Current Report Filing (8-k)
April 09 2018 - 9:53AM
Edgar (US Regulatory)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 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): April 6, 2018
CARBON
NATURAL GAS COMPANY
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(Exact
name of registrant as specified in charter)
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Delaware
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000-02040
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26-0818050
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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1700
Broadway, Suite 1170, Denver, Colorado
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80290
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(Address
of principal executive offices)
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(Zip
code)
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(720)
407-7043
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(Registrant's
telephone number including area code)
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|
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(Former
Name or former address, if changed since last report)
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Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2. below):
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate
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 ☐
If
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 13a of the Exchange Act. ☐
Item
1.01. Entry into a Material Definitive Agreement
On
April 6, 2018, Carbon Natural Gas Company, a Delaware corporation (“
Carbon
” or the “
Company
”),
entered into a preferred stock purchase agreement (the “
Purchase Agreement
”) with Yorktown Energy Partners
XI, L.P., a current stockholder of the Company, for the private placement of 50,000 shares of the Company’s Series B Convertible
Preferred Stock at a price of $100 per share, resulting in proceeds to the Company of $5,000,000 (the “
Private Placement
”).
Neither
the shares of Series B Convertible Preferred Stock issued in the Private Placement nor the shares of common stock issuable upon
the conversion of the Series B Convertible Preferred Stock have been registered under the Securities Act of 1933, as amended (the
“
Securities Act
”), and may not be offered or sold in the United States absent registration or an applicable
exemption from registration requirements. Pursuant to the terms of the Purchase Agreement the Company agrees, under certain circumstances,
to file a registration statement with the U.S. Securities and Exchange Commission (the “
SEC
”) covering
the resale of the shares of common stock issuable upon the conversion of the Series B Convertible Preferred Stock.
The
Company will use the proceeds from the Private Placement to fund its portion of a capital contribution to its affiliated company,
Carbon California Company, LLC (“
CCC, LLC
”), that will be made in connection with the acquisition of
oil and gas interests in Ventura County, California which is expected to close in May 2018.
Carbon
believes that it has a reasonable basis to believe that the purchaser in the Private Placement is an accredited investor as that
term is defined in the SEC’s Regulation D, adopted under the Securities Act. Accordingly, Carbon claims the exemption from
registration of the offer and sale of the shares under Section 5 of the 1933 Act, under rule 506 of the SEC’s Regulation
D, and also under Section 4(a)(2) of the Securities Act.
The
form of the Purchase Agreement is included as
Exhibit 10.1
to this Current Report on Form 8-K (the “
Current
Report
”).
Item
3.02 – Unregistered Sales of Equity Securities
To
the extent required by Item 3.02 of Form 8-K, the information contained in Item 1.01 and Item 5.03 of this report is incorporated
herein by reference.
Item
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On
April 6, 2018, Carbon filed a Certificate of Designation with the Delaware Secretary of State creating a series of preferred stock
(the “
Series B Convertible Preferred Stock
”), which sets forth the designation, preferences, relative
rights, qualifications, limitations and restrictions of the Series B Convertible Preferred Stock approved by our Board of Directors.
Pursuant to the Delaware General Corporation Law, a certificate of designation amends the Company’s Certificate of Incorporation.
Prior
to the filing of the Certificate of Designation on April 6, 2018, Carbon did not have a designated series of preferred stock.
For
a complete description of the Series B Convertible Preferred Stock, you should refer to the Certificate of Designation filed with
this Current Report as
Exhibit 3.1
.
In
connection with the closing of the Private Placement described in Item 1.01 above, we sold all 50,000 shares of the Series B Convertible
Preferred Stock pursuant to the Purchase Agreement.
The
following summarizes the terms of the Series B Convertible Preferred Stock:
Conversion
The
Series B Convertible Preferred Stock converts into shares of our common stock at the election of the holder of Series B Convertible
Preferred Stock shares and will automatically convert into shares of the Company’s common stock if and when the Company
completes a qualifying equity financing. The number of shares of common stock issuable upon conversion is dependent upon the price
per share of common stock issued in connection with any such qualifying equity financing but has an initial floor conversion price
equal to $8.00 per share. The number of shares of common stock issuable upon conversion is currently determined by dividing the
issue price of the Series B Convertible Preferred Stock ($100.00) by $8.00, which currently results in each share of Series B
Convertible Preferred Stock being convertible into 12.5 shares of common stock. The conversion price will be proportionately increased
or decreased to reflect changes to the outstanding shares of common stock, such as the result of a combination, reclassification,
subdivision, stock split, stock dividend or other similar transaction involving the common stock.
Voting
Each
share of Series B Convertible Preferred Stock will be entitled to the same number of votes of common stock that such share of
Series B Convertible Preferred Stock would represent on an as converted basis. Prior to conversion, except as otherwise provided
by the Delaware General Corporation Law or the Company’s Amended and Restated Certificate of Incorporation, the Series B
Convertible Preferred Stock and common stock will vote together as a single class on all matters to come before the stockholders;
provided, however, that any amendments to the terms of the Series B Convertible Preferred Stock require the approval of the holder
of Series B Convertible Preferred Stock shares and the separate consent of a majority of the disinterested holders of the Company’s
common stock.
Dividends
Each
share of Series B Convertible Preferred Stock is entitled to receive cash dividends of six percent (6%) of the initial issue price
of $100 per share per annum, when and as declared by the Company’s Board of Directors, out of funds legally available therefor.
These dividends are cumulative and accumulate on a daily basis and are payable before any dividends or other distribution is made
with respect to the common stock, however, the shares of Series B Convertible Preferred Stock do not participate in any common
stock dividends.
Liquidation
Prior
to any payment to holders of common stock or any other class or series of stock ranking junior to the Series B Preferred Stock
on liquidation, the holders of the Series B Convertible Preferred Stock then outstanding will receive, an amount equal to $100.00
per share plus all accrued but unpaid dividends. Thereafter, distributions upon a liquidation will be distributed among the holders
of the common stock.
Section
9 - Financial Statements and Exhibits
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits
:
*
Filed herewith
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to
be signed on its behalf by the undersigned, hereunto duly authorized.
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CARBON
NATURAL GAS COMPANY
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April
6, 2018
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/s/
Patrick R. McDonald
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Patrick
R. McDonald,
Chief
Executive Officer
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4
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