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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 10, 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.)
2980 S. Rainbow Boulevard, Suite 108
Las Vegas, Nevada 89146
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(Address of principal executive offices)
(702) 248-1047
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(Registrant's telephone number, including area code)
N/A
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(Former Address of Registrant)
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Item 5. Other Events.
(a) On December 10, 1999, the Registrant, subject to the closing
of the Plan and Agreement of Reorganization referred to in (b) below, issued 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, see Item 7(a) though (f) inclusive, and are summarized as
follows:
(1) All debentures of this issue rank equally and ratably
without priority over one another.
(2) Provided that the Registrant becomes obligated, the
holder or holders of this debenture may at any time prior to the
maturity hereof (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 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 decrease 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, consolidated 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
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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. In the
event the Registrant and the shareholders of LLO-Gas, Inc. do not
entered into a business combination which closes on or before
December 31, 1999, an individual debenture holder may institute
any suit or proceeding in the event of default.
(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 number 1 and 2, for which John
Castellucci is obligated for an amount equal 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.
(b) On December 10, 1999, the Registrant entered into a Plan and
Agreement of Reorganization with LLO-Gas, Inc., a Delaware corporation and John
Castellucci. The Plan and Agreement of Reorganization contemplates that the
Registrant will acquire all of the issued and outstanding shares of stock of
LLO-
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Gas, Inc. in exchange for 11,900,000 shares of the Registrant. The terms and
conditions set forth in the original letter of intent entered into by and
between the parties were adjusted to reflect the transaction as at December 10,
1999.
As of the date hereof, LLO-Gas, Inc. owns one (1) "card lock"
gasoline and diesel dispensing facility and owns seven (7) ARCO AM/PM gas
station/convenience stores. Six of the franchised facilities were 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 (8) 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 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 7 (a) through (f) below) or from cash
contributions or loans to LLO-Gas, Inc. by its shareholder. LLO-Gas, Inc.
represents and warrants that it will have proper financial information and such
additional information so that the Registrant can file all applicable documents
to comply with the Securities Exchange Act of 1934, as amended.
The closing will occur on December 20, 1999.
Item 7. Financial Statements and Exhibits.
The following exhibits are filed as a part of this report:
(a) 3-Year 10 Percent Convertible Note, Number 1 payable to Interlochen
Enterprises, Inc. dated as of November 1, 1999 in the sum of $250,000.
(b) 3-Year 10 Percent Convertible Note, Number 2 payable to Meridian
Enterprises, Inc. dated as of November 1, 1999 in the sum of $250,000.
(c) 3-Year 10 Percent Convertible Note, Number 3 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of $250,000.
(d) 3-Year 10 Percent Convertible Note, Number 4 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of $250,000.
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(e) 3-Year 10 Percent Convertible Note, Number 5 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of $250,000.
(f) 3-Year 10 Percent Convertible Note, Number 6 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of $250,000.
(g) Plan and Agreement of Reorganization by and between LLO-Gas, Inc., a
Delaware corporation and John Castellucci, dated 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: December 13, 1999 /s/ Kimberly Lynn Jack
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Kimberly Lynn Jack,
President