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): FEBRUARY 20, 2006
WALKER FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-5418 13-2637172
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
990 Stewart Avenue - Suite 650, Garden City, New York 11530
(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code: (516) 832-7000
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 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.
CONVERTIBLE DEBENTURE
On February 20, 2006, Walker Financial Corporation (the "Company") amended the
agreement providing for the sale of $220,000 in principal amount of its
five-year convertible debentures ("Convertible Debentures") to Dutchess Private
Equities Fund, II, L.P. (the "Investor"). The Investor may now convert the
Convertible Debentures into shares of the Company's Common Stock, par value
$0.10 per share (the "Common Stock"), at any time at the lesser of (i) the
lowest closing bid price of the Common Stock between December 12, 2005 and the
date of filing of the Registration Statement, or (ii) $0.10. Additionally, the
amendment removes the ability of the Investor to switch the conversion price of
the Debenture from a fixed price to one that is based on the market price of the
Company's stock in the event of default and removes the Investors right to use
proceeds from the Investment Agreement to redeem the Convertible Debenture.
In addition, the Company entered into an agreement providing for the sale of
$221,000 in principal amount of its five-year Convertible Debenture to the
Investor. The Convertible Debentures bear interest at 10% per annum. The
Investor may convert the Convertible Debentures into shares of the Company's
Common Stock, par value $0.10 per share (the "Common Stock"), at any time at the
lesser of (i) the lowest closing bid price of the Common Stock between February
20, 2006 and the date of filing of a Registration Statement covering the resale
of the shares underlying this Convertible Debenture, or (ii) $0.10
The Company's obligation to repay the amounts outstanding under the Convertible
Debentures is secured by substantially all of the Company's assets.
In connection with the Convertible Debentures, the Company also granted to the
Investor warrants to purchase 412,500 shares of common stock at $0.10 per share
(the "Warrants"). The Warrants may be exercised for a period of five years at an
exercise price of $0.10 and the exercise price is subject to standard adjustment
upon the occurrence of certain events, including, without limitation, upon our
consolidation, merger or sale of all of substantially all of our assets, a
reclassification of our common stock, or any stock splits, combinations or
dividends with respect to the Common Stock.
INVESTMENT AGREEMENT
Also on February 20, 2006, the Company entered into an Investment Agreement (the
"Investment Agreement") with Dutchess Private Equities Fund, L.P. ("Dutchess")
providing for the sale and issuance to Dutchess from time to time of up to
$10,000,000 in shares of Common Stock for a period of up to 36 months from the
date the Registration Statement is declared effective. The amendment removes
Dutchess's obligation under the Investment Agreement to take the shares under
the Agreement on the condition that the shares be free trading under the "Cover"
provisions of the Investment Agreement.
The Company is obligated to file a registration statement with 10 days after
filing the Company's annual report for the year ended December 31, 2005, but in
no event later than March 31, 2006 ( the "Filing Date") for the registration of
the shares of Common Stock issuable upon conversion of the Convertible
Debentures, exercise of the Warrants and upon a sale under the Investment
Agreement (the "Registration Statement"). The Company is further obligated to
use its best efforts to cause the SEC to declare the Registration Statement
effective within 90 days after the filing date of the Registration Statement. If
the Company does not file the Registration Statement with the SEC by the Filing
Date, it is obligated to pay liquidated damages to the Investor in an amount
equal to 2% of the principal amount of the debenture outstanding, pro rata, for
every month which such registration statement has not been filed. In addition,
if the Registration Statement is not filed by the filing date, the conversion
price of the Convertible Debenture will decrease by 10% of and continue to
decrease by 10% for each 21 day calendar period the registration statement goes
without filing. If the Registration Statement is not declared effective within
90 days of the filing date, we are obligated to pay liquidated damages to the
Investor in an amount equal to 2% of the principal amount of the debenture
outstanding, pro rata, for every 30 days which such Registration Statement has
not been declared effective by the SEC.
All securities were issued in reliance upon an exemption from registration under
Section 4(2) of the Securities Act of 1933, as amended, and/or Regulation D
promulgated thereunder as a transaction not involving a public offering. In
addition, the investors are accredited investors and/or qualified institutional
buyers, the investors had access to information about the company and their
investment, the investors 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 FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(c) EXHIBITS.
Exhibit
Number Description
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10.1 Amended Debenture Agreement dated as of February 20, 2006 amending
the Debenture Agreement dated December 23, 2005 by and between
the Company and the Investor
10.2 Debenture Agreement dated as of February 20, 2006 by and between
the Company and the Investor
10.3 Warrant Agreement dated as of February 20, 2006 by and between the
Company and the Investor
10.4 Investment Agreement dated as of February 20, 2006 by and between
the Company and the Investor
10.5 Registration Rights Agreement dated as of February 20, 2006 by and
between the Company and Investor
10.6 Debenture Registration Rights Agreement dated as of February 20,
2006 by and between the Company and Investor
10.7 Security Agreement dated as of February 20, 2006 by and between the
Company and Investor
10.8 Subscription Agreement dated as of February 20, 2006 by and between
the Company and Investor
10.9 Placement Agent Agreement dated as of February 20, 2006 by and
between the Company and US Euro Securities, Inc.
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.
WALKER FINANCIAL CORPORATION
Date: February 24, 2006 /s/ Mitch Segal
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Mitch Segal
Chief Executive Officer