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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 event reported): January 31, 2005
Global Matrechs, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-29204 58-2153309
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
90 Grove Street, Suite 201 Ridgefield, Connecticut 06877
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (203) 431-6665
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))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
SECOND SECURITIES PURCHASE AGREEMENT WITH SOUTHRIDGE PARTNERS LP
On January 31, 2005, we entered into a Second Securities Purchase Agreement
with Southridge Partners LP, one of our existing investors, whereby we agreed to
sell a convertible promissory note in the principal amount of $250,000 and
warrant to purchase up to 10,000,000 shares of our common stock to Southridge in
exchange for its $250,000 investment. Under the terms of this purchase
agreement, Southridge may, at its option, and at any time prior to July 1, 2005,
purchase an additional note in the principal amount of up to $1,500,000, and
otherwise on substantially the same terms as the note issued on January 31,
2005.
The note is convertible, at the option of the holder, into shares of our
common stock at a conversion price of $0.02 per share. Southridge may require us
to repurchase some or all of its note if the market price of our common stock
falls below $0.03 per share for ten (10) consecutive trading days, at a
repurchase price equal to 140% of the principal amount of the note. In the event
we default under the terms of the note, the entire outstanding principal (and
any outstanding interest accrued thereon) shall become immediately due and
payable, and the interest rate will rise to 18% per annum.
We have secured the payment of the notes with a subordinated security
interest in our accounts, general intangibles, inventories, and other
collateral. In addition, in the event we propose to register securities under
the Securities Act of 1933, as amended, we are required to notify Southridge in
advance of such registration and, at its request (subject to limited
exceptions), include the shares of our common stock underlying the note and
warrant on the registration statement filed in connection with such registration
(and assume any expenses associated therewith).
The warrant has an expiration date of January 31, 2010. It contains a
cashless exercise provision whereby the holder may pay the exercise price
associated with any exercise by having us withhold a number of shares otherwise
issuable upon such exercise having a fair market value equal to the applicable
aggregate exercise price. In the event such provision is used with respect to an
exercise, we would receive no proceeds upon such exercise.
The discussion in this current report is only a summary and is qualified in
its entirety by reference to the warrant, the purchase agreement and the note
which are included as Exhibits 4.1, 10.1, and 10.2, respectively, to this
current report on Form 8-K and are incorporated by reference herein.
EXCHANGE AGREEMENT WITH WOODWARD LLC AND PROMISSORY NOTES OF EUROTECH LTD.
On January 31, 2005, we entered into an Exchange Agreement with Woodward
LLC pursuant to which we acquired promissory notes, and have accordingly assumed
all rights pertaining thereto, issued by Eurotech Ltd. The notes are currently
in default and have an aggregate outstanding principal amount of $290,000. The
notes carry a default annual interest rate of 18% and are past due in their
entirety. In exchange for these notes, we issued to Woodward a promissory note
in the principal amount of $250,000.
Under the terms of the Exchange Agreement, in the event we propose to
register securities under the Securities Act of 1933, as amended, we are
required to notify Woodward in
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advance of such registration and, at its request (subject to limited
exceptions), include the shares of our common stock underlying the note on the
registration statement filed in connection with such registration, and assume
any expenses associated therewith.
The discussion in this current report is only a summary and is qualified in
its entirety by reference to the exchange agreement and the note which are
included as Exhibits 10.3 and 10.4, respectively, to this current report on Form
8-K and are incorporated by reference herein.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
As described in Item 1.01 of this current report, on January 31, 2005,
pursuant to an Exchange Agreement with Woodward LLC, we acquired promissory
notes issued to Woodward by Eurotech Ltd. with an aggregate outstanding
principal amount of $290,000 in exchange for a promissory note in the principal
amount of $250,000. The description of the exchange agreement and note contained
in Item 1.01 of this current report is incorporated by reference herein.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF THE REGISTRANT
As described in Item 1.01 of this current report, on January 31, 2005 we
issued a secured note to Southridge Partners LP in the amount of $250,000. The
description of the note and the purchase agreement contained in Item 1.01 of
this current report is incorporated by reference herein.
As described in Item 1.01 and of this current report, on January 31, 2005
we issued a secured note to Woodward LLC in the amount of $250,000. The
description of the note and the purchase agreement contained in Item 1.01 of
this current report is incorporated by reference herein.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
In connection with our Second Securities Purchase Agreement with
Southridge, we issued and sold a 2% secured convertible promissory note in the
principal amount of $250,000. The Note is convertible, at the option of the
holder, into shares of common stock of the Company at a conversion price of
$0.02 per share.
We also issued to Southridge a warrant to purchase up to 10,000,000 shares
of its common stock at an exercise price of $0.025 per share with an expiration
date of January 31, 2010. The warrant contains a cashless exercise provision
whereby the holder may pay the exercise price associated with any exercise by
having us withhold a number of shares otherwise issuable upon such exercise
having a fair market value equal to the applicable aggregate exercise price.
We paid a commission in connection with this private placement in the
amount of $25,000. The private placement was exempt from registration under
Section 4(2) of the Securities Act of 1993, as amended.
In connection with our Exchange Agreement with Woodward LLC, we issued a 2%
secured convertible promissory note in the principal amount of $250,000 with a
maturity of two (2) years. The Note is convertible, at the option of the holder,
into shares of common stock of the Company at a conversion price of $0.02 per
share.
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The Company received as consideration from Woodward LLC promissory notes of
Eurotech Ltd. it had held prior to the transaction. The private placement was
exempt from registration under Section 4(2) of the Securities Act of 1993, as
amended.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Number Title
------ -----
4.1 Common Stock Purchase Warrant issued to Southridge Partners LP
10.1 Second Securities Purchase Agreement with Southridge Partners LP
10.2 Nonnegotiable 2% Secured Convertible Promissory Note issued to
Southridge Partners LP
10.3 Exchange Agreement with Woodward LLC
10.4 Nonnegotiable 2% Secured Convertible Promissory Note issued to
Woodward LLC
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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 hereunto duly authorized.
Global Matrechs, INC.
Date: February 4, 2005
By: /s/ Michael Sheppard
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Michael Sheppard
President, Chief Executive Officer, Chief
Operating Officer and Acting Chief
Financial Officer
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EXHIBIT INDEX
Number Title
------ -----
4.1 Common Stock Purchase Warrant issued to Southridge Partners LP
10.1 Second Securities Purchase Agreement with Southridge Partners LP
10.2 Nonnegotiable 2% Secured Convertible Promissory Note issued to
Southridge Partners LP
10.3 Exchange Agreement with Woodward LLC
10.4 Nonnegotiable 2% Secured Convertible Promissory Note issued to
Woodward LLC
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