Attached files
| file | filename |
|---|---|
| EX-10.9 - STOCK PLEDGE AGREEMENT - Helix Wind, Corp. | helix_8k-ex1009.htm |
| EX-10.6 - REGISTRATION RIGHTS AGREEMENT - Helix Wind, Corp. | helix_8k-ex1006.htm |
| EX-10.5 - ADDITIONAL WARRANT - Helix Wind, Corp. | helix_8k-ex1005.htm |
| EX-10.8 - IRREVOCABLE INSTRUCTION - Helix Wind, Corp. | helix_8k-ex1008.htm |
| EX-10.11 - ESCROW AGREEMENT - Helix Wind, Corp. | helix_8k-ex1011.htm |
| EX-10.2 - CONVERTIBLE SECURED PROMISSORY NOTE - Helix Wind, Corp. | helix_8k-ex1002.htm |
| EX-10.7 - CONFESSIONS OF JUDGEMENT - Helix Wind, Corp. | helix_8k-ex1007.htm |
| EX-10.1 - NOTE AND WARRANT PURCHASE AGREEMENT - Helix Wind, Corp. | helix_8k-ex1001.htm |
| EX-10.3 - WARRANT - Helix Wind, Corp. | helix_8k-ex1003.htm |
| EX-10.4 - FORM OF ADDITIONAL NOTE - Helix Wind, Corp. | helix_8k-ex1004.htm |
| EX-16 - LETTER FROM SQUAR, MILNER, PETERSON, MIRANDA AND WILLIAMSON, LLP - Helix Wind, Corp. | helix_8k-ex1600.htm |
| EX-10.10 - SETTLEMENT AGREEMENT - Helix Wind, Corp. | helix_8k-ex1010.htm |
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): April 1, 2010
HELIX WIND,
CORP.
(Exact
Name of Registrant as Specified in Its Charter)
Nevada
(State or
Other Jurisdiction of Incorporation)
|
000-52107
(Commission
File Number)
|
20-4069588
(IRS
Employer Identification No.)
|
1848
Commercial Street
San Diego, California
92113
(Address
of Principal Executive Offices, Zip Code)
(877)
246-4354
(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):
|_|
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
Effective
as of April 1, 2010, Helix Wind, Corp., a Nevada corporation (the “Company”),
closed the financing transaction under a Note and Warrant Purchase Agreement
(the “Purchase Agreement”) with St. George Investments, LLC, an Illinois limited
liability company (the “Investor”) pursuant to which, among other things, the
Company issued (i) a convertible secured promissory note in the aggregate
principal amount of $779,500 (the “Note”) and (ii) a five-year warrant (the
“Warrant”) to purchase up to an aggregate of 2,500,000 shares of the Company’s
common stock, par value $0.0001 per share (“Common Stock”), subject to
adjustment, with an exercise price of $.75 per share. The Warrant contains a
cashless exercise provision. The Purchase Agreement also contains
representations, warranties and indemnifications by the Company and the
Investor. The Company also entered into a Registration Rights
Agreement with the Investor in which the Company has agreed to prepare and file
with the SEC, as soon as practicable after the closing date, but no later than
sixty (60) days from the closing date, a registration statement registering for
resale by the Investor of no fewer than 20,000,000 shares of Common
Stock.
The
Purchase Agreement also provides that, subject to meeting certain conditions,
including the Company’s filing of a registration statement with the SEC within
sixty (60) days of the initial closing date, and no Event of Default has
occurred under any of the notes, the Investor will loan to the Company an
additional $130,000 (the “Additional Notes”) on or about each monthly
anniversary of the issuance of the Note during the four consecutive calendar
months immediately following such issuance of the Note, for a total aggregate
additional net purchase price of $400,000 (after deducting the original issue
discount amounts). Upon the issuance of each additional note, the
Company would also issue to the Investor an additional five year Warrant to
purchase up to 250,000 shares of Common Stock with an exercise price of $.75 per
share (the “Additional Warrants”).
The
obligations of the Company to the Investor are secured by a pledge (the “Stock
Pledge Agreement”) made by Kenneth O. Morgan, a Company shareholder, of
4,800,000 of his shares of common stock of the Company. The Company also
executed and delivered a Confession of Judgment in favor of the
Investor.
In
connection with the Stock Pledge Agreement, the Company agreed to place
6,000,000 shares of Company Common Stock into escrow for the benefit of Kenneth
O. Morgan. Under the terms of the escrow agreement, Kenneth O. Morgan
would be entitled to receive the 6,000,000 shares of Company Common Stock in the
event his shares are forfeited to the Investor under the Pledge
Agreement.
In
connection with the financing, Dominick & Dominick, the placement agent,
received a cash payment of $48,000, and will receive an additional $8,000 upon
the issuance of each Additional Note, and the issuance of warrants to Dominick
& Dominick (or their designee) to purchase 80,000 shares of common stock.
The warrants have the same terms as those issued to Investor.
The
following is a brief summary of each of those agreements. These summaries are
not complete, and are qualified in their entirety by reference to the full text
of the agreements that are attached as exhibits to this Current Report on Form
8-K. Readers should review those agreements for a more complete understanding of
the terms and conditions associated with this transaction.
Purchase
Agreement
Pursuant
to the Purchase Agreement, so long as the Note is outstanding, the Company will
not (i) incur any new indebtedness for borrowed money without the prior written
consent of the Investor; provided, however the Company
may incur obligations under trade payables in the ordinary course of business
consistent with past practice without the consent of the Investor; (ii) grant or
permit any security interest (or other lien or other encumbrance) in or on any
of its assets; and (iii) enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service, with any affiliate of the Company, or amend or modify any
agreement related to any of the foregoing, except on terms that are no less
favorable, in any material respect, than those obtainable from any person who is
not an affiliate.
Note
and Additional Notes
The Note
has an original issue discount of $180,000.00 and an obligation to pay $7,500 of
the Investor’s transaction fees. Accordingly, the amount provided under the Note
is $592,000.00. The Note matures on the earlier of 6 months from the
date of issuance or when the Company raises in excess of $500,000. If there is a
default the Note will accrue interest at the rate of 15% per annum. The Note is
convertible into Common Stock at a price per share as calculated under the terms
provided in the Note based on the trading price of the Company's stock. The
number of shares the Note is convertible into is subject to customary
anti-dilution provisions.
The Note
provides that upon each occurrence of certain liquidity events, as defined in
the Note, (i) the outstanding balance of the Note shall accrue interest at
the rate of 15% per annum until this Note is repaid in full, and (ii) the
Investor shall have the right, at any time thereafter until the Note is repaid
in full, to accelerate the outstanding balance under the Note, and exercise
default remedies under and according to the terms of the Pledge
Agreement.
An Event
of Default under the Note includes (i) a failure to pay any amount
due under the Note when due; (ii) a failure to deliver shares upon conversion of
the Note; (iii) the Company breaches any covenant, representation or other term
or condition in the Purchase Agreement, Note or other transaction document; or
(vi) upon bankruptcy events. For so long as no Event of Default shall
have occurred under the Note, the Investor shall remain obligated to purchase
the Additional Notes and Additional Warrants according to the terms and subject
to the conditions of the Purchase Agreement.
Each of
the four Additional Notes in the principal amount of $130,000 each have
substantially similar terms to the terms of the Note; provided, however each
Additional Note matures on the earlier of 6 months from the date of issuance or
when the Company raises in excess of $1,000,000. The amount to be
provided under each Additional Note is $100,000 after the original issue
discount.
Warrant
and Additional Warrants
The
Warrant provides the holder the right to purchase up to 2,500,000 shares of
Common Stock, subject to adjustment as described in the Warrant, at an exercise
purchase price of $.75 per share. The Warrant is exercisable for five
years, commencing from the date of issuance. The Warrant has anti-dilution and
cashless exercise rights. If the Company fails to deliver shares issuable upon
exercise of the Warrant within three days, the Company shall pay the Investor
$100 per day for each $10,000 of exercise price subject to the delivery
default.
Each of
the four Additional Warrants to purchase up to 250,000 shares of Common Stock at
an exercise price of $.75 per share has substantially similar terms to the terms
of the Warrant.
Other
Terms
The Note,
Additional Notes, Warrant and Additional Warrants contain certain limitations on
conversion and exercise. They provide that no conversion or exercise may be made
if, after giving effect to the conversion and/or exercise, the Investor would
own in excess of 9.99% of the Company’s outstanding shares of Common
Stock.
Other
than Excepted Issuances (described below), if the Note, Additional Notes,
Warrant and Additional Warrants are outstanding, the Company agrees to issue
shares or securities convertible for shares at a price (including an exercise
price) which is less than the conversion price of the Note or exercise price of
the Warrant, then the conversion price and exercise price, as the case may be,
shall be reduced to the price of any such securities. The only Excepted
Issuances are (i) the Company’s issuance of securities to strategic licensing
agreements or other partnering agreements which are not for the purpose of
raising capital and no registration rights are granted and (ii) the Company’s
issuance to employee, directors and consultants pursuant to plans
outstanding.
The Note,
Additional Notes, Warrant and Additional Warrants were offered and sold in
reliance on the exemption from registration afforded by Rule 506 of Regulation D
promulgated under Section 4(2) of the Securities Act of 1933, as
amended. The offering was not conducted in connection with a public
offering, and no public solicitation or advertisement was made or relied upon by
the Investor in connection with the offering.
Settlement
Agreement
Effective
April 1, 2010, the Company completed a Settlement Agreement and Mutual Release
with Kenneth O. Morgan pursuant to which the Company paid Kenneth O. Morgan the
amount of $150,000 in settlement of the previously announced litigation between
the parties. Pursuant to the terms of the Settlement Agreement,
Kenneth O. Morgan has agreed to dismiss his lawsuit against the Company and
Scott Weinbrandt, and the Company has agreed to dismiss its counterclaims
against Kenneth O. Morgan. This summary of the settlement agreement
is not complete, and is qualified in its entirety by reference to the full text
of the settlement agreement that is attached as an exhibit to this Current
Report on Form 8-K. Readers should review those agreements for a more complete
understanding of the terms and conditions associated with this
transaction.
Item
3.02 Unregistered
Sales of Equity Securities
The
information provided in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item
4.01 Changes
in Registrant’s Certifying Accountant
Helix
Wind, Corp. (the “Company”) dismissed Squar, Milner, Peterson, Miranda and
Williamson, LLP (“Squar Milner,” or the “Firm”), as our independent registered
public accounting firm effective April 1, 2010. The Company engaged Anton &
Chia, LLP (“Anton Chia”), as our independent registered public accounting firm
effective April 1, 2010. The decision to change firms has been approved by the
Company’s board of directors.
Squar
Milner issued an audit report dated March 31, 2009 (the “Audit Report”) on the
December 31, 2008 and 2007 financial statements of Helix Wind,
Inc. The Audit Report, which is the only audit report issued by Squar
Milner relating to any financial statements of Helix Wind, Inc. or the Company,
did not contain an adverse opinion or a disclaimer of opinion, nor was it
qualified or modified as to uncertainty, audit scope, or accounting principles,
other than to state that there is substantial doubt about the ability of the
Company to continue as a going concern.
During
our two most recent fiscal years and the subsequent interim period up to the
dismissal of Squar Milner, there have not been any disagreements between the
Company and Squar Milner on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Squar Milner, would have
caused Squar Milner to make reference to the subject matter of such disagreement
in connection with the Audit Report. Except as described in the
following paragraph, there have not been any “reportable events,” as that term
is described in Item 304(a)(1)(v) of Regulation S-K, during the Company’s two
most recent fiscal years and the subsequent interim period preceding Squar
Milner’s dismissal.
A
material weakness is a deficiency, or a combination of deficiencies, in internal
control over financial reporting (“ICFR”) such that there is a reasonable
possibility that a material misstatement of a company’s annual or interim
financial statements will not be prevented or detected on a timely
basis. The Company has not filed a Form 10-K since going public in
February 2009, but in the Company’s Form 10-Q for the quarter and year-to-date
period ended September 30, 2009 filed with the Securities and Exchange
Commissions (the “SEC”) on November 19, 2009, management identified the
following internal control deficiencies, which it deemed material weaknesses
during its assessment of the Company’s ICFR as of September 30,
2009:
|
1.
|
Management
identified a lack of sufficient segregation of duties. Specifically, this
material weakness is such that the design over these areas relies
primarily on detective controls and could be strengthened by adding
preventative controls to properly safeguard Company
assets.
|
|
2.
|
Management
identified a lack of sufficient personnel (due to the limited resources of
the Company) in the accounting function with appropriate skills, training
and experience to perform the review processes to ensure the complete and
proper application of generally accepted accounting principles,
particularly as it relates to valuation of share-based payments, the
valuation of warrants, and other complex debt/equity transactions.
Specifically, this material weakness led to segregation of duties issues
and resulted in material adjustments to the Company’s December 31, 2008
and 2007 audited financial statements and revisions of the disclosures
related to share- based payments, valuation of warrants and other equity
transactions. Such material weakness also resulted in significant
adjustments of the Company’s unaudited March 31, 2009, June 30, 2009 and
September 30, 2009 condensed consolidated financial
statements.
|
In
addition, management concluded that the Company’s disclosure controls and
procedures were not effective as of September 30, 2009.
The
Company provided Squar Milner with a copy of the disclosures made in this report
before this report was filed with the SEC. We requested that Squar
Milner furnish a letter addressed to the SEC stating whether or not it agrees
with the disclosure made herein; such letter is attached as Exhibit 16
hereto.
During
our two most recent fiscal years and the interim period prior to engaging Anton
Chia, neither our Company nor anyone on our Company's behalf consulted Anton
Chia regarding any of the matters enumerated in Item 304(a)(2)(i) or Item
304(a)(2)(ii) of Regulation S-K. An individual who was a non-equity
partner at Squar Milner and a member of the engagement team for the
aforementioned audit left the Firm on September 16, 2009; according to their web
site, such person (who is now a CPA) is currently the managing partner of Anton
& Chia.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits
|
Exhibit
10.1
|
Note
and Warrant Purchase Agreement dated March 30, 2010
|
|
Exhibit
10.2
|
Convertible
Secured Promissory Note dated March 30, 2010
|
|
Exhibit
10.3
|
Warrant
to Purchase Shares of Common Stock dated March 30, 2010
|
|
Exhibit
10.4
|
Form
of Additional Note
|
|
Exhibit
10.5
|
Additional
Warrant
|
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Exhibit
10.6
|
Registration
Rights Agreement dated March 30, 2010
|
|
Exhibit
10.7
|
Consent
to Entry of Judgment by Confession dated March 30, 2010
|
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Exhibit
10.8
|
Irrevocable
Transfer Agent Instruction Letter dated March 30, 2010
|
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Exhibit
10.9
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Pledge
Agreement dated March 30, 2010
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Exhibit
10.10
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Settlement
Agreement and Mutual Release dated March 30, 2010
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Exhibit
10.11
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Escrow
Agreement dated March 30, 2010
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Exhibit
16
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Letter
from Squar, Milner, Peterson, Miranda and Williamson, LLP, dated April 5,
2010
|
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.
HELIX
WIND, CORP.
By: /s/ Scott Weinbrandt
Name: Scott
Weinbrandt
Title: Chief
Executive Officer
Date: April
6, 2010