SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 13(d) of the Securities Exchange Act of 1934
Date of Report: September 26, 1997
ALCOHOL SENSORS INTERNATIONAL, LTD.
(Exact name of registrant as specified in its charter)
New York 0-26998 11-3104480
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
11 Oval Drive, Islandia, New York 11722
(Address of principal executive offices) (Zip Code)
(516) 342-1515
(Registrant's telephone number, including area code)
Item 5. Other Events.
On September 26, 1997, pursuant to a Securities Purchase Agreement, dated
September 24, 1997, by and between Alcohol Sensors International, Ltd. (the
"Registrant") and Milbright Estates, Ltd. (the "Purchaser"), the Registrant sold
and issued to the Purchaser (a) a total of 300 shares of 8% Series B Convertible
Preferred Stock (the "Series B Preferred Stock") and (b) a Warrant (the
"Warrant") to purchase 50,000 shares of the common stock, par value $.001 per
share (the "Common Stock"), of the Company, for total gross proceeds of
$3,000,000. In connection with the sale and issuance of the Series B Preferred
Stock and Warrant, the Registrant issued warrants (the "Third Party Warrants")
to purchase an aggregate 100,000 shares of Common Stock to third parties and
paid certain of such third parties an aggregate of $300,000.
The Series B Preferred Stock has a liquidation preference of $10,000 per
share and bears cumulative dividends at a rate of 8% per share per annum. Such
dividends are payable in cash or, at the option of the Registrant, in shares of
Series B Preferred Stock and are due and payable upon the conversion of the
Series B Preferred Stock and into Common Stock. The Series B Preferred Stock is
convertible, at the option of the holder, into shares of Common Stock at any
time following the earlier of (a) the effectiveness of a registration statement
for the Common Stock into which the Series B Preferred Stock is convertible (the
"Registration Statement") or (b) 120 days from the date of original issuance of
the Series B Preferred Stock (the "Original Issuance Date"). Notwithstanding the
foregoing, the Series B Preferred Stock is convertible, (a) with respect to 100
shares, at any time on or after November 24, 1997, (b) with respect to an
additional 100 shares, at any time on or after December 24, 1997 and (c) with
respect to any other shares, at any time on or after January 23, 1998. Each
share of Series B Preferred Stock shall be convertible into that number of
shares of Common Stock as is determined by dividing (a) the sum of (i) $10,000
plus (ii) the amount of all accrued but unpaid or accumulated dividends on the
share of Series B Preferred Stock being so converted by (b) the Conversion Price
(as defined below) in effect at the time of conversion. The "Conversion Price"
of the Series B Preferred Stock will be equal to the lower of (a) $4.03125, the
average of closing bid prices of a share of Common Stock as quoted on The Nasdaq
Stock Market for the ten consecutive trading days immediately preceding the
Original Issuance Date Stock or (b) 82.5% of the average closing bid price of a
share of Common Stock as quoted on The Nasdaq Stock Market for the ten
consecutive trading days immediately preceding the date of the conversion notice
delivered to the Registrant. If not sooner converted, all outstanding shares of
Series B Preferred Stock shall be subject to automatic conversion two years
after the Original Issuance Date. Except in connection with such automatic
conversion, in no event shall a holder of Series B Preferred Stock be entitled
to convert any Series B Preferred Stock in excess of that number of shares upon
conversion of which the sum of (a) the number of shares of Common Stock
beneficially owned by the holder and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Series B Preferred Stock), and (b) the number of
shares of Common Stock issuable upon the conversion of the shares of the Series
B Preferred Stock with respect to which the determination of this proviso is
being made, would result in beneficial ownership by the holder or its affiliates
of more than 4.99% of the outstanding shares of Common Stock.
Except as otherwise required by law or the Certificate of Amendment to the
Certificate of Incorporation of the Corporation filed with the Secretary of
State of the State of New York on September 23, 1997, which Certificate of
Amendment, as amended, sets forth the designations, preferences and rights of
the Series B Preferred Stock and the holders thereof, the holders of Series B
Preferred Stock are not entitled to vote on any matters submitted to the
stockholders of the Registrant.
Unless the approval of the Registrant's shareholders has previously been
obtained, the Registrant is not required to issue any Common Stock upon
conversion of the Series B Preferred Stock to the extent that (a) the issuance
of such Common Stock, when taken together with all prior issuances of Common
Stock upon conversion of Series B Preferred Stock, would result in the issuance
by the Registrant of a number of shares of Common Stock equal to or greater than
20% of the number of shares of Common Stock outstanding on the date of initial
issuance of the Series B Preferred Stock (a "20% Issuance"), and such 20%
Issuance requires the prior approval of the shareholders of the Registrant
pursuant to any applicable rule, regulation, stated policy, practice or
interpretation of The Nasdaq Stock Market or (b) the Board of Directors of the
Registrant determines in good faith that the issuance of such Common Stock upon
conversion (whether or not constituting a 20% Issuance) otherwise requires the
prior approval of the shareholders of the Registrant pursuant to any applicable
rule, regulation, stated policy, practice or interpretation of any stock
exchange or stock market on which the Common Stock then listed or admitted to
trading (the "Stockholder Approval Requirement"). Following the first conversion
of Series B Preferred Stock to which a 20% Issuance is applicable, the
Registrant (a) shall promptly give notice to all holders of the Series B
Preferred Stock that the Registrant is unable to issue any further Common Stock
upon conversion of Series B Preferred Stock, and that the Series B Preferred
Stock cannot be converted without compliance with the Stockholder Approval
Requirement, and (b) shall take one of the following actions, at its election,
within twenty days following the date of such notice: (i) the Registrant shall
notify all such holders of the Series B Preferred Stock that the Registrant
intends to seek shareholder approval pursuant to the Stockholder Approval
Requirement, in which event the Registrant shall thereafter take all action
necessary to call a meeting of its shareholders as promptly as reasonably
practicable to vote on such matter; (ii) the Registrant shall obtain from the
stock exchange or stock market on which the Common Stock is then listed a waiver
of the Stockholder Approval Requirement and shall commence any mailing to
stockholders notifying them of such waiver that is required by the rules of such
stock exchange or stock market; or (iii) the Registrant shall notify all such
holders of the Series B Preferred Stock that it is redeeming Series B Preferred
Stock pursuant to the redemption provisions of the Series B Preferred Stock. In
the event that the Registrant elects to seek stockholder approval, and such
stockholder approval is not obtained within 75 days following the date of the
Registrant's notice to the holders of the Series B Preferred Stock that it
intends to seek such stockholder approval, the Registrant shall promptly
following the end of such 75 day period notify all holders of the Series B
Preferred Stock that it is redeeming Series B Preferred Stock. If the
Stockholder Approval Requirement is complied with or if a waiver of or exception
to the Stockholder Approval Requirement is obtained, the conversion rights of
the holders of the Series B Preferred Stock shall be reinstated.
If the Registrant is required to redeem Series B Preferred Stock pursuant
to the provisions thereof, the Registrant shall (a) issue the Maximum Number of
Shares of Common Stock (as defined below) to the holder or holders of Series B
Preferred Stock who have requested conversion, and will (b) redeem, out of funds
legally available therefor, all of the Series B Preferred Stock that remain
after such conversion at a price per share of Series B Preferred Stock equal to
$12,200 (subject to adjustment) plus an amount equal to all dividends, if any,
accrued but unpaid on such shares as of the earlier of the date fixed for
redemption or the maturity date. For purposes of the Series B Preferred Stock,
the "Maximum Number of Shares of Common Stock" shall mean the greatest number of
shares of Common Stock that may be issued upon conversion of shares of Series B
Preferred Stock without causing a 20% Issuance.
The Registrant has the option, at any time, to redeem Series B Preferred
Stock upon notice, at a price per share of Series B Preferred Stock equal to
$12,200 (subject to adjustment) plus an amount equal to all dividends, if any,
accrued but unpaid as of the date fixed for redemption.
So long as any shares of Series B Preferred Stock remain outstanding, the
Registrant shall not, without the vote or written consent by the holders of at
least a majority of the then outstanding shares of Series B Preferred Stock,
authorize or issue any other equity security senior to the Series B Preferred
Stock as to dividend and liquidation preferences or amend, alter or repeal the
Registrant's Certificate of Incorporation if the powers, preferences, or special
rights of the Series B Preferred Stock would thereby be materially adversely
affected. Notwithstanding the foregoing, the Series B Preferred Stock is junior
in right of payment to the Series A Cumulative Non-redeemable Convertible Stock
of the Registrant.
The Warrant has a term of five years from issuance and is exercisable
during its term at $4.265625 (subject to adjustment) per share of Common Stock.
Payment of the exercise price upon exercise of the Warrant may be made in cash
or by cashless exercise. The Warrant is redeemable upon notice, at $.10 per
share underlying the Warrant, in the event that the per share bid price of the
Common Stock equals or exceeds $6.09375 (subject to adjustment) for the twenty
trading days immediately preceeding the date of such redemption notice. The
Third Party Warrants contain the same terms and conditions as the Warrant.
Pursuant to a Registration Rights Agreement, dated September 24, 1997, by
and between the Registrant and the Purchaser, the Purchaser has been granted
certain registration rights with respect to shares of Common Stock issuable upon
conversion of the Series B Preferred Stock and the shares of Common Stock
issuable upon exercise of the Warrants, pursuant to which the Registrant is
required to file a Registration Statement on Form S-3 no later than October 24,
1997, and to maintain such registration statement in effect for a period of at
least two years, subject to certain terms and conditions contained therein.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
Listed below are all exhibits to this Current Report on Form 8-K.
Exhibit
Number Description
3.1 Composite of Certificate of Incorporation, as amended through October
2, 1997.
4.1 Form of Warrant Certificate.
10.1 Securities Purchase Agreement, dated September 24, 1997, by and
between the Registrant and Milbright Estates, Ltd. (minus attachments
and exhibits thereto).
10.2 Registration Rights Agreement, dated September 24, 1997, by and
between the Registrant and Milbright Estates, Ltd.
99.1 Press Release of the Registrant, dated September 30, 1997.
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.
ALCOHOL SENSORS INTERNATIONAL, LTD.
Dated: October 7, 1997 By:s/ Steven A. Martello
Steven A. Martello, President
EXHIBIT INDEX
Exhibit
Number Description
3.1 Composite of Certificate of Incorporation, as amended through October
2, 1997.
4.1 Form of Warrant Certificate.
10.1 Securities Purchase Agreement, dated September 24, 1997, by and
between the Registrant and Milbright Estates, Ltd. (minus attachments
and exhibits thereto).
10.2 Registration Rights Agreement, dated September 24, 1997, by and
between the Registrant and Milbright Estates, Ltd.
99.1 Press Release of the Registrant, dated September 30, 1997.