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): September 3, 2004
NuWay Medical, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000-19709 65-0159115
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2603 Main Street, Suite 1150, Irvine, CA 92614
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (949) 235-8062
Not Applicable
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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 (17CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17CFR 240.13e-4(c))
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ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
As previously disclosed by NuWay Medical, Inc. (the Company) in its Annual
Report on Form 10-KSB for the year ended December 31, 2003, the Company requires
additional outside funds to maintain the costs of its business, since there are
no operations generating revenue at present. From September 2004 through the
date of filing this report, the Company raised a total of $171,000 in the form
of convertible debt from third party investors, and this effort is ongoing. For
the details of these transactions, please see the discussion under Item 3.02 of
this report.
In addition, the Company's President, Dennis Calvert, has loaned money to
the Company by paying from his personal funds certain of the Company's expenses.
A significant portion of these personal funds was obtained by Mr. Calvert by
refinancing his primary residence and cashing out equity thereon. From October
2003 to February 22, 2005, the total amount loaned by Mr. Calvert was $143,141.
The Company repaid $41,371 of this amount as of February 22, 2005. The Company
and Mr. Calvert are in negotiations such that the $101,770 still outstanding and
owed by the Company to Mr. Calvert will be repaid under the terms of a
promissory note bearing interest of 10% per annum, requiring periodic payments
and maturing in approximately one year. The terms of the note have yet to be
finalized or agreed upon.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
As previously disclosed by the Company in its Annual Report on Form 10-KSB
for the year ended December 31, 2003, the Company requires additional outside
funds to maintain the costs of its business, since there are no operations
generating revenue at present. From September 2004 through the date of filing
this report, the Company has raised a total of $190,000 from third party
investors, and this effort is ongoing.
On September 3, 2004, the Company received gross proceeds of $25,000 from
two individual investors in connection with the sale of 5,000,000 shares of the
Company's common stock.
On October 4, 2004, the Company received gross proceeds of $50,000 from an
outside investor and issued its convertible promissory note due and payable one
year from the date of issuance. The note bears interest at a rate of 10% per
annum, payable on the maturity date. The note can be converted, in whole or in
part, into shares of the Company's Series A Preferred stock, on the basis of
$.005 per share, at any time prior to maturity by either the Company or the
lender. Each share of Series A Preferred Stock may be converted by the holder
into one share of the Company's common stock. If the noteholder converts the
note into Series A Preferred Stock, on or after the note's original maturity
date the noteholder may require the Company to buy back the shares of Series A
Preferred Stock for 110% of the principal amount of the promissory note (the
"Buy Back Provision"). If the Company is unable to do so, the Company's
president, Dennis Calvert, has agreed to buy back the shares on the same terms.
If shares of Series A Preferred Stock are converted into common stock, the
holder has the right to include (piggyback) the shares of common stock in a
registration of securities filed by the Company, other than on Form S-4 or Form
S-8.
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The Company's payment obligations under the note may be accelerated upon
the following events: (i) the sale of the Company's assets outside the ordinary
course of business; (ii) a breach of the representations and warranties
contained within the agreement evidencing the loan; (iii) the failure to timely
pay the note; (iv) the Company's default in any other loan obligation greater
than $100,000; (v) the Company's dissolution, liquidation, merger,
consolidation, bankruptcy, or future insolvency; and (vi) the commencement of
any suit that threatens to have a material adverse effect on the Company,
including the entry of a final judgment or settlement in excess of $100,000.
On November 4, 2004, the Company received gross proceeds of $10,000 from
an outside investor and issued a convertible promissory note on substantially
the same terms as the previously described note.
On January 6, 2005, the Company received gross proceeds of $25,000 from an
outside investor and issued a convertible promissory note on substantially the
same terms as the previously described note.
On January 7, 2005, the Company received gross proceeds of $75,000 from
two outside investors and issued convertible promissory notes on substantially
the same terms as the previously described notes, except these notes do not
include buy-back provisions, and allow conversion into a total of 18,000,000
shares of common stock at $0.0042 per common share, rather than $0.005 per
Series A Preferred share.
On February 10, 2005, the Company amended its obligations to Dr. James
Seay, as the noteholder under the Company's promissory note dated November 20,
2003 in the principal amount of $50,000 and which matured on February 18, 2004.
On the maturity date of the note the Company was obligated to pay the noteholder
$65,000. The Company has paid the noteholder $30,000 and the balance of $35,000
remains outstanding. The amendment to the note entered into on February 10,
2005, (i) extends the maturity date of the note to February 3, 2006, (ii)
provides for interest to accrue at a rate of 10% per annum (15% upon default),
and (iii) allows for the conversion of the note into 7,000,000 shares of the
Company's common stock, or $.005 per share.
On February 13, 2005, the Company received gross proceeds of $5,000 from
an outside investor and issued a convertible promissory note on substantially
the same terms as the previously described notes, except the note does not
include buy back provisions, and allow conversion into a total of 703,125 shares
of common stock (at $0.0071 per common share, rather than $0.005 per Series A
Preferred share)..
On February 20, 2005, the Company received gross proceeds of $6,000 from
an outside investor and issued a convertible promissory note on substantially
the same terms as the previously described notes, except this note does not
include buy-back provisions, and allows conversion into a total of 843,750
shares of common stock at $0.0071 per common share, rather than $0.005 per
Series A Preferred share.
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All of these offerings and sales were made in reliance on the exemption
from registration contained in Section 4(2) of the Securities Act of 1933, as
amended, and/or Regulation D promulgated thereunder as not involving a public
offering of securities.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
10.1 Form of Convertible Loan Agreement (convertible into Series A
Preferred) entered into with each purchaser of convertible debt
10.2 Form of Convertible Term Note (convertible into Series A Preferred)
entered into with each purchaser of convertible debt
10.3 Form of Convertible Loan Agreement (convertible into Common stock)
entered into with each purchaser of convertible debt
10.4 Form of Convertible Term Note (convertible into Common stock)
entered into with each purchaser of convertible debt
10.5 Amendment Number 1 to Promissory Note dated November 20, 2003
between NuWay Medical, Inc. and Dr. James Seay (attached as Exhibit
10.23 to Form 10-KSB filed by the Company for the period ending
December 31, 2003, filed with the Securities and Exchange Commission
on November 16, 2004
10.6 Form of Convertible Term Note (convertible into Common stock)
entered into with respect to the February 2005 issuances referred to
herein
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.
Date: February 22, 2005 NUWAY MEDICAL, INC.
By: /s/ Dennis Calvert
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Dennis Calvert
Chief Executive Officer
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