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): February 11, 2005
ADVANCED COMMUNICATIONS TECHNOLOGIES, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Florida 000-30486 65-0738251
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) Number)
420 Lexington Avenue, New York, New York 10170
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (646) 227-1600
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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))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On February 11, 2005, Hudson Street Investments, Inc. ("Hudson
Street"), a wholly-owned subsidiary of Advanced Communications Technologies,
Inc. (the "Company"), became entitled to receive a distribution of $2,625,000
from Yorkville Advisors Management, LLC ("Yorkville") in exchange for all of
Hudson Street's Preferential Rights Membership Interest in Yorkville, pursuant
to the terms of Yorkville's Limited Liability Company Agreement, as amended.
Accordingly, upon its receipt of the distribution, Hudson Street will no longer
have any ownership interest in Yorkville. Hudson Street's receipt of the
Preferential Rights Membership Interest was precipitated by the Managing Member
of Yorkville announcing that Yorkville will begin winding up its affairs and is
expected to dissolve later this year due to recently adopted rules and rule
amendments by the Securities and Exchange Commission.
Hudson Street's ownership interest in Yorkville was originally a
minority Common Membership Interest. Pursuant to the terms of a Second Amendment
to the Limited Liability Company Agreement of Yorkville entered into on January
31, 2005 among Yorkville, the Company and the other equity owners of Yorkville,
the Company's minority Common Membership Interest was reconstituted as
Preferential Rights Interest. As a result, Hudson Street became entitled to
receive dividends and other distributions out of Yorkville's available assets in
an amount up to the purchase price paid by Hudson Street for its original Common
Membership Interest. The $2,625,000 preferential distribution to be received by
Hudson Street represents the entire purchase price paid by Hudson Street for its
original Common Membership Interest. The Company's and Hudson Street's sole
relationship with Yorkville is Hudson Street's ownership of the Preferential
Rights Interest in Yorkville.
In connection with the above arrangements, the Company entered into a
Letter Agreement, dated February 11, 2005, with Cornell Capital Partners, L.P.
("Cornell Capital"), whereby Cornell Capital agreed to extend and set the
maturity date of a past-due non-interest bearing Promissory Note, in the
original principal amount of $3,000,000, issued by the Company to Cornell
Capital on January 23, 2004 (the "Note"). In accordance with the terms of the
Letter Agreement, the new maturity date of the Note is June 30, 2005.
As consideration for Cornell Capital's agreement to extend the maturity
of the Note, the Company is required to pay an extension fee of $90,000 and a
structuring fee of $10,000 to Cornell Capital (together, the "Fees"). In
addition, effective as of February 10, 2005, the Note bears interest at the rate
of ten percent (10%) per annum on the remaining principal amount outstanding.
The Company also agreed to use $1,825,000 of the distribution proceeds to be
received by Hudson Street to pay the Fees and repay $1,725,000 of the remaining
$2,000,000 of principal outstanding under the Note. The Letter Agreement
authorizes Yorkville to deduct from the distribution proceeds the amounts
payable by the Company to Cornell Capital and remit such amounts directly to
Cornell Capital. To further evidence the Company's payment of $1,725,000 under
the Note and Cornell Capital's right to receive $1,825,000 of the $2,625,000
preferential distribution directly from Yorkville, the Company and Cornell
Capital entered into an Assignment Agreement on February 14, 2005, whereby the
Company assigned all of its right title and interest in and to the $1,825,000 to
Cornell Capital.
The Letter Agreement also contemplates that Cornell Capital will
convert $77,500 of outstanding principal of, plus $38,588 of accrued interest
on, a 10% Secured Convertible Debenture, dated November 22, 2002 (the
"Debenture"), into 116,088,000 shares of the Company's common stock. As of the
date hereof, Cornell Capital has not exercised such conversion right; however,
upon conversion, the Company's payment obligations under the Debenture will be
satisfied in full.
The Company has the right to request monthly draw downs of up to
$2,000,000 under a $30,000,000 Equity Line of Credit with Cornell Capital, of
which approximately $1,800,000 has been drawn down by the Company to date. As
the Company draws down on its Equity Line of Credit and because of periodic
conversions of convertible instruments of the Company owned by Cornell Capital,
Cornell Capital owns various amounts of shares of the Company's common stock
from time to time and currently owns less than five percent (5% percent) of the
Company's outstanding common stock. In addition, Cornell Capital owns 4,200
shares of the Company's Series A Convertible Preferred Stock. Yorkville is the
investment manager of Cornell Capital.
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SIGNATURE
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.
ADVANCED COMMUNICATIONS
TECHNOLOGIES, INC.
Dated: February 18, 2005 By: /s/ Wayne I. Danson
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President and Chief Financial Officer
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