Form 8-K 7-5-06
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: June 28, 2006
(Date
of
earliest event report):
AMS
HEALTH SCIENCES, INC.
(Exact
Name of Small Business Issuer as Specified in its Charter)
|
OKLAHOMA
|
001-13343
|
73-1323256
|
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(Commission
File Number)
|
(IRS
Employer Identification Number)
|
|
711
NE 39th
Street, Oklahoma City, OK 73105
|
|
(Address
of Principal Executive Offices) (Zip
Code)
|
Issuer’s
telephone number, including area code: (405) 842-0131
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(b) under the Exchange Act (17 CFR
240.14a-12(b))
|
|
[
]
|
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))
|
Information
to be Included in the Report
ITEM
1.01. Entry into a Material Definitive Agreement.
On
June
28, 2006, AMS Health Sciences, Inc. (the “Company”) entered into a Securities
Purchase Agreement (“Securities Purchase Agreement”) with Laurus Master Fund,
LTD (“Laurus”) pursuant to which the Company issued and Laurus Purchased a
Secured Convertible Term Note in the aggregate principal amount of $2,000,000
(the “Note”). The Note bears interest at a per annum rate equal to the prime
rate (as published in the Wall
Street Journal
from
time to time) plus three percent (3.0%); provided, however that the interest
rate may not be less than ten percent (10.0%). Interest payments are due monthly
beginning July 1, 2006. Principal payments in the amount of $83,333.33 are
due
monthly beginning July 1, 2007. The final maturity date of the Note is June
28,
2009 (the “Maturity Date”).
Laurus
is
required to convert the monthly payments of interest and/or principal (the
“Monthly Amount”) due on the Note into shares of the Company’s common stock if
(i) the average closing price of the Company’s common stock for the five (5)
days preceding the payment date is greater than or equal to 115% of the Fixed
Conversion Price (defined below) and (ii) the amount of such conversion does
not
exceed twenty five percent (25%) of the aggregate dollar trading volume of
the
Company’s common stock for the period of twenty-two trading days immediately
preceding such payment date. If subsection (i) above is met but subsection
(ii)
above is not met as to the entire Monthly Amount, then Laurus is required to
convert on such part of the Monthly Amount that meets the criteria of subsection
(ii). The Fixed Conversion Price of the Note is $0.51, which is equal to the
average closing price of the Company’s common stock for the ten (10) trading
days immediately prior to the date the Note was issued.
Laurus
has the option to convert any portion of the outstanding principal amount and/or
accrued interest and fees and expenses payable into shares of the Company’s
common stock at the Fixed Conversion Price. Laurus cannot optionally convert
payments due under the Note into shares of the Company’s common stock, if such
conversion would result in Laurus or its affiliates owning more than 4.99%
of
the Company’s common stock. This prohibition on Laurus’ ability to optionally
convert amounts due under the Note into shares of the Company’s common stock may
be waived by Laurus and becomes null and void upon (i) the occurrence and during
the continuance of an event of default, and (ii) receipt of a notice of Optional
Redemption (defined below) from the Company.
The
Company can prepay the Note (an “Optional Redemption”) by paying Laurus (i) 125%
of the principal amount outstanding if the Optional Redemption occurs prior
to
the June 28, 2007, (ii) 120% of the principal amount outstanding if the Optional
Redemption occurs after June 28, 2007 and prior to the June 28, 2008, and (iii)
115% of the principal amount outstanding if the Optional Redemption occurs
after
June 28, 2008 and prior to the Maturity Date.
The
Company’s obligations under the Note are secured by all of the Company’s assets,
including its shares of AMS Manufacturing, Inc. and by all of AMS
Manufacturing’s assets including its shares of Heartland Cup, Inc. Additionally,
the Company’s obligations under the Note are guaranteed by AMS Manufacturing.
Following
the occurrence and continuance of an event of default by the Company (an “Event
of Default”), the Company is required to pay additional default interest in the
amount of seven percent (7%) per annum on the outstanding principal balance
of
the Note. Additionally, upon an Event of Default, Laurus may (i) demand
repayment in full all the obligations and liabilities owing by the Company
to
Laurus under the Note, the Securities Purchase Agreement or any other agreements
contemplated thereunder, and/or (ii) may elect to require the Company to make
a
default payment equal to 110% of the outstanding principal amount of the Note
plus accrued and unpaid interest, all other fees then remaining unpaid, and
all
other amounts due and payable under the Note.
So
long
as at least twenty-five percent (25%) of the principal amount of the Note
remains outstanding, the Company and its subsidiaries are subject to
restrictions related to:
1. The
declaration of dividends;
2. The
issuance of preferred stock;
3. The
redemption of preferred stock or other equity interests;
4. The
liquidation, dissolution or the material reorganization of the Company or its
subsidiaries (other than Heartland);
5. The
ability of the Company to become subject to agreements restricting the ability
of it or its subsidiaries (other than Heartland) from performing their
obligations under the Securities Purchase Agreement or any agreement
contemplated thereunder;
6. The
ability of the Company to materially alter or change the scope of its
business;
7. The
Company’ ability to incur debt;
8. The
Company’s ability to forgive indebtedness;
9. The
Company’s ability to guarantee obligations of others; and
10. The
Company’s ability to create or acquired subsidiaries.
In
connection with the issuance of the Note, the Company issued Laurus a common
stock purchase warrant (the “Warrant”) granting Laurus the right to purchase
2,272,727 shares of the Company’s common stock at an exercise price of $0.53.
The
Company has also agreed to file a registration statement with the Securities
and
Exchange Commission covering the shares of the Company’s common stock issuable
upon conversion of the Note and exercise of the Warrant.
Additionally,
the Company granted Laurus a financing right of first refusal to provide any
Additional Financing to the Company. “Additional Financing” means any incurrence
of additional indebtedness and/or the sale or issuance of any equity interests
of the Company or any of its subsidiaries.
Item
9.01. Financial Statements and Exhibits
(c)
Exhibits
| |
99.1
|
Press
release dated July 5, 2006
|
SIGNATURES
Pursuant
to the requirements of the Securities and Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned hereto
duly authorized.
| |
AMS
HEALTH SCIENCES, INC.
|
| |
|
| |
/S/
ROBIN L. JACOB
|
| |
By:
Robin L. Jacob
|
|
Date:
July 5, 2006
|
Vice
President and Chief Financial
Officer
|
EXHIBIT
INDEX
|
Exhibit
No.
|
Description
|
Method
of Filing
|
|
99.1
|
Press
release dated July 5, 2006
|
Filed
herewith electronically
|