U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: June 27, 2005
TIDELANDS OIL & GAS CORPORATION
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(Exact Name of registrant as specified in its Charter)
Nevada 0-29613 66-0549380
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State of Incorporation Commission File No. I.R.S. Employer
Identification No.
1862 West Bitters Rd. San Antonio, TX 78248
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, ( 210 ) 764 - 8642
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(Registrant's former name and address)
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 below:
[_] 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 (17CFR 240-14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240-13e-4(c))
Item 3.02 Unregistered Sales of Equity Securities
ISSUANCE OF COMMON SHARES TO MEMBERS OF OUR BOARD OF DIRECTORS
On June 27, 2005, our board of directors authorized the issuance of
450,000 common shares to the members of our board of directors as compensation.
We will issue a total of 150,000 shares each to Michael Ward, Ahmed Karim and
Carl Hessel.We valued these restricted securities at Sixty-five ($0.65) Cents
per share.
We believe these transactions are exempt under Section 4(2) of the
Securities Act of 1933, as amended. These are restricted securities under Rule
144 and may not be publicly resold unless registered for resale pursuant to an
effective registration statement or exempt from the registration requirements of
Securities Act of 1933.
Item 5.02 Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers
A. Officer Resignation:
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On June 27, 2005, Ahmed Karim, a Vice President and Director of our
company resigned his position as Vice President. Mr. Karim will remain a member
of our board of directors.
B. Director Vacancy Nomination:
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On June 27, 2005, our board of directors nominated James B. Smith, our
Sr. Vice President and Chief Financial Officer, to become a member of our board
of directors filling a vacancy on the board. The board authorized the issuance
of 150,000 common shares under our 2004 Non-Qualified Stock Grant and Option
Plan which was registered on Form S-8 November 5, 2004. The shares were valued
at $1.3275 per share. This share price was computed using the average of the
closing high bid and ask price of our common stock on June 28, 2005, as quoted
on the NASD Electronic Bulletin Board. On August 16, 2003, we employed James B.
Smith to act as an Senior Vice President and Chief Financial Officer.
(1) Smith's Professional Background
Mr. Smith received a Bachelor of Science from Texas A&M University and
a Master of Professional accounting degree from the McCombs School of Business
at the University of Texas, Austin. He is licensed as a Certified Public
Accountant in Texas and Colorado. From 1996 through 2001, he directed the
financial affairs and tax planning for several closely held corporations engaged
in land development in Colorado. From 2000 through 2003, he served as Chief
Financial Officer for Starr Produce Company, a major produce company with
significant subsidiaries in real estate development and agri-business.
(2) Smith's Current Employment Agreement
Under the terms of Mr. Smith's present employment agreement, which
commenced October 1, 2004, he was employed as the Company's Senior Vice
President and Chief Financial Officer for a term of four (4) years. His base
annual salary is $168,000. The annual salary may be increased from year to year,
as determined by our board of directors acting as the Compensation Committee, by
at least the Consumer Price Index. As additional compensation, Mr. Smith is
entitled to an annual stock grant of Five Hundred Thousand(500,000) shares.
Stock grant dates are October 1 during the four year term. The first year stock
grant was paid October 1, 2004. As incentive compensation, Mr. Smith will be
entitled to additional compensation equal to two percent of our net profits and
one percent of the increase in sales over a previous year's sales, effective
October 1, 2004. Mr. Smith is entitled to all employee benefits as provided by
the Company. He is entitled to four weeks paid vacation and an annual automobile
allowance of $12,000.
(3) Company Transactions with Smith
On August 16, 2003, we granted Mr. Smith an option to purchase 500,000
common shares at a price of $0.22 Cents per share. On September 14, 2004, Mr.
Smith exercised this common stock option to purchase 500,000 common shares for
$110,000 payable on a promissory note bearing interest at the rate of 5% payable
in full on, or before September 14, 2005. The shares are subject to a security
agreement. On September 2, 2003, we issued Mr. Smith 13,200 common shares to Mr.
Smith valued at $6,667 as compensation. On January 8, 2004, we issued Mr. Smith
52,800 shares valued at $90,816 as compensation. On November 9, 2004, we issued
500,000 common shares to Mr. Smith as his annual stock grant under the terms of
his employment agreement. The stock grant transaction was valued at $151,000. A
summary of Mr. Smith's annual compensation is summarized in our Annual Report
filed on Form 10-KSB filed on April 14, 2005.
Item 8.01 Other Events
MERCATOR PARTIAL DEBENTURE CONVERSION
On June 27, 2005, Mercator Momentum Fund, L.P., Mercator Momentum Fund
III, L.P. and Monarch Pointe Fund, Ltd. (the "Funds") notified us of their
intent to collectively convert $1,000,000 of their 7% Debentures into common
stock as follows:
o Mercator Momentum Fund converted $250,000 Dollars of 7%
Convertible Debentures into 328,947 common shares at the
"Ceiling Price" of $0.76 per share. The principal balance of
the Debenture after this partial debenture conversion is
$513,000 Dollars.
o Mercator Momentum Fund III converted $175,000 Dollars of 7%
Convertible Debentures into 230,263 common shares at the
"Ceiling Price" of $0.76 per share. The principal balance of
the Debenture after this partial debenture conversion is
$338,900 Dollars.
o Monarch Point Fund converted $575,000 Dollars of 7%
Convertible Debentures into 756,579 common shares at the
"Ceiling Price" of $0.76 per share. The principal balance of
the Debenture after this partial debenture conversion is
$1,128,100 Dollars. Accrued interest on this Debenture is
$11,299.79.
On June 28, 2005, we issued these common shares to the Funds.
These shares were included in our registration statement filed on Form
SB-2 which was declared effective by the Securities & Exchange Commission on May
27, 2005.
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.
TIDELANDS OIL & GAS CORPORATION
Dated: June 28, 2005
/s/ Michael Ward
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By: Michael Ward
Title: President