Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): September 10, 2018
IMAGEWARE SYSTEMS, INC.
(Exact name of Registrant as specified in its Charter)
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Delaware
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001-15757
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33-0224167
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(State
or other jurisdiction
of
incorporation)
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(Commission
File No.)
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(IRS
Employer
Identification
No.)
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10815 Rancho
Bernardo Road, Suite 310, San Diego, California
92127
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(Address
of principal executive offices)
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(858)
673-8600
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(Registrant’s
Telephone Number)
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Not
Applicable
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(Former
name or 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 (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))
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (17
CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934
(17 CFR 240.12b-2) ☐
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act ☐
Item 1.01 Entry into a Material Definitive Agreement
See
Item 8.01 below.
Item 1.02 Termination of a Material Definitive
Agreement
See
Item 8.01 below.
Item 3.02 Unregistered Sales of Equity Securities
See
Item 8.01 below.
Item 3.03 Material Modifications to Rights of Security
Holders
See
Item 8.01 below.
Item 5.03 Amendments to Articles of
Incorporation or Bylaws; Change in Fiscal Year
Creation of Series C Convertible Preferred Stock
On September 10, 2018, ImageWare Systems, Inc.
(the “Company”) filed the Certificate of Designations,
Preferences, and Rights of Series C Convertible Preferred Stock
(“Series C
COD”) with the Secretary
of State for the State of Delaware – Division of
Corporations, designating 1,000 shares of the Company’s
preferred stock, par value $0.01 per share, as Series C Convertible
Preferred Stock (“Series C
Preferred”), each share
with a stated value of $10,000 per share (the
“Stated
Value”). Shares of Series
C Preferred accrue dividends
cumulatively and are payable quarterly at a rate of 8% per annum if
paid in cash, or 10% per annum if paid by the issuance of shares of
the Company’s common stock, par value $0.01 per share
(“Common
Stock”)
(“Dividend
Shares”). Shares
of Series C Preferred rank senior to the Company’s Common
Stock and Series A Convertible Preferred Stock (the
“Series A
Preferred”), and junior
to the Company’s Series B Convertible Redeemable Preferred
Stock.
Each share of Series C Preferred has a liquidation
preference equal to the greater of (i) the Stated Value plus all
accrued and unpaid dividends, and (ii) such amount per share as
would have been payable had each share been converted into Common
Stock immediately prior to the occurrence of a Liquidation Event or
Deemed Liquidation Event (as such terms are defined in the Series C
COD) (the “Liquidation Preference
Amount”). Each share of
Series C Preferred is convertible into that number of shares of the
Company’s Common Stock (“Conversion
Shares”) equal to the
Stated Value, divided by $1.00, which conversion rate is subject to
adjustment in accordance with the terms of the Series C COD.
Holders of Series C Preferred may elect to convert shares of Series
C Preferred into Conversion Shares at any time. Holders of the
Series C Preferred may also require the Company to redeem all or
any portion of such holder’s shares of Series C Preferred at
any time from and after the third anniversary of the issuance date
or in the event of the consummation of a Change of Control (as such
term is defined in the Series C COD). Subject to the terms and
conditions set forth in the Series C COD, in the event the
volume-weighted average price of the Company’s Common Stock
is at least $3.00 per share (subject to adjustment in accordance
with the terms of the Series C COD) for at least 20 consecutive
trading days, the Company may convert all, but not less than all,
issued and outstanding shares of Series C Preferred into Conversion
Shares. In addition, in the event of a Change of Control, the
Company will have the option to redeem all, but not less than all,
issued and outstanding shares of Series C Preferred for 115% of the
Liquidation Preference Amount per share. Holders of Series C
Preferred will have the right to vote, on an as-converted basis,
with the holders of the Company’s Common Stock on any matter
presented to the Company’s stockholders for their action or
consideration.
The
foregoing description of the Series C Preferred is qualified, in
its entirety, by the full text of the Series C COD, a copy of which
is attached to this Current Report on Form 8-K as Exhibit 3.1,
and is incorporated by reference herein.
Amendment to Certificate of Designations of Series A Convertible
Preferred Stock
On September 10, 2018, the Company filed an
Amendment to the Certificate of Designations, Preferences, and
Rights of Series A Convertible Preferred Stock
(“Series A
COD”) (the
“Amendment”) with the Secretary of State for the State
of Delaware – Division of Corporations, to increase the
number of shares of Series A Preferred authorized for issuance
thereunder to 38,000 shares, in order to effect the Debt Exchange
(as defined below).
The
foregoing description of the Amendment is qualified, in its
entirety, by the full text of the Amendment, a copy of which is
attached to this Current Report on Form 8-K as Exhibit 3.2,
and is incorporated by reference herein.
Item 8.01 Other Events
Series C Financing
On September 10, 2018, the Company entered into
(i) a Securities Purchase Agreement with certain accredited
investors (the “Investors”), pursuant to which the Company sold, on
September 10, 2018 (the “Closing
Date”), a total of 890
shares of Series C Preferred at a purchase price of $10,000 per
share (the “Series C
Financing”), and (ii) a
Registration Rights Agreement, pursuant to which the Company agreed
to file a registration statement no later than 30 days after the
Closing Date in order to register the Conversion Shares and the
Dividend Shares. The forms of Securities Purchase Agreement and
Registration Rights Agreement are attached hereto as Exhibits 10.1
and 10.2, respectively. The issuance of the shares of Series C
Preferred pursuant to the Securities Purchase Agreement resulted in
gross proceeds to the Company of $8.9 million. The Company expects
to use these proceeds for general working capital
purposes.
Northland Capital Markets
(“Northland”) acted as the Company’s exclusive
placement agent in connection with the Series C Financing, pursuant
to the terms of a Placement Agency Agreement dated September 10,
2018. Under the terms of the Placement Agency Agreement, a copy of
which is attached hereto as Exhibit 10.3, Northland was paid
$712,000, or 8% of the gross proceeds received by the Company on
the Closing Date as compensation for services rendered by Northland
in connection with the Series C Financing. Northland Capital
Markets is the trade name for certain capital markets and
investment banking services of Northland Securities, Inc., member
FINRA/SIPC.
The
shares of Series C Preferred were offered and sold in a transaction
exempt from registration under the Securities Act in reliance on
Section 4(a)(2) thereof and Rule 506 of Regulation D thereunder.
Each Investor represented that it was an “accredited
investor” as defined in Regulation D.
Debt Exchange
On September 10, 2018, the Company entered into
agreements (the “Exchange
Agreements”) with Neal
Goldman and Charles Crocker, pursuant to which Messrs. Goldman and
Crocker agreed to exchange approximately $6.3 million and $0.6
million, respectively, of outstanding debt (including accrued and
unpaid interest) owed under the terms of their respective lines of
credit for an aggregate of 6,896 shares of Series A Preferred (the
“Debt Exchange”). As a result of the Debt Exchange, all
indebtedness, liabilities and other obligations arising under the
respective lines of credit were cancelled and deemed satisfied in
full. A form of Exchange Agreement is attached hereto as Exhibit
10.4.
A
copy of the Company’s press release announcing the Series C
Financing and Debt Exchange is attached to this Current Report on
Form 8-K as Exhibit 99.1.
Declaration of Special Dividend
Concurrently with the Series C Financing, the
Company’s Board of Directors declared a special dividend (the
“Special
Dividend”) for holders of
the Series A Preferred (each a “Holder”), pursuant to which each Holder will
receive a warrant (“Warrant”) to purchase 39.87 shares of Common Stock
for every share of Series A Preferred held, which resulted in the
issuance of Warrants to the Holders as a group to purchase an
aggregate of 1,493,856 shares of Common Stock. Each Warrant has an
exercise price of $0.01 per share, and is exercisable immediately
upon issuance; provided,
however, that a Warrant may
only be exercised concurrently with the conversion of shares
of Series A Preferred held by a Holder into shares of Common Stock.
In addition, each Warrant held by a Holder shall expire on the
earliest to occur of (i) the conversion of all Series A Preferred
held by such Holder into Common Stock, (ii) the redemption by the
Company of all outstanding shares of Series A Preferred held by
such Holder, (iii) the Warrant no longer representing the right to
purchase any shares of Common Stock, and (iv) the tenth anniversary
of the date of issuance. A copy of the form of Warrant is attached
hereto as Exhibit 3.3.
The
foregoing description of the Securities Purchase Agreement,
Registrations Rights Agreement, Placement Agency Agreement,
Exchange Agreement, and Warrant do not purport to be complete, and
are qualified in their entirety by reference to the form of
Securities Purchase Agreement, Registration Rights Agreement,
Placement Agency Agreement, Exchange Agreement and Warrant attached
hereto as Exhibits 10.1, 10.2, 10.3, 10.4 and 3.3,
respectively, each of which are incorporated by reference
herein.
Item 9.01 Financial Statements and Exhibits
See
Exhibit Index.
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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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IMAGEWARE SYSTEMS, INC.
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Date:
September 13, 2018
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By:
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/s/
Wayne Wetherell
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Wayne
Wetherell
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Chief
Financial Officer
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EXHIBIT INDEX
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Exhibit Number
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Description
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Certificate of Designations, Preferences, and Rights of Series C
Convertible Preferred Stock of ImageWare Systems, Inc., dated
September 10, 2018
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Amendment to the Certificate of Designations, Preferences and
Rights of Series A Convertible Preferred Stock, dated September 10,
2018
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Form of Warrant
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Form of Securities Purchase Agreement
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Form of Registration Rights Agreement
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Placement Agent Agreement
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Form of Exchange Agreement
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Press
release issued by ImageWare Systems, Inc., dated September 12,
2018
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