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): March 26, 2002
DEMARCO ENERGY SYSTEMS OF AMERICA, INC.
(Exact name of registrant as specified in charter)
Commission File Number 000-28283
Utah 87-0392000
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
12885 HWY 183, STE 108-A, AUSTIN, TEXAS 78750
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (512) 335-1494
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ITEM 5 - OTHER EVENTS
On March 26, 2002, DeMarco Energy Systems of America, Inc. (the "Company")
entered into an agreement with AJW Partners, LLC, New Millennium Capital
Partners II, LLC, Pegasus Capital Partners, LLC and AJW/New Millennium Offshore
Ltd. (the "Debenture Holders") for the private placement of $1,000,000 of the
Company's Secured Convertible Debentures. These debentures are convertible into
shares of the Common Stock of the Company based on the formulas listed below.
The funding of the debentures will occur in two phases with the first $700,000
being received by the Company on March 28, 2002. Provided certain conditions are
satisfied, the remaining $300,000 will be funded within 5 days following the
effective registration with the Securities and Exchange Commission of the
securities underlying the Company's debentures. The Company will utilize the
funds for marketing and sales promotion, internal corporate infrastructure
development and general operating expenses.
The primary terms of the Convertible Debentures are as follows:
o Entire principal amount will mature on March 25, 2003.
o Debentures bear 10% interest per annum with interest payments due
quarterly.
o Interest to be paid in cash or added to the principal amount of
debentures.
o The Debenture Holders have the option to convert any unpaid principal
into shares of the Company's Common Stock at any time after the
original issue date (subject to certain limitations).
o The conversion price per share in effect on any conversion date shall
be the lesser of (1) $0.15 per share and (2) 60% of the average of the
lowest three inter-day trading prices during the ten trading days
immediately preceding the applicable conversion date.
o The debentures bear a mandatory prepayment penalty of 130% of the
principal and all accrued interest being prepaid.
o The debentures are secured by all unpledged assets of the Company
including our current and pending patents.
o The Company will file a SB-2 Registration Statement with the Securities
and Exchange registering 210% of the Common Stock underlying the
debentures.
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ITEM 7 - EXHIBITS
The following exhibits are attached and filed electronically herewith:
Exhibit Number Name of Exhibit
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4.01 DeMarco Energy Systems of America, Inc. 10%
Secured Convertible Debenture issued to AJW
Partners, LLC
4.02 DeMarco Energy Systems of America, Inc. 10%
Secured Convertible Debenture issued to New
Millennium Capital Partners II, LLC
4.03 DeMarco Energy Systems of America, Inc. 10%
Secured Convertible Debenture issued to Pegasus
Capital Partners, LLC
4.04 DeMarco Energy Systems of America, Inc. 10%
Secured Convertible Debenture issued to AJW/Mew
Millennium Offshore Ltd.
4.05 Transfer Agent Instructions
4.06 Secured Convertible Debenture Purchase Agreement
4.07 Registration Rights Agreement
4.08 Intellectual Property Security Agreement
4.09 Security 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.
(Registrant) DEMARCO ENERGY SYSTEMS OF AMERICA, INC.
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By /s/ Victor M. DeMarco
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Victor M. DeMarco, President/ Chief
Operating Officer
Date: April 3, 2002
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TABLE OF EXHIBITS
Exhibit Number Name of Exhibit
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4.01 DeMarco Energy Systems of America, Inc. 10%
Secured Convertible Debenture issued to AJW
Partners, LLC
4.02 DeMarco Energy Systems of America, Inc. 10%
Secured Convertible Debenture issued to New
Millennium Capital Partners II, LLC
4.03 DeMarco Energy Systems of America, Inc. 10%
Secured Convertible Debenture issued to Pegasus
Capital Partners, LLC
4.04 DeMarco Energy Systems of America, Inc. 10%
Secured Convertible Debenture issued to AJW/Mew
Millennium Offshore Ltd.
4.05 Transfer Agent Instructions
4.06 Secured Convertible Debenture Purchase Agreement
4.07 Registration Rights Agreement
4.08 Intellectual Property Security Agreement
4.09 Security Agreement
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