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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): September 26, 2000
DEMARCO ENERGY SYSTEMS OF AMERICA, INC.
(Exact name of registrant as specified in charter)
Commission File Number 000-28283
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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 September 26, 2000, DeMarco Energy Systems of America, Inc. (the "Company")
entered into an agreement with AJW Partners, LLC. and New Millenennium Capital
Partners II, LLC. (the "Debenture Holders") for the private placement of
$1,500,000 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 $500,000 being received by the Company on September 27, 2000. The
remaining $1,000,000 will be funded within 30 days following the effective
registration with the Securities and Exchange Commission of the underlying
securities of the Company. The Company will utilize the funds for acquisitions,
marketing and sales promotion, internal corporate infrastructure development and
general operating expenses.
The primary terms of the Convertible Debentures are as follows:
- Entire principal amount will mature on September 26, 2001.
- Debentures bear 10% interest per annum with interest payments due
quarterly. Interest to be paid in cash or shares of Common Stock at the
option of the Debenture Holders.
- The Debenture Holders have the option to convert any unpaid principal and
accrued interest into shares of the Company's Common Stock at any time
after the original issue date (subject to certain limitations).
- The conversion price per share in effect on any conversion date shall be
the lesser of (1) $0.34 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.
- The debentures bear a mandatory prepayment penalty of 130% of the principal
and all accrued interest being prepaid.
- The debentures are secured by all unpledged assets of the Company including
patents.
- The Company will file a SB-2 Registration Statement with the Securities and
Exchange registering 200% of the Common Stock underlying the debentures.
For a complete detail of the aforementioned agreements see the Exhibits attached
hereto.
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ITEM 7 - EXHIBITS
The following exhibits are attached and filed electronically herewith:
Exhibit Number Name of Exhibit
4.01 Secured Convertible Debenture
Purchase Agreement
4.02 DeMarco Energy Systems of America, Inc.
10% Secured Convertible Debenture
4.03 Security Agreement
4.04 Intellectual Property Security Agreement
4.05 Registration Rights Agreement
4.06 Escrow Agreement
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: October 6, 2000
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INDEX TO EXHIBITS
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
4.01 Secured Convertible Debenture
Purchase Agreement
4.02 DeMarco Energy Systems of America, Inc.
10% Secured Convertible Debenture
4.03 Security Agreement
4.04 Intellectual Property Security Agreement
4.05 Registration Rights Agreement
4.06 Escrow Agreement
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