SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): June 18, 1999
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ANDREA ELECTRONICS CORPORATION
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(Exact Name of Registrant as Specified in Charter)
New York 1-4324 11-0482020
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
45 Melville Park Road, Melville, New York 11747
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (516) 719-1800
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On June 22, 1999, Andrea Electronics Corporation (the "Company") issued a
press release that it had completed a private placement of 750 shares of
Series B Convertible Preferred Stock (the "Series B Preferred Stock") and a
warrant covering 75,000 shares of common stock, par value $0.50 per share (the
"Common Stock"), of the Company to an institutional investor (the "Investor"),
with proceeds to the Company of $7,500,000. A copy of this press release is
attached as Exhibit 99.1 to this Report on Form 8-K.
The shares of Series B Preferred Stock become convertible into Common
Stock according to a vesting schedule, with 12.5% of the shares becoming
convertible on October 17, 1999 and an additional 12.5% becoming convertible
at the end of each succeeding 30-day period, subject to acceleration upon the
occurrence of certain events. Each share of Series B Preferred Stock has a
stated value of $10,000 plus an additional amount equal to 4% per annum, which
sum is convertible into the Company's Common Stock at a conversion price equal
to the lower of $8.775 and the average of the two lowest closing bid prices of
the Common Stock during the 15 consecutive trading days immediately preceding
any conversion date, subject to certain adjustments. The 4% per annum
additional amount with respect to each share of Series B Preferred Stock may,
at the option of the Company, be paid in cash at the time of conversion. The
shares of Series B Preferred Stock pay no dividends, have no-voting rights and
will convert automatically into Common Stock at the applicable conversion
price then in effect on June 18, 2004, to the extent any shares remain
outstanding. The warrant has an exercise price of $8.775 per share and expires
on June 18, 2004.
Subject to certain terms and conditions, until June 18, 2000, the Company
may elect, in lieu of conversion, to redeem any or all shares of the Series B
Preferred Stock submitted for conversion if the applicable conversion price
for such shares is less than $4.725 per share. In addition, upon the
occurrence of certain events, the holder of the Series B Preferred Stock may
require the Company to redeem the Series B Preferred Stock. Due to this right
of redemption of the holder, the Company will record the Series B Preferred
Stock on its balance sheet as a mezzanine item between the Company's
liabilities and shareholders' equity. Additionally, subject to certain
conditions and limitations contained in the Securities Purchase Agreement, the
Company has the right during the six month period beginning March 14, 2000 to
sell to the Investor up to an additional $7.5 million of Series B Preferred
Stock and a warrant for up to an additional 75,000 shares of Common Stock.
The foregoing summary of the material terms of the Series B Preferred
Stock is qualified by reference to the full text of the underlying documents,
which consist of a Certificate of Amendment to the Certificate of
Incorporation of the Company, a Securities Purchase Agreement and a
Registration Rights Agreement, filed as Exhibits 3.1, 4.1 and 4.2,
respectively, to this Report on Form 8-K. A Form of Warrant is also filed as
Exhibit 4.3 to this Report.
The offer and sale of the Series B Preferred Stock was made pursuant to a
private placement under Regulation D of the Securities Act of 1933, as amended
(the "Securities Act"), and will not be registered under the Securities Act,
and may not be offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of the Securities Act.
The Company has agreed to use its best efforts to file a registration
statement pursuant to the Securities Act as soon as possible to register the
Common Stock issuable upon conversion of the Series B Preferred Stock and
exercise of the related warrants.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits:
Exhibit
Number Description
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3.1 Certificate of Amendment to the Certificate of
Incorporation of the Registrant.
4.1
Securities Purchase Agreement, dated June 11, 1999,
by and between HFTP Investment L.L.C. and the
Registrant.
4.2 Registration Rights Agreement, dated June 11, 1999,
by and between HFTP Investment L.L.C. and the
Registrant.
4.3 Form of Warrant by and between HFTP Investment
L.L.C. and the Registrant.
99.1 Press Release dated June 22, 1999.
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.
Dated: June 22, 1999 ANDREA ELECTRONICS CORPORATION
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(Registrant)
/s/ Patrick D. Pilch
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Patrick D. Pilch
Executive Vice President,
Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Description
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3.1 Certificate of Amendment to the Certificate of
Incorporation of the Registrant.
4.1 Securities Purchase Agreement, dated June 11, 1999,
by and between HFTP Investment L.L.C. and the
Registrant.
4.2 Registration Rights Agreement, dated June 11, 1999,
by and between HFTP Investment L.L.C. and the
Registrant.
4.3 Form of Warrant by and between HFTP Investment
L.L.C. and the Registrant.
99.1 Press Release dated June 22, 1999.