Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

v3.5.0.2
Related Party Transactions
9 Months Ended
Sep. 30, 2016
Related Party Transactions [Abstract]  
Related Party Transactions
Note 7. Related Party Transactions

 

Wilshire Energy Partners, LLC and Aegis International LLC

 

Effective as of December 18, 2015, in connection with the then formation and organization of Foothills Petroleum Inc., Wilshire Energy Partners, LLC (“Wilshire”), Aegis International LLC (“Aegis”) and FPI entered into a Business Development Services Agreement (“BDSA”). Under the BDSA the parties agreed that:

 
  1. Wilshire would transfer 100% of Foothills Exploration LLC, a Wyoming limited liability company (“FEL”) to FPI, and that FPI would issue 4.5 million shares of its common stock to Wilshire on its organization or as soon thereafter as may be practicable.
  2. Wilshire would endeavor in good faith, with the assistance of Aegis, to obtain $3 to $3.5 million of financing in the form of equity and/or convertible notes to implement the business plan that is under formation on behalf of FPI.
  3. Aegis would perform the following business development services:

 

  provide senior management principally in the form of services of B.P. Allaire;
  deliver or oversee administrative services on day to day basis;
  assist in securing a chief financial officer;
  formulate, craft and deliver a detailed business plan including forecasts;
  formulate or assist in formulating, budgets and other financial information;
  recruit or assist in recruiting experienced executive directors with proven track records whose backgrounds will be attractive to the oil and gas community and potential investors;
  create and deliver a website that depicts the FPI operations; and
  provide such other services as may be appropriate and necessary to implement and execute upon the business plan of FPI.

 

  4. For its services as outlined under the BDSA, Foothills Petroleum would pay to Aegis from funds received, $150,000 through September 30, 2016 (the “Foothills Initial Organizational Term”). As of September 30, 2016, the payment was made in full.
  5. Following the Foothills Initial Organizational Term, FPI on at-will basis would pay B.P. Allaire $5,000 per month for his services as chief operating officer and executive director, on terms subject to cancellation, on 30 days notice, by either of FPI or B.P. Allaire. Effective September 1, 2016, the Company increased Mr. Allaire’s salary to $7,000 per month.
  6. Wilshire would assign, effective no later than December 29, 2015, all right, title and interest in FEL in exchange for 4.5 million shares of common stock of Foothills.

 

In furtherance of the BDSA, Wilshire assigned FEL to FPI on its organization in exchange for 4.5 million shares of Foothills Petroleum, and Foothills Petroleum thereby acquired control of the Springs Prospect, owned by FEL, consisting of 38,120 contiguous acres. FPI regards the Springs Prospect as a valuable multiple objective oil resource play in the Greater Green River Basin of Wyoming. Through Wilshire’s assistance Foothills Petroleum entered into two agreements with Alternus Capital Holdings Ltd whereby Foothills obtained a total of $1,000,000 of financing in the form of convertible notes that upon completion of the Share Exchange were converted, at $0.665 per share, into 1,503,759 shares of common stock of the Company.

 

In connection with the hiring of Ritchie Lanclos as Executive Vice President of the Company and Vice President of Exploration of FPI, and Eleazar Ovalle as Executive Vice President of the Company and Vice President of Geology and Geophysical of FPI, FPI agreed to pay Wilshire, one of our principal shareholders, pursuant to a Services Agreement entered into by and between FPI and Wilshire Energy Partners and attached as Exhibit 10.3 to our Current Report on Form 8-K filed with the Commission on August 19, 2016, a fee of 25% of gross annual salary, including all cash and equity compensation, but excluding any bonuses to be received by Mr. Lanclos or Mr. Ovalle. In the event either of Mr. Lanclos or Mr. Ovalle leaves FPI of his own volition or is terminated for cause within 90 days from commencement of their employment, Wilshire shall refund FPI 100% of fees received, minus $2,500.

 

Alternus Capital Holdings Limited

 

On December 24, 2015, FPI entered into a convertible promissory note in the amount of $600,000 with Alternus Capital Holdings Limited, a British Virgin Islands company. The two year note matures on December 23, 2017, and accrues interest at 8% per year. By its terms the note was automatically required to convert the outstanding principal and interest due under the terms of the note upon a merger or other combination occurring between FPI and an entity with shares listed for trading. The conversion price of the note was established at $0.665 per share (the “Conversion Price”), subject to adjustment as described below. On April 5, 2016, and under substantially similar terms described herein, FPI received an additional $400,000 from Alternus Capital Holdings Limited. Under the agreements between Alternus and FPI, Alternus had the right but not the obligation to subscribe for an aggregate of up to $3,500,000 of convertible notes which, in the event of that full subscription would convert into not less than 30% of the outstanding shares of the “public” company. Through May 27, 2016, the date the Share Exchange, Alternus had invested $1,000,000 and based on the Conversion Price was issued 1,503,759 shares of Common Stock of Key Link in full satisfaction of its two notes. All accrued interest was waived and recorded as additional paid in capital.