SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT: JANUARY 6, 2004
NEW VISUAL CORPORATION
(Exact name of registrant as specified in its charter)
UTAH 0-21875 95-4545704
(State or Other Jurisdiction Commission File IRS Employer
of Incorporation) Number) Identification No.)
(Address of Principal Executive Offices)
(Registrant's Telephone Number, including Area Code)
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURES
New Visual Corporation (hereinafter, "New Visual" or the "Company")
completed the private placement to certain private and institutional investors
(collectively, the "Investors") of $1,000,000 in principal amount of its
three-year 7% Convertible Debentures (the "Debentures") and signed commitments
to place an additional $1,000,000 of such Debentures when the Company's
registration statement (the "Registration Statement") covering the Company's
common stock, par value $0.001 (the "Common Stock") underlying the Debentures,
which the Company intends to file in January 2004, is declared effective by the
Securities and Exchange Commission. In connection with the issuance of the
Debentures, the Company issued five-year warrants to purchase up to 6,666,667
shares of the Company's Common Stock and upon, issuance of the additional
Debentures following the effectiveness of the Registration Statement, will issue
five-year warrants for an additional 6,666,667 shares of Common Stock, in each
case at a per share exercise price of $0.25, subject to "cash-less" exercise
provisions (the "Warrants"); provided that the exercise period of the Warrants
may be reduced under certain conditions (primarily relating to the effectiveness
of the Registration Statement and the closing bid price of the Company's
publicly traded Common Stock exceeding $1.00 for each of 20 consecutive trading
days).
The Debentures are convertible into shares of Common Stock at a
conversion rate equal to $0.15 per share. This conversion price is subject to
adjustment if there are certain capital adjustments or similar transactions,
such as a stock split or merger. The terms of the Debentures provide that under
certain conditions (primarily relating to the effectiveness of the Registration
Statement and the closing bid price of the Company's publicly traded Common
Stock exceeding $1.00 for each of 20 consecutive trading days), the Company can
require a mandatory conversion of the Debentures. If not converted earlier, on
the scheduled maturity date the Convertible Debentures may, under certain
conditions, automatically convert into shares of our Common Stock at the per
share conversion price of $0.15.
The Investors have undertaken to purchase the additional Debentures
within five days after the effectiveness of the Registration Statement;
provided, that if the Registration Statement is not declared effective by the
close of business on June 30, 2004, the holders' obligation to purchase such
Debentures and the Company's obligation to issue the Debentures and the Warrants
in connection therewith, will be cancelled.
From the proceeds raised, the Company repaid the $300,000 principal
amount and accrued interest of its 7% unsecured convertible debenture that was
issued in November 2003 and is due to mature by April 30, 2004.
Under the agreements with the holders of the Debentures, the Company
agreed to certain restrictions relating to any offer or sale of its Common Stock
(or securities convertible into Common Stock) with any third party for a period
of 180 days after the effective date of the Registration Statement. In addition,
under certain circumstances, the Company will be obligated to pay liquidated
damages to the holders of the Debentures if the Registration Statement is not
filed by January 30, 2004, if it is not declared effective by April 30, 2004 or
if the effectiveness of the Registration Statement is subsequently suspended for
more than certain specified permitted periods.
In connection with this investment, the Company has remitted and, upon
closing of the transactions for the additional Debentures after the
effectiveness of the Registration Statement, will be remitting, to a finder 10%
of the cash proceeds. The Company has also issued to such finder five-year
warrants to purchase up to 666,667 shares of the Company's Common Stock and,
upon the closing of the transactions for the additional Debentures, will issue
to the finder warrants to purchase an equivalent number of shares, all at a per
share exercise price of $0.15, subject to "cash-less" exercise provisions;
provided that the exercise period of these warrants may be reduced under certain
conditions (primarily relating to the effectiveness of the Registration
Statement and the closing bid price of the Company's publicly traded Common
Stock exceeding $1.00 for each of 20 consecutive trading days). The shares
underlying these warrants have piggy-back registration rights.
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 hereunto duly authorized.
Date: January 6, 2004 NEW VISUAL CORPORATION
By: /s/ Brad Ketch
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Brad Ketch,
Chief Executive Officer