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): October 22, 2007
MEDICAL
DISCOVERIES, INC
(Exact
Name of Registrant as Specified in Charter)
Utah
|
(State
of
Incorporation)
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00-12627
|
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87-0407858
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(Commission
File Number)
|
|
(I.R.S.
Employer Identification
No.)
|
|
|
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6033
W. Century Blvd, Suite 1090, Los Angeles,
California
|
|
90045
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(Address
of Principal Executive
Offices)
|
|
(Zip
Code)
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(801)
582-9583
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(Registrant’s
Telephone Number, Including Area
Code)
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1338
S. Foothill Drive, #266, Salt Lake City,
Utah 84108
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(Former
Name or Former Address, if Changed Since
Last Report)
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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:
¨
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Written communications pursuant to Rule 425 under
the Securities Act (17 CFR 230.425). |
¨
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Soliciting material pursuant to Rule 14a-12 under
the Exchange Act (17 CFR 240.14a-12).
|
¨
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Pre-commencement communications pursuant to
Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c)).
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ITEM
1.01 |
ENTRY
INTO A MATERIAL AGREEMENT
|
On
October 22, 2007, Medical Discoveries, Inc. (the “Company”)
executed and entered into a release and settlement agreement, dated as of
October 19, 2007, with holders of the Company’s Series A Preferred Convertible
Stock pursuant to which the Company issued to such shareholders warrants to
purchase 17,000,000 shares of the Company’s common stock. For a description of
the settlement agreement and the issuance of the warrants, see the discussion
under Item 3.02 below, which is incorporated herein by reference.
ITEM
3.02 |
UNREGISTERED
SALES OF SECURITIES.
|
Release
Agreement
Mercator
Momentum Fund, LP; Monarch Pointe Fund, Ltd.; and Mercator Momentum Fund III,
LP, each a private investment entity (the foregoing three investment funds,
collectively, the “MAG
Funds”)
purchased shares of the Company’s Series A
Preferred Convertible Stock (the “Series
A Stock”)
in
2004 and in 2005. In connection with the 2005 investment, the Company agreed
to
eliminate the conversion price floor of the Series A Stock. The Company failed
to file an amendment to the Series A Stock Certificate of Designations of
Preferences and Rights for the Series A Stock (the “Amendment”)
that
would have eliminated the conversion price floor. Accordingly, in connection
with an intended conversion of some of their Series A Stock in September 2007,
the MAG Funds were required to convert Series A Stock at a conversion price
higher than the price that would have applied if the Amendment had been filed
as
agreed.
On
October 22, 2007, the Company executed and entered into that certain Release
and
Settlement Agreement, dated as of October 19, 2007
(the “Release
Agreement”),
with the MAG Funds
to
settle all losses and damages (collectively, “Losses”)
that
MAG may have suffered, and may hereafter suffer, as result of the Company’s
failure to file the Amendment.
Pursuant
to the Release Agreement, the Company issued to the MAG Funds a ten-year
warrant
to acquire up to 17,000,000 shares of the Company’s
common stock (the “Common
Stock”)
at an
exercise price of $0.01 per share expiring October 17, 2017 (the “Warrant”).
Pursuant
to the Release Agreement, the MAG Funds released the Company from any and all
claims, past, present or future, relating to the Losses or the Company’s failure
to file the Amendment. In addition, MAG has agreed not to sue the Company in
connection with the Losses or the Company’s failure to file the
Amendment.
Warrant
Pursuant
to the Release Agreement, the Company issued to the MAG Funds the Warrant to
acquire shares of the Company’s
Common Stock, comprising (i) warrants
to acquire up to 5,122,100 shares of Common Stock issued to Mercator Momentum
Fund, L.P.; warrants to acquire up to 6,050,300 shares of Common Stock issued
to
Mercator Momentum Fund III, L.P.; warrants to acquire up to 5,827,600 shares
of
Common Stock issued to Monarch Pointe Fund, Ltd, in each case, at an
exercise
price of $0.01 (the
“Warrant
Price”).
The
Warrant is exercisable during the period commencing October 17, 2007 and ending
on October 17, 2017. The initial Warrant
Price is subject to adjustments in connection with (i) the Company’s issuance of
dividends in shares of Common Stock, or shares of Common Stock or other
securities convertible into shares of Common Stock without consideration, (ii)
any cash paid or payable to the holders of Common Stock other than as a regular
cash dividend, and (ii) future stock splits, reverse stock splits, mergers
or
reorganizations, and similar changes affecting common stockholders.
Beneficial
Ownership Limitation
The
Warrant issued to the MAG Funds contain beneficial ownership limitations, which
preclude the MAG Funds from exercising its Warrant if, as a result of such
conversion or exercise, the MAG Funds would own beneficially more than 9.99%
of
the Company’s outstanding common stock then outstanding.
Other
The
Warrant was not registered under the Securities Act of 1933 (as amended, the
“Act”)
and
was issued in reliance upon the exemption from registration contained in
Section 4(2) of the Act and Regulation D promulgated thereunder. The
Warrant, and the shares of Common Stock underlying the Warrant, may not be
reoffered or sold in the United States by the holders in the absence of an
effective registration statement, or valid exemption from the registration
requirements, under the Act.
Copies
of
the Release Agreement and the form of the Warrant are filed as exhibits to
this
Current Report on Form 8-K. The summary of these documents set forth above
is
qualified by reference to such exhibits.
ITEM
9.01 |
FINANCIAL
STATEMENTS AND EXHIBITS
|
(d)
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Exhibit
No.
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|
Description
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10.1
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|
Release
and Settlement Agreement, dated as of October 19, 2007,
by and among the Company, on the one hand, and Mercator
Momentum Fund, LP, Monarch Pointe Fund, Ltd., and Mercator Momentum
Fund
III, LP, on the other hand.
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10.2
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Form
of Warrant
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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.
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MEDICAL
DISCOVERIES, INC. |
|
|
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Date: October
26, 2007 |
By: |
/s/ RICHARD
PALMER |
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Richard
Palmer |
|
President
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EXHIBIT
INDEX
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Exhibit
No.
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|
Description
|
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10.1
|
|
Release
and Settlement Agreement, dated as of October 19, 2007,
by and among the Company, on the one hand, and Mercator
Momentum Fund, LP, Monarch Pointe Fund, Ltd., and Mercator Momentum
Fund
III, LP, on the other hand.
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10.2
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Form
of Warrant
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