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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-KSB
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 30, 1997
COTTON VALLEY RESOURCES CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Ontario, Canada
(State or Other Jurisdiction of Incorporation)
0-28814 98-0164357
(Commission File Number) (I.R.S. Employer Identification Number)
8350 N. Central Expressway, Suite M2030
Dallas, Texas 75206
(Address of Principal Executive Offices) (Zip Code)
(214) 363-1968
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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INFORMATION INCLUDED IN REPORT ON FORM 8-KSB
ITEM 5. OTHER EVENTS.
PRIVATE PLACEMENT OF SECURITIES
On December 30, 1997, Cotton Valley Resources Corporation, an Ontario,
Canada corporation (the "Company"), closed the private placement of
US$4,320,000 of its 7% Secured Convertible Debentures to a group of eight
investment firms led by a Fort Worth, Texas institutional energy investor.
Initial funds were used to complete the acquisition of two recently rebuilt
well servicing rigs and related transportation and service equipment for a
total cost of US$1.2 million. The remainder of the funds are scheduled to be
used, with commercial bank financing now under negotiation, for the pending
acquisition by the Company of producing oil and gas wells in the Zama Lake area
of the Province of Alberta, Canada and equipment purchases.
The convertible debentures have a term of four years and are secured
by current and future equipment purchases and, upon completion of the Zama
acquisition, a second lien interest in the acquired properties. The debentures
are convertible into a maximum of 2.4 million shares of Common Stock and
warrants to purchase approximately 600,000 shares of Common Stock at prices
related to the market at the time of conversion, with limits on rights to
convert if the market falls below a floor price of US$1.80 per share. The
conversion price is the lesser of US$2.70 per share or 90% of the average of
the three lowest closing bid prices during the ten trading days prior to the
notice of conversion. During any thirty-day period, any investor may not
convert more than 10% of his original debentures at a conversion price less
than the floor price; and the Company may elect to redeem (for a 10% premium)
any debentures tendered for conversion at any price below the floor price. The
Company is obligated to file a registration statement with the U.S. Securities
and Exchange Commission within 30 business days after the closing to register
approximately 3 million shares of Common Stock to be issued to the investors
upon conversion of the debentures and exercise of the warrants.
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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.
COTTON VALLEY RESOURCES CORPORATION
(Registrant)
By: /s/ Eugene A. Soltero
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EUGENE A. SOLTERO, Chairman
of the Board and Chief
Executive Officer
Dated: January 7, 1998
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