FORM 8-K
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
______________________________
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d)
OFTHE
SECURITIES EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported): March 1, 2007
______________________________
Advanced
Materials Group, Inc.
(Exact
name of registrant as specified in its charter)
|
Nevada
(State
of incorporation)
|
0-16401
(Commission
File Number)
|
33-0215295
(IRS
Employer Identification
Number)
|
3303
Lee Parkway, Suite 105
Dallas,
Texas 75219
(Address
of principal executive offices)
Registrant's
telephone number, including area code:
(972)
432-0602
Check
the
appropriate box if the Form 8-K filing is intended to simultaneously satisfy
the
reporting obligation of the registrant under any of the following
provisions:
[
] Written
communications pursuant to Rule 425 under the Securities Act
[
] Soliciting
material pursuant to Rule 14a-12 of the Exchange Act
[
] Pre-commencement
communications pursuant to Rule 14d-2(b) Exchange Act
[
] Pre-commencement
communications pursuant to Rule 13e-4(c) Exchange Act
Item
1.01 Entry into a Material Definitive Agreement.
On
March
1, 2007, Advanced Materials Group, Inc. (the “Company”), through its
wholly-owned subsidiary Advanced Materials, Inc. (“AMI”), obtained a $2,000,000
credit facility (the “Credit Facility”) from JPMorgan Chase Bank, N.A.
(“Lender”). The Credit Facility was established pursuant to a Credit Agreement
between AMI and Lender and evidenced by a Line of Credit Note executed by AMI.
The proceeds under the Credit Facility will be used primarily for working
capital needs in the ordinary course of business.
AMI
can
borrow, pay and reborrow principal under the Credit Facility from time to time
during its term, but the outstanding principal balance under the Credit Facility
may not exceed the lesser of the borrowing base or $2,000,000. For purposes
of
the Credit Facility, “borrowing base” is calculated by adding 80% of AMI’s
eligible accounts receivable to 50% of the lower of cost or wholesale market
value of all of AMI’s eligible inventory.
The
outstanding principal balance under the Credit Facility bears interest at the
rate of interest per annum announced from time to time by the Lender as its
prime rate, and will be computed on the unpaid principal balance from the date
of each borrowing. Accrued interest payments on the unpaid principal balance
under the Credit Facility are payable quarterly commencing on May 1, 2007,
and
all outstanding principal under the Credit Facility, together with all accrued
but unpaid interest, is due at maturity, or April 1, 2008.
The
Credit Facility is secured by a first priority lien on all of AMI’s currently
owned and subsequently acquired accounts receivable, chattel paper, deposit
accounts, documents, equipment, general intangibles, instruments, inventory,
investment property and letter of credit rights pursuant to a Continuing
Security Agreement between AMI and Lender.
The
Credit Agreement contains certain covenants with which AMI must comply. Subject
to Lender’s consent, AMI is prohibited under the Credit Agreement from, among
other things, declaring or paying dividends on its capital stock, issuing,
selling or otherwise disposing of any shares of its capital stock and incurring,
assuming or permitting to remain outstanding any indebtedness for borrowed
money, subject to certain exceptions. Additionally, AMI is prohibited from
engaging in any business activities substantially different from those in which
it is currently engaged and from merging or consolidating with any other entity
or selling any of its assets outside of the ordinary course of
business.
If
a
default occurs under the Credit Agreement, the Line of Credit Note or any other
related documents, Lender may declare all amounts outstanding under the Credit
Facility immediately due and payable. In such event, Lender may exercise any
rights and remedies it may be provided by law or agreement, including the
ability to cause all or any part of the collateral under the Continuing Security
Agreement to be transferred to Lender or registered in Lender’s or any other
designated entity’s name. Any such event may materially impair AMI’s and the
Company’s ability to conduct its business.
Item
1.02 Termination of a Material Definitive Agreement.
In
order to facilitate the Company’s
obtaining the Credit Facility, on April 2, 2007, the Company terminated its
existing $1,500,000 line of credit agreement with Textron Financial Corporation,
which was evidenced by a Loan and Security Agreement dated October 9, 2003,
as
amended.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The
disclosures required by this Item 2.03 are incorporated herein by reference
to
the disclosures contained under Item 1.01 above.
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.
ADVANCED
MATERIALS
GROUP, INC.
Date:
April 23,
2007 By:
/s/
William G. Mortensen
William
G. Mortensen
President
and Chief Financial Officer