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 13, 2005
M POWER ENTERTAINMENT INC.
(Exact name of registrant as specified in its charter)
Delaware 000-22057 76-0513297
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2602 Yorktown Place, Houston, Texas 77056
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 731-2310
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:
[ ] 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 ))
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ITEM 3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS.
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On January 20, 2006, the Board of Directors of M Power Entertainment Inc. (the
"Company") unanimously agreed by a written consent to action without a meeting,
to adopt a Certificate of Designations for the creation of Series D preferred
stock ("Series D Preferred Stock").
The Series D Preferred Stock has a par value of $.001 per share. The Series
D Preferred Stock consists of one thousand (1,000) shares, each having no
dividend rights, no liquidation preference, and no conversion or redemption
rights. However, the one thousand (1,000) shares of Series D Preferred Stock
have the right, voting in aggregate, to vote on all shareholder matters equal to
fifty-one percent (51%) of the total vote. For example, if there are 10,000,000
shares of the Company's common stock issued and outstanding at the time of a
shareholder vote, the holders of Series D Preferred Stock, voting separately as
a class, will have the right to vote an aggregate of 10,400,000 shares, out of a
total number of 20,400,000 shares voting.
Additionally, the Company shall not adopt any amendments to the Company's
Bylaws, Articles of Incorporation, as amended, make any changes to the
Certificate of Designations, or effect any reclassification of the Series D
Preferred Stock, without the affirmative vote of at least 66-2/3% of the
outstanding shares of Series D Preferred Stock. However, the Company may, by any
means authorized by law and without any vote of the holders of shares of Series
D Preferred Stock, make technical, corrective, administrative or similar changes
to the Certificate of Designations that do not, individually or in the
aggregate, adversely affect the rights or preferences of the holders of shares
of Series D Preferred Stock.
ITEM 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED
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AUDIT REPORT OR COMPLETED INTERIM REVIEW.
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On January 13, 2006, the Company's Chief Executive Officer and President,
Gary Kimmons determined the Company's acquisitions of Corazong Music Management
B.V.; White Canyon, Inc. and Channel Access, Inc.; Alan Howarth, Inc.; and R.S.
Entertainment, Inc. (now M Power Releasing, Inc.), originally treated and
accounted for as closed were not closed and therefore the financial information
related to the acquisitions and the target companies previously included in the
Company's March 31, 2005, June 30, 2005 and September 30, 2005 unaudited
financial statements, which were included in the Company's 10-QSB filings, which
were made with the Commission on June 22, 2005, August 22, 2005 and December
12, 2005, respectively, and that as a result, such filings should no longer be
relied upon.
Based on these findings, we determined restatements would cause certain
items in the financial statements in the March 31, 2005 10-QSB, June 30, 2005
10-QSB and the September 30, 2005 10-QSB to be removed and reclassified. The
Company estimates that the impact of these restatements will be material. The
Company anticipates the restated filings to be completed prior to the filing of
our Form 10-KSB for the year ended December 31, 2005.
The Company's Board of Directors has discussed the non-reliance on the
Company's previously issued financial statements with the Company's previous
independent accountants, Hansen Barnett & Maxwell, LLC ("HB&M") up to the date
the Company's relationship with HB&M ceased (as disclosed in our Form 8-K
filing, filed with the Commission on January 18, 2008). The Company has also
discussed the non-reliance on the Company's previously issued financial
statement with the Company's current independent accountants, Malone & Bailey,
PC, Certified Public Accountants.
The Company's management will also reconsider the Company's previous
disclosure regarding the effectiveness and adequacy of the Company's disclosure
controls and procedures in connection with the Company's failure to account for
the fact that the four acquisitions listed above had not closed as of the date
of the Company's filing which included its March 31, 2005, June 30, 2005 and
September 30, 2005 financial statements.
ITEM 8.01 OTHER EVENTS.
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UPDATE OF PREVIOUSLY DISCLOSED AND
NOT YET CLOSED PURCHASE AGREEMENTS
ACQUISITION OF CORAZONG MUSIC MANAGEMENT B.V.
On December 17, 2004, we entered into a purchase agreement with Corazong
Music Management B.V. ("Corazong" and the "Corazong Agreement"). Pursuant to the
Corazong Agreement, we agreed to pay $1,440,000 worth of our common stock to the
Corazong sellers in consideration for 100% of the issued and outstanding common
stock of Corazong. Additionally, we agreed to provide Corazong with a line of
credit up to $1,200,000 by February 15, 2005, and to provide the Corazong
sellers an additional 5,000 (Post Split) shares of our common stock for each
month thereafter that the line of credit is not available. To date, we have been
unable to provide the line of credit and approximately 55,000 shares of our
common stock have been issued to Corazong sellers. As the line of credit has not
been provided to the Corazong sellers, the Corazong Agreement has not closed and
the Corazong sellers have the right to rescind the transaction. We plan to
negotiate an amendment to the Corazong Agreement with the Corazong sellers in
the near future to remove the necessity of the line of credit as well as any
other contingencies from the Corazong Agreement and allow us to finalize and
close the acquisition. Upon closing the transaction, of which there is no
assurance, we plan to operate Corazong as a wholly owned subsidiary.
ACQUISITION AGREEMENT WITH WHITE CANYON, INC. AND CHANNEL ACCESS, INC.
On April 7, 2005, we entered into a Purchase Agreement (the "White Canyon
Agreement") with two unrelated individuals (the "White Canyon Sellers"), whereby
we were to acquire 100% of the issued and outstanding common stock of White
Canyon, Inc. ("White Canyon") and Channel Access, Inc. ("Channel Access").
According to the terms of the White Canyon Agreement, we were to issue the White
Canyon Sellers an aggregate of 1,000,000 shares of our restricted Series C
Convertible Preferred Stock, each share of which may be converted into four (4)
shares of post-split restricted common stock, or redeemed by us at $4.00 per
share. Additionally, after our completion of our stock-split, we were to issue
to the White Canyon Sellers an additional 100,000 post-split shares of its
common stock as further consideration for the acquisitions.
Pursuant to the White Canyon Agreement, the Company agreed to redeem any
unconverted shares of the Company's Series C Convertible Preferred Stock for
$4.00 per share, upon the Company's listing on the American Stock Exchange
("AMEX"), which was to occur no later than September 30, 2005. The White Canyon
Agreement also contained a provision whereby the White Canyon Sellers retained
the right to rescind the agreement if any of the unconverted shares of Series C
Convertible Preferred Stock were not redeemed by September 30, 2005. Pursuant
to the White Canyon Agreement, if the White Canyon Sellers rescinded the
agreement they were able to keep the 100,000 post split shares of the Company's
common stock as liquidated damages.
No shares of Series C Convertible Preferred Stock were ever issued to the
White Canyon Sellers in connection with the White Canyon Agreement, and we were
unable to redeem such shares of Series C Convertible Preferred Stock and/or
obtain listing on the AMEX prior to September 30, 2005. As a result, on
September 30, 2005, the White Canyon Sellers elected to rescind the White Canyon
Agreement the shares of White Canyon and Channel Access have been returned by us
to the White Canyon Sellers. The White Canyon Sellers retained the 100,000 post
split shares of our common stock as liquidated damages in connection with their
rescission of the White Canyon Agreement. Neither we nor the White Canyon
Sellers have any obligations to each other in connection with the White Canyon
Agreement as of the date of this Report.
ACQUISITION OF ALAN HOWARTH, INC.
On May 18, 2005, with a closing date of May 19, 2005, our subsidiary M
Power Futures, Inc., which we own 82.4% of, entered into a Purchase Agreement
with Alan Howarth, Inc. ("Howarth" and the "Howarth Agreement"). Pursuant to
the Howarth Agreement, we were to pay $650,000 in cash or shares of our common
stock to the sellers of Howarth in consideration for 100% of the issued and
outstanding shares of Howarth. Additionally, the Howarth Agreement provided
that the sellers may rescind the Howarth Agreement at any time if we failed to
have our common stock listed on the American Stock Exchange ("AMEX") within 180
days of the closing of the Howarth Agreement. As our common stock was not, and
is not listed on AMEX, Howarth has the right to rescind the transaction and
Howarth has not yet become a wholly owned subsidiary of M Power Futures, Inc.,
as was our original intention at the time of closing. We are currently in
negotiations with the Howarth sellers to enter into an amended agreement to
remove the requirement that we obtain listing on AMEX from the Howarth
Agreement, as well as any other contingencies so that we can close the Howarth
transaction.
ACQUISITION OF R.S. ENTERTAINMENT, INC. (NOW KNOWN AS M POWER RELEASING INC.)
On March 2, 2005, we entered into a Purchase Agreement with R.S.
Entertainment, Inc. ("R.S." and the "R.S. Agreement"), whereby we agreed to
purchase 100% of the outstanding shares of R.S. in return for $1,000,000 worth
of restricted shares our common stock. Additionally, under the R.S. Agreement,
we were to provide R.S. with a line of credit up to $2,500,000, which has not
been provided to date, and issue R.S. an additional 10,000 (Post Split) shares
of our common stock for each month until the line of credit is granted. To date
100,000 shares of common stock have been issued to R.S. As a result of our
inability to provide R.S. with a line of credit in the amount of $2,500,000, and
in connection with R.S.'s ability to rescind the R.S. Agreement if the line of
credit is not available after 120 days from the closing date, the R.S. Agreement
has not closed and the sellers of R.S. have provided us notice of their desire
to rescind the R.S. Agreement. As a result of this rescission we have received
and are cancelling the 132,276 shares of Series B Preferred Stock issued to the
R.S. shareholders to date in connection with the R.S. Agreement and not having
any affiliation with R.S. moving forward. Additionally, we previously advanced
R.S. $50,000 in connection with the line of credit, which funds we anticipate
being repaid in connection with rescinding the R.S. Agreement.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit Description
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3.1* Certificate of Designations of Series D Preferred Stock
* Attached hereto.
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.
M POWER ENTERTAINMENT INC.
Date: January 25, 2006 By /s/ Gary F. Kimmons
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Gary F. Kimmons
President and Chief Executive Officer