UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/A
|
x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For the fiscal
year ended December 31, 2008
or
|
|
o
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
|
For
the transition period from
__________to_________
|
Commission
file number: 001-32997
Petro
Resources Corporation
(Name of
registrant as specified in its charter)
|
DELAWARE
|
86-0879278
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
777
Post Oak Boulevard, Suite 910, Houston, Texas 77056
(Address
of principal executive offices, including zip code)
Registrant’s
telephone number including area code: (832) 369-6986
Securities
registered under Section 12(b) of the Act:
|
Title
of each class
|
Name
of each exchange on which registered
|
|
$0.01
par value
Common
Stock
|
NYSE
Amex
|
Securities
registered under Section 12(g) of the Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes
o
No
x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act. Yes
o
No
x
Indicate
by check mark if the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes
x
No
o
Indicate by check mark if disclosure of
delinquent filers in response to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of the
registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company (as
defined in Rule 12b-2 of the Act):
Large
accelerated filer __ Accelerated filer
__
Non-accelerated
filer __ Smaller reporting
company
x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act) Yes
o
No
x
State the
aggregate market value of voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter: $27,075,429.
As of
March 31, 2009, 36,788,172 shares of the registrant’s common stock were issued
and outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
None.
EXPLANATORY NOTE:
Petro
Resources Corporation, a Delaware corporation, is amending its Annual Report on
Form 10-K for the fiscal year ended December 31, 2008, as originally filed with
the Securities and Exchange Commission on March 31, 2009, for purposes of
providing the information required by Part III of Form 10-K, as such information
will not be incorporated by reference to a proxy statement for the company’s
2009 Annual Meeting of Stockholders filed with the Securities and Exchange
Commission within 120 days after December 31, 2008. This
amendment does not include items from the original Form 10-K that are not being
hereby amended.
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Item
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Page
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PART
III
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10.
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Directors,
Executive Officers and Corporate Governance
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1
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11.
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Executive
Compensation
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4
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|
12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
7
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13.
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Certain
Relationships and Related Transactions, and Director
Independence
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8
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14.
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Principal
Accountant Fees and Services
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9
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15.
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Exhibits
and Financial Statement Schedules
|
10
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PART
III
Item
10.
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The names
of our executive officers and directors and their ages, titles and biographies
as of April 28, 2009 are set forth below:
|
|
|
|
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Wayne
P. Hall
|
|
61
|
|
Chairman
of the Board of Directors and Chief Executive Officer
|
|
Donald
L. Kirkendall
|
|
52
|
|
President
and Director
|
|
Harry
Lee Stout
|
|
61
|
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Executive
Vice President, Chief Financial Officer and General
Counsel
|
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Allen
R. McGee
|
|
59
|
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Chief
Accounting Officer
|
|
James
W. Denny, III
|
|
61
|
|
Executive
Vice President and Chief Operating Officer
|
|
J.
Raleigh Bailes, Sr.
|
|
60
|
|
Director
|
|
Brad
Bynum
|
|
39
|
|
Director
|
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Gary
L. Hall
|
|
59
|
|
Director
|
|
Joe
L. McClaugherty
|
|
57
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|
Director
|
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Steven
A. Pfeifer
|
|
46
|
|
Director
|
Mr. Wayne
Hall has served as our chief executive officer and as a member of our board of
directors since April 1, 2005, and also served as our president from April
1, 2005 to October 13, 2006. Between January 2004 and April 2005, Mr. Hall
managed his family investments in securities and oil and gas interests. From
January 2002 until January 2004, Mr. Hall served as senior advisor to Energy
Partners, Ltd., an oil and gas exploration and production company. Mr. Hall
served as president and director of Hall-Houston Oil Company, a privately-owned
exploration and production concern he co-founded, from October 1983 until
January 2002.
Mr.
Kirkendall has served as our president and as a member of our board of directors
since October 13, 2006, and as our executive vice president from October 2005.
From May 2004 to October 2005, Mr. Kirkendall was an independent consultant in
the oil and gas exploration industry. Between January 2001 and May 2004, Mr.
Kirkendall was employed as a natural gas specialist in the Professional Services
Group of SunGard Corporation, where he was responsible for the implementation of
natural gas trading, scheduling and accounting software.
Mr. Stout
has served as our executive vice president, chief financial officer and general
counsel since June 1, 2007. From August 2006 to May 2007, Mr. Stout
served as a consultant for Petrohawk Energy Corporation in the areas of contract
review, coordination of litigation and the preparation and finalization of
derivative oil and natural gas hedge instruments. From 1991 to 2006,
Mr. Stout served as President of KCS Energy Services, Inc.
Mr. McGee has served as our chief
accounting officer since April 1, 2005, and also served as our chief
financial officer from April 1, 2005 to June 1, 2007. Mr. McGee has owned and
managed Allen Roberts McGee, P.C., a private accounting practice since 1987. The
firm specializes in both tax and financial accounting for privately held firms,
principally oil and gas companies and family estates with major holdings in oil
and gas and real estate. Mr. McGee is licensed by the State of Texas as a
certified public accountant. Mr. McGee is a brother-in-law of our
chief executive officer, Wayne Hall.
Mr. Denny has serves as our executive
vice president and chief operating officer since March 1,
2008. Mr. Denny previously served as president and chief
executive officer of Gulf Energy Management Company, a wholly owned subsidiary
of Harken Energy Corporation, from January 2002 until October
2007. From October 1999 until January 2002, he served as executive
vice president of operations and chief operating officer for Harken Energy
Corporation. Mr. Denny is a registered professional engineer in
Louisiana and is a certified earth scientist by the Society of Independent
Petroleum Earth Scientists. Mr. Denny is a member of various industry
associations, including the American Petroleum Institute, National Society of
Professional Engineers, Society of Petroleum Engineers, and the Society of
Petroleum Evaluation Engineers.
Mr. Bailes has served as a member of
our board of directors since March 1, 2006. Mr. Bailes has been a partner of
Bailes, Bates & Associates, LLP, a tax and accounting firm, since March
2003. Between November 1999 and March 2003, Mr. Bailes owned and managed J.
Raleigh Bailes, CPA, a tax and accounting firm. Mr. Bailes is admitted to
practice before the U.S. Tax Court and is licensed by the State of Texas as a
certified public accountant.
Mr. Bynum has served as a member of our
board of directors since March 1, 2006. Mr. Bynum is currently chief financial
officer of Hall-Houston Exploration Partners, L.L.C., a privately-held oil and
gas exploration and development company, a position he has held since February
2005. Between 1997 and February 2005, Mr. Bynum was employed at Merrill Lynch
Pierce Fenner & Smith, most recently as a director of investment banking in
Merrill Lynch’s Global Energy and Power Investment Banking Group, in Houston,
Texas.
Mr. Gary
Hall has served as a member of our board of directors since March 1, 2006. Hr.
Hall is currently president of Hall-Houston Exploration Partners, L.L.C., an oil
and gas exploration and production company, a position he has held since
December 2004. Between March 2004 and December 2004, Mr. Hall managed his family
investments. Between January 2002 and March 2004, Mr. Hall was vice chairman of
the board of directors of Energy Partners Ltd., an oil and gas exploration and
production company. From 1983 to January 2002, Mr. Hall was the
chairman and chief executive officer of Hall-Houston Oil Company, an oil and gas
exploration and production company. Mr. Gary Hall is the brother of our chief
executive officer, Wayne Hall.
Mr. McClaugherty has served as a
member of our board of directors since April 13, 2006. For the past fifteen
years, Mr. McClaugherty has been a senior partner of McClaugherty & Silver,
P.C., a full service firm engaged in the practice of civil law located in Santa
Fe, New Mexico. Mr. McClaugherty is admitted to the state bars of New
Mexico, Texas and Colorado.
Mr. Pfeifer has served as a member of
our board of directors since May 5, 2006. Since January 2005, Mr. Pfeifer has
served as the managing member of P.O.& G. Resources - Texas, LLC, a
privately held oil and gas exploration and production company. From September
1999 to September 2004, Mr. Pfeifer was employed as an oil and gas analyst by
Merrill Lynch Pierce Fenner & Smith, most recently as First Vice President
in charge of Merrill Lynch’s Global Energy Research team. From October 2004 to
December 2004, Mr. Pfeifer managed his family investments.
Additional
Information About our Board and its Committees
Audit
Committee
The
current members of our audit committee are J. Raleigh Bailes, Sr., Brad Bynum
and Joe L. McClaugherty. Mr. Bailes serves as chairman of the
audit committee. Our audit committee includes at least one member who
has been determined by our board of directors to meet the qualifications of an
audit committee financial expert in accordance with SEC rules. Mr. Bailes is the
independent director who has been determined to be an audit committee financial
expert. Mr. Bailes is a certified public accountant and has been
engaged in a public accounting and tax practice for the last 34
years. Each of the members of our audit committee are independent, as
independent for audit committee members is defined in Section 803(A)(2) of the
NYSE Amex Company Guide. In addition, Mr. Bynum and Mr. McClaugherty
each meet the definition of “financially sophisticated” as defined in Section
803(B)(2) of the NYSE Amex Company Guide and has an understanding of fundamental
financial statements.
Compensation
and Nominating Committee
The
compensation and nominating committee of our board of directors discharges the
board’s responsibilities relating to the compensation of our directors and
officers, and recommends candidates for election to our board of
directors and oversees the director nomination process. The current
members of our compensation and nominating committee are Joe L. McClaugherty,
Brad Bynum and Steven A. Pfeifer. Mr. McClaugherty serves as chairman
of the compensation and nominating committee. The members of our
nominating committee are independent, as independence for directors is defined
in Section 803(A)(2) of the NYSE Amex Company
Guide.
There has
been no change to the procedure by which our securities holders may recommend
nominees to our board of directors from the procedures last announced in our
proxy statement filed with the Securities and Exchange Commission on April 29,
2008.
Compensation
Committee Interlocks and Insider Participation
During
our 2008 fiscal year, our compensation and nominating committee included Joe L.
McClaugherty, Brad Bynum and Steven A. Pfeifer. No member of
our compensation and nominating committee is, or has ever
been, employed by Petro Resources Corporation or our
subsidiaries. None of our executive officers serve on the board of
directors of another entity one of whose executive officers serves on our board
of directors.
Code
of Ethics
We have
adopted a code of conduct that applies to our directors and employees (including
our principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions), and
have posted the text of the policy on our website (
www.petroresourcescorp.com
).
If we make any substantive amendments to our code of conduct or grant any
waiver, including any implicit waiver, from a provision of the code to our chief
executive officer, president, chief financial officer or chief accounting
officer or corporate controller, or persons performing similar functions, we
will disclose the nature of such amendment or waiver on our website or by way of
a current report on Form 8-K filed with the Securities and Exchange
Commission.
Section
16(a) Beneficial Ownership Reporting Compliance
Rules
adopted by the Securities and Exchange Commission under Section 16(a) of the
Securities Exchange Act of 1934, or the Exchange Act, require our officers and
directors, and persons who own more than 10% of the issued and outstanding
shares of our equity securities, to file reports of their ownership, and changes
in ownership, of such securities with the Securities and Exchange Commission on
Forms 3, 4 or 5, as appropriate. Such persons are required by the
regulations of the Securities and Exchange Commission to furnish us with copies
of all forms they file pursuant to Section 16(a).
Based
solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to us
during our most recent fiscal year, and any written representations provided to
us, we believe that all of the officers, directors, and owners of more than ten
percent of the outstanding shares of our common stock complied with Section
16(a) of the Exchange Act for the year ended December 31, 2008, except as
follows:
|
·
|
Our
president, Donald L. Kirkendall, conducted the late filing of a Form 4 to
report his grant of common shares and
options;
|
|
·
|
Our
chief financial officer, Harry Lee Stout, conducted the late filing of a
Form 4 to report his purchase of common
shares;
|
|
·
|
Our
chief operating officer, James W. Denny III, conducted the late filing of
a Form 4 to report his purchase of common shares;
and
|
|
·
|
Our
director, Joe L. McClaugherty, conducted the late filing of a Form 4 to
report his purchase of common
shares.
|
Based on
the reports, no officer or director sold any shares of our common stock in
2008.
Item
11. EXECUTIVE COMPENSATION
The
following table sets forth the compensation paid by us during the fiscal years
ended December 31, 2008 and 2007 to our chief executive officer and our two most
highly paid officers during 2008 other than our chief executive
officer.
|
Name
and Principal Position
|
Year
|
Salary
($)(1)
|
Bonus
($)
|
Stock
Awards ($)(4)
|
Option
Awards ($)(4)
|
Total
Compensation
($)(4)
|
|
Wayne
P. Hall, Chairman and CEO
|
2008
2007
|
$150,000
$100,000
|
$29,167
--
|
--
--
|
--
--
|
$179,167
$100,000
|
|
Donald
L. Kirkendall, President (2)
|
2008
2007
|
$150,000
$100,000
|
$79,167
|
$107,500
--
|
$293,364
--
|
$630,031
$100,000
|
|
James
W. Denny III, Chief Operating Officer (3)
|
2008
2007
|
$150,000
--
|
--
--
|
$119,000
--
|
$
112,381
--
|
$381,381
--
|
______________________
|
(1)
|
Commencing
July 1, 2007, we agreed to pay Messrs. Hall and Kirkendall annual salaries
of $150,000. Mr. Denny commenced his employment with us on
March 1, 2008, is paid a salary of $180,000 per year and is eligible to
receive a performance based bonus for up to 100% of his base salary. Mr.
Denny’s 2008 salary shown in the table above reflects a proration for the
months of March through December
2008.
|
|
(2)
|
In
January 2008, we awarded Mr. Kirkendall 100,000 shares of common stock, of
which 25,000 shares were issued on January 9, 2008 and the remaining
75,000 shares vest and will be issued, subject to his continued
employment, in 25,000 share increments on January 10, 2009, 2010 and
2011. In January 2008, we also granted Mr. Kirkendall 200,000
stock options, at an exercise price of $2.00 per share, of which 50,000
options vested on the date of grant and the remaining 150,000
options vest in 50,000 share increments on January 10, 2009, 2010 and
2011.
|
|
(3)
|
In
March 2008, we awarded Mr. Denny 130,000 shares of our common stock, of
which 40,000 shares were issued in March 2008 and the remaining 90,000
shares vest and will be issued, subject to his continued employment, in
30,000 share increments on March 1, 2009, 2010 and 2011. In
March 2008, we also granted Mr. Denny 100,000 stock options, at an
exercise price of $1.70 per share, of which 25,000 options vested on the
date of grant and the remaining 75,000 options vest in 25,000 share
increments on March 1, 2009, 2010 and
2011.
|
|
(4)
|
The
dollar amounts reflect the dollar amount recognized for financial
statement reporting purposes for the fiscal year ended December 31, 2008,
in accordance with FAS 123(R). Assumptions used in the
calculation of this amount are included in footnote (2) to our audited
financial statements for the fiscal year ended December 31, 2008
included in our annual report on Form 10-K for the year ended
December 31, 2008 filed with the Securities and Exchange Commission on
March 31, 2009.
|
Outstanding
Equity Awards at December 31, 2008
The unexercised options and warrants
granted to our named executive officers and outstanding at December 31, 2008 are
as follows:
|
|
Option
Awards
|
Stock
Awards
|
|
Name
|
Number
of Securities Underlying Unexercised Options
Exercisable
(#)
|
Number
of Securities Underlying Unexercised Options Unexercisable
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
That
Have
Not
Vested
|
Market
Value
of
Shares
That
Have
Not
Vested
(6)
|
|
Wayne
P.
Hall,
CEO
|
--
|
--
|
--
|
--
|
--
|
--
|
|
Donald
L.
Kirkendall,
President
|
30,000
(1)
50,000
(3)
|
--
150,000
(3)
|
$2.00
$2.00
|
11/21/10
01/10/13
|
75,000
(2)
|
$24,750
|
|
James
W.
Denny
III,
COO
|
25,000
(4)
|
75,000
(4)
|
$1.70
|
03/01/13
|
90,000
(5)
|
$29,700
|
__________________
(1) In
November 2005, we issued to Mr. Kirkendall warrants to purchase 43,750 shares of
common stock for services provided to us prior to his employment. Mr.
Kirkendall subsequently transferred 13,750 of those warrants to a third
party.
(2) In
January 2008, we awarded Mr. Kirkendall 100,000 shares of common stock, of which
25,000 shares were issued on January 9, 2008 and the remaining 75,000 shares
vest and will be issued, subject to his continued employment, in 25,000 share
increments on January 10, 2009, 2010 and 2011.
(3) In
January 2008, we granted Mr. Kirkendall 200,000 stock options, at an exercise
price of $2.00 per share, of which 50,000 options vested on the date of grant
and the remaining 150,000 options vest in 50,000 share increments on
January 10, 2009, 2010 and 2011.
(4) In
March 2008, we granted Mr. Denny 100,000 stock options, at an exercise price of
$1.70 per share, of which 25,000 options vested on the date of grant and the
remaining 75,000 options vest in 25,000 share increments on March 1, 2009, 2010
and 2011.
(5) In
March 2008, we awarded Mr. Denny 130,000 shares of our common stock, of which
40,000 shares were issued in March 2008 and the remaining 90,000 shares vest and
will be issued, subject to his continued employment, in 30,000 share increments
on March 1, 2009, 2010 and 2011.
(6) The
dollar amounts are based on the market value of the shares as of December
31, 2008 using the last sale price on that date of $0.33 per share as reported
on the NYSE Amex.
Stock
Incentive Plan
We
adopted a stock incentive plan in 2006 providing for the grant of non-qualified
stock options and incentive stock options to purchase shares of our common stock
and for the grant of restricted and unrestricted share grants. We
have reserved 3,000,000 shares of our common stock under the
plan. All officers, directors, employees and consultants to our
company are eligible to participate under the plan. The purpose of
the plan is to provide eligible participants with an opportunity to acquire an
ownership interest in our company. As of the date of this report,
340,000 shares of our common stock and options to purchase 1,035,000 shares of
our common stock have been granted under the plan.
Compensation
of Directors
It is our
present policy to pay our outside or non-officer directors a fee of $1,000 per
day for attending board or committee meetings, or a ratable portion for meetings
of less than one full day. We have also granted to our five outside
directors, J. Raleigh Bailes, Brad Bynum, Gary L. Hall, Joe L. McClaugherty and
Steven A. Pfeifer options to purchase 200,000 common shares each at an exercise
price of $3.80 per share. Effective as of December 31, 2008, Mr.
McClaugherty and Mr. Pfeifer returned their respective 200,000 options for
cancellation. The options vest and first become exercisable over four years,
including 50,000 options vesting upon the grant of the options and an additional
50,000 options vesting on the first three anniversaries of the option grant. The
options are subject to early termination in the event the holder ceases to
be a director. All of our directors receive reimbursement for
out-of-pocket expenses for attending board of directors or committee
meetings. Any future outside directors may receive an attendance fee
for each meeting of the board of directors. From time to time we may
also engage certain outside members of the board of directors to perform
services on our behalf and we will compensate such persons for the services
which they perform.
Directors
who are employees of Petro Resources Corporation receive no compensation for
services provided in that capacity, but are reimbursed for out-of-pocket
expenses in connection with attendance at meetings of our board and its
committees.
2008
Director Compensation
|
Name
|
Fees
Earned or Paid in Cash ($)
|
Option
Awards ($)
|
All
Other Compensation ($)
|
Total
($)
|
|
|
|
|
|
|
|
J.
Raleigh Bailes, Sr.
|
$8,000
|
--
|
--
|
$8,000
|
|
Brad
Bynum
|
$8,000
|
--
|
--
|
$8,000
|
|
Gary
L. Hall
|
$4,000
|
--
|
--
|
$4,000
|
|
Joe
L. McClaugherty
|
$7,000
|
--
|
--
|
$7,000
|
|
Steven
A. Pfeifer
|
$4,000
|
--
|
--
|
$4,000
|
Item
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
In
reviewing the following tables, please keep in mind that the percentage amounts
for each reported party are based on 36,788,172 common shares issued and
outstanding as of April 15, 2009. The percentage amounts also give
effect to the issuance of common shares underlying options and warrants
exercisable within sixty (60) days held by the reported party.
5%
Beneficial Owners
The following table sets forth certain
information, as of April 15, 2009, regarding the beneficial ownership of our
common stock by each person who is believed by us to be the beneficial owner of
more than five percent (5%) of our issued and outstanding shares of common
stock:
|
Name
and Address of
Beneficial
Owner
|
|
Amount
and Nature of
Beneficial
Ownership
|
|
Percent
of
Class
|
|
Eagle
Operating, Inc.
P.O.
Box 853
Kenmare,
North Dakota 58746
|
|
3,144,655
|
|
8.5%
|
|
Bonanza
Master Fund, Ltd. (1)
c/o
Bonanza Capital, Ltd.
300
Crescent Court, Suite 1740
Dallas,
Texas 75201
|
|
2,000,000
|
|
5.2%
|
|
J.
Carlo Cannell
240
E. Deloney Ave
Jackson,
Wyoming 83001
|
|
3,323,480
|
|
9.0%
|
___________________
|
(1)
|
The
share amount shown for Bonanza Master Fund, LP represent 2,000,000 shares
underlying presently exercisable
warrants.
|
Executive
Officers and Directors
The
following table sets forth certain information, as of April 15, 2009, regarding
the beneficial ownership of our common stock by each of our directors and
executive officers and all of our directors and executive officers as a
group. The address of the following persons listed below is c/o Petro
Resources Corporation, 777 Post Oak Boulevard, Suite 910, Houston,
Texas 77056.
|
Name
of Beneficial Owner
|
|
Amount
and Nature of
Beneficial
Ownership
|
|
Percent
of
Class
|
|
Wayne
P. Hall (1)
|
|
2,313,650
|
|
6.3%
|
|
Donald
L. Kirkendall (2)
|
|
365,000
|
|
*
|
|
Harry
Lee Stout (3)
|
|
231,000
|
|
*
|
|
Allen
R. McGee
|
|
795,675
|
|
2.2%
|
|
James
W. Denny, III (4)
|
|
130,000
|
|
*
|
|
J.
Raleigh Bailes, Sr. (5)
|
|
200,000
|
|
*
|
|
Brad
Bynum (5)
|
|
200,000
|
|
*
|
|
Gary
L. Hall (5) (6)
|
|
400,000
|
|
1.1%
|
|
Joe
L. McClaugherty (5)
|
|
10,000
|
|
*
|
|
Steven
A. Pfeifer (5)
|
|
0
|
|
*
|
|
Directors
and executive officers as a group (10)
|
|
4,645,325
|
|
12.3%
|
*Less
than one percent
|
|
(1)
|
The
share amount shown for Wayne P. Hall includes 100,000 shares of common
stock and 100,000 shares underlying presently exercisable warrants held by
Hall SouthWest Business Ventures, LP, Mr. Hall’s family’s private
investment company.
|
|
|
(2)
|
The
share amount shown for Mr. Kirkendall includes 60,000 shares underlying
presently exercisable warrants and 100,000 shares underlying presently
exercisable options.
|
|
|
(3)
|
The
share amounts for Mr. Stout include 25,000 shares under presently
exercisable warrants and 25,000 shares under presently exercisable
options.
|
|
|
(4)
|
The
share amounts for Mr. Denny include 50,000 shares under presently
exercisable options.
|
|
|
(5)
|
The
share amounts for Messrs. Bailes, Bynum and Gary L. Hall include 200,000
shares for each underlying presently exercisable
options.
|
|
|
(6)
|
The
share amount shown for Gary L. Hall includes 100,000 shares of common
stock and 100,000 shares underlying presently exercisable warrants held by
Houston Explorer Group, LP, a private investment company owned by Mr.
Hall.
|
Equity
Compensation Plan Information
Information
relating to securities authorized for issuance under our equity compensation
plans is set forth in “Item 5, Market for Registrant’s Common Stock,
Related Stockholder Matters and Issuer Purchases of Equity Securities” in our
annual report on Form 10-K filed with the Securities and Exchange Commission on
March 31, 2009.
Director
Independence
We
continue to monitor the rules and regulations of the Securities and Exchange
Commission and the NYSE Amex to ensure that at least 50% of our board is
composed of “independent” directors. Our directors who are
“independent”, as defined in Section 803(A)(2) of the NYSE Amex Company Guide,
include J. Raleigh Bailes, Sr., Brad Bynum, Joe L. McClaugherty and Steven A.
Pfeifer. Pursuant to Rule 801(a) of the NYSE Amex Company Guide, only
50% of the members of our board of directors are required to be independent due
to our status as a “smaller reporting company”, as such term is defined by the
rules of the Securities and Exchange Commission. Our audit
committee and compensation and nominating committee are made up exclusively of
our independent directors.
Item
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
On
September 26, 2008, we redeemed 2,563,712 shares of our outstanding Series A
Preferred Stock at an aggregate redemption price of $7,946,735. The
preferred shares were held by investment funds managed by Touradji Capital
Management, which immediately prior to the redemption beneficially owned in the
aggregate in excess of 5% of our common shares. Pursuant to the
original terms of the Series A Preferred Stock, we were required to redeem all
Series A Preferred Stock, at the redemption price paid by us, no
later than October 2, 2008. After giving effect to the redemption, there are no
shares of Series A Preferred Stock outstanding.
In April
2006, we purchased a 5.33% limited partnership interest in Hall-Houston
Exploration II, L. P., an oil and gas exploration and development partnership
which has operations focused primarily offshore in the Gulf of Mexico. Our
interest in the partnership required that we commit to contribute up to $8
million to the capital of the partnership, and during fiscal 2008 we paid
capital contributions of $1,999,800. The president and chief financial officer
of Hall-Houston Exploration Partners, L.L.C. are Gary L. Hall and Brad Bynum,
respectively, both of whom presently serve on our board of directors; and Brad
Bynum also serves on our audit committee. In addition, Gary L. Hall is the
brother of our chief executive officer, Wayne P. Hall. Wayne P. Hall
has no direct or indirect ownership interest in Hall-Houston Exploration
Partners, L.L.C. However, Wayne P. Hall and two of our outside
directors, Joe L. McClaugherty and Steven A. Pfeifer, each purchased
limited partnership interests in Hall-Houston Exploration II, L.
P. We invested in Hall-Houston Exploration II, L. P. on the
same terms as all other limited partner investors in the partnership, including
Messrs. Wayne P. Hall, McClaugherty and Pfeifer.
On
September 26, 2008, we sold our 5.33% limited partner interest in Hall-Houston
Exploration II, L. P. to a non-affiliated partnership for cash consideration of
$8.0 million and the purchaser’s assumption of the first $1,353,000 of capital
calls on the limited partnership interest sold subsequent to September 26,
2008. We agreed to reimburse the purchaser for up to $754,255 of
capital calls on the limited partnership interest sold in excess of the first
$1,353,000 of capital calls subsequent to September 26,
2008.
Review,
Approval or Ratification of Transactions with Related Persons
Our board of directors has established
an audit committee and the audit committee charter provides, among other things,
that our audit committee will be comprised exclusively of members of our board
who satisfy the independence requirements of Section 803(A)(2) of the NYSE Amex
and that the audit committee is responsible for approving all related party
transactions, as defined by the rules of the NYSE Amex, to which our company is
a party.
Item
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The
following table sets forth the aggregate fees billed to us for services rendered
to us for the years ended December 31, 2008 and 2007 by our independent
registered public accounting firm for such years, Malone & Bailey, PC, fees
for the audit of our consolidated financial statements for the years ended
December 31, 2008 and 2007, and assistance with the reporting requirements
thereof, the review of our condensed consolidated financial statements included
in our quarterly reports on Form 10-Q, and accounting and auditing assistance
relative to acquisition accounting and reporting.
|
|
|
2008
|
|
|
2007
|
|
|
Audit
Fees
|
|
$
|
170,550
|
|
|
$
|
156,832
|
|
|
Audit-Related
Fees (1)
|
|
|
--
|
|
|
|
55,340
|
|
|
Tax
Fees (2)
|
|
|
7,500
|
|
|
|
5,000
|
|
|
All
Other Fees
|
|
|
—
|
|
|
|
—
|
|
_____________________________
(1) Audit
related fees during 2007 were for the initial audit of our subsidiary, PRC
Williston, LLC.
(2) Tax
fees were for the preparation of our Form 1120 tax return.
Audit
Committee Pre-Approval Policies
Our audit
committee approves all audit fees, audit-related fees, tax fees and special
engagement fees by our independent registered public accounting
firm. The audit committee approved 100% of such fees for the year
ended December 31, 2008.
Item
15. EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
(a)
Financial
statements
Reference
is made to the Index and Financial Statements under Item 8 in Part II in our
annual report on Form 10-K filed with the Securities and Exchange Commission on
March 31, 2009, where these documents are listed.
(b)
Financial statement
schedules
Financial
statement schedules are either not required or the required information is
included in the consolidated financial statements or notes thereto filed under
Item 8 in Part II in our annual report on Form 10-K filed with the Securities
and Exchange Commission on March 31, 2009.
(c)
Exhibits
The
following exhibits are either filed herewith or incorporated herein by
reference:
|
Exhibit
Number
|
Description
|
|
3.1
(1)
|
Certificate
of Incorporation of the Registrant, as amended
|
|
3.1.1
(6)
|
Certificate
of Amendment to Certificate of Incorporation of the Registrant dated May
10, 2007
|
|
3.2
(1)
|
Amended
and Restated Bylaws of the Registrant dated April 14,
2006
|
|
3.2.1
(2)
|
Amendment
to Bylaws of the Registrant
|
|
3.2.2
(7)
|
Amendment
to Bylaws of the Registrant dated October 12, 2006
|
|
4.1
(3)
|
Certificate
of Designations of Preferences and Rights of Series A Preferred
Stock
|
|
10.1
(1)
|
Form
of Registration Rights Agreement dated August 1, 2005
|
|
10.2
(1)
|
Form
of Warrant sold as part of August 2005 private
placement
|
|
10.3
(1)
|
Lease
Purchase Agreement dated January 10, 2006 between Petro Resource
Corporation and The Meridian Resource & Exploration,
LLC
|
|
10.4
(1)
|
2006
Stock Incentive Plan*
|
|
10.5
(1)
|
Form
of Registration Rights Agreement dated February 17,
2006
|
|
10.6
(1)
|
Form
of Warrant sold as part of February 2006 private
placement
|
|
10.7
(2)
|
Subscription
Agreement for Hall-Houston Exploration II, L.P.
|
|
10.8
(2)
|
Amended
and Restated Agreement of Limited Partnership dated as of April 21, 2006
for Hall-Houston Exploration II, L.P.
|
|
10.9
(4)
|
Purchase
and Sale Agreement dated December 11, 2006 with Eagle Operating,
Inc.
|
|
10.10
(4)
|
Credit
Agreement dated February 16, 2007 between PRC Williston LLC and D.B. Zwirn
Special Opportunities Fund, L.P., as administrative
agent
|
|
10.11
(4)
|
Security
Agreement dated February 16, 2007 Between PRC Williston, LLC and D.B.
Zwirn Special Opportunities Fund, L.P., as administrative
agent
|
|
10.12
(4)
|
Guaranty
and Pledge Agreement dated February 16, 2007 between Petro Resource
Corporation and D.B. Zwirn Special Opportunities Fund, L.P., as
administrative agent
|
|
10.13
(4)
|
Lease
dated September 30, 2006 with Gateway Ridgecrest Inc.
|
|
10.14
(3)
|
Securities
Purchase Agreement dated April 3, 2007
|
|
10.15
(3)
|
Registration
Rights Agreement dated April 3, 2007
|
|
10.16
(5)
|
Letter
Agreement dated May 25, 2007 between Petro Resource
Corporation and Harry Lee Stout*
|
|
10.17
(6)
|
Letter
Agreement dated August 14, 2007 between PRC Williston LLC and D.B.
Zwirn Special Opportunities Fund, L.P., as administrative
agent
|
|
10.18
(7)
|
Letter
Agreement dated September 19, 2007 between PRC Williston LLC and
D.B. Zwirn Special Opportunities Fund, L.P., as administrative
agent
|
|
10.19
(8)
|
First
Amendment dated May 13, 2008 to Credit Agreement dated February 16, 2007
between PRC Williston LLC and D.B. Zwirn Special Opportunities Fund, L.P.,
as administrative agent
|
|
10.20
(9)
|
Credit
Agreement dated as of September 9, 2008 among Petro Resources Corporation,
CIT Capital USA Inc., as administrative agent, and the lenders party
thereto
|
|
10.21
(9)
|
Second
Lien Term Loan Agreement dated as of September 9, 2008 among Petro
Resources Corporation, CIT Capital USA Inc., as administrative agent, and
the lenders party thereto
|
|
10.22
(9)
|
Guaranty
and Collateral Agreement dated as of September 9, 2008 among Petro
Resources Corporation, PRC Williston LLC, and CIT Capital USA Inc., as
administrative
agent
|
|
10.23
(9)
|
Second
Lien Guaranty and Collateral Agreement dated as of September 9, 2008 among
Petro Resources Corporation, PRC Williston LLC, and CIT Capital USA Inc.,
as administrative agent
|
|
10.24
(10)
|
Partnership
Interest Purchase Agreement dated September 26, 2008, as amended on
September 29, 2008, between Petro Resources Corporation and PRC HHEP II,
LP
|
|
10.25
(11)
|
Employment
Agreement dated May 27, 2008 between Petro Resources Corporation
and Wayne P. Hall.*
|
|
10.26
(11)
|
Employment
Agreement dated May 27, 2008 between Petro Resources Corporation
and Donald L. Kirkendall.*
|
|
10.27
(11)
|
Employment
Agreement dated May 27, 2008 between Petro Resources Corporation
and Harry Lee Stout. *
|
|
10.28
(11)
|
Employment
Agreement dated May 27, 2008 between Petro Resources Corporation
and James W. Denny. *
|
|
10.29
(11)
|
Employment
Agreement dated May 27, 2008 between Petro Resources Corporation
and Allen R. McGee. *
|
|
10.30
(11)
|
First
Amendment to Credit Agreement dated March 19, 2009 among Petro Resources
Corporation, CIT Capital USA Inc., as administrative agent, and the
lenders party thereto
|
|
10.31
(11)
|
First
Amendment to Second Lien Term Loan Agreement dated March 19, 2009 among
Petro Resources Corporation, CIT Capital USA Inc., as administrative
agent, and the lenders party thereto
|
|
21.1
(4)
|
List
of Subsidiaries
|
|
23.1
(11)
|
Consent
of Malone & Bailey, PC
|
|
23.2
(11)
|
Consent
of Cawley Gillespie & Associates, Inc
|
|
23.3
(11)
|
Consent
of DeGolyer & MacNaughton
|
|
23.4
(11)
|
Consent
of Netherland, Sewell and Associates, Inc.
|
|
23.5
(11)
|
Consent
of W.D. Von Gonten & Co.
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
32.1
|
Certification
of the Chief Executive Officer and Chief Financial Officer provided
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of
2002
|
* The
referenced exhibit is a management contract, compensatory plan or
arrangement.
|
(1)
|
Incorporated
by reference from Petro Resource Corporation’s Registration Statement on
Form SB-2 filed on March 21, 2006.
|
|
(2)
|
Incorporated
by reference from Petro Resource Corporation’s Amendment No. 1 to
Registration Statement on Form SB-2 filed on June 9,
2006.
|
|
(3)
|
Incorporated
by reference from Petro Resources Corporation’s current report on
Form 8-K filed on April 4, 2007.
|
|
(4)
|
Incorporated
by reference from Petro Resources Corporation’s annual report on
Form 10-KSB for the year ended December 31, 2006, filed on
April 2, 2007.
|
|
(5)
|
Incorporated
by reference from Petro Resources Corporation’s current report on
Form 8-K filed on June 1, 2007.
|
|
(6)
|
Incorporated
by reference from Petro Resources Corporation’s quarterly report on
Form 10-QSB filed on August 14, 2007.
|
|
(7)
|
Incorporated
by reference from Petro Resources Corporation’s Amendment No. 1 to
Registration Statement on Form SB-2 filed on September 21,
2007.
|
|
(8)
|
Incorporated
by reference from the Petro Resources Corporation’s quarterly report on
Form 10-Q filed on May 15, 2008.
|
|
(9)
|
Incorporated
by reference from Petro Resources Corporation’s current report on
Form 8-K filed on September 11, 2008.
|
|
(10)
|
Incorporated
by reference from Petro Resources Corporation’s quarterly report on
Form 10-Q filed on November 13, 2008.
|
|
(11)
|
Incorporated
by reference from Petro Resources Corporation’s annual report on
Form 10-K filed on March 31,
2009.
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
|
PETRO
RESOURCES CORPORATION
|
|
|
|
|
|
|
|
Date:
April 29, 2009
|
By:
|
/s/ Wayne
P. Hall
|
|
|
|
|
Wayne
P. Hall
|
|
|
|
|
Chairman
of the Board
and
Chief Executive Officer
(Authorized
Signatory)
|
|
|
|
|
|
|
12
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