Item 1.01. Entry into a Material Definitive Agreement
On September 18, 2019, Houston American Energy Corp. (the "Company") entered
into Bridge Loan Agreements (the "Bridge Loan Agreement") with the Company's
Chief Executive Officer and principal shareholder pursuant to which the Company
issued promissory notes (the "Bridge Loan Notes") in the principal amount of
$621,052 and warrants (the "Warrants") to purchase common stock. The aggregate
consideration received by the Company for the Bridge Loan Notes and Warrants was
Bridge Loan Notes
The Bridge Loan Notes are unsecured obligations bearing interest at 12.0% per
annum and payable interest only on the last day of each calendar month with any
unpaid principal and accrued interest being payable in full in 120 calendar
The Bridge Loan Notes are subject to mandatory prepayment from and to the extent
of (i) 100% of net proceeds received by the Company from any sales, for cash, of
equity or debt securities (other than Bridge Loan Notes) of the Company, (ii)
100% of net proceeds received by the Company from the sale of assets (other than
sales in the ordinary course of business); and (iii) 75% of net proceeds
received from the sale of oil and gas produced from the Company's Hockley
County, Texas properties. Additionally, the Company has the option to prepay the
Bridge Loan Notes, at its sole election, without penalty.
The Warrants are exercisable for a period of ten years to purchase shares of
common stock at $0.197 per share and subject to standard adjustments to reflect
stock splits, reverse stock splits and stock dividends.
Each Warrant evidences a right to purchase two shares of common stock for each
dollar of consideration paid for Bridge Loan Notes, or an aggregate of 1,180,000
The foregoing is qualified in its entirety by reference to the forms of Bridge
Loan Agreement, Bridge Loan Note and Warrant filed herewith as Exhibits 10.1,
10.2 and 10.3.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant
The information relating to the Bridge Loan Agreement and Bridge Loan Notes
included in Item 1.01 of this Form 8-K is incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities
See Item 1.01 above regarding the sale of Bridge Loan Notes and Warrants.
Proceeds from the sale of the Bridge Loan Notes will be used to pay for the
acquisition of a 20% working interest in 5,871 gross acres in the Northern Shelf
of the Permian Basin.
The Bridge Loan Notes and Warrants were offered and sold in a private placement
transaction (the "Offering") pursuant to the exemption from registration
provided by Section 4(a)(2) of the Securities Act of 1933 (the "Securities Act")
and Rule 506(b) promulgated thereunder. Each of the investors is an affiliate of
the Company and represented that it is an "accredited investor", as defined in
Rule 501 promulgated under the Securities Act.
No placement agents, underwriters or finders participated in the Offering and no
commissions or similar fees were paid in connection with the Offering.
This Current Report on Form 8-K does not constitute an offer to sell or the
solicitation of an offer to buy any securities. At the time of their issuance,
the Bridge Loan Notes, the Warrants and the shares of Common Stock issuable upon
exercise of the Warrants have not been registered under the Securities Act, or
any applicable state securities laws and may not be offered or sold in the
United States, absent registration or an applicable exemption from such
Pursuant to the Warrant, the Company granted certain "piggyback" registration
rights" to the Warrant holders.
Item 7.01. Regulation FD Disclosure.
Houston American Energy Corp. (the "Company") issued a press release on
September 20, 2019 announcing financing and completion of the acquisition of
additional acreage in the Permian Basin. The press release is attached to this
Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein solely for
purposes of this Item 7.01.
In accordance with General Instruction B.2 of Form 8-K, the information set
forth in this Item 7.01, including Exhibit 99.1, is furnished pursuant to Item
7.01 and shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
subject to the liabilities under that section, nor shall such information be
deemed incorporated by reference in any filing under the Securities Act of 1933,
as amended, or the Exchange Act, except as shall be expressly set forth by
specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
10.1 Form of 2019 Bridge Loan Agreement
10.2 Form of 2019 Bridge Loan Note
10.3 Form of 2019 Warrant
99.1 Press release, dated September 20, 2019
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