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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) March 23, 2006
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FOOTHILLS RESOURCES, INC.
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(Exact name of Registrant as specified in its charter)
Nevada 001-31546 98-0339560
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(State or other jurisdiction (Commission File number) (IRS Employer
of incorporation or organization) Identification No.)
Canadiana Lodge, Wellfield Close, Coad's Green, Launceston, Cornwall, England,
PL15 7LR
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(Address of principal executive offices) (Zip Code)
011.441.566.782.199
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(Registrant's Telephone Number, Including Area Code)
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(Former Address If Changed since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation for the registrant under any of the
following provisions (see General Instruction A.2. 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 (17 CFR 240.14d-2(b))
[] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Section 1 - Registrant's Business and Operations
Item 1.01. Entry into a Material Definitive Agreement.
As previously reported, as of February 15, 2006, Foothills Resources,
Inc. (the "Registrant") entered into a Term Sheet (the "Term Sheet") with
Brasada Resources, LLC (together with its corporate successor in interest,
Brasada California, Inc., "Brasada"). Brasada is engaged in oil and gas
exploration and development. As contemplated by the Term Sheet, on or before
June 15, 2006 a newly-formed, wholly-owned subsidiary of the Registrant will
merge with and into the corporate successor in interest to Brasada (the
"Merger"), as a result of which Registrant will acquire all of the issued and
outstanding capital stock of Brasada and Brasada will become a wholly-owned
subsidiary of the Registrant.
The Term Sheet contemplates that, as a condition to the closing of the
Merger, the Registrant will have closed a private placement offering (a "PPO"),
to be conducted pursuant to the exemption from the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), provided by Rule
506 of Regulation D and Section 4(2) of the Securities Act, whereby the
Registrant will offer and sell up to 10,000,000 units ("Units") of the
Registrant's securities at a price of $0.70 per Unit, or an aggregate offering
price of $7,000,000. Each Unit will consist of one share of common stock, par
value $0.001 per share ("Common Stock") and Common Stock purchase warrants
("Warrant"). Each Warrant will be exercisable for five years and will entitle
its holder to purchase three shares of Common Stock at $1.00 per share for every
four Units purchased in the PPO. As of the date of this report, the PPO has not
closed.
Also as previously reported, effective March 17, 2006 the Registrant
closed on the offer and sale of $997,500 principal amount of its debentures
("Foothills Debentures") to a limited number of accredited investors pursuant to
Regulation D. Effective March 22 and 23, 2006, the Registrant closed on the
offer and sale of an additional $2,990,000 principal amount of Foothills
Debentures. The Foothills Debentures are unsecured, bear interest at the rate of
9% per annum, which interest begins to accrue commencing 120 days from issuance,
and are for a term of three years. The Foothills Debentures are payable in
consecutive monthly installments of principal and interest, commencing 120 days
from the date of their issuance. The Foothills Debentures will become
convertible and will automatically convert, as to their outstanding principal
amount, into Units upon the simultaneous closing of the Merger and the PPO (and
the principal amount of the Foothills Debentures so converted shall be a part of
the $7,000,000 proceeds of the PPO). In addition, the Foothills Debentures will
become convertible, at the option of the holder, 70 days after the earlier of
(i) termination of the exclusivity period provided for in the Term Sheet, if the
Merger has not closed by such date, or (ii) the date of termination or
abandonment of the Merger prior to the end of the exclusivity period. The
Foothills Debentures will convert into Units at a conversion price of $0.70 per
Unit, equal to the price per Unit in the PPO.
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If the Registrant defaults under the Foothills Debentures, the full
principal amount of the Foothills Debentures, together with interest, will, at
the holder's option, become immediately due and payable in cash. In addition,
commencing five days after the occurrence of any default that results in the
eventual acceleration of the Foothills Debenture, the interest rate will
increase to 18% per annum, or such lower maximum amount of interest permitted to
be charged under applicable law.
The Registrant paid sales commissions and related expenses of $84,250
to a registered broker dealer which assisted in the placement of the Foothills
Debentures.
The Registrant used the $2,990,000 derived from its issuance of the
additional Foothills Debentures to provide additional bridge financing ("Bridge
Financing") to Brasada to enable Brasada to meet its working capital
requirements. The Registrant had previously provided $997,500 in Bridge
Financing to Brasada. The Bridge Financing is evidenced by a Bridge Note
("Bridge Note") and related documents (collectively, the "Bridge Loan
Documents"). The Bridge Note is for a term of 120 days from the initial closing
of the Bridge Financing (July 20, 2006) (the "Due Date"), and bears interest at
the rate of 9% per annum. The Bridge Note is secured by a perfected security
interest and first lien on all of the assets of Brasada, as well as by the
deposit into escrow of such number of shares (the "Escrowed Bridge Loan Shares")
as shall equal 51% of the issued and outstanding capital stock of Brasada. The
security for the Bridge Loan will be released upon the repayment in full of the
Bridge Note. Closing of the Merger will be deemed to constitute such repayment
in full.
Brasada will begin making consecutive monthly interest only payments on
the Bridge Note of accrued interest commencing 30 days from the closing of the
Bridge Financing through the Due Date, at which time Brasada will be required to
repay the unpaid principal amount of the Bridge Note, together with accrued and
unpaid interest.
A default by Brasada under the Bridge Note, including but not limited
to the failure to close the Merger prior to the Due Date, will cause an increase
to the interest rate from 9% to 15% per annum, which increased interest rate
will continue until all defaults are cured. In addition, if such default is not
cured, the Registrant will be entitled to foreclose on its security interest in
the collateral provided for under the Bridge Loan Documents and to obtain
delivery of the Escrowed Bridge Loan Shares.
Section 2 - Financial Information
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
Please see the discussion under Item 1.01 of this Report regarding the
Foothills Debentures issued by the Registrant, which discussion is incorporated
by reference into this Item 2.03.
Section 8 - Other Information
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Item 8.01. Other Information
On March 2, 2006, the Registrant's Board of Directors declared a
2.4047592 forward stock split in the form of a dividend. The record date for the
stock dividend was March 22, 2006, and the payment date is March 30, 2006.
In addition, on March 21, 2006 the Registrant's chief executive officer
contributed 15,000,000 shares of Common Stock to the capital of the Registrant
in order to facilitate transactions contemplated by the proposed Merger.
Section 9 - Financial Statements and Exhibit
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
Exhibit Number Description
10.1 Amended and Restated Bridge Loan
Promissory Note, dated as of
March 23, 2006
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FOOTHILLS RESOURCES, INC.
Date: March 23, 2006 By: /s/ J. Earl Terris
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J. Earl Terris
Chairman of the Board of Directors,
Chief Executive Officer and President
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