SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Under Sec.240.14a-12
TIDELANDS OIL & GAS CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] Fee paid previously by written preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form Schedule or Registration Statement No.:
3) Filing Party: Tidelands Oil & Gas Corporation
4) Date Filed: February 28, 2006
Tidelands Oil & Gas Corporation
1848 West Bitters Rd.
San Antonio, TX 78248
PROXY STATEMENT
This proxy statement is being furnished by Tidelands Oil & Gas Corporation (the
"Company") on, or about February 28, 2006 in connection with the solicitation of
a written consent from shareholders, seeking approval by a majority in capital
interest, of a proposed amendment of the company's Certificate of Incorporation
to increase authorized capital stock from 100,000,000 shares to 250,000,000
shares.
As of February 7, 2006, the record date for determining the holders of stock
entitled to notice of the proposed solicitation of written consent, there were
79,495,815 shares (1) of common stock outstanding; constituting all the voting
stock of the Company entitled to vote at any meeting.
The execution of a written consent by the holders of a majority in capital
interest of the outstanding stock of the Company's common stock, viewed as a
single class, is necessary to effectuate shareholders approval by written
consent.
Note 1: This number of shares does not include 1,000,000 shares which are the
subject matter of pending Company litigation.
PERSONS MAKING THE SOLICITATION
This solicitation of proxies is made on behalf of our Board of Directors and the
cost will be borne by the Company. Our directors, officers and employees (none
of whom will receive any compensation in addition to his or her regular
compensation) may solicit written consents from stockholders by mail, telephone,
telegrams, facsimile and other electronic communication, and from personal
interviews. We will reimburse banks, brokers and nominees for their expenses in
forwarding proxy materials and form of written consent to our beneficial owners.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company has approximately 79,495,815 shares of common stock outstanding.
Each share is entitled to one vote on all matters to come before the
shareholders.
The Company will solicit a written consent of shareholders from all shareholders
of the Company, seeking approval of a majority in capital interest of the
Company's outstanding stock for an amendment to the Company's Certificate of
Incorporation to increase authorized Capital Stock from 100,000,000 shares to
250,000,000 shares.
DISSENTERS RIGHTS
Stockholders have no dissenters rights with respect to the matters referred to
in this Proxy Statement.
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE ACTED UPON
The directors and executive officers of the Company do not have any substantial
interest in the matters to be acted upon.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the amount and nature of beneficial ownership of
each of the Executive Officers and Directors of the Company. The information
below is based on 79,495,815 shares issued and outstanding as of February 7,
2006.
(b) Security Ownership of Management. Based on 79,495,815 shares as set forth
in
(a) above as of February 7, 2006.
Table 2.
Title of Class Name and Address Amount and Nature Percent of Class
Common Michael Ward 8,317,038 10.46%
1862 W. Bitters Rd.
San Antonio, TX 78248
Common James B. Smith(1) 1,590,000 1.93%
309 Wollschlaegar
Boerne, TX
Common Ahmed Karim 652,513 0.82%
1532 Woods Dr.
N. Vancouver, B.C.
Canada V7R 1A9
Common Robert W. Dowies 140,000 0.176%
1862 W. Bitters Rd.
San Antonio, TX 78248
Common Carl Hessel (2) 4,442,221 5.58%
c/o Margaux Investment
Management Group, S.A.
9 Rue de Commerce
CH 1211 Geneva 11
Switzerland
Total 15,141,772 19.04%
Notes:
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(1) Includes 500,000 shares in the name of Aigle Partners, Ltd. in which Mr.
Smith has a partnership interest and 500,000 shares in the name of du Midi
Trust, in which Mr. Smith has a beneficial interest.
(2) Mr. Hessel is a partner in Margaux Investment Management Group, S.A. Mr.
Hessel also exercises voting and dispositive control over the Margaux securities
and as such beneficial ownership reflects 2,000,000 common stock warrants owned
by Margaux, 1,988,889 shares owned by Margaux and 453,332 shares owned
personally by Mr. Hessel.
PROPOSAL 1
PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
On January 20, our Board of Directors adopted, subject to stockholder approval,
an amendment to our Certificate of Incorporation to increase the total
authorized shares from 100,000,000 shares to 250,000,000 shares. Such increase
would be effectuated by amending current Article III of the Certificate of
Incorporation of the Company to read as follows:
"Article III: The total number of shares of stock which this corporation shall
have authority to issue is 250,000,000 shares of common stock, par value $0.001
per share."
The additional shares of common stock for which authorization is sought herein
would be part of the existing class of common stock and, if and when issued,
would have the same rights and privileges as the shares of common stock
presently outstanding.
As of January 20, 2006, 79,495,815 shares of Common stock were issued and
outstanding.
On January 20, 2006, the Company entered into a series of Securities Purchase
and related agreements ("Purchase Agreements") with seven purchasers. The
Purchase Agreements require the reservation of additional common stock. The
required reservation presently exceeds our authorized common stock
capitalization. Presently, we have reserved approximately 1,225,237 shares for
general corporate purposes, 9,278,948 shares reserved for outstanding warrant
exercises and 9,000,000 reserved for the Purchase Agreement referred to above.
If all of the Purchase Agreements' debentures were converted to common stock and
all the Series A and B common stock warrants were exercised, we would need
17,660,525 common shares. After giving effect to the 9,000,000 shares that we
reserved for the Purchase Agreements and assuming all the debentures are
converted and warrants exercised, we would need an additional 8,660,525 common
shares. Therefore, we need to increase our authorized common stock capital.
PURPOSES AND EFFECTS OF THE AUTHORIZED SHARES AMENDMENT
On January 20, 2006, the Company entered into a series of Securities Purchase
and related agreements ("Purchase Agreements") with seven purchasers. We
reported the securities purchase transactions in a Current Report on Form 8-K
filed on January 24, 2006. We sold $6,569,750 Dollars, in the aggregate
principal amount, of discounted convertible debentures ("Debentures") and Series
A and Series B Warrants to purchase common stock ("Warrants") for an aggregate
payment of $5,396,098 after deduction for the interest discount. The Debenture
Holder have the right to convert all or part of the Debenture face amount into
shares of Tidelands common stock at any time at an initial conversion rate of
$0.87 per share. Additionally, we granted the Purchasers Series A Common Stock
Purchase Warrants to purchase 2,557,661 common shares at $0.935 per share and
Series B Common Stock Purchase Warrants to purchase 7,551,432 common shares at
$1.275 per share.
At the time of the sale, we disclosed that we had insufficient authorized common
stock to perform the potential debenture conversions and warrant exercises. The
Stock Purchase Agreements and related transaction documents require that we
increase our authorized common stock capital. We have reserved 9,000,000 common
shares of our unissued authorized common stock capital for this transaction.
The Company's directors are required to take this action to comply with the
Stock Purchase Agreements. We are increasing the capital beyond the levels
required for compliance with the Stock Purchase Agreements because the directors
believe that it is desirable to have additional authorized shares of common
stock available for other possible future financings, possible future
acquisition transactions, stock dividends, stock splits and other general
corporate purposes.
The Company's directors believe that having such additional authorized shares of
common stock available for issuance in the future should give the Company
greater flexibility and may allow such shares to be issued without the expense
and delay of a special shareholders' meeting.
Although such issuance of additional shares with respect to future financings
and acquisitions would dilute existing shareholders, management believes that
such transactions would increase the value of the Company to its shareholders.
The Board of Directors does not intend to issue any common stock or securities
convertible into common stock except on terms that the Board of Directors deems
to be in best the interest of the Company and its stockholders. Other than our
agreements with other groups as disclosed in our SEC Periodic Reports and the
Stock Purchase Agreements referenced above, we have no arrangements, agreements,
or understandings in place at the present time for the issuance or use of the
additional shares of common stock to be authorized by the proposed amendment to
the Certificate of Incorporation.
Although an increase in the authorized shares of common stock could, under
certain circumstances, have an anti-takeover effect, this proposal to amend the
Certificate of Incorporation is not in response to any effort of which we are
aware to accumulate our stock or obtain control of the Company, nor is it part
of a plan by management to recommend a series of similar amendments to the Board
of Directors and stockholders.
There are certain advantages and disadvantages of voting for an increase in the
Company's authorized common stock. The advantages include:
- The ability to comply with the Securities Purchase Agreements which resulted
in our receipt of $5,396,098.
- The ability to raise more capital by issuing capital stock in other future
financing transactions.
- To have shares of common stock available to pursue business expansion
opportunities, related to our gas pipeline and related operations.
The disadvantages include:
- Failure to increase our authorized common stock capital would result in
material breach of the Stock Purchase and related transaction documents.
- Dilution to the existing shareholders, including a decrease in our net income
per share in future periods. This could cause the market price of our stock to
decline.
- The issuance of authorized but un-issued stock could be used to deter a
potential takeover of the Company that may otherwise be beneficial to
shareholders by diluting the shares held by a potential suitor or issuing shares
to a shareholder that will vote in accordance with the desires of the Company's
Board of Directors, at that time.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
AMENDMENT OF THE CERTIFICATE OF INCORPORATION VOTING PROCEDURES
Management plans to solicit the majority Shareholders Written Consent from such
Shareholders to amend the Certificate of Incorporation to increase authorized
capital stock from 100,000,000 shares to 250,000,000 shares.
FORM OF WRITTEN CONSENT
Attached hereto as Exhibit A is the form of Written Consent of Shareholders
proposed to be used by the Board of Directors to solicit written consent from
the shareholders of the Company.
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS
If one annual report or information statement is being delivered to two or more
security holders who share an address, furnish the following information in
accordance with Sec.240.14a-3(e)(1):
(a) Only one annual report or information statement, as applicable, is being
delivered to multiple security holders sharing an address, unless the Company
has received contrary instructions from one or more of the security holders;
(b) The Company undertakes to deliver promptly upon written or oral request a
separate copy of this Schedule 14A Information Statement, to a security holder
at a shared address to which a single copy of the documents was delivered. A
security holder may notify the Company that the security holder wishes to
receive a separate copy of this Proxy by calling telephone (210)764-8642, or
sending a written request to the Company at 1848 West Biters Rd., San Antonio,
TX 78248, Attention: Michael Ward, Chief Executive Officer.
(c) The above phone number and mailing address can be used by a security holder
to notify the Company that the security holder wishes to receive a separate
annual report or proxy statement, as applicable, in the future;
(d) Security holders sharing an address can request delivery of a single copy of
annual reports or information statements if they are receiving multiple copies
of annual reports or information statements, by notification to the above
telephone or address.
EXHIBITS
A. Form of Written Consent of Shareholders Approving Increase in Authorized
Shares.
B: Letter to Shareholders Regarding: Written Consent of Shareholders Notice
By Order of the Board of Directors
/s/Michael Ward
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Michael Ward
Director
Dated: February 28, 2006
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EXHIBIT A
TIDELANDS OIL & GAS CORPORATION
WRITTEN CONSENT OF THE SHAREHOLDERS
APPROVING INCREASE IN AUTHORIZED SHARES
The undersigned shareholders of record of the above-named corporation, a Nevada
corporation, whose shares represent a majority of the outstanding shares of the
corporation, pursuant to Nevada Revised Statutes Section 78.320, hereby adopt by
action by Written Consent, the following resolutions, effective as of April 17,
2006:
WHEREAS, the authorized number of shares of this corporation is 100,000,000
shares, of which 79,495,815 shares of capital stock are issued and outstanding;
and
WHEREAS, the Directors of this corporation, in consultation with the officers of
this corporation, have given serious consideration to changing the number of
authorized shares of the common stock of this corporation to 250,000,000; AND
WHEREAS, to effectuate said changes, "Article III" of the Certificate of
Incorporation of this corporation must be amended;
NOW, THEREFORE BE IT RESOLVED, that Article III of the Certificate of
Incorporation shall be amended to read in full as follows:
"Article III: The total number of shares of stock which this corporation shall
have authority to issue is 250,000,000 shares of common stock, par value $0.001
per share."
RESOLVED FURTHER, that this amendment of the Certificate of Incorporation is
hereby approved.
RESOLVED FURTHER, that a Certificate of Amendment be executed and verified by
the President and Secretary of the corporation and filed in the office of the
Nevada Secretary of State, and elsewhere as required; and
RESOLVED FURTHER, that the officers of this corporation be, and they hereby are,
authorized and directed to do or cause to be done all such acts and things, and
to execute and file all documents and certificates as they may deem necessary
and proper in order to effect the above amendment to the corporation's
Certificate of Incorporation.
Shareholders:
Name: ___________________________________
Print Clearly
Signature: ______________________________
Date: ___________________________________
No. Of Shares: _________
Percent of
Outstanding
Stock: _________
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EXHIBIT B
{Letterhead}
Tidelands Oil & Gas Corporation
WRITTEN CONSENT OF SHAREHOLDERS NOTICE
Dear Stockholder:
You are encouraged to the read the enclosed Schedule 14A Definitive Proxy
Statement filed with the SEC on February 28, 2006, as it is requesting your
written consent to amend our Certificate of Incorporation.
As stated in the enclosed Schedule 14A:
"..On January 20, 2006, our Board of Directors adopted, subject to stockholder
approval, an amendment to our Certificate of Incorporation to increase the total
authorized shares from 100,000,000 Shares to 250,000,000 Shares. Such increase
would be effectuated by amending current Article III of the Certificate of
Incorporation of the Company to read as follows..."
You are being provided a Consent form with instructions for various ways to
provide us with your approval.
The required response date is on, or before April 17, 2006. This means that we
need to be in physical receipt of your vote on, or before April 17, 2006. Your
consideration in this matter is greatly appreciated.
Sincerely,
/s/Michael Ward
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Michael Ward
Chief Executive Officer