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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): October 18, 2012
DISCOVERY ENERGY CORP.
f/k/a "Santos Resource Corp.
(Exact name of registrant as specified in its Charter)
Nevada 000-53520 98-0507846
(State or other jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification Number)
One Riverway Drive, Suite 1700
Houston, Texas 77056
713-840-6495
(Address and telephone number of principal executive offices, including
zip 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 of Registrant under any of the
following provisions:
[ ] 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))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On October 18, 2012, Discovery Energy Corp. (the "Company") completed the
execution of an engagement agreement (the "Engagement Agreement"), dated
effective October 11, 2012, with Chrystal Capital Partners LLP (the "Financial
Advisor"), pursuant to which the Financial Advisor agreed to assist the Company
in connections with its efforts to complete a major capital raising transaction
of up to US$20.0 million. The Financial Advisor is a corporate finance firm
based in London, regulated by the UK Financial Services Authority. To avoid
additional dilution at this time, the Company currently intends to seek to raise
only $15.0 million at this time.
The term of the Engagement Agreement is initially for two months, and it
will continue on a month-to-month basis thereafter until either party terminates
it. In the event of a successful capital raise, the term of the Engagement
Agreement will continue on a year-to-year basis thereafter until either party
terminates it. The Company has the right to terminate the Engagement Agreement
within its first two months by paying a termination fee that starts at US$33,500
and rises to US$100,000 with the fee increasing with the passage of time. After
termination of the Engagement Agreement, the Financial Advisor will be entitled
to the success fees described below for any transaction completed within 18
months after termination with any prospect presented by the Financial Advisor.
Pursuant to the Engagement Agreement, the Company agreed to pay the
following fees to the Financial Advisor:
* Monthly fees in the amount of GBP 7,500 (Sterling) (or
approximately US$12,100);
* Cash success fees generally in amounts equal to 7% of the gross
amount of all funds raised, but subject to certain carve outs for
existing contacts and possibilities;
* A stock success fee represented by a Restricted Share Award
Agreement of 6,472,425 shares of the Company's common stock, which
is subject to reduction or forfeiture in certain circumstances; and
* Option success fees giving to the Financial Advisor the right for
three years to purchase a number of shares of the Company's common
stock equal to 7% of the number of shares issued in the related
capital raises at exercise prices equal to the sale prices of the
Company's shares in such raises, but subject to certain carve outs
for existing contacts and possibilities.
The Company will also reimburse the Financial Advisor for its expenses in
connection with its services.
The Engagement Agreement contains other agreements, representations,
warranties, and indemnities that the Company has been advised are customary and
reasonable when dealing with corporate finance firm regulated by the UK
authorities.
The description of terms and conditions of the Engagement Agreement set
forth herein do not purport to be complete and are qualified in their entirety
by the full text of the Engagement Agreement, which will be filed as an exhibit
to the Company's third quarter Quarterly Report on Form 10-Q.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
The information included in Item 1.01 of this Report is also incorporated
by reference into this Item 3.02 of this Report.
The issuance of 6,472,425 to the Financial Advisor described in Item 1.01
of this Report is claimed to be exempt pursuant to Section 4(2) and Regulation S
under the Act. No advertising or general solicitation was employed in offering
these securities. The offering and sale was made only to one accredited
investor, and subsequent transfers were restricted in accordance with the
requirements of the Act. Moreover, the offer or sale is made only to a person
which was not a "U.S. person" in an "offshore transaction," no "directed selling
efforts" were made in the United States, and "offering restrictions" were
implemented (each of the preceding terms in quotation marks being defined in
Regulation S).
In addition to the issuances of the shares described in Item 1.01 of this
Report, commencing during the first week of September 2012, the Company began a
private placement of its common stock at a price of $0.125 per share. Through
the date of this Report, the Company has sold 2.0 million shares for a total of
$250,000 in proceeds. The shares were issued to a total of four investors, all
of whom are accredited. The issuances of the Shares described in this Item 3.02
of this Report are claimed to be exempt pursuant to Section 4(2) and Rule 506 of
Regulation D under the Act. No advertising or general solicitation was employed
in offering these securities. The offering and sale was made only to accredited
investors, and subsequent transfers were restricted in accordance with the
requirements of the Act.
None of the securities the issuances of which are described in Item 1.01 or
this Item 3.02 of this Report were registered under the Securities Act of 1933,
as amended, and may not be offered or sold in the United States in the absence
of an effective registration statement or exemption from registration
requirements.
Per Rule 135c under the Act, nothing contained herein shall be construed to
be an offer to sell, or a solicitation of an offer to buy, any of securities.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DISCOVERY ENERGY CORP.,
f/k/a "Santos Resource Corp."
(Registrant)
Date: October 18, 2012 By: /s/ Keith J. McKenzie
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Keith J. McKenzie,
Chief Executive Office
