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 5, 2011
AVSTAR AVIATION GROUP, INC.
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(Exact name of registrant as specified in its charter)
Colorado 0-30503 76-0635938
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) ID Number)
3600 Gessner, Suite 220, Houston, Texas 77063
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 965-7582
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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:
[ ] 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))
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF REGISTRANT
On May 5, 2011, AvStar Aviation Group, Inc. (the "Company") issued a
convertible promissory note in the original principal amount of $90,000 (the
"Note") to Henry L. Schulle, a consultant to the Company, in lieu of cash for
consulting services provided by Mr. Schulle to the Company. The Note bears
regular interest at a rate of 8.5 % per annum. The Note is unsecured, and it is
due and payable one year after the date of its issuance. At any time prior to
the payment in full of the entire balance of the Note, the holder has the option
of converting all or any portion of the unpaid balance of the note into shares
of the Company's common stock at a conversion price discussed hereafter. The
conversion price for the Note features a "variable" conversion price and also a
"fixed" conversion price of $.04, which will apply if it is less than the
related variable conversion price. The variable conversion price is the closing
trading prices of the Company's common stock for the most recent trading days
preceding the date of exercise; provided, however, that the variable conversion
price must be a minimum of at least $.005 per share. The Note contains customary
representations and warranties, registration rights, customary anti-dilution
provisions, and customary events of default that entitle the holder to
accelerate the due date of the unpaid principal amount of, and all accrued and
unpaid interest on, the Note. In early September 2011, Mr. Schulle assigned his
rights under the Note (and two other convertible promissory notes) to Fairhills
Capital, which has converted a small portion of the Note. The Company does not
now have sufficient authorized but unissued shares to permit the further
conversion of the Notes in any meaningful way.
Commencing near the beginning of August 2011 and continuing through the
present, the Company borrowed certain amounts from several of its shareholders.
The Company believes that these borrowings became material to it in amount on or
about October 3, 2011. The following table gives information regarding these
borrowings:
Date(s) of Aggregate
Borrowings Lending Shareholder Amount of Debt
---------- ------------------- --------------
Aug. 8, 2011 &
Oct. 3, 2011 H.L. Schulle $60,500
Sept. 13, 2011 Sabinal Trust, Robert Gaidousek, Trustee $19,000
Nov. 9, 2011 THC Trust, Robert Gaidousek, Trustee $87,187
The indebtedness indicated in the table has not yet been memorialized in
written documentation. Accordingly, it must be view as demand indebtedness, of
which the lender can require the repayment thereof at any time. The Company
intends in the future to negotiate with the lending shareholders the exact terms
of the indebtedness and memorialize those terms in written documentation. Mr.
Schulle also acts as a consultant to the Company, and the Company also owes the
Sabinal Trust approximately $23,600 in unreimbursed expenses incurred by it on
the Company's behalf.
ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES.
Commencing on September 19, 2011 and continuing through the first week of
November 2011, several holders of convertible promissory notes issued by the
Company converted portions of the notes held by them. The following table gives
information regarding these conversions:
Date or Date Number of Amount of
Range of Conversions Holder Shares Issued Debt Converted
-------------------- ------ ------------- --------------
Sept. 19, 2011 Redwood Management, LLC 12,050,000 $10,243
Sept. 19, 2011 to
Oct. 21, 2011 Fairhills Capital 107,802,837 $64,450
Nov. 13, 2011 Asher Enterprises, Inc. 13,333,333 $ 8,000
The issuances of the preceding shares in connection with the conversion of
the convertible promissory notes are claimed to be exempt pursuant to Section
4(2) of the Securities Act of 1933 (the "Act") and Rule 506 of Regulation D
under the Act. No advertising or general solicitation was employed in offering
these securities. The offering and sale was made only to a limited group of
sophisticated investors, and subsequent transfers were restricted in accordance
with the requirements of the Act.
The securities issued in connection with the acquisition were not
registered under the Securities Act of 1933, as amended, and may not be offered
or sold in the United States in the absence of an effective registration
statement or exemption from registration requirements.
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.
AVSTAR AVIATION GROUP, INC.
Date: November 21, 2011 /s/ Clayton I. Gamber
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Clayton I. Gamber,
Chief Executive Officer & Presiden
