AND EXCHANGE COMMISSION
TO SECTION 13 OR 15(d)
THE SECURITIES EXCHANGE ACT OF 1934
of Report (Date of earliest event reported): May 29, 2020
ENERGY SYSTEMS, INC.
name of registrant as specified in its charter)
Riverway, Suite 1700
of principal executive offices)
telephone number, including area code: (713) 579-0600
the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the reporting obligation of the registrant under
any of the following provisions:
communications pursuant to Rule 425 under the Securities Act|
material pursuant to Rule 14a-12 of the Exchange Act|
communications pursuant to Rule 14d-2(b) Exchange Act|
communications pursuant to Rule 13e-4(c) Exchange Act|
registered pursuant to Section 12(b) of the Act: None
by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Note; Additional Information about the AFE Transaction
Company has previously disclosed (a) it entered into an Agreement and Plan of Merger dated October 10, 2019 by and among SES,
Australian Future Energy Pty Ltd (“AFE”) and SES Merger Sub, Inc. (“Merger Sub”), (the “Merger Agreement”)
and in connection with the Merger Agreement, the Company entered into Share Exchange Agreements (each, a “Share Exchange
Agreement”) with certain of the shareholders of Batchfire Resources Pty Ltd (“Batchfire”), whereby such shareholders
will exchange their shares of Batchfire for shares of the Common Stock at a ratio of 10 Batchfire shares for one share of Common
Stock and (b) that on February 21, 2020, the Company, AFE and Merger Sub amended the Merger Agreement extending the outside date
for termination of the Merger Agreement from April 15, 2020 to May 11, 2020 and (c) that on May 4, 2020, the Company was informed
of a rights offering commenced by Batchfire Resources Pty Ltd (“Batchfire”), whereby Batchfire intends to raise $20
million AUD (approximately $12.8 million USD) and as result of this offering, the Company expects to have its ownership interest
in Batchfire diluted and potentially to affect its Share Exchange Agreements entered into October 2019 with certain shareholders
Company and AFE have been unable to complete the merger by the outside date for termination of May 11, 2020 noting that the Merger
Agreement requires a minimum of 25% participation level from certain Batchfire shareholders in the share exchange with the Company
and the Batchfire rights issue would dilute the participation of certain Batchfire shareholders below the 25% level. The Company
no longer anticipates the merger or the share exchange with certain of the shareholders of Batchfire to proceed as planned, although
neither party has to date formally terminated the Merger Agreement.
connection with the merger, the Company has previously filed with the SEC a preliminary registration and proxy statement on Form
S-4 that also constitutes a prospectus of the Company relating to the common stock that would be issued pursuant to the merger.
The proxy statement/prospectus includes important information about both the Company and AFE. Investors and security holders may
obtain these documents when available free of charge at the SEC’s website at www.sec.gov. In addition, the documents filed
with the SEC by the Company can be obtained free of charge from the Company’s website at www.synthesisenergy.com.
the Company does not expect the merger with AFE and the share exchange with certain of the shareholders of Batchfire to be consummated
as planned, the Company and its executive officers and directors may nevertheless be deemed to be participants in the solicitation
of proxies from the shareholders of the Company in respect of the merger. Information regarding the Company’s directors
and executive officers is available in its annual report on Form 10-K for the year ended June 30, 2019, which was filed with the
SEC on January 13, 2020. Other information regarding the participants in the proxy solicitation and a description of their direct
and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant
materials filed with the SEC.
Item 1.01 Entry into a Material Definitive Agreement
Company currently has outstanding indebtedness pursuant to
Senior Secured Debentures issued to holders in October 2017 (the “2017 Debentures”);|
Senior Secured Debentures issued to holders in October 2019 (the “2019 Debentures”); and|
Senior Secured Debentures issued to holders in February 2020 (the “2020 Debentures”)|
May 29, 2020, the Company entered into a Bridge Debenture Agreement with certain holders (“Additional Funding Lenders”)
of the foregoing debentures, pursuant to which the holders purchased $210,000 in principal amount of new 11% Senior Secured Convertible
Debentures. The terms of the new debentures are on substantially the same terms as the Company’s outstanding 2019 Debentures
but (i) have a conversion price of $0.05 per share and (ii) are junior in priority to the 2017 Debentures and pari passu with
the 2019 and 2020 Debentures. As additional consideration to the Additional Funding Lenders for providing the new financing, the
Company has agreed to (i) adjust the conversion price of the 2017, 2019 and 2020 debentures held by the Additional Funding Lenders
to $0.05 per share, (ii) adjusting the exercise prices of all existing Common Stock purchase warrants issued in connection to
the 2017, 2019 and 2020 Debentures, held by the Additional Funding Lenders, to $0.05 per share and (iii) adjusting the base conversion
price (floor) of those debentures shall be adjusted from $1.11 to $0.01 per share.
compensation for its services in arranging the sale of the debentures, the Company shall pay to T.R. Winston & Company, LLC,
a placement agent fee of $14,700 which was taken in kind.
Item 5.01 Changes in Control of Registrant
is hereby made to the disclosure under Item 5.02.
5.02 Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
May 29, 2020, the board of directors appointed Mr. Charles “Duke” Runnels as a new director of the Company. Since
2004, Mr. Runnels has been President and CEO of FORT Properties, Inc., a private equity firm specializing in commercial real estate
across the United States. FORT Properties purchases, finances, syndicates, and manages the properties acquired. During this period
of time, FORT acquired over $500, 000,000 worth of properties across nine states. Mr. Runnels also was appointed Chairman of the
Board of Collective Coworking Holdings Corp., a company operating in the flexible office space segment of real estate. Mr. Runnels
was appointed President and CEO in 2020.
May 31, 2020, Charles Runnels was appointed as the principal executive, financial and accounting officer of the Company. Upon
the failure of the merger with AFE to occur by the May 11, 2020 date, the expiration of the Company’s director’s and
officers’ insurance coverage and the significant cost of extending such insurance coverage, all of the current directors
(Lorenzo Lamadrid, Robert Rigdon, Denis Slavich, Harry Rubin, Xu Ziwang and Robert Anderson) and current officers (Robert Rigdon,
CEO; and David Hiscocks, Controller) resigned as of May 29, 2020. The significant change of board members is deemed to constitute
a change of control of the Company.
Company has entered, or is expected to enter, into consulting agreements with each of Messrs. Rigdon and Hiscocks to assist the
Company on specified projects. Mr. Rigdon will receive $7,500 per month for such efforts. The consulting fee payable to Mr. Hiscocks
is not yet determined.
Item 8.01 Other Events
Company is updating its risk factor disclosures in its periodic filings to add the following risk factor:
common stock may be at risk of being de-listed from the OTCQB. We may not be able to remain in compliance with certain of
the requirements for continued listing required by OTCQB. If we are unable to meet the listing requirements, our common stock
may be de-listed by OTCQB. In such event, we would intend to take such actions in order that OTC Pink would offer quotations for
the common stock.
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Energy Systems, Inc.|
June 1, 2020
Runnels, Principal Executive Officer|