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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): October 3, 2005
GLOBAL MATRECHS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 000-29204 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
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF THE REGISTRANT
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
On October 3, 2005, we entered into a Securities Purchase Agreement with
MacNab LLC ("MacNab") pursuant to which we sold a nonnegotiable 2% secured
convertible promissory note (the "Note") with an aggregate principal amount of
$50,000, and a common stock purchase warrant to purchase up to 2,000,000 shares
of our common stock, $.0001 par value per share (the "Warrant"), for an
aggregate purchase price of $50,000.
THE NOTE
The Note bears interest at a fixed rate of 2% per annum computed on the
unpaid principal balance, which is payable upon maturity. The Note matures on
October 3, 2007, at which time all remaining principal of the Note is due and
payable in full.
The Note is convertible at any time, at the option of the holder, into
shares of our common stock at a conversion price of $0.02 per share. MacNab 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 10 consecutive trading days, at a
repurchase price equal to 140% of the principal amount of the note.
We have secured the payment of the note 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 MacNab 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 Securities Purchase Agreement and the Note contain customary events of
default, including non-payment of principal or make-whole amount, interest, fees
or other amounts; violation of covenants; inaccuracy of representations and
warranties and certain bankruptcy events. 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.
THE WARRANT
Under the terms of the Warrant, MacNab may purchase, at any time, up to
2,000,000 shares of our common stock at an exercise price of $0.025 per share.
The Warrant has an expiration date of October 3, 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. In the event such provision is used with respect to an
exercise, we would receive no proceeds upon such exercise.
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Adjustments to the exercise price of the warrant must be made in the event
that we pay a dividend in common stock or securities convertible to common
stock, or if we subdivide, split or combine our shares of outstanding common
stock. In the event that any of the foregoing occur, then the number of shares
issuable pursuant to the Warrant shall be adjusted so that MacNab may thereafter
receive the number of shares of common stock it would have owned immediately
following such action if it had exercised the warrants immediately prior to the
transaction. The exercise price on the Warrant shall be adjusted to reflect the
proportionate increase or decrease in the number of shares.
We are obligated to pay placement fees in connection with this private
placement consisting of cash and non-cash consideration with an the aggregate
estimated fair value of $5,000. The private placement was exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended.
The discussion in this current report is only a summary and is qualified in
its entirety by reference to the Note, the Warrant and the Securities Purchase
Agreement, which are included as Exhibits 4.1, 4.2, and 10.1, respectively, to
this current report on Form 8-K and are incorporated by reference in this
Current Report.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Number Title
4.1 Common Stock Purchase Warrant issued to MacNab LLC
4.2 Nonnegotiable 2% Secured Convertible Promissory Note issued to
MacNab LLC
10.1 Securities Purchase Agreement
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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: October 7, 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 MacNab LLC
4.2 Nonnegotiable 2% Secured Convertible Promissory Note issued to
MacNab LLC
10.1 Securities Purchase Agreement
5