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: November 22, 2004
TIDELANDS OIL & GAS CORPORATION
(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 1.01 Entry into a Material Definitive Agreement and
Item 2.03 Creation of a Direct Financial Obligation or an Obligation
under an Off Balance Sheet Arrangement of a Registrant.
On November 18, 2004, we entered into Securities Purchase Agreement
with Mercator Momentum Fund, LP, Mercator Momentum Fund III, LP, Monarch Pointe
Fund, LP, (collectively, "the Funds") and Mercator Advisory Group, LLC.
("Mercator").
We issued the Funds 7% Convertible Debentures in the aggregate
principal amount of $5,000,000. The Debentures mature May 18, 2006. We are
required to pay interest monthly. The aggregate monthly interest payment is
$29,166.67. The allocation of the debentures is as follows:
o Mercator Momentum Fund, LP acquired $1,270,000 7% Convertible
Debentures;
o Mercator Momentum Fund III, LP acquired $875,000 7%
Convertible Debentures;
o Monarch Pointe Fund, LP acquired $2,855,000 7% Convertible
Debentures.
The payment of funds for the debentures is structured in two tranches.
On November 19, 2004, we received a total of $3,250,000 which represents 65% of
the funds due. The balance of the funds will be paid when we file a registration
statement on Form SB-2. We are required to file the SB-2 within 30 days. Upon
filing, we will receive $1,750,000 balance on the 7% Convertible Debentures.
The 7% Convertible Debentures are convertible into our common stock at
a 15% discount to the market price at the time of conversion, subject to a $0.45
Cent floor and a $0.76 Cent ceiling.
We have granted the Funds and Mercator registration rights on these
securities. If we do not have our registration statement effective within 90
days from filing the discount will be increased to 25% of the market price at
the time of conversion.
In connection with this financing we issued 6,578,948 common stock
warrants which expire November 18, 2007. We issued the warrants as follows:
o Mercator Momentum Fund, LP 417,763 warrants exercisable at
$0.87 and 417,763 warrants exercisable at $0.80;
o Mercator Momentum Fund III, LP 287,829 warrants exercisable at
$0.87 and 287,829 warrants exerciseable at $0.80;
o Monarch Pointe Fund, LP 939,145 warrants exercisable at $0.87
and 939,145 warrants exercisable at $0.80.
o Mercator Advisory Group, LLC 1,644,737 warrants exercisable at
$0.87 and 1,644,737 warrants exercisable at $0.80.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
Item Number Description
10.1 Securities Purchase Agreement
10.2 7% Convertible Debenture Mercator Momentum Fund, LP
10.3 7% Convertible Debenture Mercator Momentum Fund III, LP
10.4 7% Convertible Debenture Monarch Pointe Fund, LP
10.5 Registration Rights Agreement
10.6 Warrant to Purchase Common Stock Mercator Advisory Group, LLC $0.87
10.7 Warrant to Purchase Common Stock Mercator Advisory Group, LLC $0.80
10.8 Warrant to Purchase Common Stock Mercator Momentum Fund, LP $0.87
10.9 Warrant to Purchase Common Stock Mercator Momentum Fund, LP $0.80
10.10 Warrant to Purchase Common Stock Mercator Momentum Fund, LP $0.87
10.11 Warrant to Purchase Common Stock Mercator Momentum Fund, LP $0.80
10.12 Warrant to Purchase Common Stock Monarch Pointe Fund, Ltd. $0.87
10.13 Warrant to Purchase Common Stock Monarch Pointe Fund, Ltd. $0.80
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: November 22, 2004
/s/ Michael Ward
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By: Michael Ward
Title: Vice President