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| EX-99.1 - Glen Rose Petroleum CORP | v176416_ex99-1.htm |
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of report (Date of earliest event reported): March 5, 2010; (February 17,
2010)
GLEN
ROSE PETROLEUM CORPORATION
(Exact
name of registrant as specified in Charter)
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Delaware
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001-10179
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87-0372864
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(State
or other jurisdiction of
incorporation
or organization)
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(Commission
File No.)
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(IRS
Employee Identification No.)
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22762
Westheimer Parkway
Suite
515
Katy,
Texas 77450
(Address
of Principal Executive Offices)
(832)
437-4026
(Issuer
Telephone number)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the Registrant under any of the following
provisions (see General Instruction A.2 below).
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17
CFR240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)).
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Pre-commencement
communications pursuant to Rule 13e-(c) under the Exchange Act (17 CFR
240.13(e)-4(c))
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1
This Form
8-K and other reports filed by Glen Rose Petroleum Corporation (the “Company”)
from time to time with the Securities and Exchange Commission (collectively the
“Filings”) contain forward looking statements and information that are based
upon beliefs of, and information currently available to, our management as well
as estimates and assumptions made by our management. When used in the Filings
the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,”
“plan” or the negative of these terms and similar expressions as they relate to
us or our management identify forward looking statements. Such statements
reflect our current view with respect to future events and are subject to risks,
uncertainties, assumptions and other factors relating to our industry,
operations and results of operations and any businesses that we may acquire.
Should one or more of these risks or uncertainties materialize, or should the
underlying assumptions prove incorrect, actual results may differ significantly
from those anticipated, believed, estimated, expected, intended or
planned.
| Item 1.01 Entry into a Material Definitive Agreement |
Glen Rose
Petroleum Corporation has entered the following material definitive
agreements.
Iroquois
Capital Opportunity Fund LP and others
On March
3, 2010, Glen Rose Petroleum Corporation closed a secured convertible note and
warrant transaction agreement and a working interest purchase and sale agreement
with Iroquois Capital Opportunity Fund and 12 other investors. The
secured convertible note transaction provides that the Company will receive
$3,350,000 in exchange for the notes and warrants. The two year notes
pay 8 percent interest with a 12 percent interest if payment is made in
kind. The outstanding principal and interest on the notes is
convertible into Company common stock at the option of the note holder at $.30
per share with the Company having the right to force conversion once the Company
achieves a greater than $1.25 share price and minimum daily volume of
$2,000,000. The maximum number of conversion common stock shares for
the notes’ principal amounts, assuming all shares are converted, is 11,666,667
common stock shares. The notes are secured by all of the Company’s
and its subsidiaries’ assets. The investors are also receiving
a total of 11,666,667 warrants exercisable at $.60 per share with five year
terms. The warrants have cashless exercise
provisions. Should the Company issue common stock for consideration
that is less than the note conversion price or the warrant exercise price during
the term of the notes or warrants, the note conversion price and the warrant
exercise price shall be adjusted downward to equal the price at which the
Company issued that common stock.
2
The
subscription agreement also calls for the Company to have a director nominated
by Iroquois Capital Opportunity Fund LP or its assignee. Accordingly,
the Company has amended its bylaws to provide for such a “Nominated
Director.” Further, under the amended bylaws, the Nominated Director
must approve certain business decisions without regard to the vote of the other
Directors, including (i) the Company’s or Subsidiary’s annual budget; (ii)
acquisition or disposition of material assets, outside the ordinary course of
business; (iii) formation or dissolution of the Company or Subsidiary; (iv)
expenditure of or incurring of an obligation of $20,000 or more for a single
purpose during any consecutive twelve month period unless such expenditure has
been approved in a budget approved by the board of directors of the Company or
Subsidiary (“single purpose” may include an approved general plan of operations
relating to oil and gas production and shall not be a reference to the
engagement of any single vendor in connection with such approved general plan of
operations relating to oil and gas production), provided such expenditure has
been approved in a budget approved by the board of directors of the Company and
Subsidiary, as applicable; (v) open or close any account with any
financial institution; (vi) initiation or settlement of any litigation,
arbitration or judicial proceeding; and (vii) the issuance of any equity of the
Company or right to receive or acquire any equity of the Company, or
modification of any of the foregoing outstanding at any time. The
Nominated Director bylaw provision ceases to be effective when the notes are
paid.
The
Company has also closed a transaction with Glen Rose Partners I, LLC, an
affiliate of Iroquois Capital Opportunity Fund, LP, to sell 12.5% of its working
interest in the Wardlaw Field in exchange for $1,000,000. The
purchase and sale agreement has a carveout for existing producing
wells. It also includes an Area of Mutual Interest agreement in which
Glen Rose Partners I, LLC is able to be a 12.5% participant in future
development by the Company or its subsidiaries. The purchase and sale
agreement states that Glen Rose Partners I, LLC is carried on expenses up to
$2,000,000. Further, for five years Glen Rose Partners I, LLC will
also have conversion rights to convert its working interest in the Wardlaw
Prospect with an imputed value equal to the working interest purchase price as
adjusted, into the Company’s common stock in the same manner as the secured
convertible notes are convertible except that the Glen Rose Partners I,LC
conversion price shall be 150% of the secured convertible notes’ conversion
price in effect as of the conversion date, provided that the secured convertible
notes remained outstanding on the date of such conversion.
Consulting
Agreement with Iromad, LLC
As part
of the above-referenced Iroquois Opportunity Fund, LLC transactions, the Company
has entered into a consulting agreement with Iromad, LLC which requires the
Company to pay $25,000 per month with a 3 year term. The Company will
be paying a six month advance ($150,000) immediately. The agreement
calls for Iromad, LLC’s personnel to be available to consult with the officers
of the Company at reasonable times on technical and operational
matters. The $25,000 per month provides for 100 hours of
work. If Iromad, LLC exceeds 100 hours of work in a month, it will
bill the Company its regular hourly rates.
3
Joseph
Tovey
Joseph
Tovey began consulting with the Company on July 21, 2009. With the
close of the Iroquois Capital Opportunity Fund, LLC transaction the Company is
engaging new consultants. Accordingly, the Company
has entered into a termination and settlement agreement with Joseph Tovey
whereby his consulting agreement that began July 21, 2009 will be terminated and
he or business entities affiliated with him will receive total cash compensation
of $45,000 plus expense reimbursement of $17,528. Mr. Tovey will also
receive four tranches of warrants as follows:
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1)
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Warrant
to acquire 100,000 common shares of the Company at a strike price of $0.50
per share exercisable for twelve months from the Effective Date of the
termination and settlement
agreement;
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2)
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Warrant
to acquire 100,000 common shares of the Company at a strike price of
$1.00 per
share exercisable for twenty-four months from the Effective Date of the
termination and settlement
agreement;
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3)
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Warrant
to acquire 100,000 common shares of the Company at a strike price of
$1.50 per
share exercisable for thirty-six months from the Effective Date of the
termination and settlement agreement;
and
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4)
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Warrant
to acquire 100,000 common shares of the Company at a strike price of
$2.00 per
share exercisable for forty-eight months from the Effective Date of the
termination and settlement
agreement.
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Put
Option Holders Novation Agreements
As stated
in its Form 10-Q for the period ending December 31, 2009, filed February 22,
2010, the Company had option agreements to ex-employees and directors which
exercised at $1.50 and $2.91 exercise prices. These options were modified
to extend the expiration date to March 31, 2009, to add a put feature where the
option holder can put the option back to the Company for the difference between
$4.00 per share and the purchase price between April 1, 2008 and April 10, 2008,
and to add a call feature whereby the Company can call the option for the
difference between $7.50 and the purchase price. Since the put feature
does not subject the holder to the normal risks of share ownership, the Company
has classified the put options as liability awards and recorded such at fair
value. A liability and corresponding expense of $2,727,186 was
recorded.
The
Company has entered into novation agreements with fifteen of its sixteen holders
of put options with similar agreements pending with the single remaining put
option holder. The novation agreements replace the put option
liability with unsecured 4% notes maturing on September 30, 2011, but may
thereafter be extended at the Company’s option to September 30, 2012 at 6% per
year. The fifteen put option holders who have executed their novation
agreements will receive notes totaling $2,303,272 in principal. The
remaining put option holder will receive a note in the amount of $186,508 upon
execution of the novation agreement. Thus, the cumulative amount of
principal on the 4% per year notes when all the novation agreements are executed
is $2,489,780. The notes are dated as of February 5,
2010.
4
The
Company began receiving the novation agreements on February 17, 2010 which is
the earliest item reported by this Form 8-K.
Dr.
Howard Berg Note
Dr.
Howard Berg released the Company’s obligation under a note dated August 3, 2009
and an accompanying security agreement in exchange for payment of $100,000 and
delivery of 603,917 shares of the Company’s Common Stock.
DK
True Energy Development, Ltd.
DK True
Energy Development, Ltd. entered into a one year consulting agreement with the
Company that had a five year trail on the issuance of up to 5,250,000 $1.05
warrants with a five year term from the date of the consulting agreement if the
Company met certain production standards as further stated in Exhibit 10-1 and
10-2 of the Company’s Form 8-K dated December 3, 2007, which is incorporated
herein by reference. The Company has obtained a release of liability
for that warrant in from DK True Energy Development, Ltd. in exchange for the
payment of $5,833 in cash and the issuance of 729,167 $1.05 warrants expiring on
November 28, 2012 and further payment of $140,000 plus 500,000 $.75 warrants
with a three year term.
RTP
Secure Energy Corp.
RTP
Secure Energy Corp. entered into a one year consulting agreement with the
Company that had a five year trail on the issuance of up to 3,750,000 $1.05
warrants with a five year term from the date of the consulting agreement if the
Company met certain production standards as further stated in Exhibit 10-3 and
10-4 of the Company’s Form 8-K dated December 3, 2007, which is incorporated
herein by reference. The Company has obtained a release of liability
for that warrant from RTP Secure Energy Corp. in exchange for the payment of
$4,167 in cash and the issuance of 520,833 $1.05 warrants expiring on November
28, 2012.
| Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing |
As
previously in its Form 8-K dated January 13, 2010, the Company received a
delisting notice from The NASDAQ Stock Market LLC (“NASDAQ”) due to the
Company’s non-compliance with NASDAQ’s $1.00 per share bid price requirement. In
response, the Company requested a hearing before a NASDAQ Listing Qualifications
Panel to appeal the Staff’s delisting determination. On March 4, 2010, the
Company advised NASDAQ that it is withdrawing its appeal and request for
continued listing. Accordingly, NASDAQ will suspend trading of the Company’s
securities effective with the open of business on Monday, March 8,
2010.
5
Following
the suspension of trading on NASDAQ, the Company expects that its common stock
will be quoted on the OTC Bulletin Board (the “OTCBB”), which is operated by
FINRA. In that regard, the Company has been advised by a market maker that it
has filed the necessary application with FINRA to quote the Company’s securities
on the OTCBB. It is expected that the application will be cleared by
FINRA so as to facilitate trading on the OTCBB beginning on Monday, March 8,
2010. In the event, the application is not cleared by FINRA in time
for trading on Monday, the Company’s securities will be eligible for quotation
and trading on The Pink Sheets.
| Item 3.02 Unregistered Sales of Equity Securities |
As
further described above, the Company entered into convertible note and warrant
transactions totaling $3,350,000 with 13 investors, including Iroquois Capital
Opportunity Fund, LP, in which it may issue shares upon a conversion of the note
principal amount of up to 11,666,667 $.001 par value common stock shares at $.30
per share plus warrants for the purchase of 11,666,667 $.001 par value common
stock shares at $.60 per share. The Company intends to use the
proceeds of the offering for its business operations. The Company
issued these convertible notes and warrants under an exemption under SEC Rule
506 regulation D.
As
further described above, the Company, under its termination and settlement
agreement with Joseph Tovey, is issuing him 400,000 warrants to purchase its
common stock, with 100,000 warrants having an exercise price of $.50, 100,000
warrants having an exercise price of $1.00, 100,000 warrants having an exercise
price of $1.50, and 100,000 warrants having an exercise price of
$2.00. These warrants have no cashless exercise
provision. These warrants are being issued pursuant to the exemption
under SEC Rule 701.
The
Company has issued 603,917 of its $.001 Par Value Common Stock in a securities
exchange transaction under Section 3(a)(9) of the Securities Act of 1933 in
connection with the cancellation of the Company’s obligations to Dr. Berg under
a note that he held. The value of the obligation satisfied through
the issuance of the common stock shares to Dr. Berg is $181,750 and the common
stock shares were valued at $.30 per share.
As
further described above, the Company is issuing a 729,167 share $1.05 warrant
and 500,000 share $.75 warrant to DK True Energy Development, Ltd. in exchange
for the cancellation of the Company’s warrant obligation to DK True Energy
Development, Ltd. involving up to 5,250,000 $1.05 warrants under an agreement
dated November 28, 2007. The new warrants are being issued in a
securities exchange transaction under Section 3(a)(9) of the Securities Act of
1933 with consideration being the cancellation of the previous
warrant.
6
As
further described above, the Company is issuing a 520,833 share $1.05 warrant to
RTP Secure Energy Corp. in exchange for the cancellation of the Company’s
warrant obligation to RTP Secure Energy Corp. involving up to 3,750,000 $1.05
warrants under an agreement dated November 28, 2007. The new warrant
is being issued in a securities exchange transaction under Section 3(a)(9) of
the Securities Act of 1933 with consideration being the cancellation of the
previous warrant.
| Item 5.02 Appointment of Principal Officer |
Ruben
Alba has been appointed the Corporation’s Chief Operating Officer effective
March 15, 2010. He received his Chemical Engineering Degree
from New Mexico State University. He worked in the oil and gas industry
for over 13 years with Halliburton Energy Services and Superior Well Services.
He holds two patents in unique completion technologies and is adept to
the challenges of unconventional reservoirs.
Mr. Alba
will be in-charge of all field activities for the Company at the Wardlaw Field
with the principal responsibility of significantly increasing
production.
| Item 5.03 Amendments to Articles of Incorporation or Bylaws |
As
required by the transaction documents relating to the secured convertible notes
described above in Item 1.01 and 3.02, the Corporation amended its bylaws
effective March 2, 2010 to provide for the service of a “Nominated Director”
designated by Iroquois Opportunity Fund, LP for the term of the secured
convertible notes.
Under the
amended bylaws, the Nominated Director must approve certain business decisions
without regard to the vote of the other Directors, including (i) the Company’s
or Subsidiary’s annual budget; (ii) acquisition or disposition of material
assets, outside the ordinary course of business; (iii) formation or dissolution
of the Company or Subsidiary; (iv) expenditure of or incurring of an obligation
of $20,000 or more for a single purpose during any consecutive twelve month
period unless such expenditure has been approved in a budget approved by the
board of directors of the Company or Subsidiary (“single purpose” may include an
approved general plan of operations relating to oil and gas production and shall
not be a reference to the engagement of any single vendor in connection with
such approved general plan of operations relating to oil and gas production),
provided such expenditure has been approved in a budget approved by the board of
directors of the Company and Subsidiary, as applicable; (v) open or
close any account with any financial institution; (vi) initiation or settlement
of any litigation, arbitration or judicial proceeding; and (vii) the issuance of
any equity of the Company or right to receive or acquire any equity of the
Company, or modification of any of the foregoing outstanding at any
time. The Nominated Director bylaw provision ceases to be effective
when the notes are paid.
7
| Item 9.01 Financial Statements and Exhibits |
(d) Exhibits.
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Exhibit
No.
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Description
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99.1
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Exhibit
99.1 – Press Release dated March 3, 2010 announcing Iroquois Capital
Opportunity Fund LP transaction
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated:
March 5, 2010
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GLEN
ROSE PETROLEUM CORPORATION
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By:
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/s/ Andrew
Taylor-Kimmins
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Andrew
Taylor-Kimmins, President
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