Unassociated Document
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): January 18, 2008
MDWERKS,
INC.
(Exact
name of registrant as specified in its charter)
Delaware
(State
or
Other Jurisdiction of Incorporation)
|
333-118155
|
|
33-1095411
|
|
(Commission
File Number)
|
|
(IRS
Employer Identification
Number)
|
Windolph
Center, Suite I
1020
N.W.
6th
Street
Deerfield
Beach, FL 33442
(Address
of Principal Executive Offices)
(954)
389-8300
(Registrant’s
Telephone Number, Including Area Code)
_____________________________________________
(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):
| o |
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
| o |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14-12)
|
| o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
|
| o |
Pre-commencement
communications pursuant to Rule 13-e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
|
The
use of the terms “we,” “us” or “the Company” in this report shall be deemed to
mean MDwerks, Inc., unless the context requires otherwise. References in this
report to “our subsidiaries” shall be deemed to mean each of MDwerks Global
Holdings, Inc., Xeni Medical Systems, Inc., Xeni Financial Services Corp.,
Xeni
Medical Billing, Corp. and Patient Payment Solutions, Inc.
Item
1.01 Entry
into a Material Definitive Agreement
On
January 18, 2008, we received net proceeds of $500,000 in connection with a
financing provided by Vicis Capital Master Fund, an unaffiliated, accredited
institutional investor (the “Investor”). In connection with the financing, we
and the Investor entered into a Securities Purchase Agreement, dated January
18,
2008 (the “January Securities Purchase Agreement”), pursuant to which we issued
50 shares of Series B Convertible Preferred Stock, par value $0.001 per
share ( “Series B Preferred Stock”), a seven year Series F Warrant to
purchase 375,000 shares of our common stock at a price of $2.25 per share and
a
seven year Series G Warrant to purchase 250,000 shares of our common stock
at a
price of $2.50 per share.
The
Securities Purchase Agreement, dated January 18, 2008, by and between the
Investor and us (the “January Securities Purchase Agreement”) provides that our
obligations to the Investor under the Series B Preferred Stock, the January
Securities Purchase Agreement and the various transaction documents entered
into
in connection with the January Securities Purchase Agreement (the “January
Transaction Documents”) are secured by a lien on all of our assets pursuant to
the security agreement, dated September 28, 2007, between us and the Investor
(the “Company Security Agreement”). The Company Security Agreement is more fully
described below and is attached as an exhibit to our Current Report on Form
8-K,
which was filed with the Securities and Exchange Commission (the “SEC”) on
October 2, 2007.
The
January Securities Purchase Agreement further provides that our obligations
under the Series B Preferred Stock, the January Securities Purchase Agreement
and the January Transaction Documents are guaranteed by each of our subsidiaries
pursuant to the terms of the guaranty agreements, dated September 28, 2007,
between Investor and each of our subsidiaries (the “Guaranty Agreements”). The
Guaranty Agreements are more fully described below and are attached as exhibits
to our Current Report on Form 8-K, which was filed with the SEC on October
2,
2007.
The
January Securities Purchase Agreement also provides that the guaranty
obligations of our subsidiaries in connection with the January Securities
Purchase Agreement and the January Transaction Documents are secured by the
liens on all of the assets of each our subsidiaries, except for the accounts
receivable and certain contract rights of Xeni Financial Services, Corp.,
created pursuant to the security agreements, dated September 28, 2007 by
and between our subsidiaries and the Investor (the “Guarantor Security
Agreements”). The Guarantor Security Agreements are more fully described below
and are attached as exhibits to our Current Report on Form 8-K, which was filed
with the SEC on October 2, 2007.
In
connection with the sale of the Series B Preferred Stock, we amended the
Registration Rights Agreement, dated September 28, 2007, by and between the
Investor and us (the “Registration Rights Agreement”), pursuant to which we
agreed, in addition to registering the securities previously covered by such
Registration Rights Agreement, to register for resale, the shares of our common
stock into which the Series B Preferred Stock sold pursuant to the January
Securities Purchase Agreement is convertible and the shares of our common stock
for which the Series F Warrants and the Series G Warrants sold pursuant to
the
January Securities Purchase Agreement are exercisable.
The
following summary description of the material agreements entered into in
connection with the transaction described above and the terms of the Series
B
Preferred Stock is qualified in its entirety by reference to the copies of
such
material agreements and the Certificate of Designations for the Series B
Preferred Stock filed as exhibits to this Current Report on Form 8-K.
January
Securities Purchase Agreement
The
January Securities Purchase Agreement provided for the sale by us to the
Investor of (i) 50 shares of Series B Preferred Stock (ii) Series F Warrants
to
purchase an aggregate of 375,000 shares of common stock and (iii) Series G
Warrants to purchase an aggregate of 250,000 shares of common stock. Pursuant
to
the January Securities Purchase Agreement, the aggregate purchase price for
the
Series Preferred Stock, the Series F Warrants and the Series G Warrants was
$500,000, which was paid by wire transfer of immediately available funds.
The
January Securities Purchase Agreement provides to the Investor, for a period
of
eighteen months after the closing date, a right of first refusal with respect
to
subsequent placements of equity or equity equivalent securities by us. The
right
of first refusal is on a pro
rata
basis
(based upon the amount invested) with Gottbetter Capital Master,
Ltd.
The
January Securities Purchase Agreement contains certain restrictions on our
ability to: (i) declare dividends; (ii) reclassify, combine or reverse split
our
Common Stock; (iii) incur liens; (iii) incur certain types of indebtedness;
(iv)
issue classes of securities senior to, or parri
passu
with,
the Series B Preferred Stock; (v) liquidate or sell a substantial portion of
our
assets; (vi) enter into transactions that would result in a Change of Control
(as defined in the January Securities Purchase Agreement); (vi) amend our
charter documents in a way that adversely affects the rights of the Investor;
(vii) except through Xeni Financial Services, Corp., make loans to, or advances
or guarantee the obligations of, third parties; (viii) make intercompany
transfers; (ix) engage in transactions with officers, directors, employees
or
affiliates; (x) divert business to other business entities; (xi) make
investments in securities or evidences of indebtedness (excluding of loans
made
by Xeni Financial Services, Corp.) in excess of $250,000 in a calendar year;
and
(xii) file registration statements.
Events
of
default under the January Securities Purchase Agreement include: (i) default
in
the payment of dividends on or the failure to redeem the Series B Preferred
Stock when due; (ii) failure to perform the covenants contained in the
Securities Purchase Agreement or the related transaction documents; (iii)
failure to file, or cause to become effective, a registration statement covering
the shares of common stock underlying the Series F Warrants, the Series G
Warrants and the Series B Preferred Stock within the timeframes required by
the
Registration Rights Agreement or the failure to keep such registration effective
as required by the Registration Rights Agreement; (iv) suspension from listing
on the OTC Bulletin Board or other exchange for 10 consecutive trading days;
(v)
the failure to timely deliver shares of common stock upon conversion of the
Series B Preferred Stock or exercise of the Series F Warrants or the Series
G
Warrants; (vi) default in the payment of indebtedness in excess of $250,000;
(vii) a judgment entered against us in excess of $250,000; and (viii)
insolvency, bankruptcy and similar circumstances.
The
January Securities Purchase Agreement also contains customary representations,
warranties, covenants and indemnification provisions for transactions of the
type entered into between the Company and Investor.
Series
B Preferred Stock
On
January 17, 2008 we filed an amended and restated Certificate of Designations
(as amended and restated, the “Certificate of Designations”) with the Secretary
of State of the State of Delaware, to, among other things, increase the number
of authorized shares of Series B Preferred Stock from 250 shares to 325
shares.
The
Certificate of Designations, which designates the rights, preferences,
privileges and terms of the Series B Preferred Stock provides that the Series
B
Preferred Stock will rank senior to other classes of common stock and preferred
Stock that are currently outstanding as to distributions of assets upon
liquidation, dissolution or winding up and as to payment of dividends on shares
of equity securities.
Each
share of Series B Preferred Stock is entitled to cumulative dividends at the
annual rate of 8% of the stated value of the Series B Preferred Stock. The
stated value of each share of Series B Preferred Stock is $10,000. Dividends
are
payable in cash or additional shares of Series B Preferred Stock.
Each
share of Series B Preferred Stock is convertible, at any time, at the option
of
the holder, into the number of shares of common stock determined by dividing
the
stated value of the Series B Preferred Stock by the conversion price. The
initial conversion price of the Series B Preferred Stock is $2.25 per
share.
The
conversion price is subject to adjustment for stock splits, dividends,
subdivisions, distributions reorganizations and similar transactions.
Furthermore, the conversion price is also subject to adjustment in the event
of
the issuance of securities for a price below the conversion price then in effect
or the issuance of convertible securities with an exercise or conversion price
that is less than the then current conversion price for the shares of Series
B
Preferred Stock.
To
the
extent that any shares Series B Preferred Stock remain outstanding on September
28, 2008, each holder thereof shall have the option to either require us to
redeem such holder’s shares of Series B Preferred Stock or convert such holder’s
shares of Series B Preferred Stock into shares of common stock at the conversion
price then in effect.
Holders
of Series B Preferred Stock have the option to require us to redeem shares
of
Series B Preferred Stock in the event of a Change of Control (as defined in
the
Certificate of Designations).
Holders
of Series B Preferred Stock are entitled to vote on matters submitted to our
stockholders as if the Series B Preferred Stock had been converted into shares
of Common Stock pursuant to the terms of the Certificate of Designations. To
the
extent the holders of Series B Preferred Stock are required to vote separately,
as a class, the affirmative vote of the holders of a majority of the outstanding
shares of Series B Preferred Stock will be required to approve the matter to
be
voted upon.
As
of the
date of this report, there are 250 shares of Series B Preferred Stock issued
and
outstanding.
Series
F Warrants
The
Series F Warrants are exercisable at a price of $2.25 per share for a period
of
seven years from the date of issuance. The Series F Warrants may be exercised
on
a cashless basis. The exercise price will be subject to adjustment in the event
of subdivision or combination of shares of our common stock and similar
transactions, distributions of assets, issuances of shares of common stock
with
a purchase price below the exercise price of the Series F Warrants, issuances
of
any rights, warrants or options to purchase shares of our common stock with
an
exercise price below the exercise price of the Series F Warrants, issuances
of
convertible securities with a conversion price below the exercise price of
the
Series F Warrants.
As
of the
date of this report, the outstanding Series F Warrants are exercisable for
an
aggregate of 1,875,000 shares or our common stock.
Series
G Warrants
The
Series G Warrants are exercisable at a price of $2.50 per share for a period
of
seven years from the date of issuance. The Series G Warrants may be exercised
on
a cashless basis. The exercise price will be subject to adjustment in the event
of subdivision or combination of shares of our common stock and similar
transactions, distributions of assets, issuances of shares of common stock
with
a purchase price below the exercise price of the Series G Warrants, issuances
of
any rights, warrants or options to purchase shares of our common stock with
an
exercise price below the exercise price of the Series G Warrants, issuances
of
convertible securities with a conversion price below the exercise price of
the
Series G Warrants.
As
of the
date of this report, the outstanding Series G Warrants are exercisable for
an
aggregate of 1,250,000 shares of our common stock.
Company
Security Agreement
Pursuant
to the terms of the January Securities Purchase Agreement, we agreed that the
lien granted pursuant to the Company Security Agreement would, in addition
to
securing the obligations previously secured thereby, secure our obligations
in
connection with the January Securities Purchase Agreement, the January
Transaction Documents and the Series B Preferred Stock issued in connection
with
the January Securities Purchase Agreement. The Company Security Agreement
provides for a lien on all of our assets in favor of the Investor.
Guaranty
Agreements
Pursuant
to the terms of the January Securities Purchase Agreement, we agreed that the
Guaranty Agreements would, in addition to applying to the obligations previously
guaranteed thereby, apply to our obligations in connection with the January
Securities Purchase Agreement, the January Transaction Documents and the Series
B Preferred Stock issued pursuant to the January Securities Purchase Agreement.
The Guaranty Agreements provide for unconditional guaranties of the obligations
guaranteed thereunder.
Guarantor
Security Agreements
Pursuant
to the terms of the January Securities Purchase Agreement, we agreed that the
security interests granted by our subsidiaries pursuant to the Guarantor
Security Agreements would, in addition to securing the obligations previously
secured thereunder, secure the obligations of our subsidiaries under the
Guaranty Agreements insofar as those obligations related to the January
Securities Purchase Agreement, the January Transaction Documents and the
Series B Preferred Stock issued pursuant to January Securities Purchase
Agreement. The Guarantor Security Agreements provide for liens in favor of
the
Investor on all of the assets of each of our subsidiaries, except for the
accounts receivable and certain contract rights of Xeni Financial Services,
Corp.
Amendment
to Registration Rights Agreement
Pursuant
to a First Amendment to Registration Rights Agreement, dated January 18, 2008,
we agreed that, in addition to registering the securities previously covered
by
the Registration Rights Agreement, to register for resale, the shares of our
common stock into which the Series B Preferred Stock sold pursuant to the
January Securities Purchase Agreement is convertible and the shares of our
common stock for which the Series F Warrants and the Series G Warrants sold
pursuant to the January Securities Purchase Agreement are
exercisable.
The
Registration Rights Agreement requires us to file a registration statement
covering the resale of the shares underlying the Senior Note, the Series D
Warrants and the Series E Warrants within 365 calendar days after September
28,
2007. We are required to cause such registration statement to become effective
on or before the date which is 485 calendar days after the filing of such
registration statement. In addition to it being an event of default under the
Securities Purchase Agreement, if we fail to file such registration statement
in
the time frame required, fail to cause it to become effective in the time frame
required, or fail to maintain the effectiveness of the registration statement
as
required by the Registration Rights Agreement, we will be required to pay a
cash
penalty in the amount of 2% of the aggregate stated value of the Series B
Preferred Stock for each month, or part thereof, that the registration statement
is not filed or effective, as the case may be. The cash penalty is limited
to
15% of the aggregate stated value of the Series B Preferred Stock.
The
Registration Rights Agreement also provides for piggyback registration
rights.
Item
3.02 Unregistered
sales of Equity Securities.
Item
1.01
above is incorporated into this Item 3.02 by reference.
Investor
is an “accredited investor,” as defined in Regulation D under the Securities Act
of 1933, as amended, or the Securities Act. None of the Series
B
Preferred Stock, the Series F Warrant, the Series G Warrant
or the
shares of our common stock underlying such securities were registered under
the
Securities Act, or the securities laws of any state and were offered and sold
in
reliance on the exemption from registration afforded by Section 4(2) and
Regulation D (Rule 506) under the Securities Act and corresponding provisions
of
state securities laws, which exempts transactions by an issuer not involving
any
public offering.
We
made
this determination with respect to the sale of the Series B Preferred Stock,
the
Series F Warrant, the Series G Warrant based on the representations of the
Investor, which included, in pertinent part, that Investor is an “accredited
investor” within the meaning of Rule 501 of Regulation D promulgated under the
Securities Act, and that Investor was acquiring the securities it was acquiring
for investment purposes for its own account and not as nominee or agent, and
not
with a view to the resale or distribution, and that Investor understood such
securities may not be sold or otherwise disposed of without registration under
the Securities Act or an applicable exemption therefrom.
Thus,
the
Series B Preferred Stock, the Series F Warrant, the Series G Warrant and shares
of common stock underlying such securities may not be offered or sold in the
United States absent registration or an applicable exemption from the
registration requirements and certificates evidencing such shares contain a
legend stating the same.
Item
9.01 Financial
Statements and Exhibits.
The
following exhibits are filed as part of this report:
|
Exhibit
No.
|
|
Description
|
|
3.1
|
|
Amended
and Restated Certificate of Designations designating the rights,
preferences, privileges and restrictions on the Series B Preferred
Stock.
|
|
4.1
|
|
Securities
Purchase Agreement, dated January 18, 2008, by and between Investor
and
MDwerks, Inc.
|
| |
|
|
|
4.2
|
|
Class
F Warrant to purchase 375,000 shares of Common Stock at a price
of $2.25
per share
|
| |
|
|
|
4.3
|
|
Class
G Warrant to purchase 250,000 shares of Common Stock at a price
of $2.50
per share
|
| |
|
|
|
4.5
|
|
First
Amendment to Registration Rights Agreement between MDwerks, Inc.
and
Investor
|
| |
|
|
|
10.1
|
|
Guaranty
issued to Investor by Xeni Financial Services, Corp.*
|
| |
|
|
|
10.2
|
|
Guaranty
issued to Investor by Xeni Medical Billing, Corp.*
|
| |
|
|
|
10.3
|
|
Guaranty
issued to Investor by MDwerks Global Holdings, Inc.*
|
| |
|
|
|
10.4
|
|
Guaranty
issued to Investor by Xeni Medical Systems, Inc.*
|
| |
|
|
|
10.5
|
|
Guaranty
issued to Investor by Patient Payment Solutions, Inc.*
|
| |
|
|
|
10.6
|
|
Security
Agreement entered into by and between Investor and MDwerks,
Inc.*
|
| |
|
|
|
10.7
|
|
Security
Agreement entered into by and between Investor and Xeni Medical
Billing,
Corp.*
|
| |
|
|
|
10.8
|
|
Security
Agreement entered into by and between Investor and MDwerks Global
Holdings, Inc.*
|
| |
|
|
|
|
|
Security
Agreement entered into by and between Investor and Xeni Medical
Systems,
Inc.*
|
| |
|
|
|
10.10
|
|
Security
Agreement entered into by and between Investor and Xeni Financial
Services, Corp.*
|
*
Incorporated by reference to our Current Report on Form 8-K, filed with the
Securities and Exchange Commission on October 2, 2007.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
| |
|
|
| |
MDWERKS,
INC. |
|
|
|
| Dated:
January 23, 2008 |
By: |
/s/
Howard B. Katz |
| |
Howard
B. Katz |
| |
Chief
Executive Officer |
Exhibit
Index
|
Exhibit
No.
|
|
Description
|
|
3.1
|
|
Amended
and Restated Certificate of Designations designating the rights,
preferences, privileges and restrictions on the Series B Preferred
Stock.
|
| |
|
|
|
4.1
|
|
Securities
Purchase Agreement, dated January 18, 2008, by and between Investor
and
MDwerks, Inc.
|
| |
|
|
|
4.2
|
|
Class
F Warrant to purchase 375,000 shares of Common Stock at a price
of $2.25
per share
|
| |
|
|
|
4.3
|
|
Class
G Warrant to purchase 250,000 shares of Common Stock at a price
of $2.50
per share
|
| |
|
|
|
4.5
|
|
First
Amendment to Registration Rights Agreement between MDwerks, Inc.
and
Investor
|
| |
|
|
|
10.1
|
|
Guaranty
issued to Investor by Xeni Financial Services, Corp.*
|
| |
|
|
|
10.2
|
|
Guaranty
issued to Investor by Xeni Medical Billing, Corp.*
|
| |
|
|
|
10.3
|
|
Guaranty
issued to Investor by MDwerks Global Holdings, Inc.*
|
| |
|
|
|
10.4
|
|
Guaranty
issued to Investor by Xeni Medical Systems, Inc.*
|
| |
|
|
|
10.5
|
|
Guaranty
issued to Investor by Patient Payment Solutions, Inc.*
|
| |
|
|
|
10.6
|
|
Security
Agreement entered into by and between Investor and MDwerks,
Inc.*
|
| |
|
|
|
10.7
|
|
Security
Agreement entered into by and between Investor and Xeni Medical
Billing,
Corp.*
|
| |
|
|
|
10.8
|
|
Security
Agreement entered into by and between Investor and MDwerks Global
Holdings, Inc.*
|
| |
|
|
|
|
|
Security
Agreement entered into by and between Investor and Xeni Medical
Systems,
Inc.*
|
| |
|
|
|
10.10
|
|
Security
Agreement entered into by and between Investor and Xeni Financial
Services, Corp.*
|
*
Incorporated by reference to our Current Report on Form 8-K, filed with the
Securities and Exchange Commission on October 2, 2007.