Siberian Energy Group Inc (fka SIBN)

[FlatEarthSoc]

In October 2010, the Company entered into Debt Conversion Agreements with nine (9) creditors of the Company (the majority of which were shareholders and related parties of the Company), pursuant to which such creditors agreed to convert an aggregate of $2,554,460 of debt owed to such creditors by the Company and accrued and unpaid interest thereon, which debt represented loans previously provided by the creditors to the Company, accrued and unpaid salary and other debts owed to the creditors by the Company, into 23,222,359 shares of restricted common stock of the Company (representing 55% of the Company’s then outstanding shares (including the 180,000 shares due to Ms. Teplitskaia, as discussed below under Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, which have not been issued to date)), at the rate of one share for each $0.11 of debt converted (the “Conversion”). The Conversion price of $0.11 per share was calculated based on the average market price of the Company’s common stock on the Over-The-Counter Bulletin Board for the six months prior to September 30, 2010.

Included in the creditors who agreed to the Conversions were Alternative Energy Finance (which is an entity controlled by Timothy Peara, a Director of the Company), which converted $158,924 of debt owed to it by the Company into 1,444,767 shares of restricted common stock (representing 3.4% of the Company’s outstanding common stock); Timothy Peara, who converted $147,537 of debt owed to him by the Company into 1,341,242 shares of restricted common stock (representing 3.2% of the Company’s outstanding common stock); Elena Pochapski, the Company’s Chief Financial Officer and Director, who converted $298,832 owed to her by the Company into 2,716,655 shares of restricted common stock (representing 6.5% of the Company’s outstanding common stock); and David Zaikin, the Company’s Chief Executive Officer and Director, who converted $1,153,228 of debt owed to him by the Company into 10,483,895 shares of restricted common stock (representing 24.9% of the Company’s outstanding common stock). Additionally, Business Standard, a consultant of the Company, converted $607,975 of debt owed to it by the Company into 5,527,046 shares of common stock (representing 13.2% of the Company’s then outstanding common stock).

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