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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): October 17,
2018
Torchlight Energy Resources, Inc.
(Exact
name of registrant as specified in its charter)
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Nevada
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001-36247
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74-3237581
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(State or other jurisdiction of
incorporation or organization)
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(Commission File Number)
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(IRS Employer Identification No.)
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5700 W.
Plano Parkway, Suite 3600
Plano, Texas
75093
(Address
of principal executive offices)
Telephone
– (214) 432-8002
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:
☐
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))
Item 1.01 Entry into a Material Definitive Agreement.
On
October 17, 2018, we sold to certain investors in a private
transaction 16% Series C Unsecured Convertible Promissory Notes
with a total principal amount of $6,000,000. Interest and principal
are due and payable on the notes in one balloon payment at maturity
on April 17, 2020. The notes are convertible, at the election of
the holders, into an aggregate 6% working interest in certain oil
and gas leases in Hudspeth County, Texas, known as our
“Orogrande Project.” The notes allow us to redeem them
early only upon the event of a fundamental transaction, such as a
merger or sale of substantially all our assets. The notes provide
that the noteholders may accelerate and declare any and all of the
obligations under the notes to be immediately due and payable in
the event of default, such as nonpayment, failure to perform
required conversions, failure to perform any covenant or agreement
under the notes, an insolvency event, or certain defaults or
judgments.
As part
of the sale of the of the notes, the noteholders required that
McCabe Petroleum Corporation, a Texas corporation owned by our
Chairman Gregory McCabe (“MPC”), provide them a put
option whereby they have the right to have MPC purchase from them
any unpaid principal amount due on the notes. Additionally, if
there is a fundamental transaction, Mr. McCabe will be required to
pay a fee to each noteholder that elects not to convert or require
MPC to purchase the principal amount under the note, which fee will
be equal to such noteholder’s pro-rata share of a total fee
amount of $1,500,000.
We
received total proceeds of $6,000,000 from the sale of the notes,
of which $3,000,000 was used to pay back the promissory note issued
to MPC on December 1, 2017, which note was due on December 31,
2020. We intend to use the remaining proceeds for working capital
and general corporate purposes, which includes, without limitation,
drilling and lease acquisition capital.
Prior
to entering into the above transactions, our Board of Directors
formed a special committee composed of independent directors to
analyze and authorize the transactions on behalf of Torchlight
Energy Resources, Inc. and determine whether the transactions are
fair to the company. In this role, the special committee engaged an
independent financial consulting firm which rendered a fairness
opinion deeming that the transactions were fair to the company,
from a financial point of view, and contained terms no less
favorable to the company than those that could be obtained in
arm’s length transactions.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
Reference is made to the disclosure set forth above under Item 1.01
of this current report, which disclosure is incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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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Torchlight
Energy Resources, Inc.
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Date: October
18, 2018
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By:
/s/ John A.
Brda
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John A.
Brda
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President
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