UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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Filed
by the Registrant
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Filed
by a Party other than the Registrant
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Check
the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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GALAXY
ENERGY CORPORATION
(Name
of
Registrant As Specified in its Charter)
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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Fee
computed on table below per Exchange Act Rule 14c-5(g) and
0-11.
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1)
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Title
of each class of securities to which transaction applies:
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2)
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Aggregate
number of securities to which transaction applies:
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3)
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is
calculated and state how it was determined):
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4)
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Proposed
maximum aggregate value of transaction:
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Fee
paid previously with preliminary
materials
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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1)
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Amount
Previously Paid:
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2)
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Form,
Schedule or Registration Statement No.:
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GALAXY
ENERGY CORPORATION
1331
– 17th Street, Suite 1050
Denver,
Colorado 80202
NOTICE
OF SPECIAL MEETING OF SHAREHOLDERS
TO
BE HELD DECEMBER 14, 2007
To
the
Shareholders of Galaxy Energy Corporation:
A
special
meeting of shareholders of Galaxy Energy Corporation, a Colorado corporation
(the “Company”), will be held on Friday, December 14, 2007, at 10:00 a.m., local
time, at 1331 – 17th Street, Suite 1050, Denver, Colorado, for the following
purposes:
1.
To
consider and vote upon a proposal to approve a reverse split of the Company’s
issued and outstanding common stock, par value $0.001 per share (the “Common
Stock”), at a ratio of 20-to-1 (the “Reverse Stock Split”) whereby any block of
20 shares of Common Stock held by a shareholder will be converted into one
share
of Common Stock and fractional shares will be rounded up to the nearest whole
share in lieu of issuing fractional shares created by the Reverse Stock
Split;
2.
To
consider and vote upon a proposal to approve the issuance of shares of Common
Stock upon conversion of the Company’s subordinated notes payable (the
“Subordinated Debts”), in lieu of cash payments of the principal and interest on
such Subordinated Debts, to the extent that such issuance requires shareholder
approval under the rules of the American Stock Exchange; and
3.
To
transact such other business as may properly come before the meeting or any
adjournment thereof.
The
Board
of Directors has fixed November 1, 2007 as the record date for the determination
of shareholders entitled to notice of and to vote at the meeting or any
adjournment thereof. Only shareholders of record at the close of
business on the record date are entitled to notice of and to vote at the
meeting. A complete list of such shareholders will be available for
examination at the offices of the Company in Denver, Colorado, during ordinary
business hours for a period beginning November 2, 2007 and continuing
through the meeting.
All
shareholders are cordially invited to attend the
meeting. SHAREHOLDERS ARE URGED, WHETHER OR NOT THEY PLAN TO ATTEND
THE MEETING, TO COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY AND TO RETURN
IT
PROMPTLY IN THE POSTAGE-PAID RETURN ENVELOPE PROVIDED. If a
shareholder who has returned a proxy attends the meeting in person, such
shareholder may revoke the proxy and vote in person on all matters submitted
at
the meeting.
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By
order of the Board of Directors,
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Denver,
Colorado
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Marc
E. Bruner
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___________,
2007
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President
and Chief Executive Officer
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1331
– 17th Street, Suite 1050
Denver,
Colorado 80202
PROXY
STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
TO
BE HELD DECEMBER 14, 2007
INTRODUCTION
The
accompanying proxy is solicited by and on behalf of the Board of Directors
of
the Company for use at a special meeting of shareholders of the Company to
be
held at the time and place and for the purposes set forth in the foregoing
notice. The approximate date on which this proxy statement and the
accompanying proxy were first sent to shareholders of the Company is [MAILING
DATE].
Shares
represented by valid proxies will be voted at the meeting in accordance with
the
directions given. If no direction is indicated, the shares will be
voted for the proposals described in the foregoing notice.
The
Board
of Directors is not aware of any other matter to be presented for consideration
at the meeting. If any other matter is properly presented for action
at the meeting, the proxy holders will vote the proxies in accordance with
their
best judgment in such matters. The proxy holders may also, if it is
deemed to be advisable, vote such proxies to adjourn the meeting or to recess
the meeting from time to time. The persons named as proxies will have
discretionary authority to vote all shares for which they serve as proxies,
including abstentions and broker non-votes, on the adjournment of the meeting,
whether or not a quorum is present, to a date not more than 120 days after
the
original record date to permit further solicitation of proxies.
Any
shareholder of the Company returning a proxy has the right to revoke the proxy
at any time before it is exercised by giving written notice of such revocation
to the Company addressed to Christopher S. Hardesty, Chief Financial Officer,
Galaxy Energy Corporation, 1331 – 17th Street, Suite 1050, Denver, Colorado
80202; however, no such revocation shall be effective until such notice of
revocation has been received by the Company at or prior to the
meeting.
VOTING
PROCEDURES AND TABULATION
The
Company will appoint one or more inspectors of election to act at the meeting
and to make a written report thereof. Prior to the meeting, the
inspectors will sign an oath to perform their duties in an impartial manner
and
to the best of their abilities. The inspectors will ascertain the
number of shares outstanding and the voting power of each of such shares,
determine the shares represented at the meeting and the validity of proxies
and
ballots, count all votes and ballots and perform certain other duties as
required by law. The inspectors will
tabulate the
number of votes cast for, against or abstained from the proposal described
in
the foregoing notice.
The
proposal to reverse split the issued and outstanding Common Stock at a ratio
of
20-to-1 and issue whole shares in lieu of issuing fractional shares created
by
the Reverse Stock Split must be approved by a majority of the shares of Common
Stock present or represented at the meeting.
The
proposal to issue shares of Common Stock upon the conversion of the Subordinated
Debts, in lieu of cash payments of the principal and interest on the
Subordinated Debts, to the extent that such issuance requires shareholder
approval under the rules of the American Stock Exchange must be approved by
a
majority of the shares of Common Stock present or represented at the
meeting.
If
a
shareholder abstains from voting on either of the proposals presented at the
meeting, it will have the same effect as a vote cast “AGAINST” such
proposal.
Galaxy
Energy Corporation Proxy Statement
Page
1
If
the
Company receives a signed proxy card with no indication of the manner in which
shares are to be voted on the proposal, such shares will be voted in accordance
with the recommendation of the Board of Directors for such
proposal.
Brokers
who hold shares in street name only have the authority to vote on certain items
when they have not received instructions from beneficial owners. Any
“broker non-votes” will be counted for the purposes of determining whether a
quorum is present for the meeting, but will not be counted as votes cast
regarding the proposal.
QUESTIONS
AND ANSWERS ABOUT THE PROPOSALS
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Q.
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What
proposal are shareholders being asked to consider at the upcoming
special
meeting?
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A.
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The
Company is seeking approval of the Reverse Stock Split whereby any
block
of 20 shares of Common Stock held by a shareholder will be converted
into
one share of Common Stock and fractional shares will be rounded up
to the
nearest whole share. The Company is also seeking approval to
issue Common Stock upon the conversion of or in lieu of cash payments
on
the principal and interest of the Subordinated Debts to the extent
such
issuance equals or exceeds 20% of the Company’s outstanding Common
Stock.
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Q.
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Are
the two proposals related?
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A.
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Yes. The
two proposals are part of management’s plan to restructure the
Company. The Company is proposing these actions to eliminate
its Subordinated Debts by converting them into
equity. Management considers the elimination of the Company’s
debts to be an indispensable step toward allowing the Company to
refocus
its efforts upon profitable development of its properties. If
the Company does not eliminate its debts, it will need to obtain
cash to
service those debts, instead of obtaining cash to develop its
properties. If the Company cannot obtain the necessary cash, it
may default upon its obligations as they become due and may not be
able to
continue operations of its
properties.
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The
Reverse Stock Split is an integral part of management’s plans to eliminate debt
and maintain the listing of its Common Stock on the American Stock Exchange
(“AMEX”). The Company’s stock price has declined to a level where
AMEX is concerned that the Company’s Common Stock may not be suitable for
auction market trading. Also, at current market prices, conversion of
the Subordinated Debts may not be possible because the Company may not have
enough authorized shares of Common Stock to convert all of the outstanding
Subordinated Debts to equity. By undertaking the Reverse Stock Split,
the Company can increase its market price for the Common Stock and, therefore,
enable conversion of the Subordinated Debts at a higher conversion
price. A higher conversion price will result in fewer shares of
Common Stock needed for issuance in order to satisfy the Subordinated
Debts.
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Q.
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Why
is the Company seeking shareholder approval to implement the Reverse
Stock
Split of the Company’s outstanding Common
Stock?
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A.
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Colorado
Revised Statutes require a vote of shareholders to implement the
Reverse
Stock Split. Also, the Company is proposing the Reverse Stock
Split as a strategy to increase the trading price of the Company’s Common
Stock in an effort to maintain its listing on
AMEX.
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Q:
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What
do I do with my stock certificates after the Reverse Stock
Split?
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A:
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It
will not be necessary for shareholders to exchange their existing
stock
certificates for post-Reverse Stock Split
certificates. Outstanding stock certificates should not be
destroyed or sent to the Company. Delivery of your certificates
issued prior to the effective date of the Reverse Stock Split will
constitute “good delivery” of shares in transactions subsequent to the
Reverse Stock Split. Certificates representing post-Reverse
Stock Split shares will be issued with respect to transfers completed
after the Reverse Stock Split. New certificates will also be
issued upon the request of any shareholder, subject to normal requirements
as to proper endorsement, signature guarantee, if required, and payment
of
applicable taxes.
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Galaxy
Energy Corporation Proxy Statement
Page 2
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Q:
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What
if I have lost my
certificate?
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A:
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If
you have lost your certificate, you can contact the Company’s transfer
agent to have a new certificate issued. You may be required to
post a bond or other security to reimburse the Company for any damages
or
costs if the certificate is later delivered for sale of
transfer. Our transfer agent may be reached
at:
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Computershare
350
Indiana St., Suite 800
Golden,
Colorado 80401
Phone:
(303) 262-0889
Fax:
(303) 262-0632
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Q.
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Why
is the Company seeking shareholder approval to issue Common Stock
upon the
conversion of or in lieu of cash payments on the Subordinated Debts
to the
extent such issuance equals or exceeds 20% of the Company’s outstanding
Common Stock?
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A.
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The
AMEX rules require shareholder approval for any sale, issuance, or
potential issuance of stock at a price below the greater of the book
or
market value, where the amount of stock being issued or potentially
issuable is equal to or in excess of 20% of the common stock
outstanding. Because of this rule, the Company is seeking
approval to issue Common Stock upon the conversion of or in lieu
of cash
payments on the Subordinated Debts to the extent such issuance would
equal
or exceed 20% of the Company’s outstanding Common
Stock.
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Q.
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Why
does the Company want to convert the Subordinated Debts into Common
Stock?
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A.
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The
Company is seeking to restructure its Subordinated Debts so that
the
Company has the financial strength to continue to operate and make
the
necessary capital investments in its properties. In addition,
such conversion will bring the Company into compliance with one of
the
AMEX listing requirements that the Company is currently out of compliance
with. AMEX has rules that require listed companies to maintain
the balance of shareholders’ equity at or above $2,000,000, $4,000,000,
and $6,000,000 if such companies have sustained losses from continuing
operations and/or net losses in two out of three, in three out of
four,
and in the preceding five most recent fiscal years,
respectively. The Company’s current shareholders’ equity
balance does not satisfy these minimum requirements. Therefore,
the Company is seeking to convert its Subordinated Debt into equity
to
increase shareholders’ equity on its balance sheet and maintain its
listing of Common Stock on AMEX.
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Q.
Why
were the Subordinated Debts issued?
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A.
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On
March 1, 2005, the Company completed a private placement of $7,695,000
in
subordinated convertible notes to fund the Company’s entry into the
Piceance Basin project. On April 25, 2006 and June 20, 2006,
the Company issued $7,000,000 of subordinated convertible debentures
to
cover general working capital needs and development costs for the
Company’s existing properties. On August 31, 2007, the Company
issued an unsecured subordinated promissory note to PetroHunter Energy
Corporation (“PetroHunter”) in the amount of $2,493,778 for earnest money
and operating costs paid by PetroHunter. From September 2006 to
October 15, 2007, the Company has issued a series of promissory notes
to
the Bruner Family Trust UTD March 28, 2005 (the “Bruner Trust”) totaling
$12,600,000 in order to service the Company’s other outstanding debts and
to cover general working capital needs. In addition, the Bruner
Trust purchased a note in the principal amount of $2,049,728 from
one of
the Company’s creditors.
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Q.
What
happens if the proposals are approved?
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A.
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If
the proposals are approved, then (1) the Company will reverse split
the
Common Stock on a 20-to-1 basis and issue one whole share in lieu
of
issuing any fractional shares and (2) the holders of the Subordinated
Debts may, at their option, convert their Subordinated Debts into
Common
Stock even if the number of shares issued equals or exceeds 20% of
the
Company’s outstanding Common Stock.
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Galaxy
Energy Corporation Proxy Statement
Page 3
Q.
What
if the proposals are not approved?
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A.
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If
the Reverse Stock Split does not receive shareholder approval, the
Company
may not be able to maintain its listing of the Common Stock on AMEX
and it
may not have enough authorized Common Stock to convert the Subordinated
Debts to Common Stock. If the proposal to issue Common Stock in
lieu of cash payments on the Subordinated Debts does not receive
shareholder approval, and if the issuance equals or exceeds 20% of
the
Company’s outstanding Common Stock, then the Company may be required to
redeem for cash the portion of the Subordinated Debts that is not
convertible due to such 20% limitation. Since the Company has
not been generating sufficient revenue to support its operations
and does
not have sufficient cash to make such a redemption, the Company is
likely
to default on its obligations under the Subordinated
Debts.
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Q.
What
if Proposal 2 is approved and Proposal 1 is not approved?
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A.
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If
the Reverse Stock Split does not receive shareholder approval, the
Company
will not undertake the conversion of the Subordinated Debts into
Common
Stock, even if the conversion of the Subordinated Debts is
approved. Both Proposal 1 and Proposal 2 are integral parts of
management’s plan to restructure and refocus the Company. The
Company seeks approval of both proposals in order to maintain its
listing
of Common Stock on AMEX.
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Q.
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Can
the conversion of the Subordinated Debts allow the holders of the
debt
instruments to obtain control of the
Company?
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A.
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The
issuance of Common Stock to convert the Subordinated Debts will
concentrate control of the Company in the Bruner Trust. Marc E.
Bruner is one of the trustees of the Bruner Trust and is the president
and
a director of the Company. Assuming conversion of all the
Subordinated Debts, Marc E. Bruner could beneficially own and control
37%
of the issued and outstanding post-Reverse Stock Split shares of
Common
Stock. Marc E. Bruner’s beneficial ownership position upon
conversion of the Subordinated Debts, together with his position
as
president and a director of the Company, will give him significant
influence over the Company after conversion of the Subordinated
Debts.
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Q:
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Can
I require the Company to purchase my
stock?
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A:
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No,
the transactions contemplated by the proposals do not give rise to
dissenters’ rights. Pursuant to the Colorado Revised Statutes
Section 7-113-102, you are not entitled to an appraisal and purchase
of
your Common Stock as a result of the Reverse Stock Split or the issuance
of Common Stock upon the conversion of the Subordinated Debts into
Common
Stock.
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Galaxy
Energy Corporation Proxy Statement
Page 4
20-TO-1
AND THE ISSUANCE OF WHOLE SHARES IN LIEU OF FRACTIONAL SHARES CREATED BY THE
REVERSE STOCK SPLIT
The
Company currently has 400,000,000 shares of Common Stock authorized, and
83,661,968 shares of Common Stock are outstanding as of the November 1,
2007. By implementing a reverse split of the issued and outstanding
shares of Common Stock, more shares will then be available for issuance in
the
future. In particular, more shares will be available for issuance to
the Subordinated Debt holders.
The
Board
of Directors is not implementing the Reverse Stock Split in anticipation of
any
“going private” transaction. On the contrary, the Reverse Stock split
is being proposed in an effort to maintain the Company’s listing of the Common
Stock on AMEX. The Company has received notice from AMEX that the
Company is not in compliance with Section 1003(f)(v) of the AMEX Company
Guide. Section 1003(f)(v) requires that the Common Stock’s selling
price does not become a “low selling price for a substantial period of
time.” The trading price of the Company’s Common Stock has not
exceeded $0.30 per share for the past year. Other sections of the
AMEX Company Guide, Sections 1003(a)(i), 1003(a)(ii) and 1003(a)(iii), require
the Company to maintain a shareholders’ equity balance in excess of $2,000,000,
$4,000,000, and $6,000,000 since the Company has sustained losses from
continuing operations and/or net losses in two out of three, in three out of
four, and in the preceding five most recent fiscal years,
respectively. The price of the Common Stock has become a “low selling
price” pursuant to AMEX’s standards and the Company’s shareholders’ equity
balance has fallen below the minimum requirements.
The
board of directors recommends a vote “FOR” approval of the Reverse Stock Split
at a ratio of 20-to-1 and the issuance of whole shares in lieu of any fractional
shares created by the Reverse Stock Split.
The
Reverse Stock Split is part of the Company’s plan to remedy the non-compliance
with Sections 1003(a)(i), 1003(a)(ii), 1003(a)(iii) and
1003(f)(v). By implementing a 20-to-1 reverse split of the Common
Stock, the Company will be able to raise the trading price of the Common Stock
on AMEX. With the per share price Common Stock increased, the Company
will be in a better position to convert the outstanding Subordinated Debts
into
Common Stock, thereby increasing the balance of shareholders’ equity above
$2,000,000, $4,000,000, and $6,000,000 minimum
thresholds. Furthermore, if the Company does not first implement the
Reverse Stock Split, the Company may not have a sufficient number of authorized
and unissued Common Stock to convert the outstanding Subordinated Debts into
Common Stock. See Proposal 2 beginning on page 9 of this proxy
statement and the related discussion for further information.
Material
Effects of the Reverse Stock Split
The
Reverse Stock Split will be implemented simultaneously for all of the Common
Stock, and the ratio will be the same for all of the Common
Stock. Any block of 20 shares of Common Stock held by a shareholder
will be converted into one share of Common Stock without the need for any action
on the part of the shareholder. Fractional shares created by the
Reverse Stock Split will be rounded up to the nearest whole share.
The
Reverse Stock Split will affect all of the Company’s shareholders uniformly and
will not materially affect any shareholder’s percentage ownership interests in
the Company. Percentage ownership for some shareholders may change
immaterially due to the effect of issuing one whole share in lieu of any
fractional shares created by the Reverse Stock Split.
The
principal effect of the Reverse Stock Split will be to reduce the number of
shares of the Common Stock issued and outstanding from 83,661,968 shares as
of
November 1, 2007, to approximately 4,183,099 shares. In addition, the
Reverse Stock Split will increase the number of shareholders who own odd lots
(less than 100 shares). Shareholders who hold odd lots may experience
an increase in the cost of selling their shares and may have greater difficulty
in effecting sales.
Galaxy
Energy Corporation Proxy Statement
Page 5
The
Reverse Stock Split will affect all issued and outstanding shares of the Common
Stock and outstanding rights to acquire the Common Stock. All of the
Company’s stock options, stock warrants, convertible instruments and other
instruments indexed to the Common Stock contain adjustment provisions requiring
the prices and quantities of Common Stock referenced in such instruments to
be
adjusted upon the implementation of the Reverse Stock Split.
After
the
Reverse Stock Split approximately 395,816,901 shares of Common Stock will be
available for issuance. The Company plans to utilize some of the
available Common Stock to convert the Subordinated Debts into Common
Stock. See Proposal 2 beginning on page 9 of this proxy statement and
the related discussion for further information. If the shareholders
approve Proposal 2 or the Company issues additional shares of Common Stock
for
any other purpose after the Reverse Stock Split, the ownership interest of
existing shareholders will be diluted.
The
following table sets forth information regarding the Company’s current and
anticipated number of authorized shares and issued and outstanding shares of
the
Common Stock following implementation of the Reverse Stock Split and the
reduction in authorized shares.
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Shares
of Common Stock Authorized
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Shares
of Common Stock Issued and Outstanding
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Shares
of Common Stock Available for Issuance
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As
of November 1, 2007
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400,000,000
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83,661,968
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316,338,032
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After
20-to-1 Reverse Stock Split
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400,000,000
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4,183,099
(1)
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395,816,901
(1)
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___________
(1) These
numbers are approximate.
Effect
on Fractional Shares
Shareholders
will not receive fractional shares in connection with the Reverse Stock
Split. Instead, affected shareholders will receive one whole share in
lieu of any fractional shares they may have received. The Company
currently has approximately 105 record holders of the Common
Stock. The Reverse Stock Split will not change the number of
shareholders that own the Company’s Common Stock.
Effect
on Registered and Beneficial Shareholders
The
Company intends to treat shareholders holding the Common Stock in “street name,”
through a bank, broker or other nominee, in the same manner as registered
shareholders whose shares are registered in their names. Banks,
brokers or other nominees will be instructed to effect the Reverse Stock Split
for their beneficial holders holding the Common Stock in “street
name.” However, such banks, brokers or other nominees may have
different procedures than registered shareholders for processing the Reverse
Stock Split. Shareholders who hold their shares with such a bank,
broker or other nominee and who have any questions in this regard are encouraged
to contact their nominees.
Effect
on Certificated Shares
It
will
not be necessary for shareholders to exchange their existing stock certificates
for post-Reverse Stock Split certificates. Outstanding stock
certificates representing the Company’s Common Stock should NOT be destroyed or
sent to the Company. The Common Stock will continue to be traded on
AMEX. The Company will treat the pre-Reverse Stock Split certificates
as constituting “good delivery” in transactions involving the Common Stock
subsequent to the Reverse Stock Split. However, shareholders may
exchange their existing stock certificates for post-Reverse Stock Split
certificates if shareholders choose to do so.
Galaxy
Energy Corporation Proxy Statement
Page 6
Certain
Risk Factors Associated with the Reverse Stock Split
Implementation
of the Reverse Stock Split entails various risks and uncertainties, including
but not limited to the following:
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There
can be no assurance that the market price per share of the Common
Stock
after the Reverse Stock Split will remain unchanged or increase in
proportion to the reduction in the number of shares of the Common
Stock
outstanding before the Reverse Stock Split. Accordingly, the
total market capitalization of the Company after the Reverse Stock
Split
may be lower than the total market capitalization before the Reverse
Stock
Split.
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·
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After
the Reverse Stock Split, if the market price of the Common Stock
declines,
the percentage decline may be greater than would occur in the absence
of a
Reverse Stock Split.
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·
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There
can be no assurance that the market price of the Common Stock will
not
decline below the AMEX minimum listing requirements after the Reverse
Stock Split.
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·
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The
reduced number of shares that would be outstanding after the Reverse
Stock
Split could adversely affect the liquidity of the Common
Stock.
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Accounting
Matters
The
Reverse Stock Split will not affect the par value of the Common
Stock. As a result, as of the effective time of the Reverse Stock
Split, the stated capital attributable to the Common Stock on the Company’s
balance sheet will be reduced proportionately based on the Reverse Stock Split
ratio of 20-to-1, and the additional paid-in capital account will be credited
with the amount by which the stated capital is reduced. The per share
net income or loss and net book value of the Common Stock will be restated
because there will be fewer shares of the Common Stock outstanding.
Potential
Anti-Takeover Effect
Although
the increased proportion of unissued authorized shares to issued shares could,
under certain circumstances, have an anti-takeover effect (for example, by
permitting issuances that would dilute the stock ownership of a person seeking
to effect a change in the composition of the Board of Directors or contemplating
a tender offer or other transaction for the combination of the Company with
another company), the Reverse Stock Split proposal is not being undertaken
in
response to any effort of which the Board of Directors is aware to accumulate
shares of the Common Stock or obtain control of the Company. Other
than the Reverse Stock Split, the Board of Directors does not currently
contemplate the adoption of any action that could be construed to affect the
ability of third parties to take over or change the control of the
Company.
Release
No. 34-15230 of the staff of the Securities and Exchange Commission requires
disclosure and discussion of the effects of any shareholder proposal that may
be
used as an anti-takeover device. However, the purpose of the Reverse
Stock Split is to raise the per share price of the Common Stock in order to
maintain the listing on AMEX, and not to construct or enable any anti-takeover
defense or mechanism on behalf of the Company. While it is possible
that management could use the additional shares to resist or frustrate a
third-party transaction providing an above-market premium that is favored by
a
majority of the independent shareholders, the Company has no intent or plan
to
employ the additional unissued authorized shares as an anti-takeover
device.
Dissenters’
Appraisal Rights
Pursuant
to the Colorado Revised Statutes Section 7-113-102, shareholders are not
entitled to an appraisal and purchase of their Common Stock as a result of
the
Reverse Stock Split.
Galaxy
Energy Corporation Proxy Statement
Page 7
Federal
Income Tax Consequences of the Reverse Stock Split
The
following is a summary of the material federal income tax consequences of the
proposed Reverse Stock Split. This discussion is based on the
Internal Revenue Code, the Treasury Regulations promulgated
thereunder, judicial opinions, published positions of the Internal Revenue
Service, and all other applicable authorities as of the date of this document,
all of which are subject to change (possibly with retroactive
effect). This discussion does not describe all of the tax
consequences that may be relevant to a holder in light of his particular
circumstances or to holders subject to special rules (such as dealers in
securities, financial institutions, insurance companies, tax-exempt
organizations, foreign individuals and entities, and persons who acquired their
Common Stock as compensation). In addition, this summary is limited
to shareholders that hold their Common Stock as capital assets. This
discussion also does not address any tax consequences arising under the laws
of
any state, local or foreign jurisdiction.
ACCORDINGLY,
EACH SHAREHOLDER IS STRONGLY URGED TO CONSULT WITH A TAX ADVISOR TO DETERMINE
THE PARTICULAR FEDERAL, STATE, LOCAL OR FOREIGN INCOME OR OTHER TAX CONSEQUENCES
TO SUCH SHAREHOLDER OF THE REVERSE STOCK SPLIT.
Shareholders
should not recognize a gain or loss as a result of the Reverse Stock
Split. A shareholder’s aggregate tax basis of the post-Reverse Stock
Split shares will be the same as the shareholder’s aggregate tax basis in the
pre-Reverse Stock Split shares. The holding period for the
post-Reverse Stock Split shares will include the period during which a
shareholder held the pre-Reverse Stock Split shares.
The
tax
treatment of each shareholder may vary depending upon the particular facts
and
circumstances of such shareholder. Each shareholder is urged to
consult with such shareholder’s own tax advisor with respect to the tax
consequences of the Reverse Stock Split. Each shareholder should
consult with his or her own tax advisor with respect to all of the potential
tax
consequences to him or her of the Reverse Stock Split.
Galaxy
Energy Corporation Proxy Statement
Page 8
PROPOSAL
2 - TO APPROVE THE ISSUANCE OF COMMON STOCK UPON CONVERSION OF THE SUBORINATED
DEBTS, IN LIEU OF
CASH
PAYMENTS ON THE PRINCIPAL AND INTEREST OF THE SUBORDINATED DEBTS, TO THE EXTENT
SUCH ISSUANCE WOULD
REQUIRE
SHAREHOLDER APPROVAL UNDER THE AMEX RULES
The
report of the Company’s independent auditor on the financial statements for the
year ended November 30, 2006, includes an explanatory paragraph indicating
that
there is substantial doubt as to the Company’s ability to continue as a going
concern. From inception to May 31, 2007, the Company has incurred a
cumulative net loss of $72,467,216. As a result, the Company requires
significant additional funding to sustain its operations and satisfy its
contractual obligations for its planned oil and gas exploration and development
operations.
To
provide some of the required funding, the Company entered into an agreement
in
December 2006 to sell a portion of its assets in an effort to redeem its senior
secured debt as the first step in the financial restructuring of the
Company. The agreed upon sale of assets could not be completed and
the Company is currently searching for other buyers and suitable terms for
a
sale of some of its assets. If the Company can sell some of its
assets on suitable terms, the Company plans to substantially reduce the balance
of its senior secured debt or repay it in full.
Even
if
the Company is able to repay all of its senior secured debt, the Company will
still owe approximately $39.5 million to the Subordinated Debt
holders. The Company does not have the funds to pay off the
Subordinated Debts as they become due. Additionally, in order to
realize the potential of the Company’s remaining assets, the Company will need
to return to the financial markets to secure additional debt
financing. Even if the Company is able to repay all of its senior
debt with the proceeds of an asset sale, the large outstanding balance and
short-term nature of the Subordinated Debts coupled with the low trading price
of the Company’s Common Stock severely limits the opportunity for and the
availability of the financing needed to profitably develop the Company’s
remaining assets. Converting the Subordinated Debts into shares of
Common Stock will relieve the Company from having to satisfy those ongoing
debt
obligations and will increase the Company’s options in identifying and obtaining
the additional financing needed to establish the Company as a going concern,
fund the Company’s planned operations and ultimately, to achieve profitable
operations.
Management
considers both the Reverse Stock Split and the conversion of the Subordinated
Debts into Common Stock to be necessary steps to allow the company to continue
in business and to develop its properties. Without first implementing
the Reverse Stock Split, the Company may not have sufficient authorized and
unissued shares of Common Stock or a high enough trading price to effect the
conversion of the Subordinated Debts into Common Stock. Without
converting the Subordinated Debt, the Company will not be in compliance with
the
AMEX rules regarding the balance of shareholders’ equity.
The
AMEX
rules require shareholder approval for any sale, issuance, or potential issuance
of stock at a price that is below the greater of the book or market value,
where
the amount of stock being issued equals or exceeds 20% of the outstanding common
stock. Because the conversion of the Subordinated Debts could result
in the issuance of Common Stock below the book value or market price and because
of this rule, the Company is seeking shareholder approval to issue Common Stock
upon the conversion of or in lieu of cash payments on the Subordinated Debts
to
the extent such issuance equals or exceeds 20% of the Company’s outstanding
Common Stock.
The
Company has received notice from AMEX that the Company is not in compliance
with
several Sections of the AMEX Company Guide. The Company’s stock price
has declined to a level where AMEX is concerned that the Company’s Common Stock
may not be suitable for auction market trading. The trading price of
the Company’s Common Stock has not exceeded $0.30 per share for the past
year. Also, Sections 1003(a)(i), 1003(a)(ii), and 1003(a)(iii)
require the Company to maintain a shareholders’ equity balance in excess of
$2,000,000, $4,000,000, and $6,000,000 since the Company has sustained losses
from continuing operations and/or net losses in two out of three, in three
out
of four, and in five of its most recent fiscal years,
respectively. As of the November 1, 2007, the Company’s shareholders’
equity balance has fallen below these minimum standards.
Galaxy
Energy Corporation Proxy Statement
Page 9
The
Company submitted its plan to regain compliance with the continued listing
standards to AMEX on August 30, 2007. The plan includes the sale of
enough assets to pay off senior indebtedness, the Reverse Stock Split, and
the
conversion of the Subordinated Debts to restructure and refocus the Company’s
efforts on successful exploration and development of oil and gas
properties. On October 15, 2007, AMEX notified the Company that it
has accepted the plan to regain compliance with the continued listing
standards. AMEX has continued the Company’s exchange listing until
December 31, 2007, pursuant to an extension, by which time the Company must
regain compliance with the continued listing standards. The Company
will be subject to periodic review by AMEX during the extension
period. Failure to make progress consistent with the plan or to
regain compliance with the continued listing standards by the end of the
extension period could result in the Company being delisted from
AMEX.
The
board of directors recommends a vote “FOR” approval of the issuance of shares of
Common Stock upon conversion of the Company’s Subordinated Debts, in lieu of
cash payments on the principal and interest on the Subordinated Debts, to the
extent such issuance requires shareholder approval under the AMEX
rules.
The
Subordinated Debts, Principal Terms, and Reasons for
Issuance
March
2005 Subordinated Debt
. On March 1, 2005, the
Company sold $7,695,000 of senior subordinated convertible notes and three-year
warrants to purchase 1,637,235 shares of common stock at $1.88 per share to
several accredited investors to fund the Company’s entry into the Piceance Basin
project. The notes were originally convertible into Common Stock at a
price of $1.88 per share. The notes pay interest at the prime rate
plus 6.75% per annum, mature October 31, 2007, are subordinated to the Company’s
secured debt and existing senior debt, and were convertible into 4,093,085
shares of Common Stock based on a conversion price of $1.88 per share beginning
September 1, 2005. The exercise price of the warrants and conversion
price of the notes were subsequently lowered to $1.25 per
share. Principal and interest on the notes are payable upon
maturity. Payment of the note may be accelerated upon the Company’s
failure to comply with provisions of the notes, default in the payment of at
least $100,000 that gives rise to acceleration under another instrument,
bankruptcy or insolvency, the Company’s failure to file its reports with the
Securities and Exchange Commission on a timely basis, or entry of one or more
judgments of $100,000 or more that remain unsatisfied for 30
days. The Company is seeking an extension of the maturity date of
these notes to February 29, 2008.
The
terms
of the convertible notes and the warrants prohibit the conversion of any
principal under the convertible notes or the exercise of any warrants which,
after giving effect to such conversion or exercise, would cause a note or
warrant holder and its affiliates to beneficially own at any time more than
4.99% of the outstanding Common Stock of the Company.
In
connection with convertible notes and the warrants, the Company registered
the
resale of the shares of Common Stock issuable upon exercise of the warrants
and
conversion of the notes.
April
and June 2006 Subordinated Debt
. On April 25 and
June 20, 2006, the Company issued a total of $7,000,000 of subordinated
convertible debentures in order to cover general working capital needs and
development costs for the Company’s existing properties. In addition,
the debenture holders also received three-year warrants that allow the holders
to purchase 865,383 shares of common stock at $1.60 per share. The
debentures (i) pay interest at 15% per annum, payable at maturity; (ii) have
a
term of 30 months, which will extend automatically until all of the Company’s
senior debt has been retired; (iii) if the debentures are retired at maturity,
the holders are entitled to an additional payment equal to the sum of 25% plus
0.75% for each month (or part thereof) in excess of 30 months that the
debentures have remained outstanding; (iv) are subordinated to all of the
Company’s senior indebtedness; and (v) are Convertible at any time by the
holders into shares of Common Stock at a price equal to $1.56.
The
terms
of the convertible debentures and the warrants prohibit the conversion of any
principal under the convertible debentures or the exercise of any warrants
which, after giving effect to such conversion or exercise, would cause a
debenture or warrant holder and its affiliates to beneficially own at any time
more than 4.99% of the outstanding Common Stock of the Company.
Galaxy
Energy Corporation Proxy Statement
Page
10
In
connection with convertible debentures and the warrants, the Company registered
the resale of the shares of Common Stock issuable upon conversion of the
convertible debentures and exercise of the warrants.
PetroHunter
Subordinated Debt
. On December 29, 2006, the
Company entered into a Purchase and Sale Agreement (the “PSA”) with PetroHunter,
a related party, whereby the Company agreed to sell all of its oil and gas
interests in the Powder River Basin of Wyoming and Montana (the “Powder River
Basin Assets”). Pursuant to the terms of the PSA, PetroHunter made an
earnest money deposit of $2,000,000. PetroHunter became the contract
operator of the Powder River Basin Assets beginning January 1,
2007. The sale of the Powder River Basin Assets did not occur
according to the terms of the PSA and thus, the earnest money and operating
expenses paid by PetroHunter were converted into a subordinated note for
$2,493,778 upon expiration of the PSA on August 31, 2007. The note
accrues interest at the rate of 8% per annum and is due on the later of (i)
the
date upon which all of the senior indebtedness has been paid in full and (ii)
December 29, 2007.
Bruner
Trust Subordinated Debt
. In order to satisfy the
Company’s obligations under other outstanding debts and to cover general working
capital needs, the Company has issued 16 separate subordinated unsecured
promissory notes for a total of $12,600,000 to the Bruner Trust, a related
party. One of the trustees of the Bruner Trust is Marc E. Bruner, the
president and a director of the Company. The Company anticipates that
it will borrow an additional $1,500,000 from the Bruner Trust prior to
completing the conversion of the Subordinated Debts into Common
Stock. Interest accrues at the rate of 8% per annum and the notes
mature as summarized below or the time at which the Company’s senior
indebtedness has been paid in full. In October 2006, the Bruner Trust
acquired the remaining balance, together with accrued interest, of a promissory
note originally issued to DAR LLC. The note, in the amount of
$2,049,728 accrues interest at the rate of 12% per annum.
The
following table details the issue dates, due dates, and principal amounts of
the
Bruner Trust Subordinated Debts, including the anticipated additional borrowings
that the Company may undertake:
|
Issue
Date
|
Due
Date
|
|
Amount
|
|
|
January
14, 2004
|
June
30, 2007
|
|
$
|
2,049,728
|
|
|
September
28, 2006
|
January
26, 2007
|
|
|
2,500,000
|
|
|
November
1, 2006
|
March
1, 2007
|
|
|
1,000,000
|
|
|
November
13, 2006
|
March
13, 2007
|
|
|
500,000
|
|
|
November
30, 2006
|
March
30, 2007
|
|
|
1,500,000
|
|
|
January
31, 2007
|
May
31, 2007
|
|
|
500,000
|
|
|
February
28, 2007
|
June
28, 2007
|
|
|
900,000
|
|
|
March
30, 2007
|
July
28, 2007
|
|
|
1,350,000
|
|
|
April
26, 2007
|
August
24, 2007
|
|
|
1,200,000
|
|
|
May
4, 2007
|
September
1, 2007
|
|
|
450,000
|
|
|
May
31, 2007
|
September
28, 2007
|
|
|
600,000
|
|
|
June
29, 2007
|
October
27, 2007
|
|
|
750,000
|
|
|
August
22, 2007
|
December
20, 2007
|
|
|
125,000
|
|
|
August
29, 2007
|
December
27, 2007
|
|
|
250,000
|
|
|
September
12, 2007
|
January
10, 2008
|
|
|
125,000
|
|
|
September
28, 2007
|
January
26, 2008
|
|
|
600,000
|
|
|
October
11, 2007
|
February
8, 2008
|
|
|
250,000
|
|
|
November
15, 2007
(1)
|
March
14, 2008
(1)
|
|
|
750,000
|
(1)
|
|
December
15, 2007
(1)
|
April
13, 2008
(1)
|
|
|
750,000
|
(1)
|
|
|
|
|
$
|
16,149,728
|
|
|
|
|
|
|
|
|
__________________
(1)
The
Company
anticipates that it will borrow these additional funds from the Bruner Trust
upon the same terms as the previous notes.
Accrued
Interest
. The Subordinated Debts have accrued
interest that will also be converted into Common Stock in lieu of cash
payments. The following table summarizes the Subordinated Debts and
the accrued interest calculated through December 31, 2007.
Galaxy
Energy Corporation Proxy Statement
Page 11
|
|
|
Principal
|
|
|
Accrued
Interest
as
of
December
31, 2007
|
|
|
Total
|
|
|
March
2005
|
|
$
|
7,695,000
|
|
|
$
|
3,074,311
|
|
|
$
|
10,769,311
|
|
|
April
and June 2006
|
|
|
7,000,000
|
|
|
|
1,720,890
|
|
|
|
8,720,890
|
|
|
Bruner
Trust
(1)
|
|
|
16,149,728
|
(1)
|
|
|
1,390,899
|
(1)
|
|
|
17,540,627
|
(1)
|
|
PetroHunter
|
|
|
2,493,778
|
|
|
|
66,683
|
|
|
|
2,560,461
|
|
|
|
|
$
|
33,338,506
|
|
|
$
|
6,252,783
|
|
|
$
|
39,591,289
|
|
|
|
|
____________
(1)
Assumes an additional $1,500,000 borrowed in November and December,
2007.
Section
713 of the AMEX Company Guide requires shareholder approval for the sale,
issuance, or potential issuance of common stock (or securities convertible
into,
or exercisable for, common stock) representing 20% or more of an issuer’s common
stock or voting power outstanding before such issuance at a price below the
greater of the common stock’s book or market value. The Company is
soliciting shareholder approval of the issuance of shares of Common Stock upon
conversion of, or in lieu of cash payments on, the Subordinated Debs, to the
extent such issuance would equal or exceed 20% of the Company’s outstanding
Common Stock.
Management
has held preliminary discussions with some of the Subordinated Debt holders
and
believes that the Subordinated Debts can be converted at $0.10 per pre-Reverse
Stock Split share, or $2.00 per share after the Reverse Stock
Split. However, after reviewing the market prices of the Common Stock
for the last 6 months, management believes that the following range of
pre-Reverse Stock Split prices could apply to the conversion of the Subordinated
Debts:
|
|
|
Low
Estimate
|
|
|
Closing
Trading
Price
on
October
16, 2007
|
|
|
Targeted
Price
|
|
|
High
Estimate
|
|
|
Pre-Reverse
Stock Split Price Per Share
|
|
$
|
0.06
|
|
|
$
|
0.087
|
|
|
$
|
0.10
|
|
|
$
|
0.12
|
|
|
Post-Reverse
Stock Split Price Per Share
|
|
$
|
1.20
|
|
|
$
|
1.74
|
|
|
$
|
2.00
|
|
|
$
|
2.40
|
|
|
Estimated
Principal and Interest to be Converted as of December 31,
2007
|
|
$
|
39,591,289
|
|
|
$
|
39,591,289
|
|
|
$
|
39,591,289
|
|
|
$
|
39,591,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of Shares of Common Stock Needed for Conversion
|
|
|
32,992,741
|
|
|
|
22,753,614
|
|
|
|
19,795,645
|
|
|
|
16,496,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of Issued and Outstanding Shares Post-Reverse Stock Split
|
|
|
4,183,099
|
|
|
|
4,183,099
|
|
|
|
4,183,099
|
|
|
|
4,183,099
|
|
|
Total
Shares Issued and Outstanding after the Reverse Stock Split and Conversion
of Subordinated Debts
|
|
|
37,175,840
|
|
|
|
26,936,713
|
|
|
|
23,978,744
|
|
|
|
20,679,470
|
|
These
estimates are given to illustrate the possible effects of the conversion of
the
Subordinated Debts and are for informational purposes only. If the
Company obtains shareholder approval, there is no limit on the number of shares
that could be issued upon conversion of, or in lieu of cash payments on, the
Subordinated Debts, and such issuance of shares of Common Stock will no longer
be subject to shareholder approval under Section 713 of the AMEX Company
Guide. If the Company does not obtain shareholder approval, the
Company will not be able to issue any shares representing 20% or more of the
outstanding Common Stock due to restrictions relating to Section
713.
Galaxy
Energy Corporation Proxy Statement
Page 12
Procedure
for Converting the Subordinated Debts
The
Company must negotiate with each Subordinated Debt holder to accept Common
Stock
in lieu of cash payments for principal and interest due on the Subordinated
Debts. The Company contemplates that the negotiated conversion price
of all the subordinated debts will be the same and will approximate or exceed
the trading price of the Common Stock on AMEX after the Reverse Stock
Split. Upon reaching agreement with a Subordinated Debt holder, the
total principal and interest due under that holder’s debt instrument will be
calculated as of the conversion day and divided by the agreed upon per share
conversion price. The number of shares derived by this formula will
be rounded up to the nearest whole share.
Although
management does not anticipate issuing more than 32,992,741 post-Reverse stock
Split shares, no assurance can be given that the conversion price negotiated
with the Subordinated Debt holders will not fall below the Low Estimate detailed
above. If the negotiated conversion price falls below the Low
Estimate, the Company may be required to issue more than 32,992,741 post-Reverse
stock Split shares of Common Stock to convert the Subordinated Debts into
equity. If the Company obtains shareholder approval, there is no
limit on the number of shares that could be issued upon conversion of, or in
lieu of cash payments on, the Subordinated Debts.
The
holders of the Subordinated Debts are not obligated to convert the principal
and
interest due to them into Common Stock. While the March 2005 and the
April and June 2006 Subordinated Debts are convertible by their terms, those
terms do not require the conversion contemplated by this proxy
statement. Some Subordinated Debt holders may not accept the
Company’s offer to convert their instruments at the negotiated per share
conversion price or may not accept conversion in any situation. In
the event a Subordinated Debt holder will not convert the principal and interest
owed to it into Common Stock, the Company may have to make a cash payment to
redeem all or a portion of such Subordinated Debts. There can be no
assurance that the Company will have the cash necessary to make such a
redemption.
Based
on
preliminary discussions with some of the holders of the Subordinated Debts,
management believes a large portion of the Subordinated Debt holders will accept
the negotiated conversion price and accept Common Stock in lieu of cash payments
on the outstanding principal and interest due to them.
Changes
in Control
The
issuance of Common Stock to convert the Subordinated Debts will concentrate
control of the Company in the Bruner Trust. Marc E. Bruner is one of
the trustees of the Bruner Trust and is the president and a director of the
Company. Of the Subordinated Debts, the Bruner Trust will hold
approximately $17,540,627 of accumulated interest and principal, assuming the
Company borrows an additional $1,500,000 of principal in November and December,
2007.
Galaxy
Energy Corporation Proxy Statement
Page 13
The
following calculations and percentages are for illustration purposes
only. Assuming conversion of all the Subordinated Debts at $2.00 per
post-Reverse Stock Split share and a conversion date of December 31, 2007,
the
Company will issue approximately 19,795,645 post-Reverse Stock Split shares
of
Common Stock to convert the Subordinated Debts. Of these shares,
approximately 8,770,314 will be issued to the Bruner Trust. Marc E.
Bruner would then beneficially own and control approximately 37% of the issued
and outstanding post-Reverse Stock Split shares of Common Stock. Marc
E. Bruner’s control of these shares would be shared with the other trustees of
the Bruner Trust. Marc E. Bruner’s beneficial ownership position in
connection with his position as president and a director of the Company will
give him a significant controlling position in the Company after conversion
of
the Subordinated Debts.
There
are
no arrangements or understandings among the holders of the Subordinated Debts
with respect to any matters relating to the Company.
Potential
Dilution And Market Consequences
The
issuance of shares of Common Stock upon Conversion of the Subordinated Debts
will substantially dilute the interests of the Company’s other
shareholders. The Subordinated Debts will have an aggregate
outstanding principal and interest balance of $39.5 million as of December
31,
2007. To the extent the holders convert the Subordinated Debts and
then sell the shares of the Company’s Common Stock they receive upon conversion,
the Company’s stock price could decrease due to the additional amount of shares
available in the market. The subsequent sales of these shares could
encourage short sales by the Company’s shareholders and others, which could
place further downward pressure on the Company’s stock price.
Dissenters’
Appraisal Rights
Pursuant
to the Colorado Revised Statutes Section 7-113-102, shareholders are not
entitled to an appraisal and purchase of their Common Stock due to the issuance
of shares to convert the Subordinated Debts into equity.
The
terms
of the Subordinated Debts are varied and complex and only briefly summarized
in
this proxy statement. Shareholders wishing further information
concerning the rights, preferences and terms of the convertible notes and
warrants are referred to the documents filed as exhibits to the Company’s
Current Reports on Form 8-K filed with the Securities and Exchange
Commission.
SELECTED
FINANCIAL DATA
The
table
sets forth selected financial data, derived from the consolidated financial
statements, regarding our financial position and results of operations as of
the
dates indicated.
|
|
|
Year
ended November 30,
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
From
Inception
(June
18, 2002) to
November
30, 2002
|
|
|
Summary
of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,274,116
|
|
|
$
|
1,538,342
|
|
|
$
|
122,455
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Lease
operating costs
|
|
|
781,136
|
|
|
|
965,069
|
|
|
|
59,247
|
|
|
|
-
|
|
|
|
-
|
|
|
General
& administrative expense
|
|
|
5,016,534
|
|
|
|
5,316,588
|
|
|
|
3,517,218
|
|
|
|
2,095,495
|
|
|
|
1,140,066
|
|
|
Depreciation,
depletion and amortization
|
|
|
779,446
|
|
|
|
1,887,074
|
|
|
|
76,390
|
|
|
|
685
|
|
|
|
-
|
|
|
Impairment
of oil and gas properties
|
|
|
1,328,432
|
|
|
|
5,273,795
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net
(loss)
|
|
|
(26,163,107
|
)
|
|
|
(24,876,200
|
)
|
|
|
(9,831,104
|
)
|
|
|
(2,579,595
|
)
|
|
|
(1,140,066
|
)
|
|
Net
(loss) per share
|
|
|
(0.36
|
)
|
|
|
(0.37
|
)
|
|
|
(0.18
|
)
|
|
|
(0.08
|
)
|
|
|
(0.04
|
)
|
Galaxy
Energy Corporation Proxy Statement
Page 14
|
|
|
As
of November 30,
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
Balance
Sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital (deficiency)
|
|
$
|
(19,868,880
|
)
|
|
$
|
(7,085,181
|
)
|
|
$
|
(626,108
|
)
|
|
$
|
1,756,776
|
|
|
$
|
(1,012,916
|
)
|
|
Cash
and cash equivalents
|
|
|
608,180
|
|
|
|
1,328,469
|
|
|
|
10,513,847
|
|
|
|
2,239,520
|
|
|
|
41,320
|
|
|
Oil
and gas properties, net
|
|
|
44,793,140
|
|
|
|
44,358,725
|
|
|
|
37,491,529
|
|
|
|
2,799,720
|
|
|
|
873,797
|
|
|
Total
assets
|
|
|
47,760,258
|
|
|
|
48,459,378
|
|
|
|
49,648,165
|
|
|
|
5,655,433
|
|
|
|
954,359
|
|
|
Long-term
debt
|
|
|
16,881,267
|
|
|
|
11,188,252
|
|
|
|
10,915,928
|
|
|
|
2,483,557
|
|
|
|
50,000
|
|
|
Stockholders’
equity
|
|
|
7,919,911
|
|
|
|
25,418,378
|
|
|
|
26,681,207
|
|
|
|
2,634,559
|
|
|
|
(149,897
|
)
|
INCORPORATION
BY REFERENCE
The
Company files annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the
“
SEC
”). You may read and copy any document filed at the Public
Reference Room of the SEC, 100 F Street, N.E., Room 1580, Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the Public Reference Room. The Company’s SEC filings
are also available to the public from the SEC’s website at
http://www.sec.gov/.
Included
in the information available and incorporated in this proxy statement by
reference are (i) audited financial statements of the Company as of November
30,
2006 and 2005, which are contained in the Company’s Form 10-K for the fiscal
year ended November 30, 2006; and (ii) unaudited financial statements of the
Company as February 28, 2007, May 31, 2007, and August 31, 2007, and which
are
contained in the Company’s Forms 10-Q for the quarterly periods ended February
28, 2007, May 31, 2007, and August 31, 2007.
INTEREST
OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No
director or officer, or associate of any director or officer or any other person
has any substantial interest in, direct or indirect, by security holdings or
otherwise, or will receive extra or special benefit from Proposals 1 and 2
which
is not shared on a pro rata basis by all other holders of securities of the
same
class in accordance with their respective interests. In particular,
it is anticipated that the Bruner Trust will receive the same conversion price
per share as all other Subordinated Debt holders.
VOTING
SECURITIES AND PRINCIPAL SHAREHOLDERS
Only
holders of record of Common Stock at the close of business on November 1, 2007,
the record date for the meeting, are entitled to notice of and to vote at the
meeting or any adjournment(s) thereof. The presence of a majority of
the Common Stock outstanding on the record date is necessary to constitute
a
quorum. On the record date for the meeting, there were issued and
outstanding 83,661,968 shares of Common Stock. At the meeting, each
shareholder of record on the record date will be entitled to one vote for each
share registered in such shareholder’s name on the record date. The
following table provides certain information as to the share ownership of
officers and directors individually and as a group, and the holders of more
than
5% of our Common Stock as of November 1, 2007:
|
Name
and Address of Beneficial Owner (1)
|
Amount
and Nature of
Beneficial
Ownership
|
Percent
of Class (2)
|
|
Marc
A. Bruner
29
Blauenweg
Metzerlen,
Switzerland 4116
|
11,701,799
(3)
|
14.0%
|
|
Resource
Venture Management
29
Blauenweg
Metzerlen,
Switzerland 4116
|
4,899,525
|
5.9%
|
Galaxy
Energy Corporation Proxy Statement
Page 15
|
Name
and Address of Beneficial Owner (1)
|
Amount
and Nature of
Beneficial
Ownership
|
Percent
of Class (2)
|
|
Bruner
Group, LLP
1775
Sherman Street #1375
Denver,
Colorado 80203
|
4,500,000
|
5.4%
|
|
Marc
E. Bruner
|
2,127,500
(4)
|
2.5%
|
|
Cecil
D. Gritz
|
533,750
(5)
|
*
|
|
Dr.
James Edwards
|
300,000
(6)
|
*
|
|
Robert
Thomas Fetters, Jr.
|
240,000
(7)
|
*
|
|
Nathan
C. Collins
|
240,000
(7)
|
*
|
|
Christopher
S. Hardesty
|
211,000
(8)
|
*
|
|
Ronald
P. Trout
|
60,000
(9)
|
*
|
|
All
officers and directors as a group (7 persons)
|
3,712,250
(10)
|
4.5%
|
*less
than one percent (1%)
__________________
|
(1)
|
To
our knowledge, except as set forth in the footnotes to this table
and
subject to applicable community property laws, each person named
in the
table has sole voting and investment power with respect to the shares
set
forth opposite such person’s name.
|
|
(2)
|
This
table is based on 83,661,968 shares of Common Stock outstanding as
of
November 1, 2007. If a person listed on this table has the
right to obtain additional shares of Common Stock within sixty (60)
days
from November 1, 2007, the additional shares are deemed to be outstanding
for the purpose of computing the percentage of class owned by such
person,
but are not deemed to be outstanding for the purpose of computing
the
percentage of any other person.
|
|
(3)
|
Included
in Mr. Bruner’s share ownership are shares owned of record by Resource
Venture Management and Bruner Group, LLP. Mr. Bruner is a
control person of both these entities. Also included in Mr.
Bruner’s share ownership are 203,390 shares issuable upon exercise of
warrants.
|
|
(4)
|
Includes
627,500 shares issuable upon exercise of stock
options.
|
|
(5)
|
Includes
533,750 shares issuable upon exercise of stock
options.
|
|
(6)
|
Includes
300,000 shares issuable upon exercise of stock
options.
|
|
(7)
|
Includes
240,000 shares issuable upon exercise of stock
options.
|
|
(8)
|
Includes
195,000 shares issuable upon exercise of stock
options.
|
|
(9)
|
Includes
60,000 shares issuable upon exercise of stock
options.
|
|
(10)
|
Includes
2,196,250 shares issuable upon exercise of stock
options.
|
SHAREHOLDER
PROPOSALS AND OTHER MATTERS
If
a
shareholder intends to present a proposal for action at the Company’s 2008
annual meeting and wishes to have such proposal considered for inclusion in
the
Company’s proxy materials in reliance on Rule 14a-8 under the Securities
Exchange Act of 1934, the proposal must have been submitted in writing and
received by the Company by February 29, 2008. Such proposals must
also meet the other requirements of the rules of the Securities and Exchange
Commission relating to shareholder proposals.
For
any
proposal that is not submitted for inclusion in the proxy statement for the
2008
annual meeting but is instead sought to be presented directly at next year’s
annual meeting, Securities and Exchange Commission rules permit management
of
the Company to vote proxies in its discretion if (a) the Company receives notice
of the proposal before the close of business on February 29, 2008 and advises
shareholders in the proxy statement about the nature of the matter and how
management intends to vote on such matter, or (b) the Company does not receive
notice of the proposal prior to the close of business on February 29,
2008.
Galaxy
Energy Corporation Proxy Statement
Page 16
Solicitation
of Proxies may be made by mail, personal interview or telephone by officers,
directors and regular employees of the Company. The Company may also
request banking institutions, brokerage firms, custodians, nominees and
fiduciaries to forward solicitation material to the beneficial owners of the
Common Stock that those companies or persons hold of record, and the Company
will reimburse the forwarding expenses. In addition, the Company has
retained Georgeson Inc. to assist in solicitation for a fee estimated not to
exceed $55,000, not including out-of-pocket expenses. The Company
will bear all costs of solicitation.
The
Company will provide, by first class mail or other equally prompt means, a
copy
of the information that is incorporated by reference in the proxy statement,
without charge, to each person to whom a proxy statement is delivered upon
written or oral request within one day of receipt of such
request. Requests for such information may be directed to Galaxy
Energy Corporation, Attention: Corporate Secretary, 1331 – 17th Street, Suite
1050, Denver, Colorado 80202, telephone (303) 293-2300.
|
|
|
GALAXY
ENERGY CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denver,
Colorado
|
|
Marc
E. Bruner
|
|
[MAILING
DATE]
|
|
President
and Chief Executive Officer
|
Galaxy
Energy Corporation Proxy Statement
Page 17
GALAXY
ENERGY CORPORATION
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints Marc E. Bruner and Christopher S. Hardesty, and
either of them, proxies with power of substitution in each, and hereby
authorizes them to represent and to vote, as designated below, all shares of
common stock, $0.001 par value per share (“Common Stock”), of Galaxy Energy
Corporation, standing in the name of the undersigned at the close of business
on
November 1, 2007, at the special meeting of shareholders to be held on December
14, 2007, at Denver, Colorado, and at any adjournment thereof and especially
to
vote on the items of business specified herein, as more fully described in
the
notice of the meeting dated [MAILING DATE], and the proxy statement accompanying
the same, the receipt of which is hereby acknowledged.
This
proxy when duly executed will be voted in the manner directed herein by the
undersigned shareholder.
If no direction is made, this proxy
will be voted “FOR” Proposals 1 and 2.
PLEASE
MARK YOUR VOTE IN THE FOLLOWING MANNER USING DARK INK ONLY.
ý
|
FOR
|
o
|
AGAINST
|
o
|
ABSTAIN
|
o
|
2. Proposal
to approve the issuance of shares of Common Stock upon conversion of the
Company’s Subordinated Debts, in lieu of cash payments of the principal and
interest on such Subordinated Debts, to the extent that such issuance requires
shareholder approval under the rules of the American Stock
Exchange.
|
FOR
|
o
|
AGAINST
|
o
|
ABSTAIN
|
o
|
3. In
their discretion, the undersigned hereby authorizes the proxies to vote upon
such other business or matters as may properly come before the meeting or any
adjournment thereof.
|
FOR
|
o
|
AGAINST
|
o
|
ABSTAIN
|
o
|
AUTHORIZED
SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR INSTRUCTIONS
TO
BE EXECUTED.
The
undersigned hereby revokes any proxy or proxies heretofore given to represent
or
vote such Common Stock and hereby ratifies and confirms all action that said
proxies, their substitutes, or any of them, might lawfully take in accordance
with the terms hereof.
|
Signature
1
Please
keep signature within the box
|
Signature
2
Please
keep signature within the box
|
Date
(mm/dd/yyyy)
|
|
|
|
|
NOTE:
This proxy should be signed exactly as name appears hereon. Joint
owners should both sign. If signed as attorney, executor, guardian,
or in some other representative capacity, or as an officer of a corporation,
please indicate full title or capacity. Please complete, date and
return it in the enclosed envelope, which requires no postage if mailed in
the
United States.
Grafico Azioni Galaxy Energy (AMEX:GAX)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Galaxy Energy (AMEX:GAX)
Storico
Da Giu 2023 a Giu 2024
