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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 20, 1999
DISCOVERY INVESTMENTS, INC.
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(Exact name of registrant as specified in its charter)
Nevada 000-26175 88-0409151
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
23805 Stewart Ranch Road, Suite 265
Malibu, California 90265
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(Address of principal executive offices)
(310) 456-8494
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(Registrant's telephone number, including area code)
2980 S. Rainbow Boulevard, Suite 108
Las Vegas, Nevada 89146
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(Former Address of Registrant)
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Item 1. Changes in Control of Registrant.
On December 20, 1999, there was a change in control of Registrant.
John Castellucci acquired 11,900,000 shares of the common stock of Registrant in
exchange for all of the issued and outstanding shares of stock owned by him in
LLO-Gas, Inc. The number and percentage of the shares of common stock owned of
record and beneficially by John Castellucci, the sole director, and each officer
of Registrant and by all officers and the director of Registrant as a group are
as follows:
Percentage of
Name and Address Number of Shares Common Stock
of Owner of Common Stock Owned Owned
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John Castellucci (1) 11,900,000 85%
23805 Stewart Ranch Road
Suite 265
Malibu, CA 90265
James R. Mandich 0 0
23805 Stewart Ranch Road
Suite 265
Malibu, CA 90265
All Officers and Directors
as a Group [(2) individuals] 11,900,000 85%
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(1) 2,000,000 shares of the common stock of Registrant are pledged
to M. Mehdi Mostaedi, 3520 Cross Creek Lane, Malibu,
California 90265. The loan obtained by John Castellucci and
secured by the common stock was not for the purpose of
acquiring control of Registrant. The consideration for the
loan was a pre-closing obligation in the amount of
$150,000.00, used for working capital for LLO-Gas, Inc., and
said loan is all due and payable on February 16, 2000.
On December 20, 1999, each of the prior officers and directors
of Registrant resigned as an officer and director.
There are no arrangements or understandings among members of
both the former and new control group and their associates with respect to
election of directors or any other matters.
Item 2. Acquisition or Disposition of Assets.
(a) On December 20, 1999, there was a closing under the Plan
and Agreement of Reorganization between Registrant, LLO-Gas, Inc., a Delaware
corporation and John Castellucci. Registrant acquired all of the issued and
outstanding shares of stock of LLO-Gas, Inc. in exchange for 11,900,000 shares
of the Registrant
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delivered to John Castellucci. LLO-Gas, Inc. owns one "card lock" gasoline and
diesel dispensing facility and owns seven ARCO AM/PM gas station/convenience
stores. Six of the franchised facilities was recently acquired directly from
Atlantic Richfield Company, a Delaware corporation, and one of the franchised
facilities was acquired from an independent owner operator. The acquisition of
all eight facilities included the operating business, assets and real estate.
The total purchase price paid by LLO-Gas, Inc. on or about October 26, 1999 was
the approximate sum of $9,467,000. Credit Suisse/CSFC provided secured financing
in the approximate sum of $7,800,000 to LLO-Gas, Inc. to complete the
transaction. The facility acquired from the independent owner operator required
LLO-Gas, Inc. to deliver to the seller subordinated secured notes for $800,000
payable eight (8) months from the closing ($200,000) and the balance in
twenty-four (24) months from the closing ($600,000). The purchase price paid to
the independent owner operator, included in the $9,467,000 referred to above,
was the total sum of $3,100,000 with the estimated inventory cost of $80,000.
The balance of the funds were provided by unsecured loans from third parties
(see Item 5 below) or from cash contributions or loans to LLO-Gas, Inc. by its
shareholder.
Item 5. Other Events.
(a) On December 20, 1999, the Registrant, became obligated on
a series of 3-Year 10 Percent Convertible Debentures in the aggregate amount of
$1,500,000, dated as of November 1, 1999, the terms and conditions are contained
in the debenture, and are summarized as follows:
(1) All debentures of this issue rank equally and
ratably without priority over one another.
(2) The holder or holders of the debenture may at any
time prior to the maturity thereof (except that, if the
Registrant has called the debenture for redemption, the right
to convert shall terminate at the close of business on the
second business day prior to the day fixed as the date for
such redemption), convert the principal amount hereof into the
Registrant's common stock at the conversion ratio of $5.00 of
debenture principal for one share of common stock. To convert
the debenture, the holder or holders hereof must surrender the
same at the office of the Registrant, together with a written
instrument of transfer in a form satisfactory to the
Registrant, properly completed and executed and with a written
notice of conversion.
(3) If the Registrant at any time pays to the holders
of its common stock a dividend in common stock, the number of
shares of common stock issuable upon the conversion of the
debenture shall be proportionally increased, effective at the
close of business on the
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record date for determination of the holders of the common
stock entitled to the dividend.
(4) If the Registrant at any time subdivides or
combines in a larger or smaller number of shares its
outstanding shares of common stock, then the number of shares
of common stock issuable upon the conversion of the debenture
shall be proportionally increased in the case of a subdivision
and decreased in the case of a combination, effective in
either case at the close of business on the date that the
subdivision or combination becomes effective.
(5) If the Registrant is recapitalized, consoli-dated
with or merged into any other corporation, or sells or conveys
to any other corporation all or substantially all of its
property as an entity, provision shall be made as part of the
terms of the recapitalization, consolidation, merger, sale, or
conveyance so that the holder or holders of the debenture may
receive, in lieu of the common stock otherwise issuable to
them upon conversion hereof, at the same conversion ratio, the
same kind and amount of securities or assets as may be
distributable upon the recapitalization, consolidation,
merger, sale, or conveyance with respect to the common stock.
(6) In lieu of issuing any fraction of a share upon
the conversion of the debenture, the Registrant shall pay to
the holder hereof for any fraction of a share otherwise
issuable upon the conversion cash equal to the same fraction
of the then current per share market price of the common
stock.
(7) In the event Registrant fails to make any payment
of principal and interest, said failure to pay shall
constitute a default under the terms of the debenture and,
subject to the terms and conditions contained in the
debenture, the entire unpaid principal and interest shall be
due and payable. No debenture holder may institute any suit or
proceeding for the enforcement of the payment of principal or
interest unless the holders of more than 25 percent in amount
of all outstanding debentures of the issue join in the suit or
proceeding.
(8) Registrant and LLO-Gas, Inc. may at any time
prepay in whole or in part, the principal amount, plus accrued
interest to the date of prepayment, of all outstanding
debentures of this issue, upon 30 days= written notice by
certified or registered mail to the registered owners of all
outstanding debentures.
(9) Except for debenture numbers 1 and 2, for which
John Castellucci is obligated for an amount equal
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to $150,000, the debenture is the obligation of Registrant
and LLO-Gas, Inc. only, and no recourse shall be had for the
payment of any principal or interest thereof against any
shareholder, officer or director of Registrant and LLO-Gas,
Inc., either directly or through Registrant and LLO-Gas,
Inc., by virtue of any statute for the enforcement of any
assessment or otherwise.
(10) The CUSIP Number is 2546E AA 1 and the ISIN
Number is US2546EAA10 (CUSIP Service Bureau of Standard &
Poor's).
(b) Registrant understands that during the pendency of the
extension for the financial statements required under Item 7 below, Registrant
will be deemed current for purposes of its reporting obligations under Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. With respect
to filings under the Securities Act of 1933, however, Registrant understands
that any registration statements will not be declared effective and
post-effective amendments to registration statements will not be declared
effective. Further, Registrant understands that offerings should not be made
pursuant to effective registration statements, or pursuant to Rules 505 and 506
of Regulation D, where any purchasers are not accredited investors under Rule
501(a) of said Regulation, until the required audited financial statements are
filed. Further, Registrant understands the following offerings or sales of
securities are not affected by said restriction:
(1) Offerings or sales of securities upon the
conversion of outstanding convertible securities or upon the
exercise of outstanding warrants or rights (see Item 5(a)
above);
(2) Dividend or interest investment plans;
(3) Employee benefit plans;
(4) Transaction involving secondary offerings; or
(5) Sales of Securities pursuant to Rule 144.
Item 7. Financial Statements and Exhibits.
It is impractical to provide, at this time, the required
financial statements for the acquisition of the assets described in Item 2;
Registrant will fill the required financial statements for the acquired business
under cover of a Form 8 as soon as practical, but not later than 60 days after
this Report on the Form 8-K has been filed. Said financial statements and any
additional information specified by Rule 3-14 of Regulation S-X show the filed
and the financial statements will be prepared pursuant to Regulation S-X except
that the supporting scheduled, if any, may not be filed as part of the Report.
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Further, proforma financial information for the transaction
described in Item 2 above will be proforma financial information that would be
required pursuant to Article XI of Regulation S-X.
The following exhibits are incorporated by reference into this report:
(a) 8-K of December 10, 1999.
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.
DISCOVERY INVESTMENTS, INC.
(Registrant)
DATED: January 4, 2000 /s/ John Castellucci
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John Castellucci
President