UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
AMENDMENT
NO. 2 TO
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): December
27, 2006
CAMELOT
ENTERTAINMENT GROUP, INC.
(EXACT
NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
|
Delaware
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000-30785
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52-2195605
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(State
or other jurisdiction of incorporation or organization)
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(Commission
File Number)
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(IRS
Employee Identification No.)
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2020
Main Street Suite 990 Irvine CA
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92614
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code:
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(949)
777 1090
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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))
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- 1
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ITEM
1.01
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ENTRY
INTO A MATERIAL DEFINITIVE
AGREEMENT
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On
December 27, 2006, we entered into a Securities Purchase Agreement (the
"Securities Purchase Agreement") with New Millennium Capital Partners II, LLC,
AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC
(collectively, the "Investors"). Under the terms of the Securities Purchase
Agreement, the Investors purchased an aggregate of (i) $1,000,000 in callable
convertible secured notes (the "Notes") and (ii) warrants to purchase
10,000,0000 shares of our common stock (the "Warrants"). The capital provided
by
the Notes will be delivered to the Company as follows; $600,000 upon closing
and
$400,000 upon effectiveness of the planned Registration Document.
The
Notes
carry an interest rate of 8% and a maturity date of December 27, 2009. The
notes
are convertible into our common shares at the Variable Conversion Price (as
defined hereafter). The Variable Conversion Price shall be equal to the
Applicable Percentage multiplied by the average of the lowest three (3) trading
prices for our shares of common stock during the twenty (20) trading day period
prior to conversion. The Applicable Percentage is between 50% and 60% depending
upon the status of the registration statement to be filed by the
Company.
At
our
option, we may prepay the Notes in the event that no event of default exists,
there are a sufficient number of shares available for conversion of the Notes
and the Common Stock is trading below the Initial Market Price as adjusted.
In
addition, in the event that the average daily price of the common stock, as
reported by the reporting service, for each day of the month ending on a
determination date is below the Initial Market Price as adjusted, we may prepay
a portion of the outstanding principal amount of the Notes equal to 104% of
the
principal amount hereof divided by thirty-six (36) plus one month’s interest.
Exercise of this option will stay all conversions for the following month.
The
full principal amount of the Notes is due upon default under the terms of Notes.
In addition, the Company has granted the investors a security interest in
substantially all of its assets and intellectual property, excluding Camelot
Studio Group and Camelot Film Group, as well as demand registration
rights.
We
simultaneously issued to the Investors seven year warrants to purchase
10,000,000 shares of our common stock at an exercise price of $.15.
The
Investors have contractually agreed to restrict their ability to convert the
Notes and exercise the Warrants and receive shares of the Company's common
stock
such that the number of shares of the Company's common stock held by them and
their affiliates after such conversion or exercise does not exceed 4.99% of
the
then issued and outstanding shares of the Company's common stock.
We
are
committed to registering the shares of common stock underlying the Notes. We
have agreed to file the registration statement within thirty (30) days from
the
closing date of our agreement with the Investors otherwise we may be subject
to
penalty provisions. There are penalty provisions if the Company does not use
its
best efforts and respond to comments from the SEC regarding its Registration
Statement in a timely manner, or after the Registration Statement has been
declared effective by the SEC, sales of all of the Registrable Securities cannot
be made pursuant to the Registration Statement due to the fault of the
Company.
In
addition, in accordance with the terms and conditions of the Company’s
Structuring Agreement with Lionheart Associates, LLC, Lionheart shall receive
$200,000 in warrants on
the
same terms as the Investor’s warrants and shall include registration
rights.
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ITEM
2.03
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CREATION
OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE
SHEET ARRANGEMENT OF A
REGISTRANT
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The
sale
of Notes described in Item 1.01 was completed on December 27, 2006. The Company
received $600,000 in gross proceeds from the Notes on December 29, 2006. At
the
closing, the company became obligated to the Investors for $600,000 in face
amount of the Notes. The balance of the Notes, $400,000, will be delivered
to
the Company upon the effectiveness of the planned Registration Statement. The
Notes are a debt obligation arising other than in the ordinary course of
business which constitute a direct financial obligation of us.
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ITEM
3.02
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UNREGISTERED
SALES OF EQUITY SECURITIES
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The
Notes
and Warrants referenced in Item 1.01 were offered and sold to the Investors
in a
private placement transaction in reliance upon exemptions from registration
pursuant to Section 4(2) of the Securities Act of 1933 and Rule 506 of
Regulation D promulgated thereto. Each of the Investors is an accredited
investor as defined in Rule 501 of Regulation D under the Securities Act of
1933.
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ITEM
9.01
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FINANCIAL
STATEMENT AND EXHIBITS
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(a)
Financial Statements of Business
Acquired.
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None
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(b)
Pro Forma Financial Information.
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None
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(c)
Exhibits.
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Number
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Description
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4.1
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Securities
Purchase Agreement dated December 27, 2006 by and among the Company
and
the Investors **
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4.2
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Form
of Callable Convertible Secured Note by and among the Company and
the
Investors **
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4.3
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Form
of Stock Purchase Warrant by and among the Company and the Investors
*
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4.4
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Registration
Rights Agreement by and among the Company and the Investors
*
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4.5
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Security
Agreement by and among the Company and the Investors *
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4.6
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Intellectual
Property Security Agreement by and among the Company and the Investors
*
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4.7
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Structuring
Agreement with Lionheart *
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4.8
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*
Incorporated by reference to Form 8-K filed January 4, 2007.
**
Incorporated by reference to Form 8-K/A filed February 1,
2007.
Page
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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.
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CAMELOT
ENTERTAINMENT GROUP, INC.
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Dated:
February 2, 2007
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By:
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/s/
Robert P. Atwell
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Robert
P. Atwell
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President,
Chief Executive Officer
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