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Delaware | 20-3126427 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Denver, Colorado 80202
Telephone: (720) 932-7800
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
President and Chief Executive Officer
Infinity Energy Resources, Inc.
950 Seventeenth Street, Suite 800
Denver, Colorado 80202
Telephone: (720) 932-7800
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Davis Graham & Stubbs LLP
1550 Seventeenth Street, Suite 500
Denver, Colorado 80202
Telephone: (303) 892-9400
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The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities pursuant to this prospectus until the registration statement filed with the Securities and Exchange Commission becomes effective. This prospectus is not an offer to sell these securities and neither Infinity Energy Resources, Inc. nor the selling stockholders are soliciting offers to buy these securities in any state where the offer or sale is not permitted.
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• | prices for oil and gas we produce may be lower than expected; | ||
• | the capital, equipment, personnel or services required to develop the leases for production may not be available; | ||
• | we may not find oil and gas reserves in the quantities anticipated; | ||
• | the reserves we find may not produce oil and gas at the rate anticipated; | ||
• | the costs of producing oil and gas may be higher than expected; and | ||
• | we may encounter one or more of many operating risks associated with drilling for and producing oil and gas. |
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• | worldwide and domestic supplies of oil and gas; | ||
• | political instability or armed conflict in oil or gas producing regions; | ||
• | the ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil prices; | ||
• | production controls; | ||
• | the price and level of foreign imports; | ||
• | worldwide economic conditions; | ||
• | marketability of production; | ||
• | the level of consumer demand; | ||
• | the price, availability and acceptance of alternative fuels; | ||
• | the price, availability and capacity of commodity processing and gathering facilities, and pipeline transportation; | ||
• | weather conditions; and | ||
• | actions of federal, state, local and foreign authorities. |
• | impairing our financial condition, cash flows and liquidity; | ||
• | limiting our ability to finance planned capital expenditures; | ||
• | reducing our revenue, operating income and profitability; | ||
• | reducing the carrying value of our oil and natural gas properties; and | ||
• | reducing demand for services provided by our oilfield service business. |
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• | our production is less than expected; | ||
• | the counterparties to our contracts fail to perform under the contracts; or | ||
• | our production costs on the related production significantly increase. |
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• | achieving a level of production from our oil and gas projects in the Fort Worth Basin of Texas, Greater Green River Basin of Wyoming, and Sand Wash and Piceance Basins of Colorado that provides sufficient cash flow to support additional borrowings and attract other forms of debt and equity capital; | ||
• | our success in locating and producing new reserves; | ||
• | prices of crude oil and natural gas; | ||
• | the level of production from existing wells; | ||
• | working capital requirements; and | ||
• | our ability to control expenses. |
• | the use of all or a substantial portion of our operating cash flow for the payment of principal and interest; | ||
• | an increase in interest expense as the amount of debt outstanding increases or as variable interest rates increase; | ||
• | increased vulnerability to competitive pressures and economic downturns; and | ||
• | restrictions on our operations that may be contained in any contract entered into with lenders. |
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• | it may be more difficult for us to satisfy our debt repayment obligations; | ||
• | covenant violations, if any, could result in accelerated payment terms; | ||
• | the amount of our interest expense may increase because our borrowings are at a variable rate of interest; | ||
• | a portion of our cash flows will be used to pay principal and interest on our debt, which will reduce the amount of capital we have to finance our operations and other business activities; and | ||
• | substantially all of our properties are pledged as collateral to lenders and failure to pay could result in foreclosure and loss of assets. |
• | any additional financing we obtain may be on unfavorable terms; | ||
• | we may have a higher debt level than many of our competitors, which may place us at a competitive disadvantage; | ||
• | we may issue equity securities at an undesired or unanticipated point in time to repay indebtedness or interest, causing additional dilution to our stockholders; | ||
• | we may be more vulnerable to economic downturns and adverse developments in our industry; and | ||
• | our debt level could limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate. |
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• | the quality and quantity of available data; | ||
• | the interpretation of that data; | ||
• | the accuracy of various mandated economic assumptions; and | ||
• | the judgment of the persons preparing the estimate. |
• | the amount and timing of actual production; | ||
• | the price for which that oil and gas production can be sold; | ||
• | supply and demand for oil and natural gas; | ||
• | curtailments or increases in consumption by natural gas and oil purchasers; and | ||
• | changes in government regulations or taxation. |
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• | defects in title; | ||
• | the absence of producible quantities of oil and gas; | ||
• | insufficient formation attributes, such as porosity, to allow production; | ||
• | water production requiring disposal; and | ||
• | improperly pressured reservoirs from which to produce the reserves. |
• | availability and cost of equipment and transportation for the production; | ||
• | demand for the oil and gas produced; and | ||
• | price for the oil and gas produced. |
• | well blowouts; | ||
• | craterings; | ||
• | explosions; | ||
• | uncontrollable flows of oil, natural gas or well fluids; |
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• | fires; | ||
• | formations with abnormal pressures; | ||
• | pipeline ruptures or spills; and | ||
• | releases of toxic gas and other environmental hazards and pollution. |
• | unexpected drilling conditions; | ||
• | pressure or irregularities in formations; | ||
• | equipment failures or accidents; | ||
• | adverse weather conditions; |
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• | defects in title; | ||
• | compliance with governmental requirements, rules and regulations; and | ||
• | shortages or delays in the availability of drilling rigs, the delivery of equipment and adequate trained personnel. |
• | land use restrictions; |
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• | drilling bonds and other financial responsibility requirements; | ||
• | spacing of wells; | ||
• | emissions into the air; | ||
• | unitization and pooling of properties; | ||
• | habitat and endangered species protection, reclamation and remediation; | ||
• | the containment and disposal of hazardous substances, oil field waste and other waste materials; | ||
• | the use of underground storage tanks; | ||
• | the use of underground injection wells, which affects the disposal of water from our wells; | ||
• | safety precautions; | ||
• | the prevention of oil spills; | ||
• | the closure of production facilities; | ||
• | operational reporting; and | ||
• | taxation. |
• | personal injuries; | ||
• | property and natural resource damages; | ||
• | releases or discharges of hazardous materials; | ||
• | well reclamation costs; | ||
• | oil spill clean-up costs; | ||
• | other remediation and clean-up costs; | ||
• | plugging and abandonment costs, which may be particularly high in the case of offshore facilities; | ||
• | governmental sanctions, such as fines and penalties; and | ||
• | other environmental damages. |
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• | the containment and disposal of hazardous substances, oilfield waste and other waste materials; | ||
• | the use of underground storage tanks; and | ||
• | the use of underground injection wells. |
• | administrative, civil and criminal penalties; | ||
• | revocation of permits; and | ||
• | corrective action orders. |
• | acquisition of desirable producing properties or new leases for future exploration; | ||
• | marketing our oil and natural gas production; |
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• | arranging for growth capital on attractive terms; and | ||
• | seeking to acquire or secure the equipment, service, labor, other personnel and materials necessary to operate and develop those properties. |
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Ownership After Offering | ||||||||||||||||
Number of | Number of | |||||||||||||||
Shares | Shares that | |||||||||||||||
Beneficially | May Be Sold | Number of | ||||||||||||||
Name | Owned (1) | (2) | Shares (3) | Percent | ||||||||||||
AG Offshore Convertibles, Ltd. (4) | 1,253,681 | 2,429,049 | — | — | ||||||||||||
HFTP Investment L.L.C. (5) | 1,074,992 | 2,085,491 | — | — | ||||||||||||
Gaia Offshore Master Fund, Ltd. (5) | 178,690 | 343,559 | — | — |
* | Less than 1%. | |
(1) | The shares of common stock considered beneficially owned by each selling stockholder equals that number of shares of our common stock that such selling stockholder could acquire by exercising all of its Warrants as of December 28, 2005. These amounts include the following number of shares issuable upon exercise of the warrants issued in connection with the initial sale of senior secured notes on January 13, 2005: AG Offshore Convertibles, Ltd.: 828,120; HFTP Investment L.L.C.: 828,120; the sale of additional senior secured notes on September 7, 2005: AG Offshore Convertibles, Ltd.: 253,626; HFTP Investment L.L.C.: 146,837; Gaia Offshore Master Fund, Ltd.: 106,790; and the sale of additional senior secured notes on December 9, 2005: AG Offshore Convertibles, Ltd.: 171,935; HFTP Investment L.L.C.: 100,035; Gaia Offshore Master Fund, Ltd.: 71,900. | |
(2) | The selling stockholders may sell up to 4,858,099 shares under this prospectus. This amount includes an aggregate of 2,100,000 shares which may be issued to the selling stockholders upon conversion of the Notes. This amount may reflect only a portion of the common shares which may be issuable to selling stockholders in the event the full principal amount of the Notes were converted into common shares. The number of shares that may be issued in the future upon conversion of the Notes will fluctuate based on the price of our common stock. Under the terms of the Notes, the conversion price is equal to 95% of the weighted average price of our common stock on the trading day immediately preceding the conversion date. The Notes contain certain restrictions on our ability to require conversion of the Notes and limit the principal amount of Notes of which we may elect to require conversion at any one time or in the aggregate. | |
In addition, the registration rights agreement entered into among us and the selling stockholders requires us to register at least 110% of the shares of our common stock issuable upon exercise of the Warrants. Therefore, a total of 2,758,099 shares issuable upon exercise of the Warrants may be offered by the selling stockholders pursuant to this prospectus. | ||
(3) | Assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus. | |
(4) | Angelo, Gordon & Co., L.P., a Delaware limited partnership, serves as the director of AG Offshore Convertibles, Ltd. John M. Angelo and Michael L. Gordon are the principal executive officers of Angelo, Gordon & Co., L.P. Each of Angelo, Gordon & Co., L.P. and Messrs. Angelo and Gordon disclaim beneficial ownership of the shares held by AG Offshore Convertibles, Ltd. AG Offshore Convertibles, Ltd. has advised Infinity that (i) it is not a registered broker-dealer, (ii) it does not control and is not controlled by a registered broker-dealer, (iii) it is an affiliate of a registered broker-dealer due solely to its being under common control with a registered broker-dealer, (iv) the broker-dealer which is an affiliate of such selling stockholder was not involved in the purchase of the Notes and Warrants and has not been and will not be involved in the ultimate sale of the underlying common stock, (v) it purchased the Notes and Warrants in the ordinary course of its business, and (vi) at the time such selling stockholder purchased the Notes and Warrants, it was not a party to any agreement or other understanding to distribute the securities, directly or indirectly. | |
(5) | Promethean Asset Management L.L.C., a New York limited liability company (“Promethean”), serves as investment manager to HFTP Investment L.L.C. (“HFTP”) and Gaia Offshore Master Fund, Ltd. (“Gaia”) and |
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may be deemed to share beneficial ownership of the shares beneficially owned by HFTP and Gaia. Promethean disclaims beneficial ownership of the shares beneficially owned by HFTP and Gaia. James F. O’Brien, Jr. indirectly controls Promethean. Mr. O’Brien disclaims beneficial ownership of the shares beneficially owned by Promethean, HFTP and Gaia. Each of HFTP and Gaia has advised Infinity that (i) it is not a registered broker-dealer, (ii) it does not control and is not controlled by a registered broker-dealer, (iii) it is an affiliate of a registered broker-dealer due solely to its being under common control with a registered broker-dealer, (iv) the broker-dealer that is an affiliate of such selling stockholder was not involved in the purchase of the Notes and Warrants, and will not be involved in the ultimate sale, of the securities, (v) it purchased the Notes and Warrants in the ordinary course of its business, and (vi) at the time such selling stockholder purchased the Notes and Warrants, it was not a party to any agreement or other understanding to distribute the securities, directly or indirectly. |
• | at fixed prices; | ||
• | at prevailing market prices at the time of sale; | ||
• | at varying prices determined at the time of sale; or | ||
• | at negotiated prices. |
• | on any national securities exchange or quotation service on which our common stock may be listed or quoted at the time of sale; | ||
• | in the over-the-counter market; | ||
• | in transactions other than on these exchanges or services or in the over-the-counter market; | ||
• | through the writing and exercise of options and warrants, whether these options and warrants are listed on an option or warrant exchange or otherwise; or |
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• | through the settlement of short sales. |
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• | our Annual Report on Form 10-K for the year ended December 31, 2004, as amended on Form 10-K/A filed with the SEC on April 29, 2005; | ||
• | our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2005, as amended on Form 10-Q/A filed with the SEC on November 14, 2005; June 30, 2005, as |
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amended on Form 10-Q/A filed with the SEC on November 14, 2005; and September 30, 2005; | |||
• | our Current Reports on Form 8-K filed with the SEC on April 1, 2005; May 18, 2005; June 21 and 27, 2005; September 8 and 13, 2005; November 7 and 28, 2005; and December 12, 2005; and | ||
• | the description of our common stock contained in Amendment No. 1 to our Registration Statement on Form 8-A (SEC File No. 0-17204) filed with the SEC on September 13, 2005. |
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Registration Fee—Securities and Exchange Commission | $ | 0 | ||
Legal Fees and Expenses | 15,000 | * | ||
Accountants Fees and Expenses | 10,000 | * | ||
Total | $ | 25,000 | * | |
* | Estimated. |
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Exhibit | ||
No. | Description of Exhibit | |
4.1 | Securities Purchase Agreement, dated January 13, 2005 (1) | |
4.2 | Registration Rights Agreement, dated January 13, 2005 (1) | |
4.3 | Form of Warrant (1) | |
4.4 | Form of Initial Note (1) | |
4.5 | Form of Additional Note (1) | |
5.1 | Opinion of Davis Graham & Stubbs LLP (3) | |
10.1 | First Additional Closing Agreement, dated September 7, 2005 (2) | |
23.1 | Consent of Davis Graham & Stubbs LLP (included in Exhibit 5.1) | |
23.2 | Consent of Ehrhardt Keefe Steiner & Hottman PC (3) | |
23.3 | Consent of Netherland, Sewell & Associates Inc. (3) |
(1) | Filed as an exhibit to Infinity’s Current Report on Form 8-K filed January 14, 2005, and incorporated herein by reference. | |
(2) | Filed as an exhibit to Infinity’s Current Report on Form 8-K filed September 8, 2005, and incorporated herein by reference. | |
(3) | Filed as an exhibit to this registration statement on Form S-3 (File No. 333-130766) filed December 29, 2005, and incorporated herein by reference. |
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INFINITY ENERGY RESOURCES, INC. | ||||
By: | /s/ James A. Tuell | |||
Name: James A. Tuell | ||||
Title: President and Chief Executive Officer |
Signature | Title | Date | ||
/s/ James A. Tuell | President (Principal Executive Officer) and Director | February 3, 2006 | ||
/s/ Timothy A. Ficker | Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) | February 3, 2006 | ||
* | Chairman of the Board | February 3, 2006 | ||
* | Director | February 3, 2006 | ||
* | Director | February 3, 2006 | ||
* | Director | February 3, 2006 |
* By: | /s/ James A. Tuell | |||
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Exhibit | ||
No. | Description of Exhibit | |
4.1 | Securities Purchase Agreement, dated January 13, 2005 (1) | |
4.2 | Registration Rights Agreement, dated January 13, 2005 (1) | |
4.3 | Form of Warrant (1) | |
4.4 | Form of Initial Note (1) | |
4.5 | Form of Additional Note (1) | |
5.1 | Opinion of Davis Graham & Stubbs LLP (3) | |
10.1 | First Additional Closing Agreement, dated September 7, 2005 (2) | |
23.1 | Consent of Davis Graham & Stubbs LLP (included in Exhibit 5.1) | |
23.2 | Consent of Ehrhardt Keefe Steiner & Hottman PC (3) | |
23.3 | Consent of Netherland, Sewell & Associates Inc. (3) |
(1) | Filed as an exhibit to Infinity’s Current Report on Form 8-K filed January 14, 2005, and incorporated herein by reference. | |
(2) | Filed as an exhibit to Infinity’s Current Report on Form 8-K filed September 8, 2005, and incorporated herein by reference. | |
(3) | Filed as an exhibit to this registration statement on Form S-3 (File No. 333-130766) filed December 29, 2005, and incorporated herein by reference. |