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 30, 2004
EARTHSHELL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 333-13287 77-0322379
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or organization) Identification No.)
800 Miramonte Drive, Santa Barbara, CA 93109
(Address of Principal Executive Offices) (Zip Code)
805-897-2248
(Registrant's telephone number, including area code)
N/A
(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:
|_| 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))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
ITEM 1.01 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
Receipt of Proceeds from Sale of Common Stock to MBS
On August 5, 2004, the Registrant and Meridian Business Solutions, LLC
("MBS") entered into a Stock Purchase Agreement (the "Stock Purchase Agreement")
pursuant to which MBS agreed to fund $5 million to the Registrant in exchange
for the Registrant's issuance of a total of 1,666,666 shares of common stock at
a price of $3.00 per share. On August 20, 2004, the Registrant received $500,000
from MBS, for which the Registrant expects to issue 166,666 shares of its common
stock to MBS by October 15, 2004. On October 1, 2004, the Registrant received an
additional $1.2 million of the $5 million committed by MBS, and the Registrant
issued 400,000 shares of its common stock to MBS. On October 11, 2004, the
Registrant was informed that MBS has funded an additional $1 million and,
pending completion of certain documentation, such amount is being remitted to
the Registrant in exchange for the issuance of an additional 333,333 shares of
its common stock. The Registrant has been informed by MBS that the remaining
$2.3 million of the $5 million commitment under the Stock Purchase Agreement
will be funded in November, 2004. The shares of common stock issued to MBS are
not registered for resale under the Securities Act of 1933, as amended (the
"Securities Act"), and the Registrant has agreed to file a registration
statement to register the shares no later than 60 days after the closing. The
cash received from MBS was used, in part, to fund the repurchase of the
Debentures(as defined below) and to restructure the Company's long-term debt.
Debenture Purchase Agreements
On September 30, 2004, the Registrant entered into agreements with each of
the holders (collectively, the "Holders") of its Secured Convertible Debentures
due March 5, 2006 (the "Debentures") to amend and restate the Debenture Purchase
Agreements entered into in July 2004 by the Registrant and the Holders (as
amended and restated, the "Debenture Purchase Agreements" and the transactions
contemplated therein, collectively, the "Debenture Transactions"). The
Debentures were in default and, as a consequence, the Holders could require the
Registrant to repurchase the Debentures at a price equal to 125% of the
outstanding principal amount, plus accrued and unpaid interest, which amount
would be approximately $8.5 million.
Collectively, the Debenture Purchase Agreements require (i) E. Khashoggi
Industries, LLC ("EKI") to pay $1 million cash (the Registrant is obligated to
reimburse EKI for this cash payment as discussed below), (ii) the Holders to
convert the Debentures in accordance with their terms, resulting in the issuance
by the Registrant of 1,149,877 shares of its common stock, which shares were
previously registered for resale by the Registrant in connection with the
issuance of the Debentures, (iii) the Registrant to issue to the Holders an
aggregate of 512,500 additional shares of the Registrant's common stock and (iv)
the Registrant to pay approximately $2.4 million to one of the Debenture holders
from 33% of any equity funding received by the Registrant (excluding the $2.7
million funded to date by MBS) or 50% of the royalties received by the
Registrant in excess of $250,000 per month (determined on a cumulative basis
commencing July 1, 2004). The Registrant has the right to convert the unpaid
portion of the $2.3 million into shares of the Registrant's common stock at a
price equal to the lesser of $3.00 per share or the price per share price that
Registrant subsequently receives upon the issuance of its common stock (or other
convertible security) during the three year period commencing September 30,
2004. The 512,500 shares of common stock issued to the Holders on October 6,
2004 are not registered for resale under the Securities Act, and the Registrant
has agreed to file a registration statement to register the shares no later than
60 days after the closing. The consideration for the repurchase of the
Debentures has been paid or issued, but the actual closure of the transactions
will occur upon the Registrant's receipt of the cancelled Debentures (all of the
Debentures have either been received or they are in the process of being
submitted by the holders). Upon receipt of the Debentures, they will be retired
by the Registrant and the Registrant shall also cancel all of the related
agreements, including the security agreement pursuant to which the Registrant
pledged its rights under the license agreement with EKI.
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EKI Agreements
In connection with its purchase of the Debentures from the Holders, on
September 30, 2004, EKI entered into an agreement with the Registrant to sell
the Debentures it purchased back to the Registrant for $1 million cash, the cash
price paid by EKI for the purchased Debentures (the "EKI Debenture Purchase
Agreement"). In connection therewith, immediately after its acquisition, EKI
sold the purchased Debentures to the Registrant and, as discussed above, the
Registrant expects to retire the Debentures shortly.
In addition, on September 30, 2004, the Registrant and EKI agreed to
convert certain existing loans from EKI to the Registrant into shares of the
Registrant's common stock (the "EKI Conversion Agreement"). This transaction
will close immediately after the closing of the Debenture Transactions and,
pursuant to the EKI Conversion Agreement, EKI is converting the $2,755,000
principal amount of such debt into shares of the Registrant's common stock at a
conversion price of $3 per share. In addition, under the terms of the EKI
Conversion Agreement, EKI is converting the accrued and unpaid interest on such
loans into shares of the Registrant's common stock at a conversion price equal
to the greater of (i) $3 per share, and (ii) the maximum per share price (not to
exceed $4 per share) obtained by the Registrant upon the sale of its common
stock to any investor during the three month period following the closing. The
1,051,494 shares of common stock issued to EKI will not be registered for resale
under the Securities Act, and the Registrant has agreed to file a registration
statement to register the shares no later than 60 days after the closing.
Biotec Agreement
The Registrant also reached agreement on September 1, 2004 to amend its
existing agreements with its affiliates, bio-tec Biologische Naturverpackungen
GmbH & Co. and bio-tec Biologische Naturverpackungen Forschungs und Entwicklungs
GmbH (collectively, "Biotec"; and such agreement, the "Biotec Amendment"). Under
the terms of the Biotec Amendment, the Registrant has agreed to satisfy the
approximate $2.5 million in indebtedness owed to Biotec by (i) paying $500,000
(ii) converting approximately $1.5 million principal amount of the Biotec debt
into shares of the Registrant's common stock at a conversion price of $3 per
share and (iii) at the Registrant's option, on the first anniversary of the
closing, pay $500,000 to Biotec or convert the remaining $500,000 Biotec debt
into 166,667 shares of the Registrant's common stock at a conversion price of $3
per share. In consideration for the above, Biotec also agreed to suspend the
monthly license fees payable by the Registrant for two years after the date of
the closing. The common stock to be issued pursuant to the Biotec Amendment will
not initially be registered for resale under the Securities Act, and the
Registrant has agreed to file a registration statement to register the shares no
later than 60 days after the closing. The Biotec transaction is expected to
close by October 15, 2004.
Press Release
The Registrant issued a press release on October 11, 2004 to announce,
among other things, that it had entered into the Debenture Purchase Agreements,
the EKI agreements and the Biotec Agreement.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable
(b) Not applicable
(c) Exhibits:
3.1 Press Release of the Registrant, dated October 11, 2004, announcing
debt restructuring and issuance of stock.
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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.
EARTHSHELL CORPORATION
Date: October 11, 2004 By: /s/ SCOTT HOUSON
----------------
Name: D. Scott Houston
Title: Chief Financial Officer
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INDEX TO EXHIBITS
NO. DESCRIPTION
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3.01 Press Release, dated October 11, 2004
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