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) January 30, 2007
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DRAGON INTERNATIONAL GROUP CORP.
(Exact name of registrant as specified in its charter)
Nevada 000-23485 98-0177646
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Building 14 Suite A09, International Trading Center, 29 Dongdu Road,
Ningbo, China 300
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 86-574-56169308
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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
On January 30, 2007 Dragon International Group Corp., (the "Company")
entered into a subscription agreement (the "Subscription Agreement") and related
agreements (collectively with the Subscription Agreement, the "Agreements") for
the purchase of $1,500,000 units of securities. The Company entered into the
Agreements with 9 accredited investors (the "Investors") for an aggregate of
$1,500,000 of financing of units of its securities consisting of 16,666,672
shares of Common Stock, and Class A Common Stock Purchase Warrants to purchase
16,666,672 shares of common stock and Class B Common Stock Purchase Warrants to
purchase 8,333,340 shares of common stock. The Common Stock is being purchased
at a price of $.09 per share, the Class A Warrants are exercisable at $.125 per
share, and the Class B Warrants are exercisable at $.15 per share, and both
warrants are for a term of five years. In connection with the Agreements, the
Chief Executive Officer and President of the Company has pledged to the
Investors 2,000,000 shares of the Company's common stock, par value $0.001 per
share, owned by him as security for the Company's obligations to the Investors.
Item 3.02 Unregistered Sales of Equity Securities
On January 30, 2007, the Company completed an initial closing (the
"Initial Closing") of $750,000 of units of securities consisting of 8,333,336
shares of Common Stock, and Class A Common Stock Purchase Warrants to purchase
8,333,336 shares of common stock and Class B Common Stock Purchase Warrants to
purchase 4,166,670 shares of common stock.
The second phase of the offering (the "Second Closing") will be for an
additional $750,000 financing of units of its securities consisting of 8,333,336
shares of Common Stock, and Class A Common Stock Purchase Warrants to purchase
8,333,336 shares of common stock and Class B Common Stock Purchase Warrants to
purchase 4,166,670 shares of common stock. The Class A Warrants are exercisable
at $.125 per share, and the Class B Warrants are exercisable at $.15 per share,
and both warrants are for a term of five years. The second closing is expected
to be completed on or before March 30, 2007.
The second closing of the offering is conditioned upon the execution
of a binding and irrevocable agreement for the acquisition by the Company of an
entity which will become a subsidiary of the Company. The Company must file a
Form 8-K disclosing the execution of such agreement within 60 days after the
consummation of the Initial Closing in order to satisfy this condition. The date
on which the Company files this Form 8-K shall be referred to as the Filing
Date. On January 19, 2007 the Company filed a Form 8-K reporting on the signing
of the acquisition agreement which is conditional upon the Company to be
acquired engaging an SEC approved auditor to prepare certain financial
statements.
The Investors have demand and piggy back registration rights
granted to them by the Company under the Subscription Agreement attached hereto
as Exhibit 10.2. In addition, if the Company satisfies the conditions of the
Second Closing, then it is obligated to file a Form SB-2 registration statement
(the "Registration Statement") (or such other form that it is eligible to use)
in order to register the Registrable Securities (defined below) for resale and
distribution under the 1933 Act within seventy-five (75) calendar days after the
Filing Date, and cause the Registration Statement to be declared effective not
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later than one hundred and fifty (150) calendar days after the Filing Date. If
the Second Closing does not occur, then the Company must file a Registration
Statement within 60 days after the date of the Initial Closing and cause the
Registration Statement to be declared effective not later than one hundred and
thirty-five (135) days after the date of the Initial Closing. The Company will
be obligated to register not less than a number of shares of common stock in the
Registration Statement that is equal to the shares sold and the shares
underlying the warrants issuable pursuant to the Subscription Agreement
(collectively the "Registrable Securities"). If the Company does not satisfy
these obligations within the specified timeframes, it will be required to pay
liquidated damages in the amount equal to 2% for each 30 days (or such lesser
pro-rata amount for any period of less than 30 days) of the purchase price of
the shares and exercise price of the warrant shares owned of record by such
Investors which are subject to such non-registration event, but not to exceed in
the aggregate 20% of the aggregate purchase price. The Subscription Agreement
also provides for the payment of liquidated damages to the Investors in certain
events, including the Company's failure to maintain effectiveness of the
Registration Statement covering the Registrable Securities. The Subscription
Agreement also contains certain offering restrictions and negative covenants by
the Company including that until the sooner of (i) two (2) years from the Second
Closing or until (ii) all the shares and the shares underlying the warrants have
been transferred the Company will not (a) create liens or other encumbrances on
any Company property, (b) amend its certificate of incorporation, bylaws or
charter documents in a manner that is adverse to the Investors, (c) repay or
repurchase, or declare or make any dividends on, its equity, (d) prepay any
financing or outstanding debt, and (e) engage in a transaction with any Company
officer, director, employee or affiliate in excess of $50,000, except in certain
limited circumstances.
Each of the investors is an accredited investor within the meaning of
Rule 501 of Regulation D under the Securities Act of 1933. The investors were
provided access to business and financial data about the Company and had
knowledge and experience in business and financial matters so as to be able to
evaluate the risks and merits of an investment in the Company. No general
solicitation or advertising was deployed in connection with the transactions.
The Company paid a due diligence fee of $44,500 in cash to certain of the
investors. In addition, Class B Warrants equal to 10% of the Class A Warrants
issued to investors will also be included as part of the due diligence fee.
Accordingly, the issuance of the securities was exempt from registration under
the Securities Act of 1933 by reason of Section 4(2) of that Act and Regulation
D thereunder as a transaction by an issuer not involving a public offering.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
10.1 Form of Class and Class B Purchase Warrants
10.2 Form of Subscription Agreement
This Current Report on Form 8-K may contain, among other things, certain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including, without limitation, (i) statements
with respect to the Company's plans, objectives, expectations and intentions;
and (ii) other statements identified by words such as "may", "could", "would",
"should", "believes", "expects", "anticipates", "estimates", "intends", "plans"
or similar expressions. These statements are based upon the current beliefs and
expectations of the Company's management and are subject to significant risks
and uncertainties. Actual results may differ from those set forth in the
forward-looking statements. These forward-looking statements involve certain
risks and uncertainties that are subject to change based on various factors
(many of which are beyond the Company's control).
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.
DRAGON INTERNATIONAL GROUP CORP.
February 2, 2007 By: /s/ David Wu
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David Wu, CEO