Our company, Discovery Energy Corp., was incorporated under the laws of the
state of Nevada on May 24, 2006 under the name "Santos Resource Corp."
Our current business plan is to explore for and produce oil and gas from a tract
of land (the “Prospect”) covered by Petroleum Exploration License
(PEL) 512 (the “License”) in the State of South Australia. We adopted
this business plan near the end of our fiscal 2012, after having previously
abandoned our initial business plan involving mining claims in Quebec, Canada
and after we had been dormant from a business perspective for a period of time.
In connection with the adoption of our current business plan, we had a change
in control of our company, a change in our management, a change in our corporate
name, and a change of our status from a “shell” company, as that
term is defined in Rule 405 of the Securities Act of 1933 and Rule 12b-2 under
the Securities Exchange Act of 1934.
The completion of a significant debt financing (the “Debenture Financing”)
– The Debenture Financing is discussed in the section captioned “Debenture
Financing” below.
The completion of our 3D seismic survey that was comprised of an approximately
179 square kilometers area on the southwest portion of the Prospect and that
was funded with a large portion of the proceeds from the Debenture Financing
(the “Nike 3D Seismic Survey”).
The retirement of all of our theretofore outstanding indebtedness, including
all amounts owed to Liberty Petroleum Corporation (“Liberty”) for
is allowing us to be issued the License in place of Liberty, and all amounts
owed on loans made by management.
The acquisition of a portion of a 7.0% royalty interest relating to and burdening
the Prospect (the portion acquired gives to us a 2.9% royalty interest, while
the previous holders of the 7.0% interest continue to hold a 4.1% royalty interest).
General. Beginning in May 2016 and since then, we have completed a series of
placements of our Senior Secured Convertible Debenture due May 27, 2021 (singly
a “Debenture” and collectively the “Debentures”). The
Debentures were issued pursuant to a securities purchase agreement (the “Securities
Agreement”) dated May 27, 2016 and related documentation. The Securities
Agreement has since been amended twice. Pursuant to the Securities Agreement,
we have issued through May 29, 2017 the following securities pursuant to the
Debenture Financing:
Debentures having an aggregate original principal amount of $5,437,500, and
warrants (the “Warrants”) to purchase up to a maximum of 17,625,000
shares (prior to any required adjustment) of our common stock (singly a “Common
Share” and collectively the “Common Shares”) at an initial
per-share exercise price of $0.20.
The first closing of the Debenture placement involved the issuance to a single
investor (the “Original Investor”) of a Debenture having an original
principal amount of $3,500,000. Subsequent to this first closing, we have conducted
four additional closings of additional Debenture issuances to the Original Investor
or an additional investor (the “New Investor”) or both. The Original
Investor has received all of the Warrants heretofore issued.
The proceeds from the Debenture placements have generally been used to fund
the Nike 3D Seismic Survey, the interpretation of it, and the payment of Company’s
expenses associated with it. Some of these proceeds have been used for the payment
of our and the Debenture holders’ costs of the transaction (including
legal fees), general and administrative expenses, the retirement of all of our
theretofore outstanding indebtedness (including all amounts owed to Liberty
for allowing us to be issued the License in place of Liberty, and all amounts
owed on loans made by management), and the acquisition of a 2.9% royalty interest
relating to and burdening the Prospect.
%
2.04%