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): Commission File Number:
October 17, 2000 000-2791
ELECTRIC CITY CORP.
(Exact name of small business issuer as specified in its charter)
DELAWARE 36-4197337
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1280 Landmeier Road, Elk Grove Village, Illinois 60007-2410
(Address of principal executive offices)
(847) 437-1666
(Issuer's telephone number)
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(Former name, former address and former fiscal year, if changed since last
report)
ELECTRIC CITY CORP.
ITEM 5 OTHER EVENTS
On October 17, 2000, Electric City Corp. (the "Company") issued to Augustine
Fund LP ("Augustine") 2,000 shares of its Series B convertible preferred stock
at a price of $1,000 per share and warrants to purchase 200,000 shares of the
Company's common stock ("Common Stock") at an exercise price of $4.425 per
share, subject to certain adjustments. The purpose of this filing is to disclose
the material terms of the issuance and to provide a pro forma balance sheet
showing how the issuance would have impacted the Company's balance sheet had it
occurred prior to the end of its most recent fiscal quarter ended September 30,
2000. The complete terms of the securities issued are contained in the documents
attached as exhibits to this document.
Designation and amount. The shares issued to the Augustine
have been designated as the "Series B Preferred Stock." The number of
shares constituting the Series B Preferred Stock is 2,000, and the
shares have a par value of $0.01 per share. The shares were sold at
a price of $1,000 per share (the "Purchase Price").
Dividends. The holders of the outstanding shares of Series B
Preferred Stock shall be entitled to receive, when, as and if declared
by the Company's Board of Directors, dividends at an annual rate of 8%
percent of the Purchase Price. Such dividends shall be deemed to accrue
on the Series B Preferred Stock and be cumulative. Dividends may be
paid in cash or additional shares of Common Stock, as may be
determined, from time to time, in the sole discretion of the Board of
Directors.
Liquidation Rights. The holders of the Series B Preferred
Stock are entitled to a liquidation preference with respect to Common
Stock or any other series of capital stock except any series A
preferred stock issued by the Company, which shall be senior to Series
B Preferred Stock.
Voting Rights. The holders of Series B Preferred Stock shall
not be entitled to vote upon any matter relating to the business or
affairs of the Company or for any other purpose.
Conversion Rights. Shares of Series B Preferred Stock may be
converted at any time subsequent to October 17, 2000 into shares of
Common Stock. The number of shares issuable upon conversion shall be
determined by dividing the Purchase Price by an amount equal to the
lesser of (x) 110% of the lowest of the closing bid prices for the
Common Stock for the five (5) trading days prior to the date of
issuance of the Series B Preferred Stock being converted (having been
determined to be $4.06), or (y) 75% (the "Conversion Percentage") of
the average of the three (3) lowest closing bid prices for the Common
Stock for the thirty (30) consecutive trading days immediately
preceding the conversion date. If the holders of the Series B Preferred
Stock have not exercised their conversion rights within three years of
the date of issuance, the shares shall automatically convert to Common
Stock on the third anniversary of the issuance.
Redemption. The Company may redeem any or all of the
outstanding shares of the Series B Preferred Stock at any time at a
cash redemption price equal to 125% of the Purchase Price.
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The Company must send the holder of the Series B Preferred Stock
notice of its intent to redeem the Series B Preferred Stock at
least five days prior to the redemption date. Upon receipt of notice
of redemption, the holder of the Series B Preferred Stock shall have
one day to convert all or any portion of the shares of Series B
Preferred Stock into shares of Common Stock.
Registration Rights. Within 90 days of issuance of the Series
B Preferred Stock, the Company shall file at its expense, a
registration statement with the Securities and Exchange Commission
covering the Common Stock issuable upon the conversion of the Series B
Preferred Stock, any shares of Common Stock issued in payment of the
preferred dividends and the Common Stock issuable upon the exercise of
the warrants described below. If the registration statement has not
been declared effective within 180 days of the date of issuance, the
Conversion Percentage shall decrease by 2% per month until the
registration statement is declared effective.
Warrants: As additional consideration for Augustine's purchase
of the Series B Preferred Stock, the Company issued to Augustine a
warrant to purchase 200,000 shares of Common Stock at an exercise price
per share equal to 120% of the lowest of the closing bid prices for the
Common Stock for the five (5) trading days prior to the closing date
(determined to be $4.425 per share). The warrant must be exercised if
at all within five (5) years after the date of issuance. The warrant
contains certain anti-dilution provisions which may cause the purchase
price to be adjusted. The anti-dilution provisions are detailed in the
attached Form of Warrant.
Trading Agreement. As part of the transaction that included
the issuance of the Series B Preferred Stock, Augustine agreed to enter
into a trading agreement with the Company along with certain other
significant holders of Common Stock that provides certain restrictions
on the sale of the holders' Common Stock. These restrictions will apply
to the Common Stock Augustine will receive upon conversion of the
Series B Preferred Stock and the exercise of its warrant, and include:
- shares owned by Augustine may only be sold in amounts not to
exceed ten percent (10%) of the average daily trading volume
of the Common Stock over the prior ten (10) trading days,
- Augustine may not make public trades in an opening transaction
during the first half hour of any trading day nor outside of
regular trading hours, and
- the Company may direct that Augustine not sell its stock in a
public transaction during a trading day on four separate days
in a year.
In addition, the trading agreement provides that in the event any third
party contacts the Company with a desire to purchase at least 100,000
shares of stock in a single transaction, the Company shall provide the
parties to the trading agreement with a right of first refusal to sell
their stock to such third party, subject to the terms of such offer.
The trading agreement has a term of three years, unless extended by the
parties.
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ELECTRIC CITY CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2000
THE FOLLOWING UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET OF THE
COMPANY IS PRESENTED AS IF THE ISSUANCE OF THE SERIES B PREFERRED STOCK AND
WARRANTS HAD OCCURRED ON SEPTEMBER 30, 2000. SUCH PRO FORMA INFORMATION IS BASED
IN PART, AND SHOULD BE READ IN CONJUNCTION WITH, THE HISTORICAL CONDENSED
CONSOLIDATED BALANCE SHEET OF THE COMPANY AND THE RELATED NOTES THERETO THAT ARE
CONTAINED IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-QSB FOR THE FISCAL
QUARTER ENDED SEPTEMBER 30, 2000. THE FOLLOWING UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET IS NOT NECESSARILY INDICATIVE OF WHAT THE ACTUAL
FINANCIAL POSITION OF THE COMPANY WOULD HAVE BEEN ASSUMING THE ISSUANCES
DESCRIBED ABOVE HAD BEEN COMPLETED AS OF SEPTEMBER 30, 2000, NOR DOES IT PURPORT
TO REPRESENT THE CURRENT OR FUTURE POSITION OF THE COMPANY.
SEPTEMBER 30, 2000
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PRO FORMA
ACTUAL ADJUSTMENTS
(UNAUDITED) (UNAUDITED) PRO FORMA
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ASSETS
Current Assets
Cash and cash equivalents $ 272,674 $ 1,830,000 (1) $ 2,102,674
Accounts receivable 2,285,092 - 2,285,092
Inventories 2,452,999 - 2,452,999
Other, including $41,000 note 243,005 - 243,005
receivable from employees
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TOTAL CURRENT ASSETS 5,253,770 1,830,000 7,083,770
Property and equipment 2,259,186 - 2,259,186
Less accumulated depreciation (247,918) - (247,916)
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NET PROPERTY AND EQUIPMENT 2,011,268 - 2,011,268
Cost in excess of assets acquired,
net of amortization of $463,632 4,730,121 - 4,730,121
Other 2,838 - 2,838
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$11,997,997 $ 1,830,000 $13,827,997
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ELECTRIC CITY CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2000
SEPTEMBER 30, 2000
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PRO FORMA
ACTUAL ADJUSTMENTS
(UNAUDITED) (UNAUDITED) PRO FORMA
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Line of credit and current portion $ 1,169,705 $ - $ 1,169,705
of long-term debt
Accounts payable 1,805,342 - 1,805,342
Accrued expenses 522,506 - 522,506
Notes payable, including $1,216,007
due to distributors 1,416,007 - 1,416,007
Deferred revenue 50,000 - 50,000
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TOTAL CURRENT LIABILITIES 4,963,559 - 4,963,559
LONG-TERM DEFERRED REVENUE 391,667 - 391,667
LONG-TERM DEBT, less current portion 1,506,583 - 1,506,583
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COMMON STOCK SUBJECT TO RESCISSION 1,520,000 - 1,520,000
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, - 20 (1) 20
5,000,000 authorized
Common stock, $.0001 par value, 30,000,000
Shares authorized, 28,954,755 issued 2,856 - 2,856
Additional paid-in capital 18,991,961 1,829,980 (1)(2)(3)(4) 20,821,941
Accumulated deficit (15,370,128) - (15,370,128)
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3,624,689 1,830,000 5,454,689
Less treasury stock, at cost, 1,000
shares (8,500) - (8,500)
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TOTAL STOCKHOLDERS' EQUITY 3,616,189 1,830,000 5,446,189
$11,997,997 $ 1,830,000 $ 13,827,997
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SEE NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
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ELECTRIC CITY CORP.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
The following pro forma adjustments were made to the unaudited historical
condensed consolidated balance sheet to reflect the issuance of the Series B
Preferred Stock and warrants as if they were issued as of September 30, 2000:
(1) Reflects the issuance of 2,000 shares of Series B Preferred Stock at
$1,000 per share, net of issuance costs of $170,000, consisting of
$10,000 in legal fees and $160,000 in placement fees paid to Delano
Securities and Wall Street Associates.
The following items relating to the issuance of the Series B Preferred Stock
have no effect on the pro forma condensed consolidated balance sheet at
September 30, 2000:
(2) Reflects a warrant to purchase 100,000 shares of Common Stock issued to
Delano Securities for services rendered as placement agent to the
Company. For accounting purposes, the warrants were valued at $309,000
using a modified Black Sholes option pricing model.
(3) Reflects a warrant to purchase 200,000 shares of Common Stock issued to
the Augustine Fund LP. For accounting purposes the warrants were valued
at $624,000 using a modified Black Sholes option pricing model.
(4) The Series B Preferred Stock has a beneficial conversion feature, which
allows conversion into common stock. The number of shares issuable upon
conversion shall be determined by dividing the Purchase Price by an
amount equal to the lesser of (x) 110% of the lowest of the closing bid
prices for the Common Stock for the five (5) trading days prior to the
date of issuance of the Series B Preferred Stock being converted
(having been determined to be $4.06), or (y) 75% of the average of the
three (3) lowest closing bid prices for the Common Stock for the thirty
(30) consecutive trading days immediately preceding the conversion
date. The intrinsic value of the beneficial conversion feature at
September 30, 2000 was $782,931.
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ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
4.1 The Securities Purchase Agreement made as of
October 17, 2000, by and between Electric City Corp.
and Augustine Fund, L.P.
4.2 Certificate of Designation of the Relative Rights and
Preferences of the Series B Convertible Preferred Stock
4.3 The Registration Rights Agreement made as of
October 17, 2000, by and between Electric City Corp. and
Augustine Fund, L.P.
4.4 Warrant To Purchase Shares Of Common Stock of Electric
City Corp.
4.5 Trading Agreement made as of October 17, 2000 between
Augustine Fund, L.P. and Electric City Corp.
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.
ELECTRIC CITY CORP.
Dated: November 29, 2000 By: /s/ Jeffrey R. Mistarz
-----------------------------------
Jeffrey R. Mistarz
Chief Financial Officer & Treasurer
(principal financial and accounting
officer)
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EXHIBIT INDEX
Exhibit Description
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4.1 The Securities Purchase Agreement made as of
October 17, 2000, by and between Electric
City Corp. and Augustine Fund, L.P.
4.2 Certificate of Designation of the Relative
Rights and Preferences of the Series B
Convertible Preferred Stock
4.3 The Registration Rights Agreement made as of
October 17, 2000, by and between Electric
City Corp. and Augustine Fund, L.P.
4.4 Warrant To Purchase Shares Of Common Stock
of Electric City Corp.
4.5 Trading Agreement made as of October 17, 2000
between Augustine Fund, L.P. and Electric
City Corp.
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