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): May 6, 2013
Lightning Gaming, Inc.
(Exact name of registrant as specified in charter)
| Nevada | 000-52575 | 20-8583866 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
23 Creek Circle, Suite 400, Boothwyn, Pa 19061
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code) 610 494 5534
_____________________________________________________
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):
| * | 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)) |
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Section 1 - Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
On May 6, 2013, we borrowed $500,000, at an interest rate of 8% per annum, and issued a Promissory Note to the The Co-Investment Fund II, L.P. (“CI II”). All principal and accrued interest under the note are payable on the June 30, 2014 maturity date, subject to conversion and acceleration provisions summarized below. We will use the proceeds for working capital purposes.
With the prior written consent of CI II, we may prepay the note at any time without payment of penalty or unearned interest, provided however, that such prepayment is accompanied by the payment of accrued interest to the date of the prepayment and all costs, expenses or charges then owed.
The maturity of the note is subject to acceleration in the event of a default, which would include, among other things, our failure to make principal or interest payments when due or otherwise fail to perform or comply with any of the material obligations under the Note or the Loan Agreement or the Security Agreements (as defined in the Loan Agreement), a material adverse change with respect to us (as detailed in the note), an unstayed or undischarged judgment against us in excess of $50,000, a breach by us or LPI under any other pre-existing material agreement, document or instrument, if such breach would reasonable be expected to have a material adverse affect on us or LPI, or the loss of a material license or permit, that would reasonably be expected to have a material adverse effect on us or LPI.
The entire balance of principal and accrued interest under the note can, at the discretion of CI II, be converted into shares of existing non-voting Common Stock at a price of $1.00 per share, or, upon consent of both parties, to a new debt or equity instrument that may be created in the future.
CI II is managed by Cross Atlantic Capital Partners Inc. (“Cross Atlantic”). Donald Caldwell is a member of our board of directors and is the founder and chief executive officer of Cross Atlantic. Frederick R. Tecce is a member of our board of directors and is a managing director and of counsel of Cross Atlantic. CI II is deemed to own beneficially more than 5% of our outstanding common stock, based on its ability to acquire our common stock through the exercise of warrants or conversion of promissory notes.
The above description of the financing transaction is merely a summary of its material terms. A copy of the material agreement relating to the financing transaction is filed as an exhibit to this Form 8-K. Interested parties should read those agreements in their entirety.
Section 2 - Financial Information
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Please refer to Item 1.01 of this Form 8-K for information concerning the direct financial obligation on which we have become obligated under the promissory note to CI II.
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Section 3 - Securities and Trading Markets
Item 3.02 Unregistered Sales of Equity Securities.
Please refer to Item 1.01 of this Form 8-K for information concerning the promissory note that we issued to CI II, which at the discretion of CI II is convertible into shares of our stock. The note was issued without registration under the Securities Act pursuant to the exemption from registration in Section 4(2) of the Securities Act.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Exhibits:
| Exhibit No. | Description |
| 99.1 | Promissory Note issued by Lightning Gaming, Inc. (“LGI”) and CI II |
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.
Lightning Gaming, Inc.
By:/s/ Brian Haveson
Brian Haveson, Chief Exective Officer
Date: May 6, 2013
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Exhibit 99.1
PROMISSORY NOTE
| $500,000 | May 6, 2013 |
FOR VALUE RECEIVED, the undersigned, Lightning Gaming, Inc., a Nevada corporation (hereinafter referred to as "Maker") hereby promises to pay to the order of The Co-Investment Fund, II, L.P. or its successors and assigns (hereinafter referred to as "Payee") the principal sum of Five Hundred Thousand Dollars ($500,000), together with interest on the unpaid principal amount of this Promissory Note (“Note”) outstanding at the rate of 8% per annum in the manner and upon the terms and conditions set forth below.
The principal and interest on the unpaid principal amount of this Note, or any portion thereof, shall be paid in full in cash on June 30, 2014. At Payee’s sole option, this Note may be converted to Maker’s existing non-voting Common Stock at a price of $1.00 per share, or, upon the consent of both parties, to a new debt or equity instrument that may be created in the future.
The amount of interest accruing hereunder shall be computed on an actual day, 365/366 day year basis. All payments hereunder shall be made in lawful currency of the United States in federal or other immediately available funds at the office of Payee, or at such other place as the holder hereof may designate in writing.
This Note is one of a series of Maker’s Notes issued pursuant to that certain Loan Agreement of even date herewith, by and among Maker, Payee and the persons named therein, (collectively, the “Loan Agreement”) and is subject to the terms and conditions thereof. Capitalized terms used herein and not defined herein shall have the meanings given to them in the Loan Agreement.
With the prior written consent of the Lender, Maker may prepay this Note at any time in whole or in part without payment of penalty or unearned interest; provided, however, that any such prepayment of principal shall be accompanied by the payment of interest accrued to the date of such prepayment and all costs, expenses or charges then owed to Payee pursuant to this Note; and further provided, that any prepayment shall be applied proportionately to all of the Notes issued pursuant to the Loan Agreement. In the event the Payee receives payments in excess of its pro rata share of Maker's payments to the holders of all of the Notes, then Payee shall hold in trust all such excess payments for the benefit of the holders of the other Notes and shall pay such amounts held in trust to such other payees upon demand by such payees.
Maker hereby expressly waives presentment, demand, protest and notice of any kind.
Upon the occurrence of any one of the following events (the "Events of Default"), the entire principal amount outstanding hereunder and accrued interest together with all other sums due hereunder shall at the option of the Requisite Lenders, without any prior notice, presentment or demand, become immediately due and payable in full:
(i) Failure of Maker to make principal or interest payments when due or otherwise to fail to perform or comply with any of its material obligations under this Note or the Loan Agreement or the Security Agreements (as defined in the Loan Agreement) where such failure continues for 10 days in the case of a payment failure and 30 days in the case of any other failure after notice is sent to Maker by the Requisite Lenders; or
(ii) An assignment by Maker or Lightning Poker,Inc., a wholly owned subsidiary (“LPI”), for the benefit of its creditors, or the commencement by or against Maker of any bankruptcy, insolvency, liquidation, receivership or similar proceedings; or
(iii) Maker shall assign or transfer its obligations under this Note without the prior written consent of the Requisite Lenders; or
(iv) The dissolution of Maker; or
(v) After delivery by Maker of written notice in accordance with the Loan Agreement, the Requisite Lenders shall determine (which determination shall be made in good faith after giving Maker an opportunity to make a presentation and provide a plan to Lender) that a material adverse change has occurred with respect to the assets, business, operations or financial condition of Maker and that the prospect of payment or performance of any covenant, agreement or duty under this Note, the Loan Agreement, the Security Agreements or any of the other agreements, instruments, documents or undertakings arising under or in connection with any of the obligations of Maker owing to Payee is impaired in any material respect; or
(vi) Maker or LPI shall be in breach of any material agreement, document or instrument, whether formerly, now or after the date of this Note, existing between Maker or LPI and any other person, firm or entity if such breach would reasonably be expected to have a material adverse affect on the business, profits, assets or condition (financial or other) of Maker or LPI, and where such breach continues after any applicable cure period; or
(vii) The loss, suspension, revocation or failure to renew any license or permit now held or acquired after the date of this Note by Maker or LPI shall occur or exist, which loss, suspension, revocation or failure to renew would reasonably be expected to have a material adverse effect on the business, profits, assets or condition (financial or other) of Maker or LPI, and which continues uncured for any cure period or otherwise for 30 days after notice is sent to Maker by the Requisite Lenders; or
(i) The entry of a judgment against Maker in excess of $50,000, which judgment shall remain unstayed or undischarged for a period of 60 days; or
In addition to the rights and remedies given it by this Note, Payee shall have all those rights and remedies allowed by applicable laws. The rights and remedies of Payee are cumulative and recourse to one or more right or remedy shall not constitute a waiver of the others. Maker shall be liable for all costs, expenses and attorneys' fees incurred by Payee in connection with the collection of the indebtedness evidenced by the Note.
No delay or omission of Payee or its assignee in exercising any power or right hereunder, and no partial exercise of such power or right, shall operate in any way as a waiver or impairment of any subsequent or further exercise thereof. Payee or its assignee shall not be liable for or prejudiced by failure to collect or lack of diligence in bringing suit on this Note or any renewal or extension hereof.
Maker may not assign or transfer its obligation hereunder without the prior written consent of the Requisite Lenders. This Note may be assigned by Payee without the consent of Maker.
This Note may be amended only by a written instrument executed by Maker, Payee and the Requisite Lenders.
This Note shall be governed by, and shall be construed and enforced in accordance with, the internal laws of the Commonwealth of Pennsylvania.
WITNESS the due execution of this Note, intending to be legally bound, on the day and year written above.
Lightning Gaming, Inc.
By:
Title: Chief Executive Officer
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