--------------------------------------------------------------------------------
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): January 25, 2006
--------------------------
NEWGOLD, INC.
(Exact Name of Registrant as Specified in Charter)
--------------------------
Delaware 0-20722 16-1400479
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
400 Capitol Mall, Suite 900
Sacramento, CA 95814
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (916) 449-3913
Same
(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))
--------------------------------------------------------------------------------
1
Item 1.01 Entry into a Material Definitive Agreement
Private Placement
On January 27, 2006, Newgold, Inc. ("Newgold" or the "Company") entered
into a Securities Purchase Agreement (the "Purchase Agreement") and a
Registration Rights Agreement (the "Registration Rights Agreement") in
connection with a private placement of a convertible debenture, in the principal
amount of $1,000,000 and bearing interest of 8% per annum (the "Debenture"). The
Debenture will be funded $600,000 at the closing , $200,000 upon the filing of a
resale registration statement with the Securities and Exchange Commission and
$200,000 upon the registration statement being declared effective. The Debenture
is due and payable on January 27, 2009 unless it is converted into shares of the
Company's common stock or is repaid prior to its expiration date. Additionally,
pursuant to the Purchase Agreement, the investor was issued warrants (the
"Warrants") to purchase an aggregate of 2,500,000 shares of Newgold common stock
with 1,250,000 warrants exercisable at $0.20 per share and 1,250,000 warrants
exercisable at $0.30 per share. The Warrants have a term of four years and are
immediately exercisable.
Pursuant to the Registration Rights Agreement, the Company is obligated
to file a registration statement with the Securities and Exchange Commission
within 30 days of the closing of the transaction covering the possible resale
from time to time in the future of the shares of common stock underlying the
convertible debenture and the Warrants. The Registration Rights Agreement
provides for certain penalties to the Company if the registration statement is
not filed or does not become effective before dates specified in that agreement.
Each of the Company and the investor has agreed to indemnify the other party and
certain affiliates against certain liabilities related to the registration
statement.
Yorkville Advisors LLC acted as advisor for the financing and received
customary due diligence and structuring fees based on the aggregate gross
proceeds of the transaction.
The foregoing summary of the terms and conditions of the Purchase
Agreement, the Registration Rights Agreement and the Warrants does not purport
to be complete and is qualified in its entirety by reference to the full text of
the Securities Purchase Agreement and Secured Convertible Debenture attached as
Exhibits hereto, and which are hereby incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets
On January 25, 2006, Newgold entered into a joint venture with ASDi,
LLC to develop two Nevada mining properties known as the Red Caps Project ("Red
Caps") and Crescent Valley Project ("Crescent Valley"). The Red Caps consists of
approximately 96 unpatented mining claims covering 1900 acres and the Crescent
Valley consists of approximately 39 unpatented mining claims covering 750 acres.
Both properties are located in the Battle Mountain-Eureka mineral belt in
Nevada. The Red Caps and Crescent Valley mining claims are currently owned by
ASDi, LLC which is owned and managed by A. Scott Dockter, Chairman and CEO of
Newgold. The joint venture will be operated through a newly formed Nevada
limited liability company called Crescent Red Caps, LLC. The terms of the joint
venture provide for ASDi to contribute the Red Caps and Crescent Valley mining
claims to the LLC in exchange for Newgold issuing 2.5 million shares of its
common stock to ASDi. Newgold will initially own a 22.22% interest in the LLC
and ASDi will hold a 77.78% interest. By expending up to $1,350,000 on each
project over the next three years, Newgold can increase its interest in the LLC
to 66.66%. Thereafter, Newgold has the right to purchase the remaining interest
in the LLC held by ASDi at a price
2
to be determined by the results of the exploration work conducted. Newgold will
be the Manager of the LLC.
Item 2.03 Creation of a Direct Financial Obligation
See Item 1.01 above, which disclosures are incorporated herein by
reference. When fully funded, the secured Debenture will represent $1,000,000 of
debt owed by the Company. The Debenture bears interest at an annual rate of 8%
which accrues until the maturity date of January 27, 2009 at which time all
principal and accrued interest not previously converted into Newgold common
stock or repaid, will be due and payable. Both principal and interest are
convertible into shares of the Company's common stock at a 5% discount from the
average bid price existing at the time of conversion or $0.2626 per share,
whichever, is lower. The $0.2626 price per share is subject to adjustment for
stock splits, dividends or if securities of the Company are sold at a price
below $0.2626 per share (with certain exceptions). Newgold may repay the debt
early by paying a Redemption Premium equal to 13% of the principal amount being
redeemed plus accrued interest thereon.
The investor also has a right of first refusal on any future financing
occurring after 18 months following the closing.
The Debenture is secured by 78 unpatented mining claims existing on the
Company's Relief Canyon mining property located in Pershing County, Nevada. In
addition, if a default should occur, the Company could be required to issue up
to an additional 24,050,025 shares of its common stock to the investor depending
on how much of the Debenture principal and interest remained at the time of the
default.
Item 3.02 Recent Sales of Unregistered Securities
See Item 1.01 above, which disclosures are incorporated herein by
reference. The issuance of the Debenture and Warrants was completed in
accordance with the exemption provided by Rule 506 of Regulation D of the
Securities Act of 1933 and/or Section 4(6) of the Securities Act of 1933, as
amended. The investor represented that it is an accredited investor, as defined
in Rule 501 of Regulation D, and that it was acquiring the securities for its
own account, not as nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of the Securities Act.
See Item 2.01 above, which disclosures are incorporated herein by
reference. The issuance of Newgold common stock to ASDi LLC was completed in
accordance with the exemption from registration provided by Section 4(2) of the
Securities Act of 1933 as a private placement made to one accredited investor.
3
Item 9.01 Financial Statements and Exhibits
Exhibits.
4.1 Convertible Debenture.
4.2.1 Form of Warrant - $.20 exercise price.
4.2.2 Form of Warrant - $.30 exercise price.
10.1 Securities Purchase Agreement, dated January 27, 2006, by and
among Newgold and the investor named therein.
10.2 Registration Rights Agreement, dated January 27, 2006, by and
among Newgold and the investor named therein.
99.1 Press Release dated January 25, 2006
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: February 2, 2006 NEWGOLD, INC.
By: /s/ A. SCOTT DOCKTER
-------------------------------
A. Scott Dockter
Chief Executive Officer
(Duly Authorized Officer)
4