SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): November 10, 2004
MARKLAND TECHNOLOGIES, INC.
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(Exact Name of Registrant as Specified in Charter)
FLORIDA 000-28863 84-1331134
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(State or Other Jurisdiction (Commission (Irs Employer
of Incorporation) File Number) Identification Number)
#207 54 DANBURY ROAD, RIDGEFIELD, CT 06877
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(Address of Principal Executive Offices) (Zip Code)
(203) 894-9700
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, If Changed Since Last Report)
Check the appropriate box below if the form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below).
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This report on Form 8-K contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. We intend the forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements in these
sections. All statements regarding our expected financial position, business and
financing plans are forward-looking statements. These statements can sometimes
be identified by our use of forward-looking words such as "may," "will,"
"should," "expect," "anticipate," "project," "designed," "estimate," "plan" and
"continue." Although we believe that our expectations in such forward-looking
statements are reasonable, we cannot promise that our expectations will turn out
to be correct. These forward-looking statements generally relate to plans and
objectives for future operations and are based upon reasonable estimates and
assumptions regarding future results or trends. These forward-looking statements
are subject to certain risks, uncertainties and assumptions relating to Markland
Technologies, Inc. ("Markland", the "Company", "we" or "our"). Factors that
could cause actual results to differ materially from Markland expectations
include the uncertainty regarding Markland's ability to repay existing
indebtedness, lack of continuing operations, possible inability of Markland to
continue in business and other risks detailed from time to time in Markland's
SEC reports. No assurance can be given that investors of Markland will retain
any level of value. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, the Company's
future performance and actual results of operations may vary significantly from
those anticipated, projected, believed, expected, intended or implied. The
Company undertakes no obligation to update any of the forward-looking
statements, which speak only as of the date they were made.
ITEM 1.01 ENTRY INTO A DEFINITIVE MATERIAL AGREEMENT
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION
UNDER AN OFFICIAL, BALANCE SHEET ARRANGEMENT OF A REGISTRANT
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
On November 9, 2004, we entered into a Securities Purchase Agreement
(the "Securities Purchase Agreement") with Harborview Master Fund, LP and
Southridge Partners, LP(the "Investors") pursuant to which we sold warrants to
purchase shares of our common stock and secured convertible promissory notes for
the aggregate consideration of $1,350,000. We received net proceeds of
$1,174,500 from this private placement. We intend to use the proceeds from this
offering for working capital. The offer and sale of these securities was made in
reliance on Section 4(2) of Securities Act of 1933, as amended. The Investors
are "accredited investors" within the meaning of Regulation D.
The Securities Purchase Agreement contains standard representations,
covenants and events of default. Occurrence of an event of default allows the
Investors to accelerate the payment of the notes and/or exercise other legal
remedies, including foreclosing on collateral.
The Notes
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The notes issued in connection with this private placement are in the
aggregate principal amount of one million seven hundred fifty five thousand
dollars ($1,755,000) and accrue interest daily at the rate of eight percent (8%)
per year on the then outstanding and unconverted principal balance of the notes.
The notes will mature on November 9, 2005.
At any time, and at the option of the Investors, the outstanding
principal and accrued interest of the notes may be converted into shares of our
common stock at an initial conversion price per share of $0.80.
Under the terms of each these notes, we are required to pay a principal
amount on each note equal to the consideration paid by the Investor holding such
note plus any accrued interest by March 15, 2005, and the remaining outstanding
balance by November 9, 2005. If we do not make the March 15, 2005 prepayment,
the conversion price will be adjusted from $0.80 per share to the lower of (i)
$0.80 and (ii) a floating rate equal to 80% of average closing price per share
of our common stock for the five trading days preceding conversion.
2
In the event we issue common stock or common stock equivalents at a
price per share below the then effective conversion price of the convertible
notes, the conversion price will be reduced to that lower price per share.
The Warrants
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The warrants issued in connection with this private placement entitle
the Investors to purchase an aggregate of 2,193,750 shares of our common stock,
at any time and from time to time, through November 9, 2009.
Under the terms of the warrants, if we do not make a prepayment of an
aggregate of $1,350,00 in principal, plus any interest having accrued thereon,
on the notes issued to the Investors in this private placement by March 15,
2005, the exercise price of the warrant will be reduced from $1.50 to the lesser
of (i) $0.792 and (ii) 80% of the average closing price per share of our common
stock on the date the adjustment is made.
Adjustments are also required in the event that we issue common stock
or common stock equivalents at a price per share below the then effective
exercise price of the warrants. The exercise price will be reduced to that lower
price per share
In the event any of the foregoing adjustments are made, the warrants
will become exercisable for a number of shares equal to the aggregate exercise
price (i.e., the exercise price per share multiplied by the number of underlying
shares) prior to the adjustment divided by the adjusted exercise price per
share.
Registration Rights and Liquidated Damages
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We have agreed to prepare and file with the SEC a registration
statement covering the resale of all of the shares of our common stock issuable
upon conversion of the notes and the exercise of the warrants issued in
connection with this private placement, as provided in the Securities Purchase
Agreement dated November 9, 2004.
The investors in our September 21, 2004 private placement have
consented to the inclusion of the Investors and additional selling shareholders
with piggy back registration rights in the filing of the registration statement
on Form SB-2 to be filed in connection with our September 21, 2004 private
placement. In addition, they have waived their rights to liquidated damages
pursuant to the Registration Rights Agreement dated September 21, 2004, that
would have been paid in connection with our filing of the registration statement
on November 10, 2004, instead of November 5, 2004.
The terms of the Securities Purchase Agreement with the Investors
requires that if either: (i) the registration statement is not declared
effective by December 20, 2004, or within five trading days after the SEC
notifies us that the registration will not be reviewed or is not subject to
further review or comments; or (ii) this registration statement is suspended for
more than an aggregate of 20 trading days, whether or not consecutive, in any
twelve-month period, we will be required to pay each of the Investors liquidated
damages in an amount equal to 2% of such Investor's investment amount, half of
which may, at our option, be paid in common stock of equivalent value. Such
value shall be determined based on the lower of (i) the average of the closing
price of our common stock for the five days preceding the payment date and (ii)
the closing price of our common stock on the day preceding the date that stock
is delivered to the Investors.
Security Interest
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We have granted a security interest in and a lien on substantially all
of our assets to the Investors pursuant to the terms of the Securities Purchase
Agreement, dated November 9, 2004. This security interest is subordinated to the
security interests granted in connection with the acquisition of EOIR and the
September 21, 2004 private placement.
A full description of this transaction and related matters is included
in the Company's Registration Statement on Form SB-2 filed on November 10, 2004.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
FILED WITH INCORPORATED BY REFERENCE
EXHIBIT THIS FORM ----------------------------------------------
NO. DESCRIPTION 8-K FORM FILING DATE EXHIBIT NO.
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99.1* Securities Purchase Agreement between SB-2 November 10, 2004 10.50
Markland Technologies, Inc., Harborview
Master Fund, LP and Southridge Partners
dated November 9, 2004
99.2 Form of Convertible Note issued to SB-2 November 10, 2004 10.51
Harborview Master Fund, LP and Southridge
Partners, LP
99.3 Form of Warrant issued to Harborview Master SB-2 November 10, 2004 10.52
Fund, LP and Southridge Partners, LP
99.4 Subordination Agreement between DKR
Soundshore Oasis Holding Fund, LLC DKR SB-2 November 10, 2004 10.53
Soundshore Strategic Holding Fund, LLC,
Harborview Master Fund, LP, Southridge
Partners, LP, and Markland
Technologies,Inc., dated November 9, 2004
99.5 Conditional Waiver and Consent between DKR
Soundshore Oasis Holding Fund, LLC DKR SB-2 November 10, 2004 10.54
Soundshore Strategic Holding Fund, LLC,
Harborview Master Fund, LP, Southridge
Partners, LP, and Markland Technologies,
Inc., dated November 9, 2004
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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 thereunto duly authorized.
MARKLAND TECHNOLOGIES, INC.
By: /s/ Robert Tarini
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Robert Tarini
Chief Executive Officer
Date: November 9, 2004
EXHIBIT INDEX
FILED WITH INCORPORATED BY REFERENCE
EXHIBIT THIS FORM ----------------------------------------------
NO. DESCRIPTION 8-K FORM FILING DATE EXHIBIT NO.
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99.1* Securities Purchase Agreement between SB-2 November 10, 2004 10.50
Markland Technologies, Inc., Harborview
Master Fund, LP and Southridge Partners
dated November 9, 2004
99.2 Form of Convertible Note issued to SB-2 November 10, 2004 10.51
Harborview Master Fund, LP and Southridge
Partners, LP
99.3 Form of Warrant issued to Harborview Master SB-2 November 10, 2004 10.52
Fund, LP and Southridge Partners, LP
Subordination Agreement between DKR
99.4 Subordination Agreement between DKR
Soundshore Oasis Holding Fund, LLC DKR SB-2 November 10, 2004 10.53
Soundshore Strategic Holding Fund, LLC,
Harborview Master Fund, LP, Southridge
Partners, LP, and Markland
Technologies,Inc., dated November 9, 2004
99.5 Conditional Waiver and Consent between DKR
Soundshore Oasis Holding Fund, LLC DKR SB-2 November 10, 2004 10.54
Soundshore Strategic Holding Fund, LLC,
Harborview Master Fund, LP, Southridge
Partners, LP, and Markland Technologies,
Inc., dated November 9, 2004
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