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 (Date of earliest event reported): JULY 31, 2006
SEW CAL LOGO, INC.
(Exact name of registrant as specified in charter)
NEVADA 333-113223 46-0495298
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
207 W. 138TH STREET, LOS ANGELES, CA 90061
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 352-3300
(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
On July 31, 2006, we entered into a Securities Purchase Agreement (the
"Securities Purchase Agreement") with New Millennium Capital Partners II, LLC,
AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC
(collectively, the "Investors"). Under the terms of the Securities Purchase
Agreement, the Investors purchased an aggregate of (i) $500,000 in callable
convertible secured notes (the "Notes") and (ii) warrants to purchase 20,000,000
shares of our common stock (the "Warrants").
At closing on July 31, 2006 ("Closing"), the Investors purchased Notes
aggregating $500,000 and Warrants to purchase 20,000,000 shares of our common
stock.
The Notes carry an interest rate of 6% per annum and a maturity date of July 31,
2009. The notes are convertible into our common shares at the Applicable
Percentage of the average of the lowest three (3) trading prices for our shares
of common stock during the twenty (20) trading day period prior to conversion.
The "Applicable Percentage" means 50%; provided, however, that the Applicable
Percentage shall be increased to (i) 55% in the event that a Registration
Statement is filed within thirty days of the closing and (ii) 60% in the event
that the Registration Statement becomes effective within one hundred and twenty
days from the Closing.
At our option, we may prepay the Notes in the event that no event of default
exists, there are a sufficient number of shares available for conversion of the
Notes and the market price is at or below $.75 per share. In addition, in the
event that the average daily price of the common stock, as reported by the
reporting service, for each day of the month ending on any determination date is
below $.03, we may prepay a portion of the outstanding principal amount of the
Notes equal to 101% of the principal amount hereof divided by thirty-six (36)
plus one month's interest. Exercise of this option will stay all conversions for
the following month. The full principal amount of the Notes is due upon default
under the terms of Notes. In addition, the Company has granted the investors a
security interest in substantially all of its assets and intellectual property
as well as registration rights.
We simultaneously issued to the Investors seven year warrants to purchase
20,000,000 shares of our common stock at an exercise price of $.05.
The Investors have contractually agreed to restrict their ability to convert the
Notes and exercise the Warrants and receive shares of the Company's common stock
such that the number of shares of the Company's common stock held by them and
their affiliates after such conversion or exercise does not exceed 4.99% of the
then issued and outstanding shares of the Company's common stock.
We are committed to filing an SB-2 Registration Statement with the SEC within 45
days from the Closing Date. We will receive the second tranche of the funding
when the SB-2 is filed with the SEC and the third and final tranche of the
funding when the SB-2 is declared effective by the SEC. There are penalty
provisions for us should the filing not become effective within 135 days of the
Closing Date. The notes are secured by all of our assets to the extent of the
outstanding note.
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ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
The sale of the first tranche of Notes described in Item 1.01 was completed on
July 31, 2006. At the closing, we became obligated to the Investors for $500,000
in face amount of the Notes. The Notes are a debt obligation arising other than
in the ordinary course of business which constitutes a direct financial
obligation of us.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
The Notes and Warrants referenced in Item 1.01 were offered and sold to the
Investors in a private placement transaction in reliance upon exemptions from
registration pursuant to Section 4(2) of the Securities Act of 1933 and Rule 506
of Regulation D promulgated thereto. Each of the Investors is an accredited
investor as defined in Rule 501 of Regulation D under the Securities Act of
1933.
ITEM 9.01 FINANCIAL STATEMENT AND EXHIBITS
(a) Financial Statements of Business Acquired.
None
(b) Pro Forma Financial Information.
None
(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
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4.1 Securities Purchase Agreement dated July 31, 2006 by and
among the Company and the Investors
4.2 Form of Callable Convertible Secured Note by and among
the Company and the Investors
4.3 Form of Stock Purchase Warrant by and among the Company
and the Investors
4.4 Registration Rights Agreement dated July 31, 2006 by and
among the Company and the Investors
4.5 Security Agreement dated July 31, 2006 by and among the
Company and the Investors
4.6 Intellectual Property Security Agreement dated July 31,
2006 by and among the Company and the Investors
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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.
SEW CAL LOGO, INC.
Date: August 28, 2006 By: /s/ Richard Songer
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Richard Songer
President, Chief Executive Officer,
Director