UNITED STATES
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: May 20, 2008
MOMENTUM BIOFUELS, INC.
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(Exact name of registrant as specified in its charter)
Colorado 000-50619 84-1069035
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(State or other jurisdiction of (Commission File (IRS Employer Identification
incorporation) Number) Number)
2600 S. Shore Blvd, Suite 100, League City, TX 77573
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(Address of Principal Executive Offices) (Zip Code)
(281) 334-5161
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Registrant's telephone number, including area code
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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:
[ ] 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))
SECTION 3 - SECURITIES AND TRADING MARKETS
ITEM 3.02 - Unregistered Sales of Equity Securities
On May 20, 2008, Momentum BioFuels, Inc. ("the Registrant") received $400,000 as
part of a Senior Secured Convertible Debt Offering with Bathgate Capital
Partners, LLC ("Bathgate"). The Registrant intends to use these funds to support
the ongoing operations of its biodiesel facility.
On May 1, 2008, the Registrant executed a Term Sheet with Bathgate that provided
for Bathgate to raise a minimum of $400,000 to a maximum of $600,000 using
Senior Secured Convertible debt.
At May 20, 2008, the Registrant issued $400,000 of Senior Secured Convertible
Notes ("Convertible Notes") with attached Investor Warrants ("Investor
Warrants") exercisable for 200,000 shares of the Registrant's common stock, as
described below.
Convertible Notes
The Convertible Notes are secured by all of the property, plant, equipment and
any other assets held by the Registrant. The Convertible Notes have a 10% annual
interest rate, that is to be paid quarterly and a due date of May 1, 2013. The
Convertible Notes are convertible into shares of the Registrant's common stock
at a rate of $0.40 per share ("conversion price"). If the notes are paid in full
prior to May 1, 2010, the Registrant will issue one additional warrant for each
$1 invested (400,000 warrants), with the same terms and conditions as the
Investor Warrants.
The notes provide that if the Registrant should raise any additional financing
while the notes are outstanding, and such financing has price lower than that of
the conversion price, the conversion price will be reset to equal the price of
the additional financing.
In the case of default on the notes, the Registrant will be required to issue
additional warrants to the investors ("Penalty Warrants") for every $0.25
invested by the investors (1,600,000 warrants). In addition, in the case of
default, the interest rate of the convertible notes increases to 18% per annum.
Warrants
In addition to the Convertible Notes, the Registrant issued Investor Warrants
exercisable for 200,000 shares of the Company's common stock. The warrants have
an exercise price of $0.40 per share and a term of 7 years. The warrants provide
for cashless exercise and have piggy back registration rights.
The Penalty Warrants will have the same terms and conditions as the original
Investor Warrants, with the exception that the exercise price will be based upon
the closing bid of the Registrant's stock at the time of default.
Placement Agent Fees
As part of the financing, Bathgate, for its services as the Placement Agent,
received a 7% cash commission ($28,000), 3% non-accountable and warrants
exercisable for 400,000 shares of the Registrant's common stock ("Placement
Warrants").
The Placement Warrants have an exercise price of $0.40 per share and a term of 7
years and provide for piggyback registration rights.
Section 9 FINANCIAL STATEMENTS AND EXHIBITS
Item 9.01 Financial Statements and Exhibits
(c) Exhibits. The following is a complete list of exhibits filed as
part of this Report. Exhibit numbers correspond to the numbers in the exhibit
table of Item 601 of Regulation S-K.
Exhibit No. Description
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10.1 Secured Convertible Note, dated May __, 2008 *
10.2 Agreement Among Lenders, dated May __, 2008 *
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*Filed herewith
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.
MOMENTUM BIOFUELS, INC.
By: /s/ Gregory A. Enders
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Gregory A. Enders, President
and Chief Executive Officer
Date: May 28, 2008