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 reported) June 15, 2007
DIGITAL LEARNING MANAGEMENT CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 000-26293 20-1661391
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
680 Langsdorf Drive, Suite 203 Fullerton, California 92831
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 921-3444
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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 Instructions 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))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On June 15, 2007, Digital Learning Management Corporation ("Digital")
entered into an Amended Exchange Agreement with Changchun Yongxin Dirui Medical
Co., Ltd, a China corporation ("Yongxin") and all of the shareholders of
Yongxin.
In accordance with the Amended Exchange Agreement, and subject to certain
preconditions to Closing, including the completion of an approximate 1:12
reverse split, appropriate shareholder consents, the filing of necessary
disclosures with the Securities and Exchange Commission, and the settlement of
certain debt, Digital agreed to issue 21,000,000 shares of newly issued common
stock and 5 million shares of Series A Preferred Stock to the Yongxin
shareholders or their designees, representing, immediately following closing,
79% of the total issued and outstanding shares of common stock and voting rights
of approximately 85% of the total voting rights of the Company.
Digital would remain a wholly owned operating subsidiary of the Company
following Closing. As a result of the numerous preconditions to Closing, a
Closing date has not been set, although, it is anticipated that such closing
will take place in July, 2007.
Neither Digital nor any of its officers or directors has a prior
relationship with Yongxin, its shareholders or its officers or directors.
A copy of the Amended Exchange Agreement is attached hereto as Exhibit
10.01 and incorporated into this Item 1.01 in its entirety by reference.
ITEM 3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS
On May 25, 2007, the Company Board of Directors approved the filing of a
Certificate of Designation, Preferences and Rights of the Terms of the Series A
Preferred Stock with the state of Delaware, which certificate of designation
designated 5,000,000 shares of Series A Preferred Stock. The Company intends to
issue the stock in accordance with and upon the Closing of the Amended Share
Exchange Agreement.
Each share of series A convertible preferred stock entitles the holder
thereof to six (6) votes at any meeting of shareholders or any action by written
consent of shareholders.
The holder of any share or shares of Series A Convertible Preferred Stock
shall have the right, at its option, (i) at any time hereafter (except that upon
any liquidation of the Corporation, the right of conversion shall terminate at
the close of business on the business day fixed for payment of the amount
distributable on the Series A Convertible Preferred Stock) to convert, in each
of the three succeeding periods as set forth herein, any such shares of Series A
Convertible Preferred Stock into such number of fully paid and nonassessable
shares of Common Stock on a six (6) for one (1) basis subject to the limitations
herein. No more than 1,666,666 of the Series A Convertible Preferred Stock may
be converted in each of the three periods following the date hereof. The
conversion formula is conditioned on the Corporation earning no less than 3
million dollars of net income in for the fiscal year end March 31, 2008; $4
million dollars of net income in the fiscal year end March 31, 2009 and $5
million dollars of net income in the fiscal year end March 31, 2010. In the
event that in any of the three fiscal years, the Corporation earns less than
required net income amounts for conversion, then the conversion right shall be
proportionately reduced by the amount of the shortfall below the required net
income amount, with the "catch-up" right to convert additional shares to the
extent that the net income exceeds 3 million; 4 million and 5 million dollars in
each of the three consecutive years. In no event shall this conversion right
allow for the conversion of the Series A Preferred Stock into more than 6 common
shares for each share of Series A Preferred Stock over the course of the
aforementioned three calendar years. The net income requirements shall be based
upon an audit of the revenues for each fiscal year. All conversions shall be
made within 30 days of the completion of such audit.
The Series A Convertible Preferred Stock shall not earn or be entitled to
any dividends until the right to convert has expired. Beginning upon the date of
expiration of such conversion rights, each share of issued and outstanding
Series A Convertible Preferred Stock shall be entitled to a preferential
dividend at the rate of ten cents ($.10) per annum. Dividends on the Series A
Convertible Preferred Stock shall accrue on the dates stated above and shall be
paid from time to time as determined by the Board of Directors when and if such
payment is legally acceptable in accordance with the Delaware General
Corporations Law, and shall be in preference to and have priority over dividends
upon the Common Stock and all other shares junior to the Series A Convertible
Preferred Stock.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
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(d) Exhibits. The following exhibits are being furnished herewith:
3.01 Certificate of Designation, Preferences and Rights of the Terms
of the Series A Preferred Stock
10.01 Amended Exchange Agreement
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.
Date: June 18, 2007 DIGITAL LEARNING MANAGEMENT CORPORATION
By: /s/Craig Nagasugi
Name: Craig Nagasugi
Title: Chief Executive Officer