| SUBSEQUENT EVENTS |
NOTE
11: SUBSEQUENT EVENTS
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(i) |
On
April 12, 2018, the Board of Directors approved (a) the entry by the Company into a $500,000 Convertible Promissory Note with
Blue Sky International Holdings Inc. The note, effective April 1, 2018, is due on April 1, 2019, accrues interest at the rate
of 11% per annum until paid in full, and is convertible into shares of common stock of the Company at the rate of $0.12 per
share; and (b) the entry into an Amended Revolving Line of Credit Agreement with Jovian Petroleum Corporation, a related party,
which establishes a revolving line of credit in the amount of $500,000 for a period of six months (through August 9, 2018)
with amounts borrowed thereunder due at the expiration of the line of credit and accruing interest at the rate of 3.5% per
annum unless there is a default thereunder at which time amounts outstanding accrue interest at the rate of 7.5% per annum
until paid in full, with such interest payable every 90 days. |
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(ii) |
On
April 18, 2018, a Separation and Release Agreement between the former President of the Company, James Burns and the Company
became effective whereby Mr. Burns ceased to be an employee of the Company. Pursuant to the terms of the agreement, the Company
will pay Mr. Burns $33,000, issue 3,000,000 warrants at an exercise price of $0.10 per share and also issue 2,000,000 shares
of restricted common stock of the Company, which it satisfied on May 14th, 2018. The warrants were granted at fair
value using a Black Scholes model for $266,971 and the restricted shares were valued at the closing price of Petrolia’s
stock, for $180,000. |
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(iii) |
On
April 20, 2018, the Company entered into an agreement to offer the position of Chairman of the Board to James Burns. Mr. Burns
accepted and became Chairman of the Board effective May 1, 2018. Pursuant to the terms of the offer, Mr. Burns will be paid
an annual salary of $65,000 and up to $25,000 in health benefits for Mr. Burns and his family. The Company will issue 500,000
shares of restricted common stock, which it satisfied on May 14th, 2018. An additional 500,000 shares of restricted
common stock will be issued upon a successful listing of the Company on the NASDAQ or NYSE exchanges. Mr. Burns will also
be granted fully vested 2,000,000 warrants exercisable at $0.10 per share expiring in 36 months. Warrants were granted at
fair value using a Black Scholes model for $177,982 and the restricted shares were valued at the closing price of Petrolia
on the date of the agreement for $45,000. |
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(iv) |
On
April 26, 2018, the Company issued 200,000 shares of common stock as a bonus to a vendor valued at $14,000 based on the closing
price of $0.07 per share. |
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(v) |
A
warrant holder exercised his 500,000 warrants at a strike price of $0.10 for gross proceeds of $50,000. |
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(vi) |
On
May 9, 2018, Bow Energy Ltd. (“Bow”), Petrolia Energy Corporation’s (the “Company’s”)
wholly-owned subsidiary, entered into an Amended and Restated Loan Agreement with a third party (the “Loan Agreement”
and the “Lender”). The Loan Agreement increased by $800,000 the amount of a previous loan agreement entered
into between Bow and the Lender, to $1,530,000. The amount owed under the Loan Agreement ($1,530,000) accrues interest at
the rate of 12% per annum (19% upon the occurrence of an event of default) and is due and payable on May 11, 2021, provided
that the amount owed can be prepaid prior to maturity, beginning 60 days after the date of the Loan Agreement, provided that
the Company give the Lender 10 days’ notice of our intent to repay and pay the Lender the interest which would have
been due through the maturity date at the time of repayment. The Company is also required to make a payment of principal and
interest in the amount of $50,818 per month towards the amount owed beginning on July 15, 2018. The Loan Agreement contains
standard and customary events of default, including cross defaults under other indebtedness obligations of us and Bow, and
the occurrence of any event which would have a material adverse effect on us or Bow. |
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The
additional $800,000 borrowed in connection with the entry into the Loan Agreement can only be used by the Company for a future
acquisition of oil and gas properties, which the Company is currently in discussions regarding, and will be secured by such
assets, when/if the transaction closes. In the event the acquisition (or another mutually agreed upon acquisition), for any
reason does not close, the $800,000 in additional funds are anticipated to be immediately repaid to the Lender. |
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In
order to induce the Lender to enter into the Loan Agreement, the Company agreed to issue the Lender 500,000 shares of restricted
common stock (the “Loan Shares”), which were issued on May 18, 2018, and warrants to purchase 2,320,000
shares of common stock (the “Loan Warrants”), of which warrants to purchase (a) 320,000 shares of common
stock have an exercise price of $0.10 per share in Canadian dollars, and expire on the date the Loan Agreement has been repaid;
(b) 500,000 shares of common stock have an exercise price of $0.12 per share in U.S. dollars, and expires on May 15, 2021;
and (c) 1,500,000 shares of common stock have an exercise price of $0.10 per share in U.S. dollars and expire on May 15, 2020. |
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(vii) |
On
June 8, 2018, the Company issued a note receivable of CAD $406,181 or $314,912 to Blue Sky Resources Ltd. This note shall
bear nine percent simple interest per annum commencing as of August 1st, 2018. The note matures on November 30,
2018. |
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(viii) |
On
May 22, 2018, 500,000 shares of common stock were issued to an officer as part of his compensation package. |
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(ix) |
The
Company closed a private placement at $0.12 per share for a total of 833,334 units for total gross proceeds of $100,000. |
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