xelr88k.htm
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): March 5, 2010
XELR8
HOLDINGS, INC.
(Exact
name of registrant as specified in its charter)
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Nevada
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000-50875
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84-1575085
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(State
of incorporation)
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(Commission
File No.)
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(IRS
Employer
Identification
No.)
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480
South Holly Street
Denver,
CO 80246
(Address
of principal executive offices, including zip code)
(303) 316-8577
(Registrant’s
telephone number, including area code)
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
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR
240.14d-2(b))
o 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
On March 5,
2010, XELR8 Holdings, Inc., (the "Company", "we", or "us") completed the initial
closing of a secured convertible note financing ("Note Financing"). At the
closing, we issued $1.23 million in aggregate principal amount of senior secured
convertible promissory notes (the "Secured Notes") to a limited number of
accredited investors (the “Lenders”). The purchase price of the
Senior Notes consisted of $1,000,000 of cash proceeds and the cancellation of
$230,000 in aggregate principal amount (and related accrued interest) of certain
bridge notes previously issued by the Company to certain accredited investors
(“Bridge Investors”) (“Bridge Notes”), which Bridge Notes were converted into
Secured Notes in connection with the Note Financing. Net
proceeds to the Company after the deduction of selling commissions, but before
expenses of the Note Financing, were approximately $870,000, or $1,100,000 after
giving effect to the issuance of the Bridge Notes.
The Secured
Notes are due March 5, 2015 and accrue interest at the rate of 10% per annum
payable semi-annually in arrears on June 15 and December 15 of each
year. Interest is payable, at the option of holders of a majority of
the aggregate principal amount of outstanding Secured Notes, in either cash or
additional Secured Notes. At any given time (prior to the maturity
date) the Lenders may elect to convert the outstanding principal and accrued
interest into shares of the Company’s common stock, $0.001 par value (the
“Common Stock”), at a conversion price of $0.15 per share, subject to certain
adjustments.
We have the
option, after effectiveness of the Registration Statement (as defined below), to
repay all outstanding principal and interest under the Secured Notes if the
volume weighted average price of our shares of Common Stock has exceeded $1.00
for the preceding 30 consecutive trading days.
The Secured
Notes are secured by substantially all of the assets of the Company and our
subsidiaries pursuant to a Security Agreement, and Trademark Collateral
Assignment and Security Agreements. All obligations under the Secured
Notes are guaranteed by VitaCube Systems, Inc., and XELR8, Inc., the Company’s
principal subsidiaries (the “Subsidiaries”) pursuant to Guarantees by each of
the Subsidiaries in favor of the Lenders.
The Company
intends to use the proceeds from the issuance of the Secured Note to finance the
restructuring plan and the implementation of the Company’s new marketing
strategy as previously announced, for operating expenses and for general
corporate purposes.
The Company
has entered into a Registration Rights Agreement with the Lenders under which it
has agreed to file a resale registration statement (the “Registration
Statement”) registering the shares of Common Stock issuable upon conversion of
the Secured Notes within sixty (60) days from the final closing of the
Offering. The Company will use its best efforts to have the
Registration Statement declared effective within one hundred twenty (120) days
from the date of filing the Registration Statement with the Securities and
Exchange Commission.
In connection
with the Note Financing, we entered into a Placement Agency Agreement with the
placement agent involved in the offering (the “Placement Agent”). The
Placement Agent agreed to act on a best efforts basis with respect to the sale
of Secured Notes in an aggregate principal amount of up to $2,000,000 (with an
over-allotment option of up to $1,000,000). Under the Placement
Agency Agreement, the Placement Agent receives a placement fee equal to 10% of
the gross proceeds of the Secured Notes (including the Secured Notes issued upon
conversion of the Bridge Notes) sold by the Placement Agent and a
non-accountable expense allowance of 3% of the gross proceeds (giving effect to
the conversion of the Bridge Notes into Secured Notes) of the Note
Financing. The Placement Agent also receives reimbursement of its
legal expenses related to the Note Financing of $50,000.
In addition,
if $2,000,000 in Secured Notes are sold in the Note Financing, we have agreed to
issue 2,500,000 shares of Common Stock to the Placement Agent. Also
under the Placement Agency Agreement, we have given the Placement Agent the
right to designate two members of our Board of Directors and the Bridge
Investors the right to designate two Board members. The Placement
Agent designated Mr. Kevin Sherman and Mr. Milton Makris, who were appointed to
the Board effective March 3, 2010 and March 5, 2010, respectively, as described
below. The Bridge Investors have not yet named their Board
designees.
Neither the
Secured Notes nor the securities underlying the Secured Notes have been
registered under the Securities Act of 1933, as amended (the “Securities Act”),
and may not be offered or sold in the United States absent the registration or
an applicable exemption from the registration requirements of the Securities
Act. The transactions contemplated hereby are exempt from the registration
requirements of the Securities Act, pursuant to Regulation D and/or Section
4(2).
Item
1.02. Termination of a
Material Definitive Agreement.
The
information provided in Item 1.01 regarding the cancellation and conversion of
the Bridge Notes is hereby incorporated by reference.
Item
2.03. Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of
a Registrant
The information
provided in Item 1.01 regarding the Note Financing is hereby incorporated by
reference.
Item
3.02 Unregistered Sales of
Equity Securities.
The
disclosure set forth above under Item 1.01 (Entry Into a Material Definitive
Agreement) is hereby incorporated by reference into this Item 3.02.
Item
5.02 Departure of
Directors or Principal Officers; Election of Directors; Appointment of
Principal Officers
Effective
March 3, 2010 and March 5, 2010, respectively, Kevin C. Sherman and Milton
Makris were appointed to the Company’s Board of Directors to serve for a period
of one year or until their successors are elected and qualified. As
discussed above, Mr. Sherman and Mr. Makris were designated by the Placement
Agent in connection with the Note Financing.
Mr. Sherman
joined the Company as Vice President of Strategy and Network Development on June
1, 2009 and was appointed Executive Vice President of the Company on February 1,
2010. Prior to joining the Company in June 2009, Mr.
Sherman served as the Senior Manager of Network Development of Product Partners,
LLC from May 2008 to May 2009. Prior to that Mr. Sherman served as
the Chief Operating Officer of Hand & Associates from January 2008 to May
2008, and as the Director of Development and Principal of Holy Innocents School
from August 2007 to December 2007. Mr. Sherman also served as the
principal of Saints Peter and Paul School from January 2004 to August
2007. Mr. Sherman achieved an impressive record of revenue
enhancement and organizational development for Product Partners LLC, a leading
network marketing company emphasizing fitness and nutrition which was listed in
Entrepreneur Magazine's 500 Fastest Growing Businesses in America with current
sales over $400 million a year.
Mr. Makris
brings over 30 years of technical, business and entrepreneurial experience to
the Company, including executive management experience with BZinc, Amber
Ready, Inc., Marathon Staffing, Motorola, Lucent, Cabletron Systems,
Digital Equipment Corporation as well as several start-ups. He has been
the Chief Operating Officer of Amber Ready, Inc. since September 2009 and a
member of the Board of Directors since January 2009. Between June
2001 and March 2009, Mr. Makris was the Director of Engineering for Motorola
Inc. Mr. Makris is also involved in a consulting, advisory,
and business development role to several small companies.
SIGNATURE
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.
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Dated: March
9, 2010
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XELR8
HOLDINGS, INC.
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By: /s/ Daniel W.
Rumsey
Daniel
W. Rumsey
Interim
Chief Executive Officer
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