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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 29, 1999
Commission File Number 000-26039
ESAT, INC.
(Exact name of registrant as specified in its charter)
NEVADA 95-0344604
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
16520 HARBOR BLVD., FOUNTAIN
VALLEY, CA 92708 (Address of principal
executive offices, including zip code)
(714) 418-3200
(Registrant's telephone number, including area code)
_______________N/A_______________
(Former name or former address, if changed since last report.)
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ITEM 5: OTHER EVENTS
On December 29, 1999 (the "Closing Date"), eSat, Inc., a Nevada
corporation ("eSat"), issued and sold 50,000 shares of its Series C 6%
Convertible Preferred Stock ("Series C Preferred Stock") to Wentworth LLC, a
limited liability company organized under the laws of the Grand Cayman Islands.
Grayson & Associates acted as the broker in connection with the private
placement under Section 506 of Regulation D, promulgated under the Securities
Act of 1933, as amended. The number of shares of common stock into which the
Series C Preferred Stock is convertible is determined by multiplying the number
of shares of Series C Preferred Stock to be converted by a fraction, the
numerator of which is the Original Issue Price ($100 per share) and the
denominator of which is the Conversion Price (the lesser of 125% of the closing
bid price of the common stock on the trading day immediately preceding the date
of conversion or 85% of the 5 day average quoted price for the 5 trading days
immediately preceding the conversion notice date). The Series C Preferred Stock
becomes convertible according to the following schedule: (i) 16,666 shares of
Series C Preferred Stock may be converted at any time after the date (the
"Effective Date") that a registration statement becomes effective for common
stock into which the Series C Preferred Stock is convertible; (ii) an additional
16,666 shares of Series C Preferred Stock may be converted beginning on the 60th
day after the Effective Date; and (iii) the balance of the Series C Preferred
Stock may be converted beginning on the 90th day after the Effective Date;
provided that in no event may any holder of Series C Preferred Stock convert
more than 20% of such holder's shares of Series C Preferred Stock in any period
of 5 consecutive trading days. If the closing bid price for the common stock of
eSat declines below $2 per share, eSat may suspend conversions once only for up
to 10 trading days. On or after the second anniversary of the issuance, eSat may
require conversion of the Series C Preferred Stock.
In addition to the Series C Preferred Stock, Wentworth LLC received
Warrants to acquire shares of eSat's common stock in an amount equal to 1 share
of common stock for each 6.66 shares into which the Series C Preferred Stock
were convertible on the Closing Date. The Warrants bear an exercise price equal
to 125% of the market price of the common stock on the Closing Date and expire
on the last day of the month in which the fifth anniversary of the Closing Date
occurs.
eSat entered into an additional agreement with Wentworth LLC which
provides that, during the one year following the Closing Date, Wentworth LLC
would buy from eSat and eSat would sell to Wentworth LLC additional shares of
eSat's common stock for a aggregate purchase price of not less than $2.5 million
and up to $20 million in the aggregate, at a per share price equal to 90% of the
5 lowest closing bid prices of the common stock for the 10 trading days prior to
eSat's offer to sell any particular tranche.
Both the Series C Preferred Stock and the Warrants and the shares into
which they are convertible have certain registration rights.
The net proceeds to eSat were $4,635,000 net of a broker's commission
of $340,000 and legal fees of $25,000. The broker also received warrants to
acquire 159,286 shares of eSat's common stock. Vantage Capital, Inc. and
Corporate Financial Enterprises are also entitled to receive a finder's fee of
$160,000 in connection with this sale of securities. Michael C. Palmer,
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Chief Executive Officer of eSat, Inc., is also President of Vantage Capital,
Inc. eSat intends to use the proceeds of this sale of securities primarily for
working capital purposes.
ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
10.01 Securities Purchase Agreement dated December 29, 1999 between
eSat and Wentworth LLC.
10.02 Form of Warrant dated December 29, 1999 issued to Grayson &
Associates.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ESAT, INC.
By: /s/ Chester L. Noblett, Jr.
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Chester L. Noblett, Jr.
Chairman of the Board
Dated: January 12, 2000
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