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 (Date of earliest event reported): December 16, 2005
Luna Technologies International, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-29991 91-1987288
(State of Incorporation) (Commission File Number) (IRS Employer ID)
61B Fawcett Road
Coquitlam, British Columbia, Canada V3K 6V2
(Address of principle executive offices)
(604) 526-5890
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Copies to:
Gregory Sichenzia, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
Phone: (212) 930-9700
Fax: (212) 930-9725
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 December 16, 2005, Luna Technologies International, Inc. (the "Company")
entered into a Securities Purchase Agreement with AJW Partners, LLC
("Partners"), AJW Offshore, Ltd. ("Offshore"), AJW Qualified Partners, LLC
("Qualified") and New Millennium Capital Partners, II, LLC ("Millennium") for
the sale of (i) $1,000,000 in secured convertible notes and (ii) warrants to
purchase 1,000,000 shares of the Company's common stock. Partners, Offshore,
Qualified and Millennium are collectively referred to as the "Purchasers".
The Purchasers are obligated to provide the Company with the funds as follows:
o $400,000 was disbursed on December 21, 2005;
o $300,000 will be disbursed within five days of filing a registration
statement covering the number of shares of common stock underlying
the secured convertible notes and the warrants; and
o $300,000 will be disbursed within five days of the effectiveness of
the registration statement.
The proceeds of the offering will be used for general corporate purposes and
working capital.
The secured convertible notes bear interest at 8%, unless the common stock of
the Company is greater than $0.2125 per share for each trading day of a month,
in which event no interest is payable during such month. The secured convertible
notes mature three years from the date of issuance, and are convertible into the
Company's common stock, at the Purchasers' option, at a 50% discount to the
average of the three lowest trading prices of the common stock during the 20
trading day period prior to conversion.
The full principal amount of the secured convertible notes are due upon a
default under the terms of secured convertible notes. In addition, the Company
granted the Purchasers a security interest in substantially all of its assets
and intellectual property. The Company is required to file a registration
statement with the Securities and Exchange Commission within 45 days of closing,
which will include 200% of the common stock underlying the secured convertible
notes, and the warrants. If the registration statement is not declared effective
within 120 days from the date of closing, the Company is required to pay
liquidated damages to the Purchasers. In the event that the Company breaches any
representation or warranty in the Securities Purchase Agreement, the Company is
required to pay liquidated damages in shares or cash, at the election of the
Company, in an amount equal to three percent of the outstanding principal amount
of the secured convertible notes per month plus accrued and unpaid interest.
The warrants are exercisable until five years from the date of issuance at a
purchase price of $0.40 per share. The Purchasers may exercise the warrants on a
cashless basis if the shares of common stock underlying the warrants are not
then registered pursuant to an effective registration statement. In the event
the Purchasers exercise the warrants on a cashless basis, then the Company will
not receive any proceeds. In addition, the exercise price of the warrants will
be adjusted in the event the Company issues common stock at a price below
market, with the exception of any securities issued as of the date of the
warrants or issued in connection with the secured convertible notes issued
pursuant to the Securities Purchase Agreement.
Upon an issuance of shares of common stock below the market price, the exercise
price of the warrants will be reduced accordingly. The market price is
determined by averaging the last reported sale prices for the Company's shares
of common stock for the five trading days immediately preceding such issuance as
set forth on the Company's principal trading market. The exercise price shall be
determined by multiplying the exercise price in effect immediately prior to the
dilutive issuance by a fraction. The numerator of the fraction is equal to the
sum of the number of shares outstanding immediately prior to the offering plus
the quotient of the amount of consideration received by the Company in
connection with the issuance divided by the market price in effect immediately
prior to the issuance. The denominator of such issuance shall be equal to the
number of shares outstanding after the dilutive issuance.
The conversion price of the secured convertible notes and the exercise price of
the warrants may be adjusted in certain circumstances such as if the Company
pays a stock dividend, subdivides or combines outstanding shares of common stock
into a greater or lesser number of shares, or takes such other actions as would
otherwise result in dilution of the selling stockholder's position.
The Purchasers have agreed to restrict their ability to convert their secured
convertible notes or exercise their warrants and receive shares of the Company's
common stock such that the number of shares of common stock held by them in the
aggregate and their affiliates after such conversion or exercise does not exceed
4.9% of the then issued and outstanding shares of common stock.
The Company claims an exemption from the registration requirements of the
Securities Act of 1933, as amended (the "Act") for the private placement of
these securities pursuant to Section 4(2) of the Act and/or Regulation D
promulgated thereunder since, among other things, the transaction did not
involve a public offering, the Purchasers were accredited Purchasers and/or
qualified institutional buyers, the Purchasers had access to information about
the company and their investment, the Purchasers took the securities for
investment and not resale, and the Company took appropriate measures to restrict
the transfer of the securities.
Item 2.03 Creation of a Direct Financial Obligation.
See Item 1.01 above.
Item 3.02 Unregistered Sales of Equity Securities.
See Item 1.01 above.
Item 9.01 Exhibits.
Exhibit
Number Description
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10.1 Securities Purchase Agreement, dated December 16, 2005, by and among
Luna Technologies International, Inc. and AJW Offshore, Ltd., AJW
Qualified Partners, LLC, AJW Partners, LLC and New Millennium
Capital Partners II, LLC.
10.2 Callable Secured Convertible Note issued to AJW Offshore, Ltd.,
dated December 16, 2005.
10.3 Callable Secured Convertible Note issued to AJW Qualified Partners,
LLC, dated December 16, 2005.
10.4 Callable Secured Convertible Note issued to AJW Partners, LLC, dated
December 16, 2005.
10.5 Callable Secured Convertible Note issued to New Millennium Capital
Partners II, LLC, dated December 16, 2005.
10.6 Stock Purchase Warrant issued to AJW Offshore, Ltd., dated December
16, 2005.
10.7 Stock Purchase Warrant issued to AJW Qualified Partners, LLC, dated
December 16, 2005.
10.8 Stock Purchase Warrant issued to AJW Partners, LLC, dated December
16, 2005.
10.9 Stock Purchase Warrant issued to New Millennium Capital Partners II,
LLC, dated December 16, 2005.
10.10 Registration Rights Agreement, dated as of December 16, 2005, by and
among Luna Technologies International, Inc., AJW Offshore, Ltd., AJW
Qualified Partners, LLC, AJW Partners, LLC and New Millennium
Capital Partners II, LLC.
10.11 Security Agreement, dated as of December 16, 2005, by and among Luna
Technologies International, Inc., AJW Offshore, Ltd., AJW Qualified
Partners, LLC, AJW Partners, LLC and New Millennium Capital Partners
II, LLC.
10.12 Intellectual Property Security Agreement, dated December 16, 2005,
by and among Luna Technologies International, Inc., AJW Offshore,
Ltd., AJW Qualified Partners, LLC, AJW Partners, LLC and New
Millennium Capital Partners II, LLC.
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.
Luna Technologies International, Inc.
Date: December 22, 2005 By: /s/ Kimberly Landry
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Kimberly Landry
Chief Executive Officer