Current Report Filing (8-k)
May 01 2018 - 8:02AM
Edgar (US Regulatory)
UNITED STATES
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): April 19, 2018
Petrolia Energy Corporation
(Exact name of registrant as specified
in its charter)
Texas
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000-52690
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86-1061005
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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710 N. Post Oak Rd., Ste. 512, Houston, Texas
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77024
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number,
including area code:
832-941-0011
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:
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Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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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-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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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 13(a) of the Exchange Act.
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Item 1.01 Entry into a Material
Definitive Agreement.
On April 19, 2018, Petrolia
Energy Corporation (the “
Company
”) entered into a Separation and Release Agreement with James E. Burns, its
then President (the “
Separation Agreement
”). Pursuant to the Separation Agreement, Mr. Burns and the Company
agreed:
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(a)
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that Mr. Burns would resign as President of the Company, effective
May 1, 2018;
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(b)
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that the Company would pay Mr. Burns $33,000 in cash, issue him a
warrant to purchase 3,000,000 shares of common stock (the “
Separation Warrants
” (which have a term of three
years and an exercise price of $0.10 per share)) and issue him 2,000,000 shares of restricted common stock (the “
Separation
Shares
”);
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(c)
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that Mr. Burns would release the Company from any further obligations
under his prior employment agreement and release the Company from any other liabilities or claims; and
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(d)
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that Mr. Burns would refrain from using the Company’s confidential
information, pursuant to the terms of the Separation Agreement.
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The description of the
Separation Agreement and warrants described above is qualified in all respects by the actual terms, conditions and provisions of
the Separation Agreement and Warrant to Purchase Common Stock, which are filed herewith as
Exhibits 10.1 and 10.3
, and incorporated
by reference into this Item 1.01.
Item 3.02 Unregistered Sales of Equity Securities.
We claim an exemption from
registration pursuant to Section 4(a)(2) and/or Rule 506(b) of Regulation D of the Securities Act of 1933, as amended (the “
Securities
Act
”), and the rules and regulations promulgated thereunder in connection with the issuance and grant of the Separation
Warrants and Separation Shares, described above, and the Letter Warrants and Letter Shares, described below, since the foregoing
issuances and grants did not involve a public offering, the recipient was (a) an “
accredited investor
”, and/or
(b) had access to similar documentation and information as would be required in a Registration Statement under the Securities Act.
With respect to the transaction described above, no general solicitation was made either by us or by any person acting on our behalf.
The transaction was privately negotiated, and did not involve any kind of public solicitation. No underwriters or agents were involved
in the foregoing issuance and we paid no underwriting discounts or commissions.
Item 5.02 Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory
Effective on May 1, 2018,
the Board of Directors of the Company (a) appointed Zel C. Khan (the current Chief Executive Officer and Director of the Company)
as President of the Company; and (b) appointed James E. Burns, the Company’s President prior to May 1, 2018, as Chairman
of the Board of Directors of the Company.
On April 26, 2018, and
effective May 1, 2018, the Company entered into a letter agreement with Mr. Burns dated April 20, 2018, pursuant to which, he agreed
to serve as Chairman of the Company and the Company agreed to pay him (a) $500 per month as an automobile allowance, (b) up to
$25,000 per year for he and his family’s health insurance, (c) $65,000 per year for compensation as Chairman (provided that
such compensation is accrued until the Company has sufficient available capital to pay such amounts in cash and Mr. Burns is to
receive 1-for-1 warrant coverage, with a $0.10 per share exercise price, for all accrued salary, issuable at the end of each calendar
quarter), (d) 500,000 shares of the Company’s restricted common stock (the “
Letter Shares
”), (e) warrants
to purchase 2,000,000 shares of the Company’s common stock, vesting at the rate of 750,000 of such warrants per quarter,
upon completing and filing of each of the following four periodic filings with the Securities and Exchange Commission, having a
term of 36 months, and an exercise price of $0.10 per share (the “
Letter Warrants
”), and (f) the right to earn
bonuses as approved by the Board of Directors in its discretion from time to time. The letter agreement has a term through April
30, 2019, provided that Mr. Burn’s position as Chairman and/or director can be terminated at any time if he is not re-nominated
to serve as Chairman/director, at which time the Company is required to pay the compensation due to Mr. Burns pursuant to the terms
of the agreement for the lesser of three months and until the end of the term.
The description of the
letter agreement and warrants described herein is qualified in all respects by the actual terms, conditions and provisions of the
letter agreement and Warrant to Purchase Common Stock, which are filed herewith as
Exhibits 10.2 and 10.3
, and incorporated
by reference into this Item 1.01.
Item 8.01 Other Events
On May 1, 2018, the
Company released a press release disclosing the items described in Item 1.01 and 5.02 above, a copy of which is furnished herewith
as
Exhibit 99.1
.
Item 9.01 Financial Statements and Exhibits
(d)
Exhibits
Exhibit No.
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Description
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10.1*
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Separation and Release Agreement dated April 19, 2018, by and between James E. Burns and Petrolia Energy Corporation
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10.2*
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Chairman Offer Letter dated April 20, 2018, by and between James E. Burns and Petrolia Energy Corporation
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10.3*
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Warrant to Purchase Common Stock, evidencing warrants to purchase 5,000,000 shares of common stock granted to James E. Burns on April 19, 2018
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99.1**
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Press Release dated May 1, 2018
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* Filed herewith.
** Furnished herewith.
SIGNATURES
Pursuant 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.
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Petrolia Energy Corporation
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/s/ Tariq Chaudhary
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Tariq Chaudhary
CFO
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Date: May 1,
2018
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EXHIBIT INDEX
* Filed herewith.
** Furnished herewith.
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