conditions,
pressure or irregularities in formations;
·
equipment failures or
accidents;
·
adverse weather
conditions;
·
compliance with governmental
requirements; and
·
shortages or delays in the availability of drilling rigs or crews
and the delivery of equipment.
Our
future drilling activities may not be successful and, if unsuccessful, such
failure will have an adverse affect on our future results of operations and
financial condition. Our overall drilling success rate or our drilling success
rate for activity within a particular geographic area may decline. We may
ultimately not be able to lease or drill identified or budgeted prospects within
our expected time frame, or at all. We may not be able to lease or drill a
particular prospect because, in some cases, we identify a prospect or drilling
location before seeking an option or lease rights in the prospect or location.
Similarly, our drilling schedule may vary from our capital budget. The final
determination with respect to the drilling of any scheduled or budgeted wells
will be dependent on a number of factors, including:
·
|
the results of exploration
efforts and the acquisition, review and analysis of the seismic
data
|
·
|
the availability of sufficient
capital resources to us and the other participants for the drilling of the
prospects
|
·
|
the approval of the prospects by
other participants after additional data has been
compiled
|
·
|
economic and industry conditions
at the time of drilling, including prevailing and anticipated prices for
natural gas and oil and the availability of drilling rigs and
crews
|
·
|
our financial resources and
results; and
|
·
|
the availability of leases and
permits on reasonable terms for the
prospects.
|
These
projects may not be successfully developed and the wells, if drilled, may not
encounter reservoirs of commercially productive natural gas or oil.
Reserve
estimates depend on many assumptions that may prove to be inaccurate. Any
material inaccuracies in our reserve estimates or underlying assumptions could
cause the quantities and net present value of our reserves to be overstated.
Reserve engineering is a
subjective process of estimating underground accumulations of natural gas and
crude oil that cannot be measured in an exact manner. The process of estimating
quantities of proved reserves is complex and inherently uncertain, and the
reserve data included in this document are only estimates. The process relies on
interpretations of available geologic, geophysic, engineering and production
data. As a result, estimates of different engineers may vary. In addition, the
extent, quality and reliability of this technical data can vary. The differences
in the reserve estimation process are substantially due to the geological
conditions in which the wells are drilled. The process also requires certain
economic assumptions, some of which are mandated by the Securities and Exchange
Commission, such as natural gas and oil prices. Additional assumptions include
drilling and operating expenses, capital expenditures, taxes and availability of
funds. The accuracy of a reserve estimate is a function of:
|
·
|
the quality and quantity of
available data;
|
|
·
|
the interpretation of that
data;
|
|
·
|
the accuracy of various mandated
economic assumptions; and
|
|
·
|
the judgment of the persons
preparing the estimate.
|
Results
of drilling, testing and production subsequent to the date of an estimate may
justify revising the original estimate. Accordingly, initial reserve estimates
often vary from the quantities of natural gas and crude oil that are ultimately
recovered, and such variances may be material. Any significant variance could
reduce the estimated quantities and present value of our reserves.
9
Our
future performance depends on our ability to find or acquire additional natural
gas and oil reserves that are economically recoverable.
In
general, the production rate of natural gas and oil properties declines as
reserves are depleted, with the rate of decline depending on reservoir
characteristics. Unless we successfully replace the reserves that we produce,
our reserves will decline, eventually resulting in a decrease in natural gas and
oil production and lower revenues and cash flow from operations. Our future
natural gas and oil production is, therefore, highly dependent on our level of
success in finding or acquiring additional reserves. We may not be able to
replace reserves through our exploration, development and exploitation
activities or by acquiring properties at acceptable costs. Low natural gas and
oil prices may further limit the kinds of reserves that we can develop
economically. Lower prices also decrease our cash flow and may cause us to
decrease capital expenditures.
Exploration,
development and exploitation activities involve numerous risks that may result
in dry holes, the failure to produce natural gas and oil in commercial
quantities and the inability to produce discovered reserves fully. We are
continually identifying and evaluating opportunities to acquire natural gas and
oil properties. We may not be able to consummate any acquisition successfully,
to acquire producing natural gas and oil properties that contain economically
recoverable reserves, or to integrate the properties into our operations
profitably.
Seasonality
Demand
for natural gas has historically been seasonal, with peak demand and typically
higher prices occurring during the colder winter months.
Regulation
of Oil and Natural Gas Exploration and Production
Exploration
and production operations are subject to various types of regulation at the
federal, state and local levels. This regulation includes requiring permits to
drill wells, maintaining bonding requirements to drill or operate wells, and
regulating the location of wells, the method of drilling and casing wells, the
surface use and restoration of properties on which wells are drilled, and the
plugging and abandoning of wells. Our operations are also subject to various
conservation laws and regulations. These include the regulation of the size of
drilling and spacing units or proration units, the density of wells that may be
drilled in a given field and the unitization or pooling of oil and natural gas
properties. Some states allow the forced pooling or integration of tracts to
facilitate exploration while other states rely on voluntary pooling of lands and
leases. In addition, state conservation laws establish maximum rates of
production from oil and natural gas wells, generally prohibiting the venting or
flaring of natural gas and impose certain requirements regarding the ratability
of production. The effect of these regulations is to limit the amounts of oil
and natural gas we can produce from our wells, and to limit the number of wells
or the locations where we can drill. Because these statutes, rules and
regulations undergo constant review and often are amended, expanded and
reinterpreted, we are unable to predict the future cost or impact of regulatory
compliance. The regulatory burden on the oil and gas industry increases the cost
of doing business and, consequently, affects profitability. We do not believe,
however, that we are affected differently by these regulations than others in
the industry.
We
have limited control over the activities on properties we do not
operate.
Other
companies operate some of the properties in which we have an interest. We have
limited ability to influence or control the operation or future development of
these non-operated properties or the amount of capital expenditures that we are
required to fund with respect to them. The failure of an operator of our wells
to perform operations adequately, an operator’s breach of the applicable
agreements or an operator’s failure to act in ways that are in our best interest
could reduce our production and revenues. Our dependence on the operator and
other working interest owners for these projects and our limited ability to
influence or control the operation and future development of these properties
could materially adversely affect the realization of our targeted returns on
capital in drilling or acquisition activities and lead to unexpected future
costs.
Requirement For
Additional Capital
The
Company believes that additional debt or equity financing will be necessary to
develop its planned activities through the next twelve to twenty four months.
However, no assurance can be given that all or a significant portion of any debt
or equity financing will be consummated, or that any changes in the Company’s
operations and expansion plans would not consume available resources more
rapidly than anticipated. The Company will need substantial funding to support
the long-term expansion, development, and marketing of its business and
subsidiary operations.
To the
extent that the Company’s capital resources, including the proceeds of any
offering, are insufficient to meet current or planned requirements, the Company
will continue to seek additional funds through equity or debt financing,
collaborative, or other arrangements with corporate partners, and from other
sources, which may have the effect of diluting the holdings of existing
shareholders. Other than the financing with Kodiak, which is dependent on this
registration statement becoming effective, and elsewhere listed in this
prospectus, the Company has no effective or approved current arrangement with
respect to such additional financing that is either secured or finalized at this
time. Even though the Company has other prospects for general or project
financing, the outcome may change, be delayed, or may not be conclusive,
therefore financing is not assured or guaranteed. Financing to be potentially
obtained from prospects is not assured or guaranteed until actually consummated
and financing actually provided.
10
Need
For Expansion
The
Company expects expansion will be required to address potential growth. This
need for expansion will continue to place a significant strain on the management
and financial resources of the Company. Failure to manage growth could disrupt
the operations and ultimately prevent the Company from generating expected
revenues. The Company’s business strategy includes entering into business
partnerships and may include acquiring future businesses, such as, existing
production or products, technology and acquisitions related to lighting or other
products. Other areas of future operations may include real estate, land and
commercial development, technology and facilities, and fuel cell technology. The
Company may be unable to complete suitable business partnerships and
acquisitions on commercially reasonable terms, if at all. Competition could
impair the Company’s ability to pursue these aspects successfully of this
business strategy.
Business
partnerships or acquisitions could disrupt ongoing business, distract management
and employees and increase expenses. If the Company makes an acquisition, it
could face difficulties assimilating that company’s personnel and operations.
Key personnel of the acquired company may decide not to work for the Company.
Acquisition of additional services or technologies also involves risk of
incompatibility and lack of integration into existing operations. If the Company
finances the acquisitions by issuing equity securities, this could dilute
existing stockholders positions. Additionally, funding instruments may have
rights, preferences or privileges senior to, or more favorably than, those of
the Company’s stockholders.
Limited
Financial Data
As a
result of its limited operating history, the Company has limited historical
financial data upon which to forecast revenues and results of operation. The
actual effect of these factors on the price of stock will be difficult to
assess. Results of operation may fall well below the expectations of securities
analysts and investors, and the trading price of the Company’s common stock may
drop.
Estimating
Inaccuracies
There are
numerous uncertainties inherent in estimating quantities of proven reserves and
in projecting future rates of production and timing of development expenditures,
including many factors beyond the control of the Company. Reserve engineering is
a subjective process of estimating underground accumulations of crude oil,
condensate and natural gas liquids that cannot be measured in an exact manner.
The accuracy of any reserve estimate is a function of the amount and quality of
data and of engineering and geological interpretation. Estimates by different
engineers may vary. Results of drilling, testing and production after the date
of an estimate may justify revision of such estimates. Reserve estimates are
often different from the quantities ultimately recovered including the continual
possibility of failure to find oil or gas and the drilling of a dry hole, and
concentrations of oil in unexpected differing amounts on certain holes or
targets drilled.
Key
Officers Management Services Were Provided By Outside Consulting Firms, And
Individuals Contributing Additional Key Officers Management Services, During
Fiscal Year Ended December 31, 2009and continuing on into 2010.
Key
management services were provided by outside consulting firms owned by key
Officers and/or current Directors, , or through other outside arrangements Such
Officers and Directors include Dennis R. Alexander, Chairman, CEO and CFO,
Melvena Alexander, Co-Treasurer, Secretary and Comptroller, David H. Ray,
Executive Vice President, Director, and Treasurer, Brandon D. Ray, Executive
Vice President of Finance and Director. Other key services were provided by two
or more, Executive Officers, Directors, consultants and advisors, and various
subcontractors, which managed the business of the Company. These include
one or more of the following named Officers or Directors, namely, Larry W.
Trapp, Executive Vice President, and Director, Mike Trapp, Director, and as of
May 21, 2009, Michael Kocan, President and Director, Robert Miller, Executive
Vice President and Director. Accordingly, the loss of the services of any key
individual or other person or individual filling a key role from time to time
could have an effect on the development of the Company’s business. The Company
may hire future employees and additional employees not provided through outside
consulting firms, and depend on their services, the loss of which may affect the
development of the Company’s business and could adversely affect the conduct of
our business. The Company has not applied for key-man life insurance and the
Company has not obtained insurance covering the possibility that any of its key
officers and management personnel might become disabled or otherwise unable to
render services to the Company. The success of the Company is also dependent
upon its ability to attract, contract with and retain highly qualified
technical, managerial and marketing personnel. The Company faces competition for
such personnel from other companies, many of which have significantly greater
resources than the Company. There can be no assurance that the Company will be
able to recruit and retain such personnel.
11
Officers
And Directors Beneficially Own And Represent Approximately 32.45 % Of the
Company’s Issued and Outstanding Common Stock And Have Additional Votes and
Voting Power
The
executive officers and directors of the Company currently beneficially own and
represent approximately 32.45% of our outstanding common stock, along with
additional votes and voting power through issuance of 5,000 shares of the EGPI
Series C Preferred Stock. As a result these stockholders may, as a
practical matter, be able to influence all matters requiring stockholder
approval including the election of directors, merger or consolidation and the
sale of all or substantially all of our assets. This concentration of
ownership may delay, deter or prevent acts that would result in a change of
control, which in turn could reduce the market price of our common
stock.
Penny
Stock As A Risk
Definition
And Rule Reference: The Securities and Exchange Commission has adopted Rule
3a51-1 of General Rules and Regulations, Promulgated under the Securities and
Exchange Act of 1934, which established the definition of a “penny stock”, for
the purposes relevant to the Company, as any equity security that has a market
price of less than $5.00 per share, or with an exercise price of less than $5.00
per share, subject to certain exceptions. For any transaction involving a penny
stock, unless exempt, the rules require: (i) that broker or dealer approve a
person’s account for transactions in penny stocks; and, (ii) the broker or
dealer receive from the investor a written agreement to the transaction, setting
forth the identity and quantity of the penny stock to be purchased.
Future
sales of our Shares of Common Stocks in the public market could lower our share
price.
We may
sell additional Shares of Common Stock in subsequent offerings. We may also
issue additional Shares of Common Stock to finance future acquisitions,
including acquisitions larger than those we have done in the past. We cannot
predict the size of future issuances of our Shares of Common Stock or the
effect, if any, that future issuances and sales of our Shares of Common Stock
will have on the market price of our Shares of Common Stock. Sales of
substantial amounts of Shares of Common Stock, or the perception that such sales
could occur, may adversely affect prevailing market prices for our Shares of
Common Stock.
Obligations
And Contingencies
The
Company is liable for future restoration and abandonment costs associated with
oil and gas properties owned or newly acquired by the Company. These costs
include future site restoration and plugging costs of wells. The cost of future
abandonment of producing wells has not been determined the date of this report.
Management believes that these costs will not have a material adverse effect
upon its financial position or results of operations.
Other
The
Company’s corporate parent operations during fiscal year ended 2008 did not
retain any employees. Individual consulting firms owned by two key
officers/directors along with three additional key officers/directors
contributing time and effort managed the day-to-day operations of our Company.
We have accounting consultants, legal consultants, oil and gas technical team
consultants and engineers available for project purposes on a part time basis;
one advisor assists us with project evaluations and business
development, information and research, technical writing and presentation.
The Company will consider full time employees upon sufficient capitalization and
cash flow which may include accounting systems and data processing coordinator,
oil and gas staff analyst and coordinator, financing officer; assistant to
executive officers, and other. Future performance will be substantially
dependent on the continued services of management and the ability to retain and
motivate them. The loss of the services of any officers or senior managers could
affect activities of our business and its operations until additional personnel
can be retained and trained to perform some of the management tasks. At the
present time the Company does not have long-term employment agreements with any
key personnel and does not maintain any life insurance policies.
USE
OF PROCEEDS
We have
agreed to bear the expenses relating to the registration of the shares for the
selling security holders. The Company anticipates the proceeds received from any
“Puts” tendered to Kodiak under the Equity Line of Credit to be used, roughly,
as follows: 15% for working capital, 42.5% for acquisitions in the lighting
industry and 42.5% for acquisition in the oil and gas industry.
DETERMINATION
OF OFFERING PRICE
The
offering price for the shares sold to Kodiak under the Put will equal 95% of the
average weighted price of the Common Stock during the three consecutive trading
days immediately after the date that Kodiak receives a Put Notice of draw down
by the Company of a portion of the equity line of credit with Kodiak. To the
extent that the disparity between the offering price and market price of the
Common Stock is material, such disparity was determined by the Company to be
fair in consideration of Kodiak establishing a line of credit to facilitate the
Company’s ongoing operations.
12
SELLING
SECURITY HOLDERS
|
·
|
The
selling stockholders listed below in the table may offer and sell, from
time to time, any or all of the shares of common stock covered by this
prospectus. The following table provides, as of February 8, 2009,
information regarding the beneficial ownership of our common stock held by
each selling stockholder (including holders of mandatory registration
rights for shares being registered), the shares that may be sold by each
selling stockholder under this prospectus and the number of shares of
common stock that each selling stockholder will beneficially own after
this offering.
|
|
·
|
The
information set forth in the table and related footnotes are prepared
based on our transfer agent’s records as of February 8, 2010 and
information provided to us by or on behalf of the selling stockholders.
Applicable percentages are based on 61,060,069 shares of common stock
outstanding as of February 8, 2010, adjusted as required by the rules
promulgated by the SEC. Because the selling stockholders may dispose of
all, none or some portion of the shares, no estimate can be given as to
the number of shares that will be beneficially owned by the selling
stockholders upon termination of this offering. For purposes of the table
below, however, we have assumed that after termination of this offering
none of the shares covered by this prospectus will be beneficially owned
by the selling stockholders and further assumed that the selling
stockholders will not acquire beneficial ownership of any additional
shares during the offering. In addition, the selling stockholders may have
sold, transferred or otherwise disposed of, or may sell, transfer or
otherwise dispose of, at any time and from time to time, the shares of our
common stock in transactions exempt from the registration requirements of
the Securities Act of 1933 after the date on which the information in the
table is presented.
|
|
·
|
We
may amend or supplement this prospectus from time to time in the future to
update or change this list of selling stockholders and shares that may be
resold.
|
Selling
Stockholder
|
Shares Beneficially
Owned Before
Offering (1)
|
Shares Being
Offered
|
Shares to be Beneficially
Owned After
Offering
|
Percentage to be Beneficially
Owned After
Offering
|
||||||||||||
Don
Tyner and Nancy Tyner JTWROS (DNTYNER) (2)
|
2,000,000 | 2,000,000 | 200,000 | * | ||||||||||||
Steven
Antebi (Antebi) (2)
|
500,000 | 500,000 | 200,000 | * | ||||||||||||
GalileoPartners
LLC (Antebi’s
Nominee) (3)
|
3,400,000 | 3,400,000 | 200,000 | * | ||||||||||||
THE
ANTEBI 1995 CHILDRENS INSURANCE & OTHER TRUST, PHIL LONDON
TTE (Antebi’s Nominee) or (ACIAOT) (3)(5)
|
600,000 | 600,000 | 200,000 | * | ||||||||||||
St.
George Investments, LLC (St. George) (4)
|
2,000,000 | 2,000,000 | 366,667 | * | ||||||||||||
Jesup
& Lamont Securities
Corp. (J&L)
(6)
|
500,000 | 500,000 | 10,000 | * |
13
* Less
than 1%.
(1)
|
Except
as otherwise indicated in the footnotes to this table, the number and
percentage of shares beneficially owned is determined in accordance with
Rule 13d-3 of the Exchange Act, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rule,
beneficial ownership includes any shares as to which the selling
stockholder has sole or shared voting power or investment power and also
any shares, which the selling stockholder has the right to acquire within
60 days.
|
(2)
|
Pursuant
to an Agreement to acquire Sierra Pipeline, LLC dated December 18, 2009.
The Agreement calls for best efforts registration for 2,500,000 shares of
which 2,000,000 shares were issued to Don Tyner and Nancy Tyner JTWROS,
and 500,000 shares to Steven Antebi. Don and Nancy Tyner, JWTROS, current
shareholders of the Company, have not had previous business relationship
with the Company and neither are an officer, or director, or affiliate
within the past three years or presently. Mr. Antebi is an advisor of the
Company and a shareholder, and is not a Director or Officer or Affiliate
of the Company. Mr. Antebi has had previous business dealings with the
Company see note (5) below.
|
(3)
|
Pursuant
to an Advisory Agreement with Steven Antebi or Nominee effective as of
December 18, 2009. The Agreement calls for the best efforts registration
of 4,000,000 per the directive of Steven Antebi. The agreement secured the
consults services in overall strategic planning, business opportunities
and related services. Mr. Antebi is an advisor of the Company and a
shareholder, and is not a Director or Officer or Affiliate of the Company.
Mr. Antebi has had previous business dealings with the Company see note
(5) below.
|
(4)
|
On
January 15, 2010, 2,000,000 shares of our Common Stock are issuable
according to a Registration Rights Agreement, and further in behalf of a
conversion of callable secured promissory notes having the mandatory
registration rights held by St. George Investments, LLC. The
Conversion Price of the notes shall be determined by dividing (a) the
Conversion Amount by (b) seventy five percent (75%) of the lower of (i)
$0.08 per share, or (ii) the average volume-weighted average price (the
“VWAP”)
for the three business days with the lowest average VWAP of the twenty
trading days immediately preceding the date set forth in a Conversion
Notice (the lower of the foregoing, the Conversion
Price”).
|
(5)
|
Steven
Antebi and or Nominee, one or more, have had previous relationship with
the Company via a Consulting and Advisory Agreement effective as of
December 7, 2006. Further information can be found in a Current Report
filed with the SEC on December 12, 2006. Steven Antebi provided other
Business Consulting and advisory services, and was not then an affiliate,
director, or officer of the
Company.
|
(6)
|
Pursuant
to an Engagement Agreement with respect to the retention of Jesup &
lamont Securities Corp. ("Jesup"), a registered broker/dealer as placement
agent and financial advisor to EGPI Firecreek, lnc . (the "Company") in
connection with a $6,000,000 acquisition
financing and up to a $1,500,000 accounts
receivable credit line (the
"Placement").
|
PLAN
OF DISTRIBUTION
Each
selling stockholder of our common stock and any of their donees, pledgees,
transferees, assignees and other successors-in-interest may, from time to time,
sell, transfer or otherwise dispose of any or all of their shares of common
stock on the OTC Bulletin Board or any other stock exchange, market or trading
facility on which the shares are traded or in private transactions. These
sales may be at fixed or negotiated prices. A selling stockholder may use any
one or more of the following methods when selling shares:
|
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
|
block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
|
|
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
|
privately
negotiated transactions;
|
|
|
settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a
part;
|
|
|
broker-dealers
may agree with the selling stockholders to sell a specified number of such
shares at a stipulated price per
share;
|
|
|
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or
otherwise;
|
|
|
a
combination of any such methods of sale;
or
|
14
|
|
any
other method permitted pursuant to applicable
law.
|
The
selling stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
Broker-dealers
engaged by any selling stockholder may arrange for other broker-dealers to
participate in sales. Broker-dealers may receive commissions or discounts
from the selling stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, but,
except as set forth in a supplement to this prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in compliance with
FINRA NASD Rule 2440; and in the case of a principal transaction a markup or
markdown in compliance with FINRA IM-2440.
In
connection with the sale of our common stock or interests therein, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of our common
stock in the course of hedging the positions they assume. The selling
stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions and to return borrowed shares in
connection with such short sales, or loan or pledge our common stock to
broker-dealers that in turn may sell these securities. The selling stockholders
may also enter into option or other transactions with broker-dealers or other
financial institutions or the creation of one or more derivative securities
which require the delivery to such broker-dealer or other financial institution
of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or
amended to reflect such transaction).
The
selling stockholders and any underwriters, broker-dealers or agents that
participate in the sale of our common stock or interests therein may be
considered “underwriters” within the meaning of Section 2(11) of the Securities
Act. In such event, any discounts, commissions, concessions or profit they
earn on any resale of the shares may be deemed to be underwriting discounts and
commissions under the Securities Act. Selling stockholders who are
“underwriters” within the meaning of Section 2(11) of the Securities Act will be
subject to the prospectus delivery requirements of the Securities Act.
Certain of the selling stockholders have advised us that it or its affiliates
are a registered broker-dealer. Each selling stockholder has advised us that (i)
it acquired our common stock in the ordinary course of business and (ii) at the
time of the purchase of our common stock, it did not have any agreement or
understanding, directly or indirectly, to distribute the shares of common stock
offered hereunder. In no event shall any broker-dealer receive fees,
commissions and markups which, in the aggregate, would exceed eight percent
(8%).
We are
required to pay certain fees and expenses incurred by us incident to the
registration of the shares. We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.
The
selling stockholders may be subject to the prospectus delivery requirements of
the Securities Act including Rule 172 thereunder. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 under the Securities Act may be sold under Rule 144 rather than this
prospectus There is no underwriter or coordinating broker-dealer
acting in connection with the proposed sale of the resale shares by the selling
stockholders.
Under the
terms of the St. George mandatory registration rights agreement entered into, we
agreed to keep the registration statement effective until the earlier of (i) the
date on which all of those shares of common stock may be resold without
registration under the Securities Act without regard to any volume limitations
under Rule 144 under the Securities Act or (ii) the date on which all of those
shares of common stock have been resold pursuant to the registration statement
or Rule 144 under the Securities Act.
The
resale shares will be sold only through registered or licensed broker-dealers if
required under applicable state securities laws. In addition, in certain states,
the resale shares may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with. As of
the date of this prospectus, we have not filed for registration or qualification
in any state.
Under
applicable rules and regulations under the Exchange Act, any person engaged in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to our common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the selling stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of our common stock by the selling stockholders or any other
person. We will make copies of this prospectus available to the selling
stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale (including by
compliance with Rule 172 under the Securities Act).
15
DESCRIPTION
OF SECURITIES TO BE REGISTERED
The
securities subject to this registration statement are shares of Common Stock of
the Company with a par value of $0.001. The holders of Common Stock
are entitled to one vote per share on all matters upon which holders of shares
of Common Stock are entitled to vote. The holders of the Company’s
Common Stock are not entitled to any dividend rights, conversion rights,
redemption provisions, liquidation rights, preemptive rights or other special
rights relating to the Common Stock. The Series A and Series B
Preferred Stock are entitled to liquidation preferences above the Common Stock
in the event of any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Company. The holders of the Series A
Preferred Stock, when and if dividends are declared by the Company's Board
of Directors, entitled to an amount in cash equal to the stated value for each
share of Series A Preferred Stock along with imputed accrued preferential
dividends in the amount of $0.10 per share per annum. The holders of
the Series B Preferred Stock are entitled to the stated value for each share of
Series B Preferred Stock, but is not entitled to dividends. The
holders of Series C Preferred Stock are not, presently, entitled to any
liquidation preferences, but the Company’s board of directors may establish such
preferences without a shareholder vote. The holders of the Series C
Preferred Stock are entitled to 21,200 votes per share on matters to be voted on
by the shareholders, including the election of directors of the Company shall
have no right to convert to common or any other series of authorized shares of
the Company. This gives the holders of the Series C Preferred Stock a
disproportionate amount of voting power over the holders of the Common
Stock.
TRANSFER
AGENT AND REGISTRAR
The
transfer agent and registrar for our common stock is Computershare Trust N.A.,
350 Indiana Street, Suite 750, Golden CO 80401.
SHARES
ELIGIBLE FOR FUTURE SALE
As of
February 11, 2010, we had 74,666,369 shares of common stock outstanding, not
including shares issuable upon notice of conversion of stock pursuant to demand
registration rights or shares underlying options or warrants that are issuable
upon notice of an exercise thereof. All shares sold in this offering will be
freely tradable without restriction or further registration under the Securities
Act, unless they are purchased by our “affiliates,” as that term is defined in
Rule 144 promulgated under the Securities Act.
The
outstanding shares of our common stock not included in this prospectus will be
available for sale in the public market as follows:
Public
Float
Of our
outstanding shares, 24,228,077 shares are beneficially owned by executive
officers, directors and affiliates (excluding shares of our common stock which
may be acquired upon exercise of stock options and warrants which are currently
exercisable or which become exercisable within 60 days of February 11, 2009 of
which there are presently none). The remaining 50,438,292 shares
constitute our public float.
Rule
144
In
general, under Rule 144, as currently in effect, a person who has beneficially
owned shares of our common stock for at least six months, including the holding
period of prior owners other than affiliates, is entitled to sell his or her
shares without any volume limitations; an affiliate, however, can sell such
number of shares within any three-month period as does not exceed the greater
of:
|
o
|
1%
of the number of shares of our common stock then outstanding, which
equaled 746,664 shares as of February 11, 2010,
or
|
|
o
|
the
average weekly trading volume of our common stock on the OTC Bulletin
Board during the four calendar weeks preceding the filing of a notice on
Form 144 with respect to that sale.
|
Sales
under Rule 144 are also subject to manner-of-sale provisions, notice
requirements and the availability of current public information about
us. In order to effect a Rule 144 sale of our common stock, our
transfer agent will require an opinion from legal counsel. We may
charge a fee to persons requesting sales under Rule 144 to obtain the necessary
legal opinions.
As of
February 11, 2010, approximately 50,438,292 shares of our common stock were
available for sale by non-affiliates of ours under Rule 144.
LEGAL
MATTERS
The
validity of the shares of common stock offered by the selling stockholders will
be passed upon for us by our counsel, VINCENT & REES, L.C. 175 S. Main St.
Suite 1530 Salt Lake City, Utah 8411.
16
INTERESTS
OF NAMED EXPERTS AND COUNSEL
No expert
or counsel named in this prospectus as having prepared or certified any part of
this prospectus or having given an opinion upon the validity of the securities
being registered or upon other legal matters in connection with the registration
or offering of our common stock was employed on a contingency basis or had, or
is to receive, in connection with the offering, a substantial interest, directly
or indirectly, in the registrant or any of its parents or subsidiaries.
Nor was any such person connected with the registrant or any of its parents,
subsidiaries as a promoter, managing or principal underwriter, voting trustee,
director, officer or employee.
INFORMATION
WITH RESPECT TO THE COMPANY
DESCRIPTION
OF BUSINESS
General
The
Company was incorporated in the state of Nevada on October 4, 1995 as Sterling
Market Positions, Inc. with 10,000,000 shares of $.001 par value common stock
authorized. Since then, the authorized capital stock of the Company has been
increased to 1,380,000,000, of which 1,300,000,000 are shares of $.001 par value
common stock, 20,000,000 are shares of $.001 par value non-voting stock and
60,000,000 are shares of $.001 par value preferred stock.
Overview
The
Company historically derived most of its revenues from retail sales of oil and
gas field inventory equipment, service, and supply items primarily in the
southern Arkansas area, and from acquired interests owned in revenue producing
oil wells, leases, and equipment located in Olney, Young County, Texas. The
Company disposed of these two segments of operations in 2003. The Company
acquired a marine vessel sales brokerage and charter business, International
Yacht Sales Group, Ltd. of Great Britain in December 2003 later disposing of its
operations in late 2005. In 2009 we disposed of our wholly owned subsidiary
Firecreek Petroleum, Inc. (further information is available in our current
Report on Form 8-K filed May 20, 2009). We account for or have accounted for
these segments as discontinued operations in the consolidated statements of
operations for the related fiscal year.
Recent
Developments
Sale/Assignment of 100% Stock of FPI
Subsidiary
The
Company and Firecreek Global, Inc., entered into a Stock Acquisition Agreement
effective the 18th day of May, 2009 (the “FPI Agreement”), relating to the
Firecreek Global, Inc.’s (“Assignee”) acquisition of all of the issued and
outstanding shares of the capital stock of our then-subsidiary, Firecreek
Petroleum, Inc., a Delaware corporation (“FPI”). Assignee’s acquisition of FPI
stock (the “Assignment”) resulted in the removal of all of the assets and debt
attributable to FPI from the Company’s books and consolidated financial
statements. In addition, the Company, and Assignee executed a right of first
refusal agreement attached as Exhibit to the FPI Agreement, granting to the
Company the right of first refusal, for a period of two (2) years after Closing,
to participate in certain overseas projects in which Assignee may have or obtain
rights related to Assignors’ previous activities in certain areas of the world.
For further information can be found in our current Report on Form 8-K filed on
May 20, 2009.
Completion
of Recent Merger Acquisition with M3 Lighting, Inc.
On May
21, 2009, EGPI Firecreek, Inc., a Nevada corporation (the “Company” or
“Registrant”), Asian Ventures Corp., a Nevada corporation (the “Subsidiary”), M3
Lighting, Inc., a Nevada corporation (“M3”), and Strategic Partners Consulting,
L.L.C., a Georgia limited liability company (“Strategic Partners”) executed and
closed a Plan and Agreement of Triangular Merger (the “Plan of Merger”), whereby
M3 merged into the Subsidiary, a wholly-owned subsidiary of the Company (the
“Merger”). M3 specializes in the areas of lighting industry sales,
design, product development, and sourcing, contracting and capital
markets. M3 has a very strong presence in the U.S. and Asia. With a
sales representative in China and offices in the U.S., the company can
effectively monitor price competition, expediting product shipments and grow the
business through sales. The company currently imports both finished
goods and sub-assemblies for domestic final assembly. M3 continues business with
their established customer base in the Southeast through distribution of
lighting. Through its experience, knowledge and contacts in the
lighting and DOT industry, M3 created a business plan to create a vertical
rollup of acquisitions that included manufactures, distributors and contractors.
This change in strategy allowed the management and key decision makers at M3
more time to focus on potential acquisitions who they had done business with for
numerous years. Focusing on the Obama Infrastructure Stimulus funding that is
being released for roadwork throughout the country; M3 is pursing companies that
are involved in the lighting, traffic signs/signals and ITS components of the
industry. M3 is also actively pursuing federal contracts to provide
lighting and contracting through our partnership with CST Federal who are a
disabled veterans agency that bids government contracts. Future
acquisitions in the DOT construction industry are expected to provide a labor
force for the maintenance and remediation services the Company plans on
providing. Further
information can be found along with copy of the Plan of Merger attached as an
exhibit to our Current Report on Form 8-K, filed with the Commission on May 27,
2009, as amended. Amendment No. 1 and No. 2 to the May 27, 2009 current Report
on Form 8-K were filed on June 24 and August 4, 2009,
respectively.
17
In
accordance with the Company’s plan of Merger, we currently plan to develop two
lines of business: (i) one line of business for its historical oil and gas
operations now reorganized into the Company’s wholly owned subsidiary unit,
Energy Producers, Inc. F/K/A Malibu Holding, Inc., and (ii) one relative to the
acquisition of M3 Lighting, Inc., F/K/A Asian Ventures, Corp. which is involved
in management, oversight, strategic planning, for distribution of commercial and
decorative lighting to the trade, and to direct
retailers.
Acquisition
of SATCO
Effective
as of November 4, 2009, the Company entered into a stock purchase agreement
pursuant to which it acquired all of the issued and outstanding capital stock of
South Atlantic Traffic Corporation, a Florida corporation (“SATCO”). In the course
of this acquisition, SATCO stockholders exchanged all outstanding common shares
for cash consideration, the Company’s common shares and sellers’ notes. SATCO
has been in business since 2001 and has several offices throughout the Southeast
United States. SATCO carries a variety of products and inventory geared
primarily towards the transportation industry, which generated over $15 million
in revenues for 2008. SATCO offers a comprehensive selection of transportation
products ranging from loop sealant, traffic signal equipment, traffic and light
poles, data/video systems and ITS surveillance systems.. SATCO works closely
with DOT agencies, local traffic engineers, contractors, and consultants to
customize high quality traffic control systems.
SATCO’s
representatives have 120 years of collective experience distributing traffic
products throughout the Southeastern U.S. The company’s success in the industry
is a direct result of SATCO’s dedication to providing quality products, at
competitive prices, with service after the sale. In addition, SATCO’s ongoing
relationships within the traffic industry allow the company to procure and
provide specialty items on an as needed basis.
SATCO has
recently entered into an exclusive Distributor Agreement with a manufacturer of
industrial wireless data radio modem communication networks with optional
embedded GPS radio location monitoring technologies. SATCO has also entered into
a distribution agreement with a company that manufactures spun concrete poles,
high quality decorative outdoor lighting fixtures, fabricated metal poles, arms,
and site furnishings. The additional lines will augment and align with SATCOs
existing products offering of traffic and intelligent transportation products
currently represented.
SATCO
maximizes it efficiency in delivering quality products to valued customers by
implementing various distribution strategies and capitalizing on developed
relationships within the transportation industry. One of the distribution
strategies implemented is SATCO’s concentration on an exclusive region –
Southeastern United States. Focusing on a specific region to operate within the
industry allows SATCO to maintain a smaller sales staff, consequently reducing
overhead while at the same time fostering a more personalized relationship with
its customers. To further reinforce SATCO’s reputation as a trusted and
experienced distributor of top-quality products in the transportation industry,
the management team of SATCO has pursued and executed agreements with multiple
manufacturers of top-line transportation, signalization and lighting products to
operate as the exclusive distributor of those products in our respective region.
SATCO was able to position itself in this manner due to key relationships that
SATCO’s management team has developed throughout its extensive experience within
the industry. In addition, SATCO follows up with personalized customer service
on each order to ensure that the needs of its customers and vendors is
met.
Due to
the personal nature of these business relationships between SATCO’s management
team and several other businesses in the transportation industry, SATCO is able
to competitively negotiate pricing with its vendors and keep costs down. At the
same time, SATCO capitalizes on those same relationships with customers who
value SATCO’s performance and unmatched customer service at a premium. This
helps increase margins and profitability, and allows SATCO to operate at a very
competitive level within the industry while constantly positioning itself for
future growth.
See also
additional information listed under the heading “Description of Properties”
located in this prospectus, and in our Current Report on Form 8-K filed November
12, 2009, and Form 8-K Amendment No. 1, filed January 22, 2010.
Acquisition
of 50% Oil and Gas Working Interests, Callahan, Stephens, and Shakelford
Counties, West Central Texas
On
December 22, 2009, the Company through its wholly owned subsidiary Energy
Producers, Inc. entered into an Acquisition Agreement for and including an
Assignment of Interests in Oil and Gas Leases (the “Assignment”), with Whitt Oil
& Gas, Inc., (“Whitt”) a Texas corporation acquiring 50% working interests
and corresponding 32% net revenue interests in oil and gas leases, reserves, and
equipment. The acquisition closed on December 31, 2009, Pursuant to the
Assignment, the Company paid to Whitt the total of two hundred twenty five
thousand ($225,000) dollars for the leases, equipment, and a turnkey work
program included for three wells located on the leases representing the
aggregate total of 240 Acres in Shackelford, Callahan, and Stephens counties,
West Central Texas. The program also includes the right but not the obligation
to drill four more wells in the future. Whitt Oil and Gas, Inc. is the operator
for the Company's non operated interests and has commenced with work programs to
rehabilitate the three wells which began in January 2010 with the goal to
restore production and be online as soon as possible. The Assignment through
closing is less all credited taxes including State, County, and or other due and
owing by Whitt through the oil transfer effective date of December 1, 2009 to
the Company. Operations upon the transfer effective date will be handled
by an Operating Agreement between the Company and Whitt.
18
The
rehabilitation and enhancement programs include well repairs followed by frac
treatment for each well, namely the McWhorter No. 1 Well with perforations in
the Bend Conglomerate Formation at 4,060 to 4,068 feet, the Young No. 3 Well to
produce at 2,530 feet depth in the Palo Pinto Lime, and the Boyett Well, to
produce in the Caddo Lime at approximately 3,400 feet. For additional
information please see our Current Report on Form 8-K, as amended, filed on
December 29, 2009 and January 6, 2009. See also additional information listed
under the heading “Description of Properties” located in this
prospectus.
Pending
Acquisition of Sierra Pipeline, LLC
As of
December 18, 2009, the Company entered into an agreement (the “Sierra
Agreement”) to acquire all of the issued and outstanding membership interests of
Sierra Pipeline, LLC, a Nevada limited liability Company (“Sierra”). The Company
issued 2,500,000 shares of the Company’s common stock to the member of Sierra in
connection with the acquisition which are to be registered on a best efforts
basis and are included in this prospectus. Unless mutually agreed in writing,
the agreement contemplates a March 5, 2010 closing of the transaction. A (i)
$2,500,000 cash payment and (ii) 2,500,000 additional shares of the Company’s
common stock (the “Closing Shares”) are due from the Company on the closing date
if not earlier terminated by the Company on or before February 17, 2010, or Don
Tyner on or before February 22, 2010, in accordance with a recent extension
granted. The Company is obligated to use its best efforts to register the
Closing Shares. If acquired, the Company, through Sierra, will own
approximately 2100 miles of a pipeline system that was initially installed and
used as a crude oil transportation system by Koch Industries (the “Sierra
Pipeline”). There are no known environmental issues with the pipeline
system. The rights of way and easements associated with the asset
have been recorded in each of the applicable county courthouses.
The right
of way and easements associated with the Sierra Pipeline have a significant
footprint and, if the Sierra Agreement closes, may create intangible value for
the Company through its newly acquired subsidiary. Other known transportation
companies have acquired and recompleted idle wellbores, transported gas,
divested idle segments of pipeline and rights of way and divested pipelines
and/or production operations. The Company believes that, through
Sierra and other acquisition targets, it may be able to execute on one or more
of these business strategies.
The
Company plans to utilize the pipeline assets to gather natural gas, develop gas
production in adjoining areas along the pipelines, and develop other
opportunities within the approximate 2,100 miles of right-of-ways.
The
pipeline gathering system is located throughout Northeastern and Central
Oklahoma where most of the lines are concentrated, as well as, in Southeast
Kansas, and Southwestern Indiana states. The pipeline gathering system consists
of pipeline ranging in size from 2” up to 12” in diameter.
According
to various data and third party reports, there are currently thousands of
existing well bores and/or wells adjacent to the pipeline gathering system. The
wells may be candidates for transportation agreements to transport the gas to
major buyers such as Williams, ONEOK, and Mustang, all of whom operate pipelines
which cross the Sierra pipeline gathering system at various locations. There may
also be opportunities for outright purchases of the well bores and/or wells that
could potentially enhance the overall value of the pipeline gathering system.
Additionally, the pipeline gathering system is located in a prime geographical
area for new shallow natural gas wells to be drilled. The footprint of this
pipeline offers an excellent opportunity to have transportation available for
newly developed gas reserves. The area in Northeast Oklahoma near this pipeline
system has been very productive of coalbed methane gas for many years. The most
cost effective method of extracting these reserves has been the recompletion of
older idle wellbores versus newly drilled wells. The coal seams in this area are
shallow (less than 1500’) and the success rates have been excellent. Sierra has
approximately 778 miles of pipe in Creek, Nowata, Tulsa, and Washington Counties
in Oklahoma. Based on independent review, there are over 27,000 idle wellbores
in these 4 counties. There may also be conventional gas reserves to be developed
in this area as well. In addition to the potential for recompletion of idle
wellbores the Company will look a segment of its operations for the development
of business related to third party gas transportation. Part of the initial
development work will be to identify these opportunities. Other potential
Pipeline business activities will be related to divestment of idle segments of
the gathering system. There should be opportunities to resell portions of the
system to third parties. Another initial task on this project would be to
identify other midstream companies with assets in proximity to this system.
Further down the road there are potentials, once sizable cash flow is developed,
to sell this project. According to information we have collected, a very similar
company had only activated 430 miles of their system when they sold to a larger
purchaser for $95MM and this did not include any production. The annual
multiples of cash flow paid for these pipeline systems run from 6 to 10 years,
normally. There are also other opportunities for another business development
plan to explore farming out the production play to a larger producer once the
acreage is acquired.
New
policies as well as the environmental push for vehicles and businesses to run on
compressed natural gas (CNG) may cause natural gas prices to increase which
could in turn stimulate increases in domestic production and
exploration.
Competition
for natural gas supplies is based primarily on the location of gas gathering
facilities and gas processing plants, operation efficiency and reliability, and
the ability to obtain a satisfactory price for products recovered. Competitive
factors include availability of capacity, proximity to supply and industry
marketing centers, cost efficiency and reliability of service, Competitors
include: other large natural gas gatherers that gather, process and market
natural gas and major integrated oil companies; medium and large sized
independent exploration and production companies; major interstate and
intrastate pipelines; and large number of smaller gas gatherers of varying
financial resources and experience.
19
The
pipeline gathering system, we believe, is competitive and marketable with other
comparable properties in the marketplace. Through research and data collected it
is reasoned that a pipeline as extensive as the Sierra Pipeline would require
marketing and exposure of 12 to 18 months to establish its fair value premise
and its potentials.
For
additional information please see our Current Report on Form 8-K, as amended,
filed on December 29, 2009 and January 6, 2009..
Pending
Acquisition of Southwest Signal, Inc.
As of
January 15, 2010, the Company entered into an agreement to acquire all of the
issued and outstanding capital stock of Southwest Signal, Inc., a Florida
corporation (“SWSC”). Southwest Signal, Inc., was established in 2000 and is
engaged in all facets of the United States Intelligent Transportation System /
Department of Transportation Industry. The Company also provides services to
leading private sector clients such as Wal-Mart, Lowes and Home Depot in
addition to large private developers. Southwest Signal, Inc. also
participates in maintenance and general bids for city, county and state funded
DOT projects. The corporate headquarters are located in Tampa
Florida.
Services
include the installation and maintenance of traffic control devices, variable
message signs, and associated hardware and software for the control of these
devices. The Company also installs and maintains highway lighting and
private sector lighting and security cameras along with the associated hardware
and software associated with these installations.. The Audited results for the
years ended December 31, 2008 and 2007 reflected Revenues of $14.3MM and $14.2
MM respectively, with EBITDA of $1.2MM for the years ended December
31, 2008 and December 31, 2007 $1.1MM.
DESCRIPTION
OF PROPERTY
On
December 22, 2009, the Company through its wholly owned subsidiary Energy
Producers, Inc. entered into an Agreement for the Assignment of Interests in Oil
and Gas Leases (“Assignment”), with Whitt Oil & Gas, Inc., (“Whitt”) a Texas
corporation acquiring 50% working interests and corresponding 32% net revenue
interests in oil and gas leases, reserves, and equipment. The leases, equipment,
and a turnkey work
program relate to three wells located on the leases representing the aggregate
total of 240 Acres in Shackelford, Callahan, and Stephens counties, West Central
Texas. The program also includes the right but not the obligation to drill four
more wells in the future. The acquired leases and the property to which they
relate are identified below:
1. That
certain Oil, Gas and Mineral Lease dated September 17, 2007, by and between
Eugene Bell, Lessor, and E & D Bell, LLC, Lessee and that certain Oil, Gas
and Mineral Lease dated September 17, 2007, by and between Harold Elledge,
Lessor, and E & D Bell, LLC, Lessee each covering the following two (2)
parcels of land in Callahan County, Texas:
Tract I:
Being 40 acres as near as is practicable in the form of a square around the LCS
Production of McWhorter #1 well, , Callahan County, Texas.
Tract II:
Being 40 acres as near as is practicable in the form of a square around the
Ratex Energy, Inc. No. 3 Young well, , Callahan County, Texas.
2. Those
two certain Oil and Gas Leases dated December 18, 2009, by and between Juanita
B. Boyett Trust, Jearl Silas Boyett, Executor, Lessor, and Whitt Oil &. Gas, Inc.,
Lessee, to the extent, and to the extent only, that said lease
covers
all of
the Southeast One-fourth (SE/4) of Section 55, B.A.L., A-2746, Stephens and
Shackelford Counties, Texas.
The following wells are
located on the leases identified, above:
1. McWhorter
No. Well, Texas Lease I.D. 27348, Callahan County, Texas.
2. Young
No. 3 Well, Texas Lease I.D. 26519, Callahan County, Texas.
3. Boyett
Well, Texas, API #42-417-37567, Shackelford County, Texas.
The
Company attempts to maintain all of its operating wells in good working
condition. Whitt Oil and Gas, Inc. (Whitt) a Texas corporation, and licensed
operator, is familiar with the oil and gas business in the area. Whitt will
operate the Company's interests in the properties overseeing production and
maintenance activities for its oil wells, equipment and other development
activities for the leases.
20
The
Material terms of the Operating Agreement with the Company include:
Whitt is
an independent contractor and operates the subject properties on a contract
basis pursuant to the AAPL form operating agreement according to our share of
Working Interests (50%) with a $350 per producing well per month overhead fee
and $250.00 pumper fee per well (presently for 3 wells) respectively plus
electricity and other intangible repair items. All other charges whether
by Whitt, an affiliate of Whitt or third parties will be the responsibility of
the working interest owners of the properties. Whitt will furnish the monthly
Lease Operation Expense and various activity reports to the Company’s wholly
owned subsidiary Energy Producers, Inc. Upon successful commencement of
production, run checks (payments) expected from future sales of oil
and gas are to be sent to the operator from the purchasers for oil and gas
produced. Conoco is initially designated as the gatherer for the oil.
Whitt is to administrate monthly activities, and after payment of
management, consulting, and lease-operating expenses (LOE's), it collects and
compiles the Joint Interest Billing (JIB) Statements and prepares certain
reports and financial statements related to production income and expenses for
monthly delivery to Company’s accounting for compilation along with its share of
the payment to be received according to its interests.
Whitt
will furnish the monthly Lease Operation Expense and various activity reports to
the Company’s wholly owned subsidiary Energy Producers, Inc. Upon successful
commencement of production, run checks (payments) expected from future sales
of oil and gas are to be sent to the operator from the purchasers for
oil and gas produced. Conoco is initially designated as the gatherer for the
oil. Whitt is to administrate monthly activities, and after payment of
management, consulting, and lease-operating expenses (LOE's), it collects and
compiles the Joint Interest Billing (JIB) Statements and prepares certain
reports and financial statements related to production income and expenses for
monthly delivery to Company’s accounting for compilation along with its share of
the payment to ber received according to its interests.
Listing
for the Equipment items related to the wells on the leases are as
follows:
*RECOVERABLE
EQUIPMENT INVENTORY
2 x 210
BBL Oil Tank
1 x 4 x
20' Separator
1-80
American Pump Jack
1-57 Oil
Well Pump Jack
8000 ft.
7000# Tested 2 3/8" Tubing
8000 ft.
3/4 Rods
6000 ft.
Recoverable 4 1/2" Casing
2500 ft.
2" Poly Flow Line
1-200 BBL
Open Top F.G. Water Tank
2 Well
Heads and Associated Equipment
1-57 Oil
Well Pumping Unit
3400 ft.
2 3/8" Tubing
3400 ft.
Rods
1-210 BBL
Tank
Flow
Lines and Associated Equipment
*The
Company is in the process of obtaining an updated independent valuation for the
equipment. Initial estimates of value from independent operators on salvage
basis are in excess of $123,000.
Wells And
Acreage
In the
oil and gas industry and as used herein, the word “gross” well or acre is a well
or acre in which a working interest is owned; the number of gross
wells is the total number of wells in which a working interest is owned. A
“net” well or acre is deemed to exist when the sum
of fractional ownership working interests in gross wells or
acres equals one. The number of net wells or acres is the sum of the fractional
working interests owned in gross wells or acres.
Set forth
below is information respecting the developed and undeveloped acreage owned by
the Company in Callahan, Stephens and Shackelford Counties, Texas, as of
December 31, 2009.
Developed Acreage
|
Undeveloped Acreage
|
|||||||||||||||
Gross
|
Net
|
Gross
|
Net
|
|||||||||||||
Callahan
County
|
80 | 25.6 | -0- | -0- | ||||||||||||
Stephens
and Shackelford Counties
|
40 | 12.8 | 120 | 38.4 | ||||||||||||
Total
|
120 | 38.4 | 120 | 38.4 |
21
Production And Sale Of Oil
And Gas
There is
no information relating to the Company’s net gas produced from the Company’s
properties located in Callahan, Stephens, and Shakelford Counties, West Central
Texas after royalties, in Fiscal Year Ended December 31, 2009. Oil and Gas was
not yet produced and online and such required tables therefore have been
omitted.
Exploration
and Production
The Company did
not participate in the drilling, rehabilitation, or reentry of a well
or wells since January through April of 2008. The Company participated
in a then three well program on the J.B. Tubb leasehold estate located in Ward
County Texas for workover, drilling and development programs, bringing three
wells online as a result. In addition The Company through the same time period
had also then completed a successful rehabilitation program for approximately 12
wells located on the Fant Ranch 2,000 plus acre unit, Knox County
Texas.
The
Company, in addition to its present plans contemplated for the Whitt Oil and
Gas, Inc. three well program including first right to drill four wells if it is
able to successfully acquire attractive oil and gas leases with substantially
proven undeveloped reserves, a preferred majority, or suitable working interest
being available, and can obtain or provide financing or market an interest on
terms acceptable to the Company.
Proved
Reserves -Whitt Oil and Gas, Inc., Three Well Program, Oil and Gas Working
Interests, Callahan, Stephens, and Shakelford Counties, West Central
Texas
The Company plans to commission a
reserve report to be performed in a professional manner using customary and
accepted petroleum engineering guidelines, practices and techniques as soon as
reasonably practicable to set forth the estimated total proved oil and gas
reserves for the interests owned by the Company’s wholly owned subsidiary
Energy Producers,
Inc.
Properties
and Equipment-M3 Lighting, Inc. (M3), a Wholly Owned Subsidiary of the
Company
As of
June 1, 2009 the Company’s Southwest Parent headquarters and operations for
Energy Producers, Inc. are located at 6564 Smoke Tree Lane, Scottsdale, Arizona
85253. The Secretary, Comptroller, and shareholder of the Company provides
approximately 1431 square feet being utilized for the Company charging $1400 on
a month on a quarterly contracted basis. Prior to June 1, 2009, the Chief
Executive Officer and shareholder of the Company provided corporate office space
through 2007 and 2008 at no charge. There was no further agreement in place to
pay for the premises. Through May 31, 2009 the premises continued to be provided
free of charge. In the event that our facilities in Scottsdale should, for any
reason, become unavailable, we believe that alternative facilities are available
at competitive rates. Please see “Certain Relationships and Related
Transactions” for further discussion.
As of May
22, 2009 our headquarters for the Company’s Eastern based operations and M3 are
located at 3400 Peachtree Road, Suite 111 Atlanta, Georgia 30326, and are
presently being provided on a co-sharing basis free of charge by officers and
shareholders of the Company. The approximate 1,000 square foot premises continue
to be provided free of charge as of January 15, 2010. Prior to the acquisition
by the Company, in 2008, the M3 relocated its headquarters to co-locate it with
that of a company related by common ownership and management. Under this
arrangement, the M3 received office space and support in addition to shared
management in exchange for management fees paid to the related company.
Management fees paid to the related company for these services totaled $20,453
during the year ended December 31, 2008. The Company paid a sales commission of
$2,031 to a non-employee stockholder/director during the year ended December 31,
2008. In the event that our facilities in Atlanta should, for any reason, become
unavailable, we believe that alternative facilities are available at reasonable
rates. Please see “Certain Relationships and Related Transactions” for further
discussion.
Property
and Equipment-South Atlantic Traffic, Inc., (SATCO), a Wholly Owned Subsidiary
of the Company
22
At
September 30, 2009 and at December 31, 2008 and 2007, property and equipment
consists of the following:
2009
|
2008
|
2007
|
||||||||||
Demo
Equipment
|
$ | 8,158 | $ | 11,414 | $ | - | ||||||
Office
Equipment
|
59,901 | 60,516 | 57,089 | |||||||||
Tools
and Equipment
|
27,477 | 49,544 | 49,544 | |||||||||
Vehicles
|
159,498 | 230,483 | 230,483 | |||||||||
Less
accumulated depreciation
|
(135,905 | ) | (189,828 | ) | (136,926 | ) | ||||||
$ | 119,129 | $ | 162,129 | $ | 200,190 |
Depreciation
expense for the years ended December 31, 2008 and 2007 was $52,806 and $64,446
and for the nine months ended September 30, 2009 was $31,587,
respectively.
SATCO
headquarters are located at 2295 Towne Lake Pkwy. Suite 116 PMB 305Woodstock, GA
30189, with additional satellite offices in offices in Cocoa, FL / Englewood, FL
/ Woodstock, GA / Charlotte, NC. and Fayetteville N.C. The Company has
non-cancelable operating leases, primarily for office space and certain office
equipment. The operating leases generally contain renewal options for periods
ranging from three months to two years and require the Company to pay all
executory costs such as maintenance and insurance. Rental expense for operating
leases was approximately $65,840 and $59,478 for the years ended December 31,
2008 and 2007, respectively.
Future
minimum lease payments under non-cancelable operating leases as of
December 31, 2008 are as follows:
Year
Ended December 31,
|
Amount
|
|||
2009
|
$ | 68,728 | ||
2010
|
19,504 | |||
2011
|
2,073 | |||
2012
|
488 | |||
Thereafter
|
- | |||
$ | 90,793 |
Please
see also “Certain Relationships and Related Transactions” for further
discussion.
LEGAL
PROCEEDINGS
As of the
date hereof, there are no material legal proceedings threatened against
us. In the ordinary course of our business we may become
subject to litigation regarding our products or our compliance with applicable
laws, rules, and regulations.
MARKET
PRICE OF AND DIVIDENDS ON COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company became available for
quotation on the over-the-counter, NASDAQ NQB Pink Sheets initially January 20,
2000. As of March 14, 2003, the Company’s common stock began
trading on the over-the-counter market and prices are reported on the OTC
Bulletin Board under the symbol “EFIR.” The trading price as of
February 11, 2010 was $.033 per share. The market price of our common
stock is subject to significant fluctuations in response to variations in our
quarterly operating results, general trends in the market, and other factors,
over many of which we have little or no control. In addition, broad market
fluctuations, as well as general economic, business and political conditions,
may adversely affect the market for our common stock, regardless of our actual
or projected performance.
The high
and low sales prices for each full quarterly period for the last two complete
fiscal years, as reported by the OTC Bulletin Board National Quotation Bureau
are set forth below. Such quotations represent prices between dealers, do not
include retail markup, markdown or commission, and do not represent actual
transactions.
Year
Ended December 31, 2009
|
High
|
Low
|
||||||
First
Quarter
|
$
|
0.2000
|
$
|
0.0500
|
||||
Second
Quarter
|
0.2000
|
0.0300
|
||||||
Third
Quarter
|
0.2600
|
0.0400
|
||||||
Fourth
Quarter
|
0.1100
|
0.0500
|
Year Ended December 31, 2008
|
High
|
Low
|
||||||
First
Quarter
|
$
|
0.0057
|
$
|
0.0009
|
||||
Second
Quarter
|
0.0050
|
0.0006
|
||||||
Third
Quarter
|
0.0025
|
0.0005
|
||||||
Fourth
Quarter (October 1 through October 7, 2008)
|
0.0070
|
0.0050
|
||||||
*Fourth
Quarter (October 8 through December 31, 2008)
|
0.2000
|
0.0500
|
23
*Reflects
Prices For the Period After a One for Two Hundred (1:200) Reverse Stock Split
Effective October 8, 2008.
Year Ended December 31, 2007
|
High
|
Low
|
||||||
First
Quarter
|
$
|
0.0870
|
$
|
0.0061
|
||||
Second
Quarter
|
0.0760
|
0.0031
|
||||||
Third
Quarter
|
0.0064
|
0.0025
|
||||||
Fourth
Quarter
|
0.0031
|
0.0007
|
As of
February 11, 2010, the Company had issued and outstanding 74,666,369 shares of
its common stock held by approximately 1570 holders of record, no shares
of Series A or B preferred stock outstanding, and 5,000 shares of its Series C
preferred stock, issued and outstanding.
We have
never declared dividends or paid cash dividends on our common stock and our
board of directors does not intend to distribute dividends in the near future.
The declaration, payment and amount of any future dividends will be made at the
discretion of the board of directors, and will depend upon, among other things,
the results of our operations, cash flows and financial condition, operating and
capital requirements, and other factors as the board of directors considers
relevant. There is no assurance that future dividends will be paid, and, if
dividends are paid, there is no assurance with respect to the amount of any such
dividend.
Securities Authorized for Issuance
Under Equity Compensation Plans.
The
following information is provided for the period ended December 31, 2009, with
respect to compensation plans (including individual compensation arrangements)
under which equity securities of the issuer are authorized for issuance,
aggregated as follows:
(i)
|
All compensation plans previously
approved by security holders;
and
|
(ii)
|
All compensation plans not
previously approved by security
holders.
|
24
Equity Compensation Plan
Information
Plan category
|
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a)(1a.)
|
Weighted average exercise
price of outstanding
options,
warrants and rights
(see footnotes)
(b)(*)(1.a)
|
Number of securities
remaining available for
future
issuance
(c)(1.a)
|
|||||||||
(i) Equity compensation
plans
approved
by security holders (Form S-8)
|
||||||||||||
2004
Stock Incentive Plan
|
12,500 | $ | n/a | -0- | ||||||||
2004
Stock Incentive Plan 2
|
7,000 | $ | n/a | -0- | ||||||||
2005
Stock Incentive Plan (1)
|
13,000 | $ | 8 | * | 6,500 | |||||||
2009
Stock Incentive Plan
|
10,000,000 | $ | 0.15 | 920,000 | ||||||||
Total
for Plans Filed On Form S-8
|
10,032,500 | $ | 926,500 | |||||||||
Equity
compensation plans approved
by security holders |
||||||||||||
Tirion
Group, Inc. -Warrant (2)(5)
|
10,000 | $ | n/a | -0- | ||||||||
DLM
Asset Management,-Warrant (2)(7)
|
16,750 | $ | 12 | 16,750 | ||||||||
Tirion
Group, Inc.-Warrant (2)(7)
|
16,750 | $ | 12 | 16,750 | ||||||||
John
R Taylor-Option (4)
|
10,000 | $ | n/a | -0- | ||||||||
William
E. Merritt-Option (4)
|
10,000 | $ | n/a | -0- | ||||||||
George
B. Faulder-Option (4)
|
10,000 | $ | n/a | -0- | ||||||||
Dr.
Mousa Hawamdah-Option (4)
|
10,000 | $ | n/a | -0- | ||||||||
James
Barker-Option (4)
|
5,000 | $ | n/a | -0- | ||||||||
Charles
Alliban-Option (4)
|
10,000 | $ | n/a | -0- | ||||||||
Dennis
R. Alexander-Option (4)
|
10,000 | $ | n/a | -0- | ||||||||
Gregg
Fryett-Option (4)
|
10,000 | $ | n/a | -0- | ||||||||
Peter
Fryett-Option (4)
|
10,000 | $ | n/a | -0- | ||||||||
Joseph
M. Vasquez (10)
|
500,000 | $ | 1 | 500,000 | ||||||||
Barclay
Lyons LLC -Warrant (11)
|
1,000,000 | $ | 1 | 1,000,000 | ||||||||
Barclay
Lyons LLC -Warrant (12)
|
1,000,000 | $ | 1.25 | 1,000,000 | ||||||||
The
Ep Group. -Warrant (11)
|
1,000,000 | $ | 1 | 1,000,000 | ||||||||
The
Ep Group. -Warrant (12)
|
1,000,000 | $ | 1.25 | 1,000,000 | ||||||||
War
Chest Capital Multi Strategy Fund, LLC -Warrant (11)
|
1,000,000 | $ | 1 | 1,000,000 | ||||||||
War
Chest Capital Multi Strategy Fund, LLC -Warrant (12)
|
1,000,000 | $ | 1.25 | 1,000,000 | ||||||||
(ii)
Equity compensation plans
not
approved by security holders
|
$ | |||||||||||
M.
Herzog-Option (3)
|
3,000 | $ | n/a | -0- | ||||||||
(Mel
Herzog and Charlotte Herzog TTEE UA DTD Jan 31, 1994 Herzog Revocable
Living Trust JT Grantors)
|
||||||||||||
D.
Alexander-Option (3)
|
3,000 | $ | n/a | -0- | ||||||||
M.
Alexander-Option (3)
|
2,500 | $ | n/a | -0- | ||||||||
D.
Kronenberg-Option (3)
|
2,500 | $ | n/a | -0- | ||||||||
(David
J. Kronenberg Assigned to D.J. and S.M. Kronenberg Family
LLLP)
|
||||||||||||
L.
Trapp-Option (3)
|
3,000 | $ | n/a | -0- | ||||||||
T.
Richards-Option (3)
|
2,500 | $ | n/a | -0- | ||||||||
Bradley
Ray-Option (3)
|
2,500 | $ | n/a | -0- | ||||||||
Steven
Antebi-Warrant (2)
|
20,000 | $ | n/a | -0- | ||||||||
Sapphire
Consultants-Warrant (2)(6)
|
12,500 | $ | 4 | 12,500 | ||||||||
Confin
International Inv.-Warrant (2)(6)
|
18,750 | $ | 4 | 18,750 | ||||||||
John
Brigandi-Warrant (2)
|
3,125 | $ | 4 | 1,560 | ||||||||
Steven
Antebi-Warrant (8)
|
20,000 | $ | n/a | -0- | ||||||||
Joseph
M. Vasquez (9)
|
2,500 | $ | n/a | -0- | ||||||||
Joseph
M. Vasquez (9)
|
2,500 | $ | n/a | -0- | ||||||||
Joseph
M. Vasquez (9)
|
2,500 | $ | n/a | -0- | ||||||||
Total
(1)
|
6,729,375 | $ | 1.19 | ** | 6,566,310 |
(1a.) Information
listed under column (a), (b) and (c) reflects adjustment for 1:200 post reverse
split (one (1) share for two hundred (200)) share basis which was effective at
October 8, 2008.
(*) Information
listed for column (b) in the table above represents the exercise or strike price
for each option or warrant.
25
(**) The
final Total listed for column (b) in the table above represents the weighted
average exercise price for all options and warrants listed and noted
(2), through (11) in the table only.
(1)
Ommitted.
(2) The
Company provided warrants to a lender and various consultants during 2005. For
further information regarding terms of these warrants to purchase underlying
shares of the Company’s common stock issued, please see our Registration
Statement on Form SB-2, as amended, and incorporated herein by
reference.
(3)
Represents historical options issued by the Company. For further information
regarding terms for these options, please see information furnished in our Form
10-KSB, Amendment No. 3, filed on October 4, 2002, and incorporated herein by
reference. As of November 30, 2007 these options have expired.
(4)
Represents options issued by the Company as part of the Firecreek Petroleum,
Inc. acquisition which vested, becoming available for exercise February 9, 2005.
For terms of these options, please see information furnished in a Current Report
on Form 8-K/A (Amendment No. 2), filed on September 16, 2004, and incorporated
herein by reference. As of February 9, 2009, these options have
expired.
(5) The
strike price for the Tirion warrant is 80% of the average of the then lowest
three closing bids for the previous 30 days from the date the warrants are
exercised. For further information regarding terms of the warrant please see our
Registration Statement on Form SB-2, as amended, and incorporated herein by
reference. As of May 19, 2007 these warrants have expired.
(6) On
March 14, 2006 the Company notified the holders of the warrants that they must
exercise their warrants for cash or the Warrants will be cancelled without
further notice, 30 days following such notice thereof.
(7)
Represents an assignment of 3,350,000 shares underlying warrants held by DLM
Asset Management, Inc. to Tirion Group, Inc. on February 14, 2006.
(8)
Represents warrants issued by the Company in behalf of an extension and
amendment of a Corporate Advisory Agreement with Steven Antebi, dated January
30, 2006. For further information regarding the terms of the extension and
amendment of a Corporate Advisory Agreement, and corresponding warrant agreement
please see a Current Report on Form 8-K/A, filed on February 3, 2006,
incorporated herein by reference. As of January 30, 2009, these warrants have
expired.
(9)
Represents options issued by the Company on behalf of an Advisory Service
Agreement with Joseph M. Vasquez dated March 1, 2006. For further information
regarding the terms of the option agreements please see an amended Current
Report on Form 8-K/A, filed on March 17, 2006, incorporated herein by reference.
These options expired on March 1, 2009.
(10) On
February 1, 2009, the Company entered into an Advisory Service Agreement with
Joseph M. Vazquez. As part of the terms of the Agreement the Company issued to
Mr. Vasquez three year warrants to purchase 500,000 shares at $1.00 per share
exercise price for the underlying common shares.
(11)
Represents shares of our Common Stock issuable upon the exercise of outstanding
three-year warrants. The Warrants issued by the Company were a part of
additional consideration for the issuance of three short term 6 month $50,000
secured convertible promissory notes to institutional investors on December 22,
2009. The exercise price for shares of common stock underlying the Warrants is
set at $1.00 per share. The Warrants immediately vest on the issue date expiring
three (3) years thereafter. Summary information the promissory note issuances
are incorporated in a Current Report listed under item 8.01 Other Information on
Form 8-K, filed on December 29, 2009.
(12)
Represents shares of our Common Stock issuable upon the exercise of outstanding
three-year warrants. The Warrants issued by the Company were a part of
additional consideration for the issuance of three short term 6 month $50,000
secured convertible promissory notes to institutional investors on December 22,
2009. The exercise price for shares of common stock underlying the Warrants is
set at $1.25 per share. The Warrants immediately vest on the issue date expiring
three (3) years thereafter. Summary information the promissory note issuances
are incorporated in a Current Report listed under item 8.01 Other Information on
Form 8-K, filed on December 29, 2009.
Omitted
and Not Calculated In The Table Above Issued After December 31,
2009
(13) On
January 15, 2010, 2,000,000 shares of our Common Stock are issuable according to
a Registration Rights Agreement, and further in behalf of a conversion of
callable secured promissory notes having the mandatory registration rights held
by St. George Investments, LLC. The Conversion Price of the notes shall be
determined by dividing (a) the Conversion Amount by (b) seventy five percent
(75%) of the lower of (i) $0.08 per share, or (ii) the average volume-weighted
average price (the “VWAP”) for
the three business days with the lowest average VWAP of the twenty trading days
immediately preceding the date set forth in a Conversion Notice (the lower of
the foregoing, the Conversion
Price”).
26
SUPPLEMENTARY
FINANCIAL INFORMATION
FORWARD LOOKING
STATEMENTS
Information
included or incorporated by reference in this prospectus may contain
forward-looking statements. This information may involve known and
unknown risks, uncertainties and other factors which may cause our actual
results, performance or achievements to be materially different from the future
results, performance or achievements expressed or implied by any forward-looking
statements. Forward-looking statements, which involve assumptions and
describe our future plans, strategies and expectations, are generally
identifiable by use of the words
“may,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend”
or “project” or the negative of these words or other variations on these words
or comparable terminology.
This
prospectus contains forward-looking statements, including statements regarding,
among other things, (a) our projected sales and profitability, (b) our
technology, (c) our manufacturing, (d) the regulation to which we are subject,
(e) anticipated trends in our industry and (f) our needs for working capital.
These statements may be found under “Management’s Discussion and Analysis or
Plan of Operations” and “Business,” as well as in this prospectus
generally. Actual events or results may differ materially from those
discussed in forward-looking statements as a result of various factors,
including, without limitation, the risks outlined under “Risk Factors” and
matters described in this prospectus generally. In light of these
risks and uncertainties, there can be no assurance that the forward-looking
statements contained in this prospectus will in fact occur.
Except as
otherwise required by applicable laws, we undertake no obligation to publicly
update or revise any forward-looking statements or the risk factors described in
the prospectus, whether as a result of new information, future events, changed
circumstances or any other reason after the date of this
prospectus.
27
EGPI
FIRECREEK, INC.
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND SEPTEMBER 30, 2008
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||||
Nine
Mos.
|
Nine
Mos.
|
Three
Mos.
|
Three
Mos.
|
|||||||||||||
30-Sep-09
|
30-Sep-08
|
30-Sep-09
|
30-Sep-08
|
|||||||||||||
General
and administrative expenses:
|
||||||||||||||||
General
administration
|
$
|
1,211,673
|
$
|
450,073
|
$
|
714,570
|
$
|
133,031
|
||||||||
Total
general & administrative expenses
|
1,211,673
|
450,073
|
714,570
|
133,031
|
||||||||||||
Net
loss from operations
|
$
|
(1,211,673
|
)
|
$
|
(450,073
|
)
|
$
|
(714,570
|
)
|
$
|
(133,031
|
)
|
||||
Other
revenues and expenses:
|
||||||||||||||||
Miscellaneous
income
|
48,000
|
0
|
0
|
0
|
||||||||||||
Interest
income
|
0
|
0
|
0
|
0
|
||||||||||||
Interest
expense
|
(6,281
|
)
|
0
|
(4,184
|
)
|
0
|
||||||||||
Net
income (loss) before provision for income taxes
|
$
|
(1,169,954
|
)
|
$
|
(450,073
|
)
|
$
|
(718,754
|
)
|
$
|
(133,031
|
)
|
||||
Provision
for income taxes
|
0
|
0
|
0
|
0
|
||||||||||||
Loss
from continuing operations
|
(1,169,954
|
)
|
$
|
(450,073
|
)
|
(718,754
|
)
|
$
|
(133,031
|
)
|
||||||
Discontinued
operations:
|
||||||||||||||||
Gain
on disposal of discontinued component (net of tax)
|
592,567
|
0
|
270,260
|
0
|
||||||||||||
Gain
(loss) from operations of discontinued component (net of
tax)
|
0
|
(770,264
|
)
|
0
|
589,438
|
|||||||||||
Net
income (loss)
|
$
|
(577,387
|
)
|
$
|
(1,220,337
|
)
|
$
|
(448,494
|
)
|
$
|
456,407
|
|||||
Basic
& fully diluted net income (loss) per common share:
|
||||||||||||||||
Basic
income (loss) per share- continuing operations
|
$
|
(0.07
|
)
|
$
|
(0.08
|
)
|
$
|
(0.03
|
)
|
$
|
(0.02
|
)
|
||||
Basic
income (loss) per share- discontinued operations
|
$
|
0.03
|
$
|
(0.13
|
)
|
$
|
0.01
|
$
|
0.10
|
|||||||
Basic
income (loss) per share
|
$
|
(0.04
|
)
|
$
|
(0.21
|
)
|
$
|
(0.02
|
)
|
$
|
0.08
|
|||||
Weighted
average of common shares outstanding:
|
||||||||||||||||
Basic
|
17,316,735
|
5,921,288
|
27,382,532
|
5,921,288
|
||||||||||||
Fully
diluted
|
17,316,735
|
5,921,288
|
27,382,532
|
5,921,288
|
See
the notes to the unaudited consolidated financial statements.
28
EGPI
FIRECREEK, INC.
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND SEPTEMBER 30, 2008
Unaudited
|
Unaudited
|
||||||||
30-Sep-09
|
30-Sep-08
|
||||||||
Operating
Activities:
|
|||||||||
Net
income (loss)
|
$
|
(577,387
|
)
|
$
|
(1,220,337
|
)
|
|||
Adjustments
to reconcile net loss items not requiring the use of
cash:
|
|||||||||
Interest
expense
|
3,284
|
0
|
|||||||
Consulting
expense and other fees
|
484,244
|
0
|
|||||||
Impairment
expense
|
554,176
|
0
|
|||||||
Gain
on disposal of Firecreek
|
Discontinued
component
|
(592,567
|
)
|
0
|
|||||
Depreciation
& depletion expense
|
Discontinued
component
|
0
|
144,174
|
||||||
Interest
expense
|
Discontinued
component
|
0
|
731,485
|
||||||
Amortization
of deferred charges
|
Discontinued
component
|
0
|
36,376
|
||||||
Gain
on derivative liability
|
Discontinued
component
|
0
|
120,340
|
||||||
Changes
in other operating assets and liabilities :
|
|||||||||
Accounts
receivable
|
(489
|
)
|
|||||||
Accounts
receivable
|
Discontinued
component
|
0
|
(58,679
|
)
|
|||||
Accounts
payable and accrued expenses
|
100,492
|
(436
|
)
|
||||||
Net
cash used by operations
|
$
|
(28,247
|
)
|
$
|
(247,077
|
)
|
|||
Investing
activities:
|
|||||||||
Cash
acquired in purchase of M3 Lighting, Inc.
|
$
|
46,133
|
$
|
0
|
|||||
Security
deposit
|
(20,000
|
)
|
0
|
||||||
Purchase
of lease & equipment
|
Discontinued
component
|
0
|
(1,406,237
|
)
|
|||||
Net
cash used for investing activities
|
26,133
|
(1,406,237
|
)
|
||||||
Net
increase (decrease) in cash during the period
|
$
|
(2,114
|
)
|
$
|
(1,653,314
|
)
|
|||
Cash
balance at January 1st
|
2,230
|
2,009,734
|
|||||||
Cash
balance at September 30th
|
$
|
116
|
$
|
356,420
|
|||||
Supplemental
disclosures of cash flow information:
|
|||||||||
Interest
paid during the period
|
$
|
0
|
$
|
0
|
|||||
Income
taxes paid during the period
|
$
|
0
|
$
|
0
|
See
the notes to the unaudited consolidated financial statements.
29
EGPI
FIRECREEK, INC.
UNAUDITED
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND SEPTEMBER 30, 2008
Other
|
||||||||||||||||||||||||||||||||
Preferred
|
Preferred
|
Common
|
Par
|
Paid
in
|
Accumulated
|
Comprehensive
|
||||||||||||||||||||||||||
Shares
|
Value
|
Shares
|
Value
|
Capital
|
Deficit
|
Loss
|
Total
|
|||||||||||||||||||||||||
Balance
at December 31, 2008
|
0
|
$
|
0
|
6,921,288
|
$
|
1,384,257
|
$
|
20,970,812
|
$
|
(22,689,867
|
)
|
$
|
(567,000
|
)
|
$
|
(901,798
|
)
|
|||||||||||||||
|
||||||||||||||||||||||||||||||||
Issued
shares for consulting services
|
7,012,361
|
7,012
|
469,298
|
476,310
|
||||||||||||||||||||||||||||
Issued
shares to pay debt
|
400,000
|
400
|
60,350
|
60,750
|
||||||||||||||||||||||||||||
Issued
warrants to consultant
|
7,934
|
7,934
|
||||||||||||||||||||||||||||||
Issued
shares to purchase M3 Lighting, Inc.
|
14,320,818
|
14,321
|
558,512
|
572,833
|
||||||||||||||||||||||||||||
Net
loss for the period
|
(577,387
|
)
|
(577,387
|
)
|
||||||||||||||||||||||||||||
Balance
at September 30, 2009
|
0
|
$
|
0
|
28,654,467
|
$
|
1,405,990
|
$
|
22,066,906
|
$
|
(23,267,254
|
)
|
$
|
(567,000
|
)
|
$
|
(361,358
|
)
|
|||||||||||||||
Other
|
||||||||||||||||||||||||||||||||
Preferred
|
Preferred
|
Common
|
Par
|
Paid
in
|
Accumulated
|
Comprehensive
|
||||||||||||||||||||||||||
Shares
|
Value
|
Shares
|
Value
|
Capital
|
Deficit
|
Loss
|
Total
|
|||||||||||||||||||||||||
Balance
at December 31, 2007
|
20,000,000
|
$
|
200,000
|
5,921,288
|
$
|
1,184,257
|
$
|
20,970,812
|
$
|
(25,954,306
|
)
|
$
|
(184,800
|
)
|
$
|
(3,784,037
|
)
|
|||||||||||||||
Loss
on investment (Star Energy)
|
(352,200
|
)
|
(352,200
|
)
|
||||||||||||||||||||||||||||
Net
loss for the period
|
(1,220,337
|
)
|
(1,220,337
|
)
|
||||||||||||||||||||||||||||
Balance
at September 30, 2008
|
20,000,000
|
$
|
200,000
|
5,921,288
|
$
|
1,184,257
|
$
|
20,970,812
|
$
|
(27,174,643
|
)
|
$
|
(537,000
|
)
|
$
|
(5,356,574
|
)
|
30
EGPI
FIRECREEK, INC.
NOTES
TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND SEPTEMBER 30, 2008
1.
ORGANIZATION OF THE COMPANY AND SIGNIFICANT ACCOUNTING PRINCIPLES
The
Company was incorporated in the State of Nevada October 1995. Effective October
13, 2004 the Company, previously known as Energy Producers Inc., changed its
name to EGPI Firecreek, Inc.
Prior to
December 2008, the Company had interests in various gas & oil wells located
in the Wyoming and Texas area. In December 2008, the Company’s major creditor,
Dutchess Private Equities Ltd. (Dutchess), foreclosed on the assets of the
Company. As a result, all of the Company’s oil and gas properties
were transferred to Dutchess in satisfaction of debt owed. See financial
statement Note 9 for further discussion.
In
October 2008, the Company effected a 1 share for 200 shares reverse split of its
common stock. See financial statement Note 4 for a further
discussion.
In May
2009 the Company acquired M3 Lighting, Inc. (“M3”) as a wholly owned subsidiary
via reverse triangular merger. M3 is a distributor of commercial and decorative
lighting to the trade and direct to retailers. As part of the Merger the
Company effected a name change for its wholly owned subsidiary Malibu Holding,
Inc. to Energy Producers, Inc. (“EPI”) as a conduit for its oil and gas
activities.
Consolidation- the
accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary. All significant inter-company
balances have been eliminated.
Use of Estimates- The
preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make reasonable estimates and
assumptions that affect the reported amounts of the assets and liabilities and
disclosure of contingent assets and liabilities and the reported amounts of
revenues and expenses at the date of the consolidated financial statements and
for the period they include. Actual results may differ from these
estimates.
31
Revenue and Cost Recognition-
Revenues are recognized when all services have been performed and
collection of the revenues is assured.
Cash- For the purpose of
compiling the statement of changes in cash flows, cash includes all cash
balances and highly liquid short-term investments with original maturity dates
of three months or less.
Long Lived Assets- The
Company reviews for the impairment of long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. An impairment loss would be recognized when estimated future
cash flows expected to result from the use of the asset and its eventual
disposition is less than its carrying amount.
The
Company applied SFAS No. 144, Accounting for the Impairment or
Disposal of Long Lived Assets, to account for the sale of the oil &
gas properties in December 2008 as more fully discussed in financial statement
note 9. Accordingly, the results of operations and cash flows from
these assets for both 2008 and 2007 are separately recorded in the consolidated
statements of operations and cash flows as a discontinued
component.
Income taxes- The Company
accounts for income taxes in accordance with the Statement of Accounting
Standards No. 109 (SFAS No. 109), "Accounting for Income Taxes".
SFAS No. 109 requires an asset and liability approach to financial
accounting and reporting for income taxes. Deferred income tax assets and
liabilities are computed annually for differences between financial statement
and income tax bases of assets and liabilities that will result in taxable
income or deductible expenses in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to
reduce deferred tax assets and liabilities to the amount expected to be
realized. Income tax expense is the tax payable or refundable for the
period adjusted for the change during the period in deferred tax assets and
liabilities.
2.
GOING CONCERN
The
accompanying consolidated financial statements have been presented in accordance
with generally accepted accounting principals, which assume the continuity of
the Company as a going concern. However, in December 2008 all of the
producing assets of the Company were foreclosed on by Dutchess to pay down loans
owed. This situation raises the doubt of the Company’s ability to continue
as a going concern.
Management’s
plans with regard to this matter are as follows:
-Raise
interim and long term finance to assist new M3 Lighting, Inc. and Energy
Producers, Inc. (oil and gas rehabilitation and development) subsidiary
acquisitions.
-Raise
6-12 months working capital for corporate operations.
-Pursue
asset based project finance or develop joint ventures to fund work programs for
oil and gas domestically.
-Pursue
formation of strategic alliances with more firmly established peer groups to
assist acquisition activities.
-Initiate
search for experienced personnel related to the M3 and oil and gas activities to
add to our staff.
3. NET
INCOME (LOSS) PER SHARE
The
Company applies SFAS No. 128, Earnings per Share to compute
net loss per share. In
accordance with SFAS No. 128, basic net loss per share has been computed based
on the weighted average of common shares outstanding during the years. Net
income (loss) per common share has been computed as follows:
30-Sep-09
|
30-Sep-08
|
|||||||
Net
income (loss) from continuing operations
|
$
|
(1,169,954
|
)
|
$
|
(450,073
|
)
|
||
Net
income (loss) from discontinued operations
|
592,567
|
(770,264
|
)
|
|||||
Net
income (loss)
|
$
|
(577,387
|
)
|
$
|
(1,220,337
|
)
|
||
Total
shares outstanding
|
28,654,467
|
5,921,288
|
||||||
Basic
weighted average of shares outstanding
|
17,316,735
|
5,921,288
|
||||||
Fully
diluted weighted average of shares outstanding
|
17,316,735
|
5,921,288
|
||||||
Basic
income (loss) per share- continuing operations
|
$
|
(0.07
|
)
|
$
|
(0.08
|
)
|
||
Basic
income (loss) per share- discontinued operations
|
$
|
0.03
|
$
|
(0.13
|
)
|
|||
Basic
income (loss) per share
|
$
|
(0.04
|
)
|
$
|
(0.21
|
)
|
||
Fully
diluted income (loss) per share- continuing operations
|
$
|
(0.07
|
)
|
$
|
(0.08
|
)
|
||
Fully
diluted income (loss) per share- discontinued operations
|
$
|
0.03
|
$
|
(0.13
|
)
|
|||
Fully
diluted income (loss) per share
|
$
|
(0.04
|
)
|
$
|
(0.21
|
)
|
32
All
amounts for fiscal year 2008 have been adjusted for the 1 for 200 reverse stock
split more fully discussed in financial statement Note 4.
4.
COMMON AND PREFERRED STOCK TRANSACTIONS AND REVERSE STOCK SPLIT
In
October 2008, the Company effected a 1 share for 200 shares reverse split of its
common stock. As a result, the issued and outstanding shares at December
31, 2008 were decreased from 1,184,257,619 shares to 5,921,288 shares. In
addition, the par value of the common stock was increased from $0.001 to
$0.20.
During
the period from January 1, 2009 to September 30, 2009, the Company issued
7,012,361 shares of common stock to consultants for services rendered at a value
of $476,310.
In
February 2009, the Company issued 400,000 shares of common stock and retired
debt owed of $60,750.
In May
2009, the Company issued 14,320,818 shares to purchase M3 Lighting, Inc. the
transaction was valued at $572,833. Also see discussion in financial
statement Note 8.
5.
PREFERRED STOCK SERIES
Series A preferred stock:
Series A preferred stock has a par value of $0.001 per share and no stated
dividend preference. The Series A is convertible into common stock at a
conversion ratio of one preferred share for one common share. Preferred A
has liquidation preference over Preferred B stock and common stock.
Series B preferred stock:
Series B preferred stock has a par value of $0.001 per share and no stated
dividend preference. The Series B is convertible into common stock at a
conversion ratio of one preferred share for one common share. The Series B
has liquidation preference over Preferred C stock and common stock.
Series C preferred stock: The
Preferred C stock has a stated value of $.001 and no stated dividend rate and is
non-participatory. One share of preferred is convertible into 10 shares of
common stock. The Series C has liquidation preference over common
stock.
In May
2009, the Company issued 5,000 shares of its Series C stock as part of the
acquisition of M3 Lighting, Inc. See further discussion in financial
statement Note 8.
6.
OPTIONS OUTSTANDING
The
Company applies SFAS No. 123, “Accounting for Stock-Based Compensation” to
account for option issues. Accordingly, all options granted are recorded
at fair value using a generally accepted option pricing model at the date of the
grant. There is no formal stock option plan for employees.
A listing
of options outstanding is as follows. Options outstanding and their
attendant exercise prices have been adjusted for the 1 for 200 reverse split of
the common stock discussed in financial statement Note 4.
|
Weighted Average
|
Weighted Average
|
||||||||||
|
Amount
|
Exercise Price
|
Years to Maturity
|
|||||||||
Outstanding
at December 31, 2008
|
178,810
|
$
|
8.04000
|
2.72
|
||||||||
Issued
|
500,000
|
|||||||||||
Exercised
|
0
|
|||||||||||
Expired
|
(112,500
|
)
|
||||||||||
Outstanding
at September 30, 2009
|
566,310
|
$
|
1.82451
|
2.17
|
33
In
February 2009, the Company issued 500,000 options with an exercise price of $1
per share expiring in 2012. The Company recorded an expense of $7,934 in
the consolidated statement of operations as a result of the issue.
7. INCOME TAX
PROVISION
Provision
for income taxes is comprised of the following:
30-Sep-09
|
30-Sep-08
|
|||||||
Net
loss before provision for income taxes
|
$
|
(1,169,954
|
)
|
$
|
(1,220,337
|
)
|
||
Current
tax expense:
|
||||||||
Federal
|
0
|
0
|
||||||
State
|
0
|
0
|
||||||
Total
|
$
|
0
|
$
|
0
|
||||
Less
deferred tax benefit:
|
||||||||
Timing
differences
|
(3,024,150
|
)
|
(1,082,171
|
)
|
||||
Allowance
for recoverability
|
3,024,150
|
1,082,171
|
||||||
Provision
for income taxes
|
$
|
0
|
$
|
0
|
||||
A
reconciliation of provision for income taxes at the statutory rate to
provision for income taxes at the Company's effective tax rate is
as follows:
|
||||||||
Statutory
U.S. federal rate
|
34
|
%
|
34
|
%
|
||||
Statutory
state and local income tax
|
10
|
%
|
10
|
%
|
||||
Less
allowance for tax recoverability
|
-44
|
%
|
-44
|
%
|
||||
Effective
rate
|
0
|
%
|
0
|
%
|
||||
Deferred
income taxes are comprised of the following:
|
||||||||
Timing
differences
|
$
|
3,024,150
|
$
|
1,082,171
|
||||
Allowance
for recoverability
|
(3,024,150
|
)
|
(1,082,171
|
)
|
||||
Deferred
tax benefit
|
$
|
0
|
$
|
0
|
Note:
The deferred tax benefits arising from the timing differences begin to expire in
fiscal years 2028 and 2029 and may not be recoverable upon the purchase of the
Company under current IRS statutes.
8.
PURCHASE OF M3 LIGHTING, INC.
In May
2009, the Company issued 14,320,818 common shares and 5,000 preferred C shares
to purchase M3 Lighting, Inc. The transaction was valued at $572,833. The
Company recorded an impairment expense of $548,792 at the date of the
transaction as the future revenues associated with M3 could not be
assured.
Selected
pro forma financial data associated with the purchase of M3 assuming the
purchase occurred on January 1, 2009 is as follows.
Per
|
Pro
|
|||||||
Financials
|
Forma
|
|||||||
Net
revenues
|
$
|
0
|
$
|
3,848
|
||||
General
administration
|
$
|
1,211,673
|
$
|
1,244,309
|
||||
Loss
per share
|
$
|
(0.04
|
)
|
$
|
(0.04
|
)
|
9. SALE
OF FIRECREEK INC.
In
February 2009, the Company sold all of its interest in its subsidiary, Firecreek
Petroleum Inc., to the former owner of the subsidiary. All of the
assets and the liabilities of the subsidiary were transferred to the former
owner of the subsidiary and the Company recognized a book gain on the
transaction of $592,567.
34
10.
Promissory Notes
The
following is the schedule of the promissory notes to shareholder payable at
September 30, 2009:
Matures
in December 2009, effective interest of 18% (shareholder)
|
$
|
37,049
|
||
Matures
in February 2010, effective interest of 18% (related
party)
|
12,000
|
|||
Matures
in February 2010, effective interest of 18% (related
party)
|
1,800
|
|||
Total
Notes Payable
|
$
|
50,849
|
11. SUBSEQUENT
EVENTS
In
October 2009, the Company issued 1,500,000 shares to an entity for investor and
public relations.
In
October 2009, the Company issued 1,150,000 shares to consultants for services
rendered.
In
November 2009, the Company issued 100,000 shares to consultants for services
rendered.
Effective
October 1, 2009, the Company acquired 100% of the stock of South Atlantic
Traffic Corporation. For additional information please see our Current Report on
Form 8-K filed on November 11, 2009, incorporated herein
by reference.
Effective
October 3, 2009, the Company and SATCO established a four million ($4,000,000)
dollar accounts receivable line of credit. For additional information please see
our Current Report on Form 8-K filed on November 11, 2009 incorporated
herein by reference.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
You
should read the following discussion and analysis in conjunction with the
Consolidated Financial Statements in Form 10-K, as amended, and the other
financial data appearing elsewhere in this Form 10-Q Report.
The
information set forth in Management’s Discussion and Analysis of Financial
Condition and Results of Operations (“MD&A”) contains certain
“forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995, including,
among others (i) expected changes in the Company’s revenues and profitability,
(ii) prospective business opportunities and (iii) the Company’s strategy for
financing its business. Forward-looking statements are statements other than
historical information or statements of current condition. Some forward-looking
statements may be identified by use of terms such as “believes”, “anticipates”,
“intends” or “expects”. These forward-looking statements relate to the plans,
objectives and expectations of the Company for future operations. Although the
Company believes that its expectations with respect to the forward-looking
statements are based upon reasonable assumptions within the bounds of its
knowledge of its business and operations, in light of the risks and
uncertainties inherent in all future projections, the inclusion of
forward-looking statements in this report should not be regarded as a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved. In light of these risks and uncertainties,
there can be no assurance that actual results, performance or achievements of
the Company will not differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements. The
foregoing review of important factors should not be construed as exhaustive. The
Company undertakes no obligation to release publicly the results of any future
revisions it may make to forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Overview
The
Company has been focused on oil and gas activities for development of interests
held that were acquired in Texas and Wyoming for the production of oil and
natural gas through December 2, 2008. The Company throughout 2008 was seeking to
continue expansion and growth for oil and gas development in its core projects.
EGPI Firecreek Inc. was formerly known as Energy Producers, Inc., an oil and gas
production company focusing on the recovery and development of oil and natural
gas. This strategy is centered on rehabilitation and production enhancement
techniques, utilizing modern management and technology applications in upgrading
certain proven reserves.
In its
2005 fiscal year, the Company initiated a program to review domestic oil and gas
prospects and targets. As a result, EGPI acquired non-operating oil and
gas interests in a project titled Ten Mile Draw (“TMD”) located in Sweetwater
County, Wyoming USA for the development and production of natural gas. In July,
2007, the Company acquired and began production of oil at the 2,000 plus acre
Fant Ranch Unit in Knox County, Texas. This was followed by the acquisition and
commencement of oil and gas production at the J.B. Tubb Leasehold Estate located
in the Amoco Crawar Field in Ward County, Texas in March, 2008. The Company
successfully increased production and revenues derived from its properties and
in late 2008, the Company was able to retire over 90% of its debt through the
disposition of those improved properties.
35
In early
2009, based on the economic downturn, struggling financial markets and the
implementation of the federal stimulus package for infrastructure projects, the
Company embarked on a transition from an emphasis on the oil and gas focused
business to that of an acquisition strategy focused on the transportation
industry serving federal DOT and state/local DOT agencies. In addition, the
acquisition targets being reviewed by the Company also have a presence in the
telecommunications and general construction industries. The acquisition strategy
focuses on vertically integrating manufacturing entities, distributors and
construction groups. In May 2009, the Company acquired M3 Lighting Inc. (M3) as
the flagship subsidiary to begin this process.
Through
2009 we continued to limit and wind down the pursuit of oil and gas projects
overseas in Central Asian and European countries, but reserve the right to re
enter these activities at a future date.
The
Company has been making presentations to asset-based lenders and other financial
institutions for the purpose of expanding and supporting our growth potential by
development of its new line of operations for M3, and in addition to its oil and
gas operations in 2009 with a goal to re build our revenue base and cash flow;
however, the Company makes no guarantees and can provide no assurances that it
will be successful in these endeavors.
One of
the ways our plans for growth could be altered if current opportunities now
available become unavailable:
The
Company would need to identify, locate, or address replacing current potential
acquisitions or strategic alliances with new prospects or initiate other
existing available projects that may have been planned for later stages of
growth and the Company may therefore not be ready to activate. This process can
place a strain on the Company. New acquisitions, business opportunities, and
alliances, take time for review, analysis, inspections and negotiations. The
time taken in the review activities is an unknown factor, including the business
structuring of the project and related specific due diligence
factors.
General
The
Company historically derived its revenues primarily from retail sales of oil and
gas field inventory equipment, service, and supply items primarily in the
southern Arkansas area, and from acquired interests owned in revenue producing
oil wells, leases, and equipment located in Olney, Young County, Texas. The
Company disposed of these two segments of operations in 2003. The Company
acquired a marine vessel sales brokerage and charter business, International
Yacht Sales Group, Ltd. of Great Britain in December 2003 later disposing of its
operations in late 2005. In 2009 we disposed of our wholly owned subsidiary
Firecreek Petroleum, Inc. (see further information in this report and in our
current Report on Form 8-K filed May 20, 2009, incorporated herein by
reference). We account for or have accounted for these segments as discontinued
operations in the consolidated statements of operations for the related fiscal
year.
Sale/Assignment
of 100% Stock of FPI Subsidiary
Having
disposed of all of the assets of FPI, on May 18, 2009, the Company and Firecreek
Global, Inc., entered into a Stock Acquisition Agreement effective the 18th day
of May, 2009, relating to the Assignees acquisition of all of the issued and
outstanding shares of the capital stock of Firecreek Petroleum, Inc., a Delaware
corporation. Moreover, included and inherent in the Assignment was all of the
Company’s debt held in the FPI subsidiary. In addition, the Company, and
Assignee executed a right of first refusal agreement attached as Exhibit to the
Agreement, granting to the Company the right of first refusal, for a period of
two (2) years after Closing, to participate in certain overseas projects in
which Assignee may have or obtain rights related to Assignors’ previous
activities in certain areas of the world. For further information please see our
current Report on Form 8-K filed on May 20, 2009, incorporated herein by
reference.
Completion
of Recent Merger Acquisition with M3 Lighting, Inc.
On May
21, 2009, EGPI Firecreek, Inc., a Nevada corporation (the “Company” or
“Registrant”), Asian Ventures Corp., a Nevada corporation (the “Subsidiary”), M3
Lighting, Inc., a Nevada corporation (“M3”), and Strategic Partners Consulting,
L.L.C., a Georgia limited liability company (“Strategic Partners”) executed and
closed a Plan and Agreement of Triangular Merger (the “Plan of Merger”), whereby
M3 merged into the Subsidiary, a wholly-owned subsidiary of the registrant (the
“Merger”). Further information can be found along with copy of the Plan of
Merger attached as an exhibit to our Current Report on Form 8-K, filed with the
Commission on May 27, 2009, as amended. Amendment No. 1 and No. 2 to the May 27,
2009 current Report on Form 8-K were filed on June 24 and August 4, 2009,
respectively, and incorporated herein by reference.
In
accordance with the Company’s plan of Merger, our plans are currently to develop
two lines of business, one line of business for its historical oil and gas
operations now reorganized into the Company’s wholly owned subsidiary unit,
Energy Producers, Inc. F/K/A Malibu Holding, Inc., this replacing Firecreek
Petroleum, Inc., and one for M3 Lighting, Inc., F/K/A Asian Ventures, Corp.
which is involved in distribution of commercial and decorative lighting to the
trade, and to direct retailers. M3 specializes in the areas of lighting
industry sales, design, product development, and sourcing, contracting and
capital markets. M3 is pursuing acquisitions for the Company in the DOT
construction industry on Federal and State levels in order to expand its sales
for lighting, guardrail, cameras, traffic management/signalization, utility
moves, variable message boards and other non-road construction opportunities, as
well as, its pursuit of light and traffic fixture manufacturing plants both
domestically and overseas. Future acquisitions in the DOT construction
industry are expected to provide a labor force for the maintenance and
remediation services the Company plans on providing.
36
The
Company expects to incur an increase in operating expenses during the next year
from commencing activities related to its plans for the Company’s oil and gas,
M3 operations, and new acquisitions. The amount of net losses and the time
required for the Company to reach and maintain profitability are uncertain at
this time. There is a likelihood that the Company will encounter difficulties
and delays encountered with business subsidiary operations, including, but not
limited to uncertainty as to development and the time and timing required for
the Company’s plans to be fully implemented, governmental regulatory responses
to the Company’s plans, fluctuating markets and corresponding spikes, or dips in
our products demand, currency exchange rates between countries, acquisition and
development pricing, related costs, expenses, offsets, increases, and
adjustments. There can be no assurance that the Company will ever generate
significant revenues or achieve profitability at all or on any substantial
basis.
General
Statement: Factors that may affect future results:
With the
exception of historical information, the matters discussed in Management’s
Discussion and Analysis or Plan of Operation contain forward looking statements
under the 1995 Private Securities Litigation Reform Act that involve various
risks and uncertainties. Typically, these statements are indicated by
words such as “anticipates”, “expects”, “believes”, “plans”, “could”, and
similar words and phrases. Factors that could cause the company’s actual
results to differ materially from management’s projections, forecasts, estimates
and expectations include but are not limited to the following:
–
Inability of the company to secure additional financing.
–
Unexpected economic changes in the United States.
– The
imposition of new restrictions or regulations by government agencies that affect
the Company’s business activities.
To the
extent possible, the following discussion will highlight the Company’s business
activities for the quarters ended September 30, 2009 and September 30,
2008.
I.
Results of Operations
Nine
months ended September 30, 2009 versus nine months ended September 30,
2008.
General
and administrative expense for the first nine months of operations in 2009
increased to $1,211,673 from $450,073 in the first nine months of 2008. The
increase was attributed to acquisition cost related to M3 Lighting, Inc.
operations.
Detail
of general & administrative expenses:
|
30-Sep-09
|
30-Sep-08
|
||||||
Advertising
& promotion
|
$
|
49,507
|
$
|
12,088
|
||||
Administration
|
33,680
|
29,442
|
||||||
Consulting
|
263,676
|
51,250
|
||||||
Impairment
expense (M3)
|
548,792
|
0
|
||||||
Investor
incentives/commissions
|
51,000
|
36,376
|
||||||
Professional
fees
|
265,018
|
314,069
|
||||||
Travel
|
0
|
6,848
|
||||||
Total
|
$
|
1,211,673
|
$
|
450,073
|
Advertising
& promotion expense was $49,507 investor and public relations.
Administration
used $33,680 for corporate parent costs related to printing, office, postage,
transfer agent, filing agent, and other costs.
Consulting
fees of $263,676 were incurred for business advisory services.
Impairment
expense in the amount of $548,792 was incurred as a result of the merger of M3
into the Company’s wholly owned subsidiary.
Investor
incentives/commissions of $51,000 were incurred related to financing
activities.
Professional
fees of $265,018 were incurred for management advisory, legal costs, accounting,
and financial modeling.
37
After
deducting general and administrative costs, the Company experienced a loss from
operations of $1,211,673 for the nine months ended September 30, 2009 compared
to an operating loss of $450,073 for the same period in 2008.
Interest
expense increased for the nine months ended September 30, 2009 to $6,282
compared to $0 for the same period in 2008. .
Consulting
and professional fees increased approximately $150,694 to $528,694 for the nine
month period ended September 30, 2009 from $365,319 for the comparative nine
month period in 2008.
Net loss
for the first nine months in 2009 was $577,387 or ($0.04) per share compared to
a loss of $1,220,337 or ($0.02) per share for the first nine months in
2008.
Three
months ended September 30, 2009 versus Three months ended September 30,
2008
General
and administrative expense for the three months of operations ended September
30, 2009 increased to $714,570 from $133,031 in the three month months period
ended September 30 of 2008. The increase was attributed to acquisition cost
related to M3 Lighting, Inc. operations.
Interest
expense increased in the three months ended September 30, 2009 to $4,185
compared to no interest for the same period in 2008.
Consulting
and professional fees increased approximately $296,295 to $399,896 for the three
month period ended September 30, 2009 from $103,601 for the comparative three
month period in 2008.
Net loss
for the three month period ended September 30, 2009 was $448,494 or ($0.02) per
share compared to a gain of $456,407, or $0.08 per share for the same three
month period in 2008.The gain in 2008 was due to gains from the disposal of
assets.
Discussion
of Financial Condition: Liquidity and Capital Resources
At
September 30, 2009 cash on hand was $116 as compared with $2,230 at December 31,
2008. All the cash was used in operations.
At
September 30, 2009, the Company had working capital deficit of $352,986 compared
to a working capital deficit of $547,137 at December 31, 2008. Working
capital deficit decreased mainly as a result of the disposal of assets and
related debts in 2008 and 2009.
Total
assets at September 30, 2009 were $20,605 as compared to $2,230 at December 31,
2008. Increase in total assets was attributable in part to acquisition of M3
Lighting, Inc.
The
Company’s total stockholders’ deficit decreased from $901,798 at December 31,
2008 to $361,358 at September 30, 2009. The Stockholders’ deficit decreased
$592,567 due to gains on the disposal of Firecreek Petroleum, Inc. and the
acquisition of M3 Lighting Inc.
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On November 24, 2009, Donahue
Associates, LLC resigned s the Company’s independent auditor. The reports of
Donahue Associates on the Company’s consolidated financial statements as of and
for the periods ended December 31, 2008 and 2007 contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to any uncertainty,
audit scope or accounting principle except to indicate that there was
substantial doubt about the Company’s ability to continue as a going
concern. The board of directors and audit committee of the Company
discussed the desire to resign with Donahue Associates and accepted the
resignation.
During
the Registrant's two most recent fiscal years, and any subsequent interim period
preceding the resignation on November 24, 2009, there were no disagreements
between the Registrant and Donahue Associates on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreement(s), if not resolved to the satisfaction of Donahue
Associates, would have caused him to make reference to the subject matter of the
disagreement(s) in connection with his reports.
On
November 24, 2009, the Registrant's board of directors resolved to retain M
& K CPAs, PLLC as the sole principal independent registered accountant for
the Registrant. During the two most recent fiscal years and through November 24,
2009, the Company had not consulted with M & K CPAs, PLLC regarding any of
the following:
38
|
(i)
|
The application of accounting
principles to a specific transaction, either completed or
proposed;
|
|
(ii)
|
The type of audit opinion that
might be rendered on the Registrant's consolidated financial statements,
and none of the following was provided to the Registrant: (a) a written
report, or (b) oral advice that M & K CPAs, PLLC concluded was an
important factor considered by the Registrant in reaching a decision as to
accounting, auditing or financial reporting issue;
or
|
|
(iii)
|
Any matter that was subject of a
disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation
S-K.
|
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
The
directors, executive officers and significant employees of the Company as of
February 11,
2010 are as follows:
Name
|
|
Age
|
|
Position(s)
|
|
Position(s)
Held Since
|
Robert
S. Miller, Jr.
|
27
|
Director
and Executive Vice President
|
2009
|
|||
Michael
Kocan
|
41
|
Director
and President and Chief Operating Officer
|
2009
|
|||
David
H. Ray
|
31
|
Director
and Executive Vice President and Treasurer
|
2009
|
|||
Brandon
D. Ray
|
28
|
Director
and Executive Vice President of Finance
|
2009
|
|||
Dennis
R. Alexander
|
55
|
Director
and Chief Executive Officer and Chief Financial Officer
|
1999
|
|||
Larry
W. Trapp
|
67
|
Director
and Executive Vice President
|
2008
|
|||
Michael
Trapp
|
42
|
Director
|
2008
|
|||
Melvena
Alexander
|
76
|
Secretary
and Comptroller, Co-Treasurer
|
1999
|
|||
Michael
D. Brown
|
Director
|
2009
|
||||
Garrett
Sullivan
|
75
|
Director
|
2009
|
Term for
Directors: In accordance with Article 9.2 of the Company’s Bylaws: The members
of the Board of Directors shall hold office until the first annual meeting of
Stockholders and until their successors shall have been elected and qualified.
At the first annual meeting of Stockholders and at each annual meeting
thereafter the Stockholders shall elect Directors to hold office until the next
succeeding annual meeting, except in the case of classification of the
Directors. Each Director shall hold office for the term for which he is elected
until his successor shall have been elected and qualified. The number of
the directors may be fixed from time to time by resolution duly passed by our
board. Our board has fixed the number of our directors at nine. Vacancies
and newly created directorships resulting from any increase in the number of
authorized directors may generally be filled by a majority of the directors then
remaining in office. The directors elect officers annually.
David H.
Ray and Brandon D. Ray are brothers. Dennis R. Alexander is the son of
Melvena Alexander. Michael Trapp is the son of Larry W.
Trapp.
We may
employ additional management personnel, as our board of directors deems
necessary. We have not identified or reached an agreement or understanding
with any other individuals to serve in management positions, but do not
anticipate any problem in employing qualified staff.
A
description of the business experience during the past several years for our
directors and executive officer is set forth below:
Dennis R.
Alexander has served as Chairman, CEO, and Chief Financial Officer of the
Company (EGPI) since May 21, 2009, having served as Chairman, President and
Chief Financial Officer of EGPI and Firecreek Petroleum, Inc. since February 10,
2007. He served as Chairman and Chief Financial Officer of EGPI and
Firecreek Petroleum, Inc. since July 1, 2004 through February 9, 2007 having
served as the President and Director of EGPI from May 18, 1999 to June 30,
2004. In September 1998 he was a founder, and from January 19, 1999
through its acquisition with EGPI served as President and Director of Energy
Producers Group, Inc. From April 1997 through March 1998, served as CEO,
Director, Consultant of Miner Communications, Inc., a media communications
company. From April 26, 1997 through March, 1998 he was a director of
Rockline, Inc., a private mining, resource company, and a founder of World Wide
Bio Med, Inc., a private health-bio care, start up company. Since March
1996 to the present he has owned Global Media Network USA, Inc., which has
included management consulting, advisory services. Mr. Alexander devotes
approximately 60 to 80 hours per week minimum, and more as required, to the
business of EGPI.
39
Michael
Kocan, has served as President and Director of the Company (EGPI) and of M3
Lighting, Inc. since May 21, 2009. Since 1999 Mr. Kocan has been president and
owner of Traffic & Lighting Corp. in Roswell, Georgia. From 1997 to
1999, he was a Sales Manager at Southeastern Transportation Products in Winter
Park, Florida. Prior to that, he acted as Managing Director for United
Lighting Standards in Warren, Michigan from 1995 until 1997. Mr. Kocan
graduated from Oral Roberts University with a Bachelor of Science degree in
Business Management in 1991.
Robert S.
Miller, Jr. has served as an Executive Vice President and Director of the
Company (EGPI) and M3 Lighting, Inc., since May 21, 2009. He has been a partner
in M3 since August 2007. From March 2006 until July 2007, he was Lighting
Project Manager for Power Design Resources in Atlanta, Georgia. Mr. Miller
obtained a Bachelor of Science Degree in Consumer Economics from the University
of Georgia in December 2005.
David H.
Ray has served as a Director and Executive Vice President and Treasurer of the
Company (EGPI) and M3 Lighting, Inic. since May 21, 2009. He became a managing
member of Strategic Partners Consulting, LLC in September 2008. From June
2006 until September 2008, Mr. Ray worked as the Manager of Financial Reporting
and Budgeting for Charys Holding Company, Inc., a publicly-traded company.
From May 2003 until June 2006, Mr. Ray worked at Cumulus Media, Inc. as an
Accounting Manager, Senior Accountant and Staff Accountant. Mr. Ray
graduated Summa Cum Laude and received a B.S. Degree in Accounting with a
concentration in Finance from North Carolina State University in May
2003.
Brandon
D. Ray has served as a Director and Executive Vice President of Finance of the
Company (EGPI) and M3 Lighting, Inc. since May 21, 2009. He became a managing
member of Strategic Partners Consulting LLC in September 2008. Before
joining Strategic Partners, he had worked as a financial analyst and general
accountant for Charys Holding Company, Inc., a publicly-traded company.
While at Charys, Mr. Ray was also responsible for the cash management and
financial reporting of the Charys subsidiary Ayin Tower Management, a
cellular/communication tower management group. Mr. Ray has also gained
experience in the financial/accounting industry while working as a staff
accountant with Cumulus Media Inc., based in Atlanta, Georgia. Mr Ray
earned his Bachelor’s of Science degree in Business Management with a
concentration in Finance from North Carolina State University in
2003.
Larry W.
Trapp has served as a Director and Excutive Vice President of the Company since
May 21, 2009 having been appointed as a Director, Executive Vice President, and
Treasurer of EGPI on December 3, 2008. Previously he has served in various
capacities as Chief Financial Officer, Vice President, and Director through
January 26, 2004 and is one of the original founders in 1998 through the
acquisition processes with EGPI, serving as Director of Energy Producers Group,
Inc. Mr. Trapp earned a BS in Business Administration with emphasis in
Finance from Arizona State University. Prior business experience includes
Vice President of Escrow Administration for a major Title Insurance Company
where he was directly responsible for the Management and performance of 22
branches and supervised an administration staff of 125 Employees.
Michael
Trapp has served as a Director of the Company since May 21, 2009 having been
appointed as a Director of EGPI on December 3, 2008. A graduate of Rice
Aviation he earned honors and honed his skills as a Airframe and Power Plant
licensee working in the airline industry for many years. He recently owned
his own mortgage company and is now a Senior Loan Officer for a multi-state
lender in Mesa, Arizona. His strong technical and analytical skills will
be a bonus in analyzing prospective projects which will enhance EGPI’s growth
and asset base.
Melvena
Alexander has served as Co-Treasurer, Secretary and Comptroller of the Company
(EGPI) and Firecreek Petroleum, Inc. since February 10, 2007 having served as
Secretary and Comptroller of EGPI and Firecreek Petroleum, Inc. since July 1,
2004 through February 9, 2007. She served as Secretary since March 15,
2003 to June 30, 2004 having been Secretary and Comptroller of EGPIsince May 18,
1999. In September 1998 she was a founder, and from January 19, 1999
through the acquisition processes with the Company served as Secretary of Energy
Producers Group, Inc. She is founder and President of Melvena Alexander
CPA since 1982, which prepares financial statements and tax reports. Mrs.
Alexander graduated Arizona State University with a B.S. in Accounting, received
CPA Certificate, State of Arizona. She is a prior member of AICPA and the
American Society of Women Accountants through June 2008. Mrs. Alexander
devotes a minimum of 40-60 hours per week, and more as required, to the business
of EGPI.
Michael
D. Brown was appointed to the Board of Directors of the Company on July 6, 2009.
Mr. Brown was nominated by President George W. Bush as the first Under Secretary
of Emergency Preparedness and Response (EP&R) in the newly created
Department of Homeland Security in January 2003. Mr. Brown coordinated
federal disaster relief activities including implementation of the Federal
Response Plan, which authorized the response and recovery operations of 26
federal agencies and departments as well as the American Red Cross. Mr.
Brown also provided oversight of the National Flood Insurance Program and the
U.S. Fire Administration and initiated proactive mitigation activities. Prior to
joining the Federal Emergency Management Agency, Mr. Brown practiced law in
Colorado and Oklahoma, where he served as a Bar Examiner on Ethics and
Professional Responsibility for the Oklahoma Supreme Court and as a Hearing
Examiner for the Colorado Supreme Court. Mr. Brown had been appointed as a
Special Prosecutor in police disciplinary matters. While attending law
school, Mr. Brown was appointed by the Chairman of the Senate Finance Committee
of the Oklahoma Legislature as the Finance Committee Staff Director, where he
oversaw state fiscal issues. Mr. Brown’s background in state and local
government also includes serving as an Assistant City Manager with Emergency
Services Oversight and as a City Councilman. Mr. Brown holds a B.A. in Public
Administration/Political Science from Central State University, Oklahoma.
Mr. Brown received his J.D. from Oklahoma City University’s School of Law.
He was an Adjunct Professor of Law for Oklahoma City
University.
40
Garrett
M. Sullivan was appointed to the Board of Directors of the Company on September
10, 2009. Over the years, Mr. Sullivan held various positions with DuPont
Chemicals and UniRoyal on both national and international levels. His experience
includes running a textile and paper manufacturing facility and serving as
President of HT&T a hospital television and call system company owned by
Philips of Holland. Mr. Sullivan served as both as President and then Vice
Chairman of Applied Digital Solutions Inc. through 2001. Mr. Sullivan earned a
Bachelor of Arts degree from Boston University, and an MBA from Harvard
University.
COMPLIANCE
WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and
directors, and persons who own more than ten percent of the Company’s Common
Stock, to file reports of ownership and changes in ownership with the Securities
and Exchange Commission (“SEC”). Officers, directors and greater than ten
percent stockholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based
solely on current management’s review of the copies of such forms received by it
from management, the Company believes that, during the year ended December 31,
2008, its officers, directors, and greater than ten-percent beneficial owners
complied with all applicable filing requirements. For the year ended December
31, 2009, the Company believes that its officers, directors, and greater than
ten-percent beneficial owners have complied with all applicable
filings.
EXECUTIVE
COMPENSATION
The
following tables summarize annual and long-term compensation paid to the
Company’s Chief Executive Officer and the Company’s four other most highly
compensated executive officers whose total annual salary and bonus compensation
exceeded $100,000 who were serving as of December 31, 2009, for all services
rendered to the Company and its subsidiaries during each of the last three
fiscal years. The Company did not retain any employees and payments are made for
services as available. The Company, through its new wholly owned subsidiary
South Atlantic Traffic Corporation, employs approximately six individuals. Note:
All other tables required to be reported have been omitted, as there has been no
compensation awarded to, earned by or paid to any of the executives of the
Company that is required to be reported other than what is stated
below.
Summary
Compensation Table
Name and
Principal Position
|
|
Year
|
|
Salary
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
|
|
All Other
Compensation
($)
|
|
Dennis
R. Alexander 1//
(*)
|
2009
|
n/a
|
n/a
|
-0-
|
5,450
|
||||||
Chairman,
CEO, CFO
|
2008
|
n/a
|
n/a
|
-0-
|
-0-
|
||||||
2007
|
n/a
|
n/a
|
-0-
|
-0-
|
|||||||
Melvena
Alexander 1/
(*)
|
2009
|
n/a
|
n/a
|
-0-
|
-0-
|
||||||
Co
Treasurer, Sect. and Cmpt.
|
2008
|
n/a
|
n/a
|
-0-
|
-0-
|
||||||
2007
|
n/a
|
n/a
|
-0-
|
-0-
|
1/
|
D.R. Alexander and Melvena
Alexander have been with the Company since
1999.
|
(*)
|
Please see “Certain Relationships
and Related Transactions” for additional discussion on agreements with
individual consulting
firms.
|
41
Employee
Pension, Profit Sharing or Other Retirement Plans
The
Company does not have a defined benefit, pension plan, profit sharing, or other
retirement plan.
Director
Compensation
As of
February 4, 2000 each member of the Board of Directors, subject to approval of
the Chairman and CEO, may be paid $500.00 per formal meeting plus certain
expenses for out of State Directors incurred in connection with attendance at
Board and Committee meetings. There are no agreements provided to Directors or
individual agreements with any Director other than that presented in this
paragraph, and the understanding that at minimum a traveling Director will be
considered by the Chairman more favorably for reimbursement of expenses for
travel and may, at the election of the Chairman, be paid $500 for attendance at
a formal meeting. This determination by the Chairman to provide for either
reimbursement or compensation for a formal meeting is principally to be based on
the finances of the Company available at the time.
Employment
Agreements
The
Company does not have any employment agreements with its executive
officers.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding the beneficial
ownership of the Company’s Securities by each person or group that is known by
the Company to be the beneficial owner of more than five percent of its
outstanding Securities, each director of the Company, each executive officer,
and all directors and executive officers of the Company as a group as of
February 11, 2010. Unless otherwise indicated, the company believes that the
persons named in the table below, based on information furnished by such owners,
have sole voting and investment power with respect to the Common Stock
beneficially owned by them, where applicable.
Under
securities laws, a person is considered to be the beneficial owner of securities
owned by him (or certain persons whose ownership is attributed to him) and that
can be acquired by him within 60 days from the date of this Form 10-K filing,
including upon the exercise of options, warrants or convertible securities. The
Company determined a beneficial owner’s percentage ownership by assuming that
options, warrants or convertible securities that are held by him, but not those
held by any other person, and which are exercisable within 60 days of the date
of this Form 10-K filing, have been exercised or converted.
The
information in the following table is based on 74,666,369 shares of common stock
issued and outstanding as of February 11, 2010.
|
Common Stock Beneficially
Owned (2)(a)
|
|
|
Preferred Stock Beneficially
Owned (2)
|
|
|||||||||||||
Title of Class
|
Name and Address of Beneficial
Owner (1)
|
|
Number
|
|
|
Percent
|
|
|
Number
|
|
|
Percent
|
|
|||||
Common
|
Robert
S. Miller, Jr.
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
535,889
|
(13)
|
0.72
|
-0-
|
-0-
|
||||||||||||
Common
|
Michael
Kocan
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
2,457,265
|
(14)
|
3.29
|
-0-
|
-0-
|
||||||||||||
Common
|
David
H. Ray (3)
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
**1,193,401
|
(15)
|
1.60
|
-0-
|
-0-
|
||||||||||||
Common
|
Brandon
D. Ray (4)
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
**1,193,401
|
(16)
|
1.60
|
-0-
|
-0-
|
||||||||||||
Common
|
Dennis
R. Alexander (5)
c/o
6564 Smoke Tree Lane
Scottsdale
Arizona, 85253
|
3,472,278
|
(17)
|
4.65
|
-0-
|
-0-
|
||||||||||||
Common
|
Larry
W. Trapp (6)
c/o
6564 Smoke Tree Lane
Scottsdale,
Arizona 85253
|
320,906
|
(18)
|
.43
|
-0-
|
-0-
|
42
Common
|
Michael
Trapp (7)
c/o
6564 Smoke Tree Lane
Scottsdale,
Arizona 85253
|
2,000
|
(19)
|
0.003
|
-0-
|
-0-
|
||||||||||||
Common
|
Melvena
Alexander (8)
c/o
6564 Smoke Tree Lane
Scottsdale,
Arizona 85253
|
204,075
|
(20)
|
0.27
|
-0-
|
-0-
|
||||||||||||
Preferred
|
Red
Quartz Development, L.L.C. (9)
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
-0-
|
-0-
|
5,000
|
100
|
|||||||||||||
Common
|
Red
Quartz Development
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
2,129,629
|
2.85
|
-0-
|
-0-
|
|||||||||||||
Common
|
Michael
Hanlon
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
2,129,629
|
2.85
|
-0-
|
-0-
|
|||||||||||||
Common
|
Garrett
Sulliavan
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
655,271
|
(21)
|
.88
|
-0-
|
-0-
|
||||||||||||
Common
|
Tom
Davis
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
3,276,353
|
4.39
|
-0-
|
-0-
|
|||||||||||||
Common
|
Amanda
Corcoran
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
126,360
|
0.17
|
-0-
|
-0-
|
|||||||||||||
Common
|
Kelly
Davis
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
272,610
|
.37
|
-0-
|
-0-
|
|||||||||||||
Common
|
Paddy
Kelly
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
351,000
|
.47
|
-0-
|
-0-
|
|||||||||||||
Common
Preferred
|
All
directors and officers as a group (10 persons), and including other
persons or groups.
|
24,228,077
|
32.45
|
5,000
|
100
|
|||||||||||||
Common
|
Strategic
Partners Consulting, L.L.C. (3)(4)(10)
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
**
|
**
|
-0-
|
-0-
|
|||||||||||||
Common
|
Billy
V. Ray Jr. (11)
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
3,000,000
|
4.02
|
-0-
|
-0-
|
|||||||||||||
Common
|
SATCO
Sellers Group (12)
c/o
3400 Peach Tree Road
Suite
111
Atlanta,
Georgia 30326
|
2,908,000
|
3.89
|
-0-
|
-0-
|
(1)
|
Unless
otherwise indicated, the address for each of these shareholders other than
(5), (6), (7), and (8) c/o EPGI Firecreek, Inc. and Energy Producers,
Inc., located at 6564 Smoke Tree Lane, Scottsdale Arizona 85254, is c/o
EGPI Firecreek, Inc., M3 Lighting, Inc. (M3), and or c/o SATCO Sellers
Group, located at 3400 Peachtree Road, Suite 111, Atlanta, Georgia
30326. Also, unless otherwise indicated, each person named in
the table above has the sole voting and investment power with respect to
his shares of our common stock beneficially
owned.
|
43
(2)
|
Beneficial ownership is
determined in accordance with the rules of the
SEC.
|
(3)
|
David H. Ray and Brandon D. Ray
are brothers. Messrs. David H. Ray and Brandon D. Ray each owns
1/3 of Strategic Partners Consulting, L.L.C., which owns 2,386,802 shares
of our common stock. The other 1/3 owner of Strategic Partners
Consulting, L.L.C. is Lynn Myers Investments, L.L.C., a Mississippi
limited liability company, having an address of 202 Ashton Place, Madison,
Mississippi 39110.
|
(4)
|
See note 3,
above.
|
(5)
|
Dennis R. Alexander is the son of
Melvena Alexander.
|
(6)
|
Larry W. Trapp is the father of
Michael Trapp.
|
(7)
|
See not 6,
above.
|
(8)
|
See note 5,
above.
|
(9)
|
Each share of Series C preferred
stock shall have 21,200 votes on the election of our directors and for all
other purposes.
|
(10)
|
See notes 3 and 4,
above.
|
(11)
|
Billy V. Ray Jr. is the Father of
David H. Ray and Brandon D.
Ray.
|
(12)
|
SATCO
Sellers Group, see first paragraph, this Item 1.01, and I. 1. (e) there
under first paragraph, and elsewhere referenced
herein.
|
(13)
|
Includes
535,889 shares of common stock owned directly by Mr. Robert S. Miller
Jr.
|
(14)
|
Includes
2,457,265 shares of common stock owned directly by Michael
Kocan.
|
(15)
|
Includes
1,193,401 shares of common stock owned indirectly, including shares with
investment control, by Mr. David H.
Ray.
|
(16)
|
Includes
1,193,401 shares of common stock owned indirectly, including shares with
investment control, by Mr. Brandon D.
Ray.
|
(17)
|
Includes
3,472,278 shares of common stock owned directly by Mr. Dennis Alexander.
Of the common shares 2,500 are held by Mr. Alexander’s wife and
children.
|
(18)
|
Includes
320,906 shares of common stock owned directly by Mr. Larry W.
Trapp.
|
(19)
|
Includes
2,000 shares of common stock owned directly by Mike
Trapp.
|
(20)
|
Includes
204,075 shares owned directly by Mrs. Melvena
Alexander.
|
(21)
|
Includes
655,271 shares owned directly by Mr. Garrett
Sullivan.
|
As
indicated in the table above, our executive officers and directors beneficially
own, in the aggregate, approximately 41.84 percent of our outstanding common
stock, along with additional votes and voting power through issuance of 5,000
shares of the EGPI Series C Preferred Stock as described in Schedule 15(p)
attached to the Plan of Merger listed in our Current Report on Form 8-K, filed
on May 27, 2009, as amended, incorporated herein by reference. As a result
these stockholders may, as a practical matter, be able to influence all matters
requiring stockholder approval including the election of directors, merger or
consolidation and the sale of all or substantially all of our assets. This
concentration of ownership may delay, deter or prevent acts that would result in
a change of control, which in turn could reduce the market price of our common
stock.
Other
than as stated herein, there are no arrangements or understandings, known to us,
including any pledge by any person of our securities:
|
·
|
The operation of which may at a
subsequent date result in a change in control of the registrant;
or
|
·
|
With respect to the election of
directors or other
matters.
|
(a)
For all Persons in the preceding tables, and corresponding footnotes below: i)
Options, warrants, and preferred stock as or if applicable, are included in
calculations as to each person’s beneficial ownership position, and ii) All
amounts are calculated on a post split one share for two hundred shares (1:200)
reverse stock split, effective on October 8, 2008.
TRANSACTIONS WITH RELATED PERSONS,
PROMOTERS AND CERTAIN CONTROL PERSONS.
Transactions
with Executive Management; Fiscal Year Ended December 31, 2009, December 31,
2008, and December 31, 2007.
Please
see “EXECUTIVE COMPENSATION” section of this document related to transactions in
addition to those contained in this section including, consideration and other
compensation for the following named executives: Dennis R. Alexander, Chairman,
CEO, and Chief Financial Officer and Director, and Melvena Alexander, Co
Treasurer, Comptroller, and Secretary.
Contracts
The
Company has oral and month to month contracts with various entities (owned by
related parties) to provide accounting, management, and other professional
services. The entities, their owners and their amounts are as follows for the
fiscal year ended December 31, 2009 listed in Table 1 below, and for the fiscal
years ended December 31, 2008, and December 31, 2007 listed in Table 2
below.
44
Table
1
Paid
|
Accrued
|
|||||||||
Entity
|
Related Party
|
2009
|
2009
|
|||||||
|
|
|||||||||
Global
Media Network USA, Inc. * **
|
Dennis
R. Alexander (1)
|
$
|
20,150
|
$
|
125,200
|
|||||
Melvena
Alexander, CPA * ***
|
Melvena
Alexander (3)
|
$
|
10,000
|
$
|
19,400
|
*Part of
the amounts paid in 2009 for each of the above named Executives were for the
unpaid accrual amounts due from 2008.
** For
2009, the contract amounts paid to Global Media Network USA, Inc. were in the
aggregate $20,150 paid against prior year accruals. No contract amounts were
charged for October 2008 through May 30, 2009. A new contract month to month
subject to adjustment is being charged at the rate of $15,000 per month plus
approved expenses.
*** For
2008, the contract amounts paid to Melvena Alexander CPA were in the aggregate
$$10,000 against prior year accruals. No contract amounts were charged for
October 2008 through May 30, 2009. A new contract month to month subject to
adjustment is being charged at the rate of $4,200 per month which includes rent
for provision of the Scottsdale fatalities provided, plus approved
expenses.
(1)
|
Dennis R. Alexander, Chairman,
CEO, and CFO, and is a shareholder of the
Company.
|
(2)
|
Melvena
Alexander, Secretary, Co Treasurer, Secretary and Comptroller, and is a
shareholder of the Company.
|
2009
Administrative Services Agreement
Relative
to the May 21, 2009 acquisition of M3 Lighting, Inc. the Company approved an
Administrative Services Agreement (ASA), and amended terms thereof, with
Strategic Partners Consulting, LLC (SPC),.Two of the Company’s officers and
directors, and shareholders, David H. Ray, Director and Executive Vice President
and Treasurer of the Company (EGPI) and M3 Lighting, Inic. since May 21, 2009
and Brandon D. Ray Director and Executive Vice President of Finance of the
Company (EGPI) and M3 Lighting, Inic. are also owners and managers of SPC.
Information is listed in Exhibit 10.1 to a Current Report on form 8-K, Amendment
No. 1, filed on June 23, 3009. The ASA initiated on November 4, 2009, in
accordance with its terms thereof, and is being currently billed at the rate of
$20,833.33 per month. The ASA is current as of February 8, 2010, with $50,720
being paid to SPC to date, with a balance payable due in the amount of
approximately $11,799.99 running balance owing on account.
2009 Loans Made By Officers,
Directors, Shareholders
During
2009, the Company’s President and Director and Shareholder, Michael Kocan, made
loans to the Company to assist its new operations for South Atlantic Traffic
Corporation. Total amount of loans made were $90,625.80. Interest due on the
notes is at the rate of 6%. The Company has paid $55,000 on the notes and the
remaining balance is $35,625.80 as of February 8, 2010 and are current at this
date... The notes are due on demand.
Table
2
Paid
|
Accrued
|
||||||||||||||||||
Entity
|
Related Party
|
2008
|
2007
|
2008
|
2007
|
||||||||||||||
Global
Media Network USA, Inc. * **
|
Dennis
R. Alexander (1)
|
$
|
195,250
|
$
|
89,750
|
$
|
50,000
|
$
|
120,250
|
||||||||||
Tirion
Group, Inc.
|
Rupert
C. Johnson (2)
|
-0-
|
7,000
|
43,000
|
43,000
|
||||||||||||||
Melvena
Alexander, CPA * ***
|
Melvena
Alexander (3)
|
$
|
108,875
|
$
|
59,250
|
$
|
-0-
|
$
|
43,875
|
||||||||||
DLM
Asset Management, Inc.
|
Dermot
McAtamney (4)
|
33,535
|
55,200
|
-0-
|
3,300
|
*Part of
the amounts paid in 2008 for each of the above named Executives were for the
unpaid accrual amounts due from 2007.
** For
2008, the contract amounts paid to Global Media Network USA, Inc. were in the
aggregate $112,500. An additional $82,750 was paid against prior year
accruals.
*** For
2008, the contract amounts paid to Melvena Alexander CPA were in the aggregate
$65,000. An additional $43,875 was paid against prior year
accruals.
45
(1)
|
Dennis R. Alexander, Chairman and
CFO, and is a shareholder of the
Company.
|
(2)
|
Rupert C. Johnson, a Director
through June 9, 2008, and a Co- shareholder of the
Company.
|
(3)
|
Melvena Alexander, Secretary and
Comptroller, and is a shareholder of the
Company.
|
(4)
|
Dermot McAtamney, a Director,
Executive Vice President, Co Treasurer through June 9, 2008, and is a
shareholder of the Company.
|
Related
Party Transaction(s) Involving Acquisition and Issuances of Shares both
preferred and common to Dennis R. Alexander, c/o the Company’s address at 6564
Smoke Tree Lane, Scottsdale Arizona 85253.
Related Party Transaction(s)
Involving Issuance of Shares both preferred and common, promissory notes, and
convertible debentures as of December 31, 2007, with Dutchess Private
Equities Fund, Ltd. (“Dutchess” or ”DPEF”), Douglas Leighton (“Leighton”) and
Michael Novielli (“Novielli”, together with DPEF and Leighton, “Dutchess”) each
with a business address of 50 Commonwealth Avenue, Suite #2, Boston, MA 02116.
Messrs. Leighton and Novielli are the Directors of DPEF.
Information
required under this section can be found in previously filed
documents:
Note: As
reported by Mr. Alexander, the Company’s Chairman, Principle Executive Officer,
and CFO, please see information contained in Form 13-D filed December 5, 2008,
see Note (1) and in a
Current Report on Form 8-K filed December 3, 2008 see Note (3).
Note: As
reported by Dutchess please also see information contained in Form 13-D filed
December 8, 2008, in a Current Report on Form 8-K filed December 3, 2008, see
Note (3) in Current
Reports on Form 8-K filed on March 27, 2007, June 19, 2007, and January 7, 2008,
respectively see Note
(4), and including information prior contained in Form 13-D filed on
January 29, 2008 see Note
(2).
Note
(1)
As of the date of event which required
filing of a statement on Schedule 13D on December 3, 2008, Mr. Alexander paid
approximately $2,335.22 to purchase 2,335,215 shares of common stock, and
100,000 shares of Sub Series C-3 of Series C preferred stock (convertible into
1,000,000 shares of common stock) of the Company. No other funds or other
consideration were used in making such purchases. Dennis R Alexander acquired beneficial
ownership of the shares of common stock for investment purposes. As of December
3, 2008, Dennis R. Alexander beneficially owned 3,472,278 shares of common
stock, consisting of 2,472,278 shares of common stock and Sub Series C-3 of
Series C preferred stock convertible into 1,000,000 shares of common stock. Not
reflected are 10,000 shares of common restricted stock under presently
exercisable stock options which may be purchased by Mr. Alexander. Of the common
shares 2,500 are held by Mr. Alexander’s wife and children. The Company’s
securities owned by Mr. Alexander as of December 3, 2008 represented
approximately 58.81% of the issued and outstanding shares of the Company’s
common stock. Except as described herein and as previously disclosed in
EGPI Firecreek’s United States Securities and Exchange Commission filings, in
the sixty days prior to December 3, 2008, the Date of the event requiring the
filing of this Statement, Dennis R. Alexander did not engage in any transactions
involving the Company’s common stock.
Note
(2)
As of the
date of event which required filing of a statement on Schedule 13D on December
3, 2008, Dutchess used approximately $2,100,000 of its working capital to
purchase 903,213,667 shares of common stock of EGPI Firecreek, Inc. and as an
inducement for its past investments. No other funds or other consideration were
used in making such purchases. In addition to the Common Stock described herein,
Dutchess owns a promissory note in the principal face amount of $47,564.78
bearing interest at 12% per annum with the full amount of principal and interest
due on or before May 18, 2008. Dutchess sold beneficial ownership of the shares
of Common Stock to which this Statement relates for investment
purposes.
As of
December 3, 2008, DPEF owned 1,180,854 shares of EGPI Firecreek, Inc., common
stock. The EGPI Firecreek securities owned by Dutchess as of December 3,
2008 represented approximately 20% of the issued and outstanding shares of EGPI
Firecreek common stock. As of December 3, 2008, Leighton and Novielli had
shared voting and dispositive power of each of the 1,180,854 shares of EGPI
Firecreek common stock beneficially owned by Dutchess. Except as described
herein and as previously disclosed in EGPI Firecreek’s United States Securities
and Exchange Commission filings, in the sixty days prior to December 3, 2008,
the Date of the Event requiring the filing of this Statement, Dutchess did not
engage in any transactions involving EGPI Firecreek common
stock.
46
Note
(3)
Settlement
Agreement
On
October 30, 2008, the Company disclosed on Current Report on Form 8-K that Mr.
Dennis Alexander and Ms. Melvena Alexander (collectively, the “Alexanders”)
resigned from their respective positions with the Company. In light of certain
events surrounding the resignations, the Company and the Alexanders entered into
a Settlement and Release Agreement in order to resolve their disputes (the
“Settlement”). Pursuant to the Settlement, the parties agreed to the following:
(i) that EGPI shall not challenge or delay the repossession through foreclosure
of any collateral by Dutchess; (ii) That upon repossession by Dutchess of
all EGPI assets, the $9,304,962 debt to Dutchess claimed in the Notice of
Default and all obligations of EGPI to Dutchess under the Loan Agreements and
Notice of Default shall be deemed fully satisfied, (iii) the Company issued a
promissory note in favor of Dutchess Private Equities Fund, Ltd. (“Dutchess”) in
the principal face amount of $47,564.78, in consideration of certain rights
described below, bearing interest at the rate of 12% per annum and providing for
monthly interest only payments for a period of six (6) months all due on or
before June 2, 2009; (iv) Dutchess shall sell to Dennis Alexander or nominee for
par value, of $0.001 per share all 100,000 shares of EGPI Preferred stock and
2.335,215 shares of EGPI common stock currently held by Dutchess such that
Dutchess will retain 1,180,854 common shares representing a twenty percent (20%)
equity interest in EGPI; and (v) The Company and Dutchess released one another
from claims of any kind and nature in both law and equity.
In
addition, the Company and Dutchess entered into that certain Oil and Gas
Property Participation and Rights Agreement (“Participation Agreement”) whereby
Dutchess granted EGPI, under certain circumstances a right of first refusal, as
provided in Section VIII of that certain participation agreement between Success
Oil Co. and EGPI and its wholly-owned subsidiary, Firecreek Petroleum, Inc.,
dated January 3, 2007;
On
December 3, 2008, the Company received resignations from each of Douglas
Leighton, Michael Novielli, Theodore Smith, and Douglas D’Agata as members of
the Company’s board of directors, effective immediately. None of the resignation
letters submitted to the Company by these individuals referenced any
disagreement with the Company on any matter relating to the Company’s
operations, policies and practices. Further, on December 3, 2008, Mr. Douglas
D’Agata resigned as the Company’s authorized officer effective
immediately.
On
December 3, 2008, Mr. Dennis Alexander was re-appointed to the Board of
Directors of the Company and as the Chief Executive Officer and Chief Financial
Officer. Further, on December 3, 2008, the following individuals were elected to
the following positions:
Larry
W. Trapp
|
67
|
Director,
Executive Vice President, and Co-Treasurer
|
||
Mike
Trapp
|
42
|
Director
|
||
Melvena
Alexander
|
74
|
Secretary,
Comptroller, and Co-Treasurer
|
Note
(4)
On March
27 and December 26 of 2007, the Company issued to Dutchess two convertible
debentures, one with a face value of $140,000 and the other with a face amount
$500,000, to pay an incentive fee to the holder of the equity credit line. The
debentures became convertible at the date of the issuances and mature in March
27, 2012 and December 26, 2014, respectively. The Company claims an exemption
from the registration requirements of the Securities Act of 1933, as amended
(the “Act”) for the private placement of these securities pursuant to Section
4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since,
among other things, the transaction does not involve a public offering and the
Investor is an “accredited investor” and/or qualified institutional buyer, the
Investor has access to information about the Company and its investment, the
Investor will take the securities for investment and not resale, and the Company
is taking appropriate measures to restrict the transfer of the securities. For
terms of the debentures please see information furnished in our Current Reports
and Exhibits thereto on Form 8-K filed on March 29, 2007 and January 7, 2008,
respectively.
On June
11, 2007 the Company issued to Dutchess a debenture in the face amount of
$2,000,000 for acquisitions and working capital. The Debenture bears interest at
12% per annum and matures on June 11, 2014. For terms of the debenture please
see information furnished in our Current Report on Form 8-K, and Exhibits
thereto filed on Jun 11, 2007.
On
December 26, 2007, EGPI Firecreek, Inc. the Company issued to Dutchess a
debenture in the face amount of $2,100,000. The Debenture bears interest at 12%
per annum and matures on December 26, 2014. The Company claims an exemption from
the registration requirements of the Act for the private placement of these
securities pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D
promulgated thereunder since, among other things, the transaction does not
involve a public offering and the Investor is an “accredited investor” and/or
qualified institutional buyer, the Investor has access to information about the
Company and its investment, the Investor will take the securities for investment
and not resale, and the Company is taking appropriate measures to restrict the
transfer of the securities. For terms of the debenture please see information
furnished in our Current Report on Form 8-K, and Exhibits thereto filed on
January 7, 2008.
47
Unsecured,
Demand Note Payable to John R. Taylor, President and Director, for loans made to
Firecreek Petroleum, Inc. Total for the note is $316,483 at December 31, 2004.
The note is current at March 31, 2005, and thereafter reduced to $59,531 at
December 31, 2005. Additional loans were incurred in Q1 2006 totaling $15,162,
and in Q2 2006 totaling $15,934. The additional loans carry 6% interest rates.
Total balance owed including interest at the rate of 6% is $108,027 at December
31, 2006. The note is current at March 31, 2007, 2008, and as of February 5,
2009 has been paid down $51,750. The balance of the note is due on demand. On
May 18, 2009, the Company retired this debt in full with the spinoff of
Firecreek Petroleum, Inc. via an Agreement for the Exchange of Common Stock,
which included all the debt held in the subsidiary. Please see our Current
Report on Form 8-K filed on May 20, 2009, incorporated herein by
reference.
Unsecured,
Demand Note Payable to George B. Faulder IV, former Vice-President and Director,
for loans made to Firecreek Petroleum. Total for the note is $59,389 at December
31, 2005. Additional loans were incurred in Q1 2006 totaling $19,189, and in Q2
2006 $3,862. The additional loans carry 6% interest rates. Total balance owed
including interest at the rate of 6% is $68,084 at December 31, 2006. The note
is current at March 31, 2007, 2008, and 2009. The note is due on demand. On May
18, 2009, the Company retired this debt in full with the spinoff of Firecreek
Petroleum, Inc. via an Agreement for the Exchange of Common Stock, which
included all the debt held in the subsidiary. Please see our Current Report on
Form 8-K filed on May 20, 2009, incorporated herein by reference.
In May
2005, the Company’s wholly-owned subsidiary, Firecreek Petroleum headquartered
at 6777 Camp Bowie Blvd S-215, Ft. Worth, TX 76116, became the lessee of office
space in Fort Worth, Texas. The lease is for 24 months from June 1, 2005 through
May 31, 2007. The offices were closed by Firecreek Petroleum, Inc. approximately
March 31, 2006 and were then moved to the Parent Company offices in Scottsdale
Arizona. On July 9, 2008, the Company and Firecreek Petroleum, having legally
disputed the lease with Hickman Investments, Ltd., entered a Settlement
Agreement with Hickman, effective July 1, 2008, to resolve all disputes relating
to the Lawsuit (the “Settlement”), which concluded the disputed litigation. For
further information please see Current Report on Form 8-K, as amended, filed on
July 10, 2008, incorporated herein by reference.
The Chief
Executive Officer and shareholder of the Company provided corporate office space
through 2007 and 2008 at no charge. There was no further agreement in place to
pay for the premises. Through May 31, 2009 the premises continued to be provided
free of charge. As of June 1, 2009 the Secretary, Comptroller, and shareholder
of the Company charges $1400 per month, contracted quarterly, for approximately
1431 square feet being utilized for our Southwest headquarters located at 6564
Smoke Tree Lane, Scottsdale, Arizona 85253. In the event that our facilities in
Scottsdale should, for any reason, become unavailable, we believe that
alternative facilities are available at competitive rates.
As of May
22, 2009 our headquarters for the Company’s Eastern based operations and M3 are
located at 3400 Peachtree Road, Suite 111 Atlanta, Georgia 30326, and are
presently being provided on a co sharing basis free of charge by officers and
shareholders of the Company. The approximate 1,000 square foot premises continue
to be provided free of charge as of January 15, 2010. Prior to the acquisition
by the Company, in 2008, the M3 relocated its headquarters to co-locate it with
that of a company related by common ownership and management. Under this
arrangement, the M3 received office space and support in addition to shared
management in exchange for management fees paid to the related company.
Management fees paid to the related company for these services totaled $20,453
during the year ended December 31, 2008. The Company paid a sales commission of
$2,031 to a non-employee stockholder/director during the year ended December 31,
2008. In the event that our facilities in Atlanta should, for any reason, become
unavailable, we believe that alternative facilities are available at reasonable
rates.
Our
wholly owned subsidiary operations for the SATCO headquarters are located at
2295 Towne Lake Pkwy. Suite 116 PMB 305Woodstock, GA 30189, with additional
satellite offices in offices in Cocoa, FL / Englewood, FL / Woodstock, GA /
Charlotte, NC. and Fayetteville N.C. The Company has non-cancelable operating
leases, primarily for office space and certain office equipment. The operating
leases generally contain renewal options for periods ranging from three months
to two years and require the Company to pay all executory costs such as
maintenance and insurance. Rental expense for operating leases was approximately
$65,840 and $59,478 for the years ended December 31, 2008 and 2007,
respectively.
Future
minimum lease payments under non-cancelable operating leases as of December 31,
2008 are as follows:
Year
Ended December 31,
|
Amount
|
|||
2009
|
$ | 68,728 | ||
2010
|
19,504 | |||
2011
|
2,073 | |||
2012
|
488 | |||
Thereafter
|
- | |||
$ | 90,793 |
48
PART
II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution.
The
following table sets forth the costs and expenses, other than underwriting
discounts and commissions, if any, payable by the registrant relating to the
sale of common stock being registered. All amounts are estimates
except the SEC registration fee.
SEC
registration fee
|
$
|
2,172.52
|
||
Blue
sky fees and expenses
|
2,000.00
|
|||
Printing
and engraving expenses
|
6,000.00
|
|||
Legal
fees and expenses
|
25,000.00
|
|||
Accounting
fees and expenses
|
10,000.00
|
|||
Transfer
agent and registrar’s fees and expenses
|
3,000.00
|
|||
Miscellaneous
expense
|
1,000.00
|
|||
Total
|
$
|
49,172.52
|
Item
14. Indemnification of Directors and Officers.
Under
Nevada law, a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he:
(a)
Is not
liable pursuant to NRS 78.138; or
(b)
Acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person is liable pursuant to NRS 78.1.38
or did not act in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the corporation, or that, with
respect to any criminal action or proceeding, he had reasonable cause to believe
that his conduct was unlawful.
Under our
Articles of Incorporation and Bylaws, the corporation shall indemnify any
individual made a party to a proceeding because he is or was an officer,
director, employee or agent of the corporation against liability incurred in the
proceeding, all pursuant to and consistent with the provisions of NRS 78.751, as
amended from time to time.
The
expenses of officers and directors incurred in defending a civil or criminal
action, suit or proceeding shall be paid by the corporation as they are incurred
and in advance of the final deposition of the action, suit or proceeding, but
only after receipt by the corporation of an undertaking by or on behalf of the
officer or director on terms set by the Board of Directors, to repay the
expenses advanced if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the
corporation.
The
indemnification permitted herein is intended to be to the fullest extent
permissible under the laws of the State of Nevada, and any amendments
thereto.
Insofar
as indemnification for liabilities arising under the Securities Act might be
permitted to directors, officers or persons controlling our company under the
provisions described above, we have been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
Item
15. Recent Sales of Unregistered Securities.
During
the last three years, the registrant has issued unregistered securities to the
persons, as described below. None of these transactions involved any
underwriters, underwriting discounts or commissions, except as specified below,
or any public offering, and the registrant believes that each transaction was
exempt from the registration requirements of the Securities Act of 1933 by
virtue of Section 4(2) thereof and/or Regulation D promulgated
thereunder. All recipients had adequate access, though their
relationships with the registrant, to information about the
registrant.
II-1
Required
information has been furnished in current Report on Form 8-K filings and other
reports, as amended, during the period covered by this Report and additionally
as listed and following:
(*) (**)
On February 5, 2010, by majority consent of the Board of Directors, the Company
approved the following issuances of its restricted common stock, par value
$0.001 per share, to the following entity for financial advisory services
retainer.
Name and Address (***)
|
Date
|
|
Share Amount(***)
|
|
Type of Consideration
|
|
Fair Market Value of
Consideration
|
|
|||
Jessup
and Lamont Securities Corporation (1) 650 Fifth Avenue, 3rd
floor New York,
NY 10019
|
2/5/10
|
|
|
500,000
|
|
Financial Advisory
Services Retainer
|
|
$
|
17,000
|
|
(*)
Issuances are approved, subject to such person being entirely responsible for
his own personal, Federal, State, and or relevant single or multi jurisdictional
income taxes, as applicable.
(**)
$17,000 of the financing proceeds in the immediately preceding table was used
primarily for retainer related to financial advisory services.
(1)
|
Jesup Lamont Securities
Corporation is a shareholder, and is not an affiliate, director, or an
officer of the Company.
|
(***) The
shares of common stock were issued pursuant to an exemption from registration as
provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”). All such certificates representing the shares issued by the Company shall
bear the standard 1933 Act restrictive legend restricting resale.
(****)
The terms of engagement include provisions for the restricted retainer shares to
have standard “piggy back” rights for registration purposes.
__________________________________
(*) (**)
On February 3, 2010, by majority consent of the Board of Directors, the Company
approved the following issuances of its restricted common stock, par value
$0.001 per share, to the following entity for document and preparation
fees.
Name and Address (***)
|
Date
|
|
Share Amount(***)
|
|
Type of Consideration
|
|
Fair Market Value of
Consideration
|
|
|||
Kodiak
Capital Group, LLC, (1)
|
2/3/10
|
1,800,000
|
Document and
Preparation Fees
|
$
|
61,200
|
||||||
One
Columbus Place, 25th
Floor
|
|
||||||||||
New
York, NY 10019
|
(*)
Issuances are approved, subject to such person being entirely responsible for
his own personal, Federal, State, and or relevant single or multi jurisdictional
income taxes, as applicable.
(**)
$61,200 of the financing proceeds in the immediately preceding table was used
primarily for document and preparation fees.
(1)
|
Kodiak Capital Group, LLC is a
shareholder, and is not an affiliate, director, or an officer of the
Company.
|
(***) The
shares of common stock were issued pursuant to an exemption from registration as
provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”). All such certificates representing the shares issued by the Company shall
bear the standard 1933 Act restrictive legend restricting resale.
On
January 15, 2009, the Company entered into an Agreement for a direct financial
obligation or an off balance sheet financing arrangement with the Company, and
other parties in behalf of providing the deposit necessary towards the Company’s
acquisition of SOUTHWEST SIGNAL, INC. in an amount of $1,000,000.00 (net of
$925,000.00 less origination fee thereon) through the issuance and sale to St.
George Investments, LLC, an Illinois limited liability company, of a secured
promissory note and a convertible promissory note (the “Financing”).
The terms of the
Financing are reflected in i) a Note Purchase Agreement ii) a Secured Promissory
Note, iii) a Convertible Promissory Note, iv) a Letter of Credit, v) a
Registration Rights Agreement, and vi) a Funding and Letter of Credit Agreement,
and all other agreements, instruments and documents being or to be executed and
delivered thereon. Approximately 2,000,000 shares of the Company’s Common Stock
are issuable according to the Registration Rights Agreement, and further in
behalf of a conversion of the form of (callable) secured convertible promissory
notes in the amount of $86,000, subject to terms, including terms of default,
and further adjustments thereon, and having such mandatory registration rights
held by St. George Investments, LLC. The Conversion Price of the notes
shall be determined by dividing (a) the Conversion Amount by (b) seventy five
percent (75%) of the lower of (i) $0.08 per share, or (ii) the average
volume-weighted average price (the “VWAP”) for
the three business days with the lowest average VWAP of the twenty trading days
immediately preceding the date set forth in a Conversion Notice (the lower of
the foregoing, the Conversion
Price”). For further information please see information and
exhibits furnished in our Current report on form 8-K, as amended, filed with the
SEC on January 22, and February 8, 2010, respectively.
__________________________________
II-2
I.
(*)(**) On January 12, 2010, by majority consent of the Board of
Directors, the Registrant approved the following issuances of its restricted
common stock, par value $0.001 per share, to the following persons for and
behalf of consideration as follows:
Type
of
|
Fair
Market Value of
|
||||||||||
Name
and Address (***)
|
Date
|
Share
Amount
|
Consideration
|
Consideration
|
|||||||
Thomas
J. Davis (1)
|
12/14/2009
|
595,238 |
Working
Capital
|
$ | 25,000.00 | ||||||
99
Hawley Street Suite 216
|
SATCO
Subsidiary
|
||||||||||
Binghamton,
Ny 13901
|
|||||||||||
Judd
A. Heredos (1)
|
1/4/2010
|
416,800 |
Working
Capital
|
$ | 12,504.00 | ||||||
1060
Beckingham Drive
|
SATCO
Subsidiary
|
||||||||||
St.
Augustine, FL 32092
|
|||||||||||
Mehrdad
Tabrizi (1)
|
12/30/2009
|
238,095 |
Working
Capital
|
$ | 10,000.00 | ||||||
4500
Columns Drive
|
SATCO
Subsidiary
|
||||||||||
Marietta,
GA 30067
|
|||||||||||
Herbert
Jackenthal (1)
|
12/14/2009
|
33,334 |
Working
Capital
|
$ | 1,000.00 | ||||||
37
St. James Drive
|
SATCO
Subsidiary
|
||||||||||
Palm
Beach Gardens, FL 33418
|
|||||||||||
Geoffrey
Peirce Sullivan (1)
|
12/30/2009
|
50,000 |
Working
Capital
|
$ | 1,500.00 | ||||||
33
St. James Drive
|
SATCO
Subsidiary
|
||||||||||
Palm
Beach Gardens, FL 33418
|
(*)
Issuances are approved, subject to such persons agreeing in writing to i) comply
with applicable securities laws and regulations and make required disclosures;
and ii) be solely and entirely responsible for their own personal, Federal,
State, and or relevant single or multi jurisdictional income taxes, as
applicable.
(**)
$50,004 worth of common stock in the immediately preceding table was used
primarily in consideration of working capital requirements for the Company’s
wholly owned subsidiary South Atlantic Traffic Corporation (SATCO).
(1) The
above named individuals are not affiliates, directors, or officers of the
Registrant.
(***) The
shares of common stock were issued pursuant to an exemption from registration as
provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”). All such certificates representing the shares issued by the Company shall
bear the standard 1933 Act restrictive legend restricting resale.
II. (*)
(**) On January 12, 2010, by majority consent of the Board of Directors, the
Company approved the following issuances of its restricted common stock, par
value $0.001 per share, to the following persons for extension of financial
obligations rendered and legal and advisory services rendered to the Company,
respectively.
Name and Address (***)
|
Date
|
Share Amount(***)
|
Type of Consideration
|
Fair Market Value of
Consideration
|
|||||||
Thomas
J. Richards (1)
c/o
6564 Smoke Tree Lane
Scottsdale,
Arizona 85253
|
12/1/09
|
300,000 |
For extension of
financial
obligation due dates
rendered to the
Company
|
$ | 25,500 | ||||||
Michael
Brenner (2)
C/O
Michael Brenner,
Attorney
At Law
314
Clematis Street
Suite
200
West
Palm Beach, Florida 33401
|
1/12/10
|
600,000 |
Legal & Advisory
Services
rendered to the
Company
|
$ | 33,000 |
(*)
Issuances are approved, subject to such person being entirely responsible for
his own personal, Federal, State, and or relevant single or multi jurisdictional
income taxes, as applicable.
(**)
$58,500 of the financing proceeds in the immediately preceding table was used
primarily for extension of financial terms and other consideration , and legal
and advisory services rendered to the Company, respectively.
(1)
|
Mr. Thomas J. Richards is a
shareholder, and is not an affiliate, director, or an officer of the
Company.
|
(2)
|
Mr. Michael Brenner is a
shareholder, and is not an affiliate, director, or an officer of the
Company.
|
(***)
The shares of common stock were issued pursuant to an exemption from
registration as provided by Section 4(2) of the Securities Act of 1933, as
amended (the “1933 Act”). All such certificates representing the shares issued
by the Company shall bear the standard 1933 Act restrictive legend restricting
resale.
__________________________________
II-3
On
December 22, 2009, the Company issued and sold an aggregate of $150,000
principal amount 6 month convertible promissory notes bearing interest at a
minimum rate of approximately 20% per annum, subject to provisions and
adjustments, and cash and or cashless warrants to purchase an aggregate of
6,000,000 shares of its underlying common stock to three Lenders. The Notes
and accrued but unpaid interest thereon are convertible at the option of the
Lenders into shares of the Company’s common stock. The three Lenders /
Investors each purchased a $50,000 Note together in the aggregate $150,000, the
total amount. The Notes may not be prepaid in whole or in part, at any time,
without the prior written consent of the Lenders. Upon written demand
by Lenders at any time after June 22, 2010, the Company shall pay Lenders One
Hundred Ten percent (110%) of the value of the Notes unless otherwise converted
pursuant to a default. Upon a default the Lenders each have rights including, i)
to accelerate the maturity of the Notes and demand immediate payment in full,
ii) exercise all legally available rights and privileges including the provision
that without any further action on the part of Lender, interest will thereafter
accrue at the rate equal to the lesser of 36% per annum or the highest rate
permitted by applicable law, per annum (the “Default Rate”), until all
outstanding principal, interest and fees are repaid in full by Borrower, iii) to
convert the outstanding principal and interest of this Note into fully-paid and
nonassessable shares of Borrower’s Common Stock at a 50% discount to average
“Fair Market Value” (the “Conversion Rate”) at the time of
Conversion. “Fair Market Value” on
a date shall be the average of the daily closing prices for the five (5)
consecutive trading days before such date excluding any trades which are not
bona fide arm’s length transactions. The closing price for each day shall be (a)
if such security is listed or admitted for trading on any national securities
exchange, the last sale price of such security, regular way, or the mean of the
closing bid and asked prices thereof if no such sale occurred, in each case as
officially reported on the principal securities exchange on which such security
are listed, or (b) if quoted on NASDAQ or any similar system, and other methods
determined in accordance with the terms and provisions of the Notes between the
Company and Lenders. Regarding the cash and or cashless Warrants, each of the
three Lenders received Warrants to purchase 1,000,000 shares of the Company’s
common stock at $1.00 per share exercise price for the underlying common shares,
and each of the three Lenders each also received Warrants to purchase 1,000,000
shares of the Company’s common stock at $1.25 per share exercise price relative
to the underlying common shares. Terms for all of the Warrants include immediate
vesting on the issue date and expire three (3) years thereafter. The Warrants
may be exercised by payment of cash or by shares of the Company’s common stock,
or any combination of both. A copy of the Convertible Promissory Notes and
Warrant Agreements are filed herewith.
I.
(*)(**) On December 18, 2009, by majority consent of the Board of
Directors, the Registrant approved the following issuances of its restricted
common stock, par value $0.001 per share, to the following persons for and
behalf of consideration for the Acquisition of Sierra Pipeline, LLC membership
interests.
Name
|
Date
|
Share Amount(****)
|
Type of Consideration
|
Fair Market Value of
Consideration
|
|||||||
Don
Tyner and Nancy Tyner, JTWROS (***)(****)/(1)
9807
Highridge Drive
Las
Vegas, Nevada 89134
|
12/18/09
to be effective 1/4/2010
|
2,000,000
|
In
consideration of
Acquisition
of Sierra
Pipeline,
LLC Membership
Interests
|
$
|
160,000
|
||||||
Steven
Antebi (***)(****)/(2)
10550
Fontenelle Way,
Los
Angeles, California, 90077
|
12/18/09
|
500,000
|
In
consideration of
Acquisition
of Sierra
Pipeline,
LLC Membership
Interests
|
$
|
40,000
|
(*)
Issuances are approved, subject to such persons agreeing in writing to i) comply
with applicable securities laws and regulations and make required disclosures;
and ii) be solely and entirely responsible for their own personal, Federal,
State, and or relevant single or multi jurisdictional income taxes, as
applicable.
(**)
$200,000 worth of common stock in the immediately preceding table was used
primarily in consideration of Acquisition of Sierra Pipeline, LLC Membership
Interests.
(1)
|
Don
Tyner and Nancy Tyner, JTWROS, are not currently affiliates, directors, or
officers of the Registrant.
|
(2)
|
Steven
Antebi provides other Business Consulting and advisory services, and is
not currently a director, or officer of the
Registrant..
|
(***) The
shares of common stock were issued pursuant to an exemption from registration as
provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”). All such certificates representing the shares issued by the Company shall
bear the standard 1933 Act restrictive legend restricting resale.
(****)
The shares are to be included for registration in a registration statement on a
best efforts basis by the Registrant in accordance with the terms of
agreement.
II.
(*)(**) On December 18, 2009, by majority consent of the Board of
Directors, the Registrant approved the following issuances of its restricted
common stock, par value $0.001 per share, to the following person for services
rendered.
Name
|
Date
|
Share Amount(****)
|
Type of Consideration
|
Fair Market Value of
Consideration
|
|||||||
Steven
Antebi (***)(****)(1)
10550
Fontenelle Way,
Los
Angeles, California, 90077
|
12/18/06
|
3,400,000
|
Consultant/Advisory
|
$
|
272,000
|
||||||
THE
ANTEBI 1995 CHILDRENS INSURANCE & OTHER TRUST, PHIL LONDON TTE
(***)(****)/(2)
10550
Fontenelle Way,
Los
Angeles, California, 90077
|
12/18/09
|
600,000
|
Consultant/Advisory
(Steven
Antebi)
|
$
|
48,000
|
(*)
Issuances are approved, subject to such persons agreeing in writing to i) comply
with applicable securities laws and regulations and make required disclosures;
and ii) be solely and entirely responsible for their own personal, Federal,
State, and or relevant single or multi jurisdictional income taxes, as
applicable.
(**)
$320,000 worth of common stock in the immediately preceding table was used
primarily in consideration of services rendered to the Company.
(1)
|
Steven
Antebi provides other Business Consulting and advisory services, and is
not currently a director, or officer of the
Registrant.
|
(2)
|
THE
ANTEBI 1995 CHILDRENS INSURANCE & OTHER TRUST, PHIL LONDON TTE, are
per directive of Steven Antebi, which provides Business Consulting and
advisory services, and is not currently a director or officer of the
Registrant.
|
(***) The
shares of common stock were issued pursuant to an exemption from registration as
provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”). All such certificates representing the shares issued by the Company shall
bear the standard 1933 Act restrictive legend restricting resale.
(****)
The shares are to be included for registration in a registration statement on a
best efforts basis by the Registrant in accordance with the terms of
agreement.
II-4
__________________________________
(*) (**)
On December 18, 2009, by majority consent of the Board of Directors, the Company
approved the following issuances of its restricted common stock, par value
$0.001 per share, to the following persons in behalf of loans made to the
Company’s wholly owned subsidiary Southwest Atlantic Traffic, Inc.
(SATCO).
Name and Address (***)
|
Date
|
Share Amount(***)
|
Type of Consideration
|
Fair Market Value of
Consideration
|
|||||||
Kelly
Davis (1)
|
12/18/2009
|
100,000 |
Grant
of Shares in behalf
|
$ | 9,000 | ||||||
1389
Village Park Drive NE
|
Of
Loans Made to SATCO
|
||||||||||
Atlanta,
GA 30319
|
|||||||||||
Michael
Kocan (2)
|
12/18/2009
|
100,000 |
Grant
of Shares in behalf
|
$ | 9,000 | ||||||
1200
Northcliff Trace
|
Of
Loans Made to SATCO
|
||||||||||
Roswell,
GA 30076
|
|||||||||||
Robert
S. Miller Jr. (3)
|
12/18/2009
|
100,000 |
Grant
of Shares in behalf
|
$ | 9,000 | ||||||
718
Peachtree Hills Circle
|
Of
Loans Made to SATCO
|
||||||||||
Atlanta,
GA 30305
|
(*)
Issuances are approved, subject to such person being entirely responsible for
his own personal, Federal, State, and or relevant single or multi jurisdictional
income taxes, as applicable.
(**)
$27,000 of the financing proceeds in the immediately preceding table was used
primarily for a grant of shares in behalf of lans made to the Company’s wholly
owned subsidiary South Atlantic Traffic, Inc. (SATCO).
(1)
|
Kelly
Davis. is a shareholder, and not an officer or director or an affiliate of
the Company.
|
(2)
|
Michael
Kocan is a shareholder, and is an Officer and Director of the
Company.
|
(3)
|
Robert
S. Miller Jr. is a shareholder, and is an Officer and Director of the
Company.
|
(***) The
shares of common stock were issued pursuant to an exemption from registration as
provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”). All such certificates representing the shares issued by the Company shall
bear the standard 1933 Act restrictive legend restricting resale.
__________________________________
I (*)
(**) On November 13, 2009, by majority consent of the Board of Directors, the
Company approved the following issuances of its restricted common stock, par
value $0.001 per share, to the following person or entity for document and
preparation fees.
Name and Address (***)
|
Date
|
|
Share Amount(***)
|
|
Type of Consideration
|
|
Fair Market Value of
Consideration
|
|
|||
Ryan
Hodson, (1)
|
11/13/09
|
600,000
|
Document
and Preparation Fees
|
$
|
40,800
|
||||||
One
Columbus Place, 25th
Floor
|
|
||||||||||
New
York, NY 10019
|
(*)
Issuances are approved, subject to such person being entirely responsible for
his own personal, Federal, State, and or relevant single or multi jurisdictional
income taxes, as applicable.
(**)
$40,800 of the financing proceeds in the immediately preceding table was used
primarily for document and preparation fees.
(1)
|
Ryan Hodson (nominee of Kodiak
Capital Group, LLC) is a shareholder, and is not an affiliate, director,
or an officer of the
Company.
|
(***) The
shares of common stock were issued pursuant to an exemption from registration as
provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”). All such certificates representing the shares issued by the Company shall
bear the standard 1933 Act restrictive legend restricting resale.
II (*)
(**) On November 13, 2009, by majority consent of the Board of Directors, the
Company approved the following issuances of its restricted common stock, par
value $0.001 per share, to the following person or entity for document and
preparation fees.
Name
and Address (***)
|
Date
|
Share Amount(***)
|
Type of Consideration
|
Fair Market Value of
Consideration
|
|||||||
Vincent
& Rees, L..C. (1)
|
11/13/2009
|
140,000 |
Legal
and Advisory Services
|
$ | 9,520 | ||||||
175
S. Main Street, 15th
Floor
|
|||||||||||
Salt
Lake City, UT 84111
|
|||||||||||
Callie
Tempest Jones (2)
|
11/13/2009
|
20,000 |
Legal
and Advisory Services
|
$ | 1,360 | ||||||
175
S. Main Street, 15th
Floor
|
|||||||||||
Salt
Lake City, UT 84111
|
|||||||||||
Chase
Chandler (3)
|
11/13/2009
|
20,000 |
Legal
and Advisory Services
|
$ | 1,360 | ||||||
175
S. Main Street, 15th Floor
|
|||||||||||
Salt
Lake City, UT 84111
|
|||||||||||
Lisa
Demmons (4)
|
11/13/2009
|
20,000 |
Legal
and Advisory Services
|
$ | 1,360 | ||||||
175
S. Main Street, 15th Floor
|
|||||||||||
Salt
Lake City, UT 84111
|
|||||||||||
Michael
Kocan (5)
|
11/13/2009
|
297,357 |
Exch
for Cancellation of
|
$ | 20,220 | ||||||
1200
Northcliff Trace
|
Debt
Owed
|
||||||||||
Roswell,
GA 30076
|
(*)
Issuances are approved, subject to such person being entirely responsible for
his own personal, Federal, State, and or relevant single or multi jurisdictional
income taxes, as applicable.
(**)
$33,820 of the financing proceeds in the immediately preceding table
was used primarily for legal and advisory services, and exchange for
cancellation of debt owed, respectively.
(1)
|
Vincent
& Rees L.P. is a shareholder, and provides legal and advisory services
to the Company. Vincent and Rees L.P. is not an affiliate of the
Company.
|
(2)
|
Callie
Tempest Jones is with the firm Vincent & Rees L.P. and provides legal
and advisory services to the Company. Mrs. Jones is a shareholder, and is
not an affiliate, officer, or director of the
Company.
|
(3)
|
Chase
Chandler is with the firm Vincent & Rees L.P. and provides legal and
advisory services to the Company. Mr. Chandler is a shareholder and is not
an affiliate, officer, or director of the
Company.
|
(4)
|
Lisa
Demmons is with the firm Vincent & Rees L.P. and provides legal and
advisory services to the Company. Mrs. Demmons is a shareholder, and is
not an affiliate, officer, or director of the
Company.
|
(5)
|
Michael
Kocan is a shareholder, and an Officer and Director of the
Company.
|
(***)
The shares of common stock were issued pursuant to an exemption from
registration as provided by Section 4(2) of the Securities Act of 1933, as
amended (the “1933 Act”). All such certificates representing the shares issued
by the Company shall bear the standard 1933 Act restrictive legend restricting
resale.
__________________________________
II-5
On
November 4, 2009, the Company entered into a Stock Purchase Agreement (the
"Agreement") by and among itself, Bob Joyner, a Florida resident ("Joyner"),
Stewart Hall, a North Carolina resident ("Hall"), Hunter Intelligent Traffic
Systems, LLC, a Georgia limited liability company located at 1021 Golf Estates
Drive, Woodstock Georgia 30189 (“Hunter”) and together with Joyner and Hall,
hereinafter sometimes referred to individually as a "Seller" and collectively
as, (the "Sellers"), and South Atlantic Traffic Corporation, a Florida
corporation located at 2295 Towne Lake Pkwy., Suite 116 PMB 305, Woodstock,
Georgia, 30189 ( “SATCO”), (the Sellers, the Purchaser, the Corporation
collectively referred to as the "Parties"), and whereas the Registrant shall
acquire all of the outstanding stock and interests held in SATCO from the
Sellers.
As a
result of the Merger, and further, subject to adjustment as described in Item
1.01 of our Current Report on Form 8-K filed with the SEC on November 12, 2009,
the SATCO Stockholders received, in exchange for all of their SATCO Common
Stock, the aggregate total of 2,908,000 shares of the EGPI Common Stock subject
to adjustment and therein the Agreement and further as listed in the above
stated Current Report on Form 8-K.
The
shares were issued in reliance upon an exemption from registration pursuant to
Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated
under the Securities Act. All of the SATCO Stockholders hold their
securities for investment purposes without a view to distribution and had access
to information concerning EGPI and our business prospects, as required by the
Securities Act. In addition, there was no general solicitation or
advertising for the purchase of the shares of EGPI Common Stock. Our
securities were issued only to accredited investors or sophisticated investors,
as defined in the Securities Act with whom we had a direct personal preexisting
relationship, and after a thorough discussion. Finally, our stock
transfer agent has been instructed not to transfer any of such shares, unless
such shares are registered for resale or there is an exemption with respect to
their transfer.
__________________________________
(*) (**)
On October 1, 2009, by majority consent of the Board of Directors, the Company
approved the following issuances of its restricted common stock, par value
$0.001 per share, to the following person for Investor and Public Relations
Services for the Company.
Name and Address (***)
|
Date
|
|
Share Amount(***)
|
|
Type of Consideration
|
|
Fair Market Value of
Consideration
|
|
|||
Wakabayashi
Fund, L.L.C. (1)
|
10/1/09
|
1,500,000
|
Investor
/ Public Relations
|
$
|
127,500
|
||||||
4-13-20
Mita Minato-Ku
|
services
|
||||||||||
Tokyo,
Japan 108-0073
|
(*)
Issuances are approved, subject to such person being entirely responsible for
his own personal, Federal, State, and or relevant single or multi jurisdictional
income taxes, as applicable.
(**)
$127,500 of the financing proceeds in the immediately preceding table was used
primarily for Investor and Public Relations Services for the
Company.
(1)
|
Wakabayashi Fund, L.L.C. is a
shareholder of the Company, and is not acting as a director, or officer of
the Company.
|
(***) The
shares of common stock were issued pursuant to an exemption from registration as
provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”). All such certificates representing the shares issued by the Company shall
bear the standard 1933 Act restrictive legend restricting resale.
__________________________________
(*) (**)
On September 17, 2009, by majority consent of the Board of Directors, the
Company approved the following issuances of its restricted common stock, par
value $0.001 per share, to the following person for extension of financial
obligations rendered (see Items 1.01 and 2.03 above.)
Name and Address (***)
|
Date
|
|
Share Amount(***)
|
|
Type of Consideration
|
|
Fair Market Value of
Consideration
|
|
|||
Thomas
J. Richards (1)
c/o
6564 Smoke Tree Lane
Scottsdale,
Arizona 85253
|
9/17/09
|
300,000
|
For
extension of financial
obligation
due dates
rendered
to the Company
|
$
|
42,000
|
(*)
Issuances are approved, subject to such person being entirely responsible for
his own personal, Federal, State, and or relevant single or multi jurisdictional
income taxes, as applicable.
(**)
$42,000 of the financing proceeds in the immediately preceding table was used
primarily for extension of financial terms and other consideration rendered to
the Company.
(1)
|
Mr.
Thomas J. Richards is a shareholder, and is not an affiliate, director, or
an officer of the
Company.
|
(***) The
shares of common stock were issued pursuant to an exemption from registration as
provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”). All such certificates representing the shares issued by the Company shall
bear the standard 1933 Act restrictive legend restricting resale.
__________________________________
(*) (**)
On July 29, 2009, by majority consent of the Board of Directors, the Company
approved the following issuances of its restricted common stock, par value
$0.001 per share, to the following persons for advisory services
rendered.
Name and Address (***)
|
Date
|
|
Share Amount(***)
|
|
Type of Consideration
|
|
Fair Market Value of
Consideration
|
|
|||
CST
Group, Inc. (1)
c/o
Trump Palace
18101
Collins Avenue Unit #4401
Sunny
Isles Beach,
Florida
33160
|
7/29/09
|
238,680
|
For
services rendered to the Company or M3 Lighting, Inc.
|
$
|
16,708
|
||||||
Joseph
Gourlay (2)
20000
E. Country Club Drive
Miami,
Florida
Apt.
#410
|
7/29/09
|
238,681
|
For
services rendered to the Company or M3 Lighting, Inc.
|
$
|
16,708
|
(*)
Issuances are approved, subject to such persons being entirely responsible for
their own personal, Federal, State, and or relevant single or multi
jurisdictional income taxes, as applicable.
(**)
$33,416 of the financing proceeds in the immediately preceding table was used
primarily in consideration of services rendered to the Company and/or M3
Lighting, Inc. (“M3”).
(1)
|
Per
directive of Mr. Stuart Siller to CST Group, Inc., a shareholder/advisor
of the Company.
|
(2)
|
Mr. Joseph Gourlay, is a
shareholder/advisor of the
Company.
|
(***) The
shares of common stock were issued pursuant to an exemption from registration as
provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”). All such certificates representing the shares issued by the Company shall
bear the standard 1933 Act restrictive legend restricting resale.
__________________________________
II-6
On May
21, 2009, the Company, Asian Ventures Corp., a Nevada corporation (its wholly
owned “Subsidiary”), M3 Lighting, Inc., a Nevada corporation (“M3”), and
Strategic Partners Consulting, L.L.C., a Georgia limited liability company
(“Strategic Partners”) executed and closed a Plan and Agreement of Triangular
Merger (the “Plan of Merger”), whereby M3 merged into the Subsidiary, a
wholly-owned subsidiary of the Company (the “Merger”). As a result of
the Merger, the stockholders of M3 (the “M3 Stockholders”) and Strategic
Partners received 14,210,809 shares of the common stock of the registrant, no
par value per share (the “EGPI Common Stock”) in exchange for all of their
listed in our Current Report on Form 8-K, as amended, filed with the SEC on May
27, 2009.
Following
the Effective Date, the Company had approximately 23,868,015 shares of the EGPI
Common Stock issued and outstanding, owned as follows: (a) 9,547,206 shares
owned by the EGPI Stockholders; (b) 11,934,007 shares owned by the M3
Stockholders, subject to adjustment as described in our Current Report on Form
8-K, as amended, filed with the SEC on May 27, 2009, and its sub paragraph five
of Para.13. listed under Item 2.01 Completion of Acquisition or Disposition of
Assets, therein and elsewhere in that Report; and (c) 2,386,802 shares owned by
Strategic Partners as described also therein the above stated
Report.
The
shares were issued in reliance upon an exemption from registration pursuant to
Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated
under the Securities Act. All of the M3 Stockholders and Strategic
Partners took their securities for investment purposes without a view to
distribution and had access to information concerning EGPI and our business
prospects, as required by the Securities Act. In addition, there was
no general solicitation or advertising for the purchase of the shares of EGPI
Common Stock and the EGPI Series C Preferred Stock. Our securities
were issued only to accredited investors or sophisticated investors, as defined
in the Securities Act with whom we had a direct personal preexisting
relationship, and after a thorough discussion. Finally, our stock
transfer agent has been instructed not to transfer any of such shares, unless
such shares are registered for resale or there is an exemption with respect to
their transfer.
__________________________________
I.
(*) (**) On February 8, 2009, by majority consent of the Board of
Directors, the Company approved the following issuances of its restricted common
stock, par value $0.001 per share, to the following persons for services
rendered.
Name and Address (***)
|
Date
|
Share Amount(***)
|
Type of Consideration
|
Fair Market Value of
Consideration
|
|||||||
Jeffrey
M. Proper
c/o
6564 Smoke Tree Lane
Scottsdale,
Arizona 85253
|
2/8/09
|
250,000 |
For
services rendered to the Company or FPI
|
$ | 15,000 | ||||||
Thomas
J. Richards
c/o
6564 Smoke Tree Lane
Scottsdale,
Arizona 85253
|
2/8/09
|
390,000 |
For
services rendered to the Company or FPI
|
$ | 23,400 | ||||||
Larry
W. Trapp
c/o
6564 Smoke Tree Lane
Scottsdale,
Arizona 85253
|
2/8/09
|
300,000 |
For
services rendered to the Company or FPI
|
$ | 18,000 | ||||||
Melvena
Alexander
c/o
6564 Smoke Tree Lane
Scottsdale,
Arizona 85253
|
2/8/09
|
180,000 |
For
services rendered to the Company or FPI
|
$ | 10,800 | ||||||
Joanne
M. Sylvanus
c/o
6564 Smoke Tree Lane
Scottsdale,
Arizona 85253
|
2/8/09
|
275,000 |
For
services rendered to the Company or FPI
|
$ | 16,500 | ||||||
Clifton
Onolfo
c/o
6564 Smoke Tree Lane
Scottsdale,
Arizona 85253
|
2/8/09
|
150,000 |
For
services rendered to the Company or FPI
|
$ | 9,000 |
(*)
Issuances are approved, subject to such persons being entirely responsible for
their own personal, Federal, State, and or relevant single or multi
jurisdictional income taxes, as applicable.
(**)
$92,700 of the financing proceeds in the immediately preceding table was used
primarily in consideration of services rendered to the Company and/or Firecreek
Petroleum, Inc. (“FPI”).
(1)
|
Mr.
Jeffrey M. Proper, Esq., for legal advisory and consulting services; Mr.
Proper is a shareholder.
|
(2)
|
Mr.
Thomas J. Richards, for business and consulting and advisory services; Mr.
Richards is a shareholder and an advisor of the
Company.
|
(3)
|
Mr.
Larry W. Trapp, for business and consulting and advisory services; He is a
shareholder, an officer, (Executive Vice President, and Co-Treasurer) and
director of the Company and Firecreek Petroleum,
Inc.
|
(4)
|
Melvena
Alexander, for day to day operational services and business provisions;
Mrs. Alexander is a shareholder, and an officer (Secretary, Comptroller,
and Co Treasurer) of the Company.
|
(5)
|
Joanne
M. Sylvanus provides accounting and advisory services to the Company and
FPI, and is a shareholder of the
Company.
|
(6)
|
Mr.
Cliff Onolfo, Miami Florida, for business and financial advisory services;
He is a shareholder and advisor of the Company. The shares are to be held
at the Company offices to be released as additional financial success fee
compensation. The shares to be returned to Company Treasury if there is no
performance completed within 90 days of the date of this
Resolution.
|
(***) The
shares of common stock were issued pursuant to an exemption from registration as
provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”). All such certificates representing the shares issued by the Company shall
bear the standard 1933 Act restrictive legend restricting resale.
__________________________________
II-7
II. (*)
(**) On February 5, 2009, by majority consent of the Board of Directors, the
Company approved the following issuances of its restricted common stock, par
value $0.001 per share, to the following persons for services
rendered.
Name and Address (***)
|
Date
|
Share Amount(***)
|
Type of Consideration
|
Fair Market Value of
Consideration
|
|||||||
Joseph
M. Vazquez III
5324
Pine Tree Drive
Miami
Beach, FL. 33140
|
2/5/09
|
340,000 |
For
services rendered
|
$ | 20,400 | ||||||
David
M. Rees
175
E. 400 South, Suite 2000
Salt
Lake City, Utah 84111
|
2/5/09
|
300,000 |
For
services rendered
|
$ | 18,000 | ||||||
Callie
Tempest Jones
175
E. 400 South, Suite 2000
Salt
Lake City, Utah 84111
|
2/5/09
|
25,000 |
For
services rendered
|
$ | 1,500 | ||||||
Chase
Chandler
175
E. 400 South, Suite 2000
Salt
Lake City, Utah 84111
|
2/5/09
|
15,000 |
For
services rendered
|
$ | 900 |
(*)
Issuances are approved, subject to such persons being entirely responsible for
their own personal, Federal, State, and or relevant single or multi
jurisdictional income taxes, as applicable.
(**)
$40,800 of the financing proceeds in the immediately preceding table was used
primarily in consideration of services rendered to the Company and/or Firecreek
Petroleum, Inc. (“FPI”).
(1)
|
(****)
Mr. Joseph M. Vazquez for legal advisory and consulting services, and is a
shareholder of the Company.
|
(2)
|
Mr.
David M. Rees for legal engagement and advisory services with
the firm Vincent & Rees. Mr. Rees is a shareholder of the
Company.
|
(3)
|
Mrs.
Callie Tempest Jones for legal engagement and advisory services with the
firm Vincent & Rees, Mrs. Jones is a shareholder of the
company.
|
(4)
|
Mr.
Chase Chandler for legal engagement and advisory services with the firm
Vincent & Rees. Mr. Chandler is a shareholder of the
Company.
|
(***) The
shares of common stock were issued pursuant to an exemption from registration as
provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”). All such certificates representing the shares issued by the Company shall
bear the standard 1933 Act restrictive legend restricting resale.
__________________________________
On
February 1, 2009, the Company entered into an Advisory Service Agreement with
Joseph M. Vazquez pertaining to advising corporate management, strategic
planning, corporate development and forecasting, marketing, structuring investor
relations programs, contract negotiations and performing general administrative
duties. The term of the Agreement is for twelve (12) months ("Initial Term")
which shall automatically be renewed for an additional twelve (12) month period,
unless terminated upon prior notice within thirty (30) days before the end of
initial term. Pursuant to the Agreement, the Company shall pay $7,500 to Mr.
Vazquez for initial set up and travel costs and first months retainer rendered
in connection with engagement, and 340,000 restricted shares of common stock.
Thereafter, the Company shall pay $5,000 per month during the remaining months
of the Initial Term of the Agreement. Further, the Company shall also issue to
Mr. Vasquez three year warrants to purchase 500,000 shares at $1.00 per share.
Per the terms of the Agreement, Beneficial ownership is not to exceed
4.99%.
A copy of
the Advisory Services Agreement is attached as Exhibit 10.33 to a Report on Form
10-K, as amended, filed with the SEC on April 14, 2009.
__________________________________
II-8
On March
27 and December 26 of 2007, the Company issued to Dutchess two convertible
debentures one with a face value of $140,000 and the other with a face amount
$500,000, to pay an incentive fee to the holder of the equity credit line. The
debentures became convertible at the date of the issuances and mature in March
27, 2012 and December 26, 2014, respectively. The Company claims an exemption
from the registration requirements of the Securities Act of 1933, as amended
(the “Act”) for the private placement of these securities pursuant to Section
4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since,
among other things, the transaction does not involve a public offering, the
Investor is an “accredited investor” and/or qualified institutional buyer, the
Investor has access to information about the Company and its investment, the
Investor will take the securities for investment and not resale, and the Company
is taking appropriate measures to restrict the transfer of the securities. For
terms of the debentures please see information furnished in our Current Reports
and Exhibits thereto on Form 8-K filed on March 29, 2007 and January 7, 2008,
respectively, incorporated herein by reference.
On June
11, 2007 the Company issued to Dutchess a debenture in the face amount of
$2,000,000 for acquisitions and working capital. The Debenture bears interest at
12% per annum and matures on June 11, 2014. For terms of the debenture please
see information furnished in our Current Report on Form 8-K, and Exhibits
thereto filed on Jun 11, 2007, incorporated herein by reference.
On
December 26, 2007, EGPI Firecreek, Inc. the Company issued to Dutchess a
debenture in the face amount of $2,100,000. The Debenture bears interest at 12%
per annum and matures on December 26, 2014. The Company claims an exemption from
the registration requirements of the Act for the private placement of these
securities pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D
promulgated thereunder since, among other things, the transaction does not
involve a public offering, the Investor is an “accredited investor” and/or
qualified institutional buyer, the Investor has access to information about the
Company and its investment, the Investor will take the securities for investment
and not resale, and the Company is taking appropriate measures to restrict the
transfer of the securities. For terms of the debenture please see information
furnished in our Current Report on Form 8-K, and Exhibits thereto filed on
January 7, 2008, incorporated herein by reference.
On April
21 and June 29 of 2006, the Company issued to Dutchess convertible debentures
with a face value of $171,875 and $300,000 respectively, to pay an incentive fee
to the holder of the equity credit line. The debentures became convertible at
the date of the issuances and mature in April and June of 2011. The Company
claims an exemption from the registration requirements of the Act for the
private placement of these securities pursuant to Section 4(2) of the Act and/or
Rule 506 of Regulation D promulgated thereunder since, among other things, the
transaction does not involve a public offering, the Investor is an “accredited
investor” and/or qualified institutional buyer, the Investor has access to
information about the Company and its investment, the Investor will take the
securities for investment and not resale, and the Company is taking appropriate
measures to restrict the transfer of the securities. For terms of the debentures
please see information furnished in Exhibit “A” to each of Exhibits 99.1 and
99.2 to our Current Reports on Form 8-K filed on April 27, 2006 and June 7,
2006, respectively, incorporated herein by reference.
On
November 14 and December 15 of 2005, the Company issued to Dutchess convertible
debentures with a face value of $375,000 and $82,500, respectively, to pay an
incentive fee to the holder of the equity credit line. The debentures became
convertible at the date of the issuances and mature in November and December
2010. The Company claims an exemption from the registration requirements of the
Act for the private placement of these securities pursuant to Section 4(2) of
the Act and/or Rule 506 of Regulation D promulgated thereunder since, among
other things, the transaction does not involve a public offering, the Investor
is an “accredited investor” and/or qualified institutional buyer, the Investor
has access to information about the Company and its investment, the Investor
will take the securities for investment and not resale, and the Company is
taking appropriate measures to restrict the transfer of the securities. For
terms of the debentures please see information furnished in Exhibit “A” to each
of Exhibits 10.3, and 99.1 to our Current Reports on Form 8-K filed on November
and December 16, 2005, respectively, incorporated herein by
reference.
II-9
Item
16. Exhibits and Financial Statement Schedules.
(a) Exhibits. The
following exhibits are included herein or incorporated herein by
reference.
Exhibit
Number
|
Description of Exhibit
|
|
2.1
|
Agreement
for the Exchange of Common Stock, dated December 12, 2003 (relating to the
acquisition of International Group Holdings, Inc.) (filed as exhibit 2.1
to the Current Report on Form 8-K dated December 1, 2003, filed December
15, 2003 and incorporated herein by reference).
|
|
2.2
|
Agreement
for the Exchange of Common Stock, dated June 29, 2004 (relating to
acquisition of Firecreek Petroleum, Inc.) (filed as exhibit 2.1 to Current
Report on form 8-K dated June 24, 2004, filed July 15, 2004 and
incorporated herein by reference).
|
|
3.1
|
Articles
of Amendment to Articles of Incorporation of EGPI Firecreek, Inc. (filed
as Exhibit 99.1 to Current Report on Form 8-K dated Feb. 15, 2005, filed
February 22, 2005 and incorporated herein by reference).
*
|
|
3.2
|
Correction
of Articles of Amendment to Articles of Incorporation of EGPI Firecreek
Inc., filed with the Nevada Secretary of State on May 12,
2005.
|
|
3.3
|
Amended
By-Laws of Registrant, dated July 1, 2004 (filed as exhibit 2.2 to Current
Report on Form 8-K dated June 4, 2004, filed July 15, 2004, and
incorporated herein by reference).
|
|
5.1
|
Consent
of Donahue Associates, LLC dated as of February 11,
2010
|
|
5.2
|
Opinion
Letter of Vincent & Rees.
|
|
10.1
|
Securities
Purchase Agreement dated May 18, 2005, between the Company and Tirion
Group, Inc. (filed as an Exhibit to Current Report on Form 8-K dated May
26, 2005 and incorporated herein by reference).
|
|
10.2
|
Registration
Rights Agreement dated May 18, 2005, between the Company and Tirion Group,
Inc. (filed as an Exhibit to Current Report on Form 8-K dated May 26, 2005
and incorporated by reference).
|
|
10.3
|
Intellectual
Property Security Agreement dated May 2, 2005, by and between the Company
and AJW Partners and its affiliates (filed as an Exhibit on Form 10-QSB
for the quarter ended March 31, 2005 and incorporated herein by
reference).
|
|
10.4
|
Guaranty
and Pledge Agreement dated May 2, 2005, between the Company, Greg Fryett,
CEO of the Company, and AJW Partners and its affiliates (filed as an
Exhibit to Form 10-QSB for the quarter ended March 31, 2005 and
incorporated herein by reference).
|
|
10.5
|
Security
Agreement dated May 2, 2005, between the Company and AJW Partners and its
affiliates (filed as an Exhibit to Form 10-QSB for the quarter ended March
31, 2005 and incorporated herein by reference).
|
|
10.6
|
Form
of Callable Secured Convertible Note to AJW Partners LLC, dated May 2,
2005 (filed as an Exhibit to Form 10-QSB for the quarter ended March 31,
2005 and incorporated herein by reference).
|
|
10.7
|
Form
of Callable Secured Convertible Note to AJW Offshore Limited, dated May 2,
2005 (filed as an Exhibit to Form 10-QSB for the quarter ended March 31,
2005 and incorporated herein by reference).
|
|
10.8
|
Form
of Callable Secured Convertible Note to AJW Qualified Partners, LLC, dated
May 2, 2005 (filed as an Exhibit to Form 10-QSB for quarter ended March
31, 2005 and incorporated herein by reference).
|
|
10.9
|
Form
of Callable Secured Convertible Note to New Millenium Capital Partners II,
LLC, dated May 2, 2005, (filed as an Exhibit to Form 10-QSB for quarter
ended March 31, 2005 and incorporated herein by
reference).
|
II-10
10.10
|
Final
Voting Agreement of EGPI Firecreek (filed as exhibit 99.3 to Current
Report on Form 8-K dated April 5, 2005, filed April 7, 2005 and
incorporated herein by reference).
|
|
10.11
|
Form
of Stock Purchase Warrant issued to AJW Partners LLC, effective May 2,
2005, Form 10-QSB for the quarter ended March 31, 2005 and incorporated
herein by reference).
|
|
10.12
|
Form
of Stock Purchase Warrant issued to AJW Offshore Limited, effective May 2,
2005, Form 10-QSB for the quarter ended March 31, 2005 and incorporated
herein by reference).
|
|
10.13
|
Form
of Stock Purchase Warrant issued to AJW Qualified Partners, LLC, effective
May 2, 2005, Form 10-QSB for the quarter ended March 31, 2005 and
incorporated herein by reference).
|
|
10.14
|
Form
of Stock Purchase Warrant to New Millenium Capital Partners II, LLC,
effective May 2, 2005, Form 10-QSB for the quarter ended March 31, 2005
and incorporated herein by reference).
|
|
10.15
|
Fee
Protector Agreement, dated June 14, 2005, by and between the Company and
DLM Asset Management, Inc. (filed as an Exhibit to the Current Report on
Form 8-K/A dated June 20, 2005 and incorporated herein by
reference).
|
|
10.16
|
Repurchase
Agreement dated May 31, 2005, by and between the Company and AJW Partners
(filed as an Exhibit to the Current Report on Form 8-K/A dated June 2,
2005 and incorporated herein by reference).
|
|
10.17
|
Callable
Secured Convertible Note, dated May 18, 2005 issued to Tirion Group (filed
as an Exhibit to Current Report on Form 8-K dated May 26, 2005 and
incorporated herein by reference).
|
|
10.18
|
Stock
Purchase Warrant, dated May 18, 2005 issued to Tirion Group (filed as an
Exhibit to Current Report on Form 8-K dated May 26, 2005 and incorporated
herein by reference).
|
|
10.19
|
Standard
Office Lease between the Company and Camp Bowie Centre (filed as an
Exhibit to Current Report on Form 8-K dated May 26, 2005 and incorporated
herein by reference).
|
|
10.20
|
Securities
Purchase Agreement, dated May 2, 2005, between the Company and AJW
Partners and its affiliates (filed as an Exhibit to Form 10-QSB for the
quarter ended March 31, 2005 and incorporated herein by
reference).
|
|
10.21
|
Registration
Rights Agreement, dated May 2, 2005, between the Company and AJW Partners
and Affiliates (filed as an Exhibit to Form 10-QSB for the quarter ended
March 31, 2005 and incorporated herein by reference).
|
|
10.22
|
Investment
Agreement, dated as of June 28, 2005, by and between the Company and
Dutchess Private Equities Fund, II, LP (filed as Exhibit 10.22 to
Registration Statement on Form SB-2/A filed on September 2, 2005 and
incorporated herein by reference).
|
|
10.23
|
Registration
Rights Agreement, dated as of June 28, 2005, by and between the Company
and Dutchess Private Equities Fund, II, L.P. (filed as Exhibit 10.23 to
Registration Statement on Form SB-2/A filed on September 2, 2005 and
incorporated herein by reference).
|
|
10.24
|
Placement
Agent Agreement, dated June 28, 2005, by and between the Company, U.S.
Euro Securities and Dutchess Equities Fund II L.P. (filed as Exhibit 10.24
to Registration Statement on Form SB-2/A filed on September 2, 2005 and
incorporated herein by reference).
|
|
10.25
|
Extension
and Amendment of Corporate Advisory Agreement between the Company and
Steven Antebi; dated June 13, 2005 (Replaces incorrect exhibit previously
filed.) (filed as Exhibit 10.25 to Registration Statement on Form SB-2/A
filed on September 2, 2005 and incorporated herein by
reference).
|
|
10.26
|
Amendment
to Investment Agreement, dated August 23, 2005 by and between the Company
and Dutchess Private Equities Fund, II, LP (filed as Exhibit 10.26 to
Registration Statement on Form SB-2/A filed on September 2, 2005 and
incorporated herein by reference).
|
|
10.27
|
Amendment
to Registration Rights Agreement, dated as of August 23, 2005, by and
between the Company and Dutchess Private Equities Fund, II, L.P. (filed as
Exhibit 10.27 to Registration Statement on Form SB-2/A filed on September
2, 2005 and incorporated herein by
reference).
|
II-11
10.28
|
Extension
and Amendment of Certain Provisions of Corporate Advisory Agreement
between the Company and Steven Antebi, dated January 30, 2006 (filed as
Exhibit 10.1 to Current Report on Form 8-K filed February 3, 2006 and
incorporated herein by reference).
|
|
10.29
|
Warrant
Certificate containing revised terms of previously issued warrant issued
to Steven Antebi, dated July 12, 2005 (filed as Exhibit 10.4 to Current
Report on Form 8-K filed on February 3, 2006 and incorporated herein by
reference).
|
|
10.30
|
Business
Relationship Letter Agreement between the Company, Firecreek, and The
Sahara Group (filed on Exhibit 10.30 with the Report on Form 10-KSB filed
on April 14, 2006 and incorporated herein by
reference).
|
|
10.31
|
Annual
Report on Form 10-KSB, filed on April 12, 2005, and incorporated herein by
reference.
|
|
10.32
|
Oil
and Gas Participation and Rights Agreement (the ”Participation Agreement”)
between the Company and Dutchess Private Equities Fund, Ltd. dated
December 3, 2008 (filed on Exhibit 10.32 with the Report on Form 10-K
filed on April 14, 2009 and incorporated herein by
reference).
|
|
10.33
|
Advisory
Services Agreement between EGPI Firecreek, Inc. and Joseph M. Vasquez,
dated February 1, 2009 (filed on Exhibit 10.33 with the Report on Form
10-K filed on April 14, 2009 and incorporated herein by
reference).
|
|
10.34
|
Promissory
Note Agreement between EGPI Firecreek, Inc. and Dutchess Private Equities
Fund, Ltd., (filed on Exhibit 10.34 with the Report on Form 10-K filed on
April 14, 2009 and incorporated herein by reference).
|
|
10.35
|
Current
Report on Form 8-K, filed on December 3, 2008, incorporated herein by
reference
|
|
21
|
Updated
List of Subsidiaries
|
Item
17. Undertakings.
The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a twenty percent change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee”
table in the effective registration statement; and
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment, any of the
securities being registered which remain unsold at the termination of the
offering.
(4) That,
for the purpose of determining liability under the Securities Act of 1933 to any
purchaser:
(i) If
the registrant is relying on Rule 430B:
(A) Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to
be part of the registration statement as of the date the filed prospectus was
deemed part of and included in the registration statement; and
(B) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as
part of a registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of
providing the information required by section 10(a) of the Securities Act of
1933, shall be deemed to be part of and included in the registration statement
as of the earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of securities in the
offering described in the prospectus. As provided in Rule 430B, for liability
purposes of the issuer and any person that is at that date an underwriter, such
date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that time shall be
deemed to be the initial bona
fide offering thereof. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such effective
date, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such effective date; or
(ii) If
the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and included in the
registration statement as of the date it is first used after effectiveness.
Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such date of first use.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
II-12
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Scottsdale, State of
Arizona, and City of Atlanta, State of Georgia, on February 11,
2010.
EGPI
FIRECREEK, INC.
|
||
By:
|
/S/
Dennis R Alexander
|
|
|
Name:
Dennis R. Alexander
|
|
|
Title:
Chief Executive Officer and Chairman of
the
Board of Directors, CFO
|
Pursuant
to the requirements of the Securities Act of 1933, this amendment to the
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature
|
Title
|
Date
|
||
/S/
Dennis R Alexander
|
Chief
Executive Officer and Chairman of
|
February
11, 2010
|
||
Dennis
R Alexander
|
the
Board of Directors, CFO
|
|||
/S/
Michael Kocan
|
Director
and President
|
February
11, 2010
|
||
Michael
Kocan
|
And
Chief Operating Officer
|
|||
/s/Robert
S. Miller Jr.
|
Director
and
|
February
11, 2010
|
||
|
Executive
Vice President,
|
|||
s/sDavid
H. Ray Jr.
|
Director
and Executive Vice President
|
February
11, 2010
|
||
David
H. Ray Jr.
|
And
Treasurer
|
|||
|
||||
/s/Brandon
D. Ray Jr.
|
Director
and
|
February
11, 2010
|
||
Brandon
D. Ray Jr.
|
Executive
Vice President of Finance
|
|||
|
||||
s/sLarry
W. Trapp
|
Director
and
|
February
11, 2010
|
||
Larry
W. Trapp
|
Executive
Vice President
|
|||
/s/Michael
Trapp
|
Director
|
February
11, 2010
|
||
Michael
Trapp
|
||||
/s/Garrett
Sullivan
|
|
Director
|
|
February
11, 2010
|
Garrett
Sullivan
|
||||
s/sMichael
D. Brown
|
Director
|
February
11, 2010
|
||
Michael
D. Brown
|
||||
s/sMelvena
Alexander
|
|
Secretary
and Comptroller
|
|
February
11, 2010
|
Melvena
Alexander
|
And
Co-Treasurer
|