Item 7.01 Regulation FD Disclosure.
On
The purchase price ("Purchase Price") for the membership interests in Southeast is anticipated to be (i) the fair market value of Southeast's assets (as determined by an independent appraiser) minus (ii) Southeast's liabilities. The Purchase Price is anticipated to be payable via the issuance to the Sellers of a secured convertible promissory note (the "Promissory Note") in a principal amount equal to the Purchase Price. The Promissory Note would have a first-ranking security interest against the membership interests of Southeast, and the principal amount would be convertible into the Company's common stock ("Common Stock"), once certain milestones are achieved, at a fixed conversion price equal to the volume weighted average price of the Common Stock during the period commencing ten business days prior to the closing date of the transaction (the "Closing Date") and ending ten business days following the Closing Date. All conversions of the Promissory Note would be subject to a 9.99% beneficial ownership limitation and the Company would agree to file a resale registration statement with respect to the underlying shares of Common Stock within 60 days of the Closing Date.
In addition to customary closing conditions, the definitive agreement would
contain the following closing conditions, which would be required to be
satisfied within a certain time period following execution of a definitive
agreement: (1) confirmation from the Company's senior secured lender that the
Company's is not in default under any existing promissory notes or security
agreements, and that the senior secured lender will subordinate its security
interest against the assets of the Company to the Sellers' security interest
against the membership interests of Southeast until the obligations under the
Promissory Note are satisfied; (2) confirmation from the Company's warrant
holders that this transaction will not trigger any price adjustments under
applicable warrant agreements; and (3) an acknowledgement from the holder of the
Company's shares of Series C Redeemable Convertible Preferred Stock ("Series C
Preferred Stock") that: (a) the number of shares of Common Stock associated with
previous conversions of Series C Preferred Stock is no more than 1,336,143 as of
The LOI contains non-binding obligations of the parties, and the actual terms of
the Acquisitions are still to be negotiated between the parties and set forth in
a definitive agreement. There are no assurances that we will be successful in
negotiating an acceptable definitive agreement, when or whether a definitive
agreement will be reached between the parties, or that the Acquisition will be
consummated. Even if a definitive agreement is executed, the terms of the
Acquisition may change materially from the terms set forth in the LOI. There are
no assurances when or if closing of the Acquisition will occur, even if the
parties successfully negotiate and sign a definitive agreement. Either party may
terminate the LOI if a definitive agreement is not entered into on or before
In accordance with General Instruction B.2 of Form 8-K, the information contained in this Current Report on Form 8-K under Item 7.01 is deemed to be "furnished" solely pursuant to Item 7.01 of Form 8-K and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Forward-Looking Statements
Certain statements contained in this Current Report on Form 8-K are
forward-looking information within the meaning of Section 21E of the Exchange
Act and Section 27A of the Securities Act of 1933, as amended. Any statements
that are not historical facts contained herein are "forward-looking statements",
which statements may be identified by words such as "expects," "plans,"
"projects," "will," "would," "may," "anticipates," "believes," "should,"
"intends," "estimates," and other words of similar meaning. Such forward-looking
statements are based on current expectations, involve known and unknown risks, a
reliance on third parties for information, transactions that may be cancelled,
and other factors that may cause our actual results, performance or
achievements, or developments in our industry, to differ materially from the
anticipated results, performance or achievements expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially from anticipated results include the occurrence of any event, change
or other circumstances that could give rise to the terms of the LOI not
hereafter being reflected in a definitive agreement; the inability to complete
the transactions contemplated by the LOI and any definitive agreement entered
into by the parties, costs related to the Acquisition; the failure to satisfy
the anticipated closing conditions described herein; changes in applicable laws
or regulations; the possibility that the Company may be adversely affected by
other economic, business, and/or competitive factors, the effect of the COVID-19
pandemic on the parties, risks and uncertainties related to the fluctuation of
global economic conditions or economic conditions with respect to the oil and
gas industry, the performance of management, actions of government regulators,
vendors, and suppliers, our cash flows and ability to obtain financing,
competition, general economic conditions and other factors that are detailed in
the Company's filings with the
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