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 30, 2004)
PHARMAFRONTIERS CORP.
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(Exact name of registrant as specified in its charter)
TEXAS
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(State or other jurisdiction of incorporation)
000-25513 760333165
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(Commission File Number) (I.R.S. Employer Identification No.)
18205 Burkhardt Rd., Tomball Texas, 77377
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(Address of principal executive offices, including zip code)
(281) 272-9331
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(Registrant's telephone number, including area code)
ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES PRIVATE PLACEMENT.
On September 30, 2004, PharmaFrontiers Corp., a Texas corporation (the
"Company"), completed a private placement of a principal amount of $1,610,000 of
15% exchangeable convertible subordinated notes ("Notes"). The Notes are
mandatorily exchangeable for securities at the earlier of an Equity Financing
(as defined below) or upon maturity on November 30, 2005. The Notes and accrued
interest are convertible at a purchase price equal to the weighted average gross
offering price of the Company common stock or common stock equivalents issued in
an Equity Financing. If no such Equity Financing occurs, the Notes and accrued
interest are convertible at $3.00 per share. An Equity Financing is defined as
a Company raise of at least $10,000,000 in one or a series of transactions of
common stock or common stock equivalent securities prior to the maturity of the
Notes.
As additional consideration for the purchase of Notes, the Company issued
to investors an aggregate of 161,000 shares of Company common stock and, upon
the earlier of an Equity Financing or maturity of the Notes, each investor will
receive a one-year warrant. The number of shares of common stock underlying the
warrant each investor will be issued will be determined by dividing the
aggregate principal amount of the Notes by the exercise price. The exercise
price will be equal to 50% of the weighted average gross offering price of
Company equity issued in an Equity Financing or, if there is no Equity
Financing, $3.
The Company received gross proceeds of $1,610,000 upon the closing of the
private placement, and netted $1,549,700 after deducting broker commissions.
In connection with the private placement, the Company granted certain
registration rights whereby it agreed to use its best efforts to register the
resale of shares of Company common stock issuable to investors upon conversion
of the Notes and granted piggyback registration rights with respect to the
resale of the common stock underlying the warrants.
The securities were offered and sold to 17 "accredited investors," as such
term is defined in Rule 501 under the Securities Act ("Act"). The offers and
sales were made without registration under the Act, or the securities laws of
certain states, in reliance on the exemptions provided by Section 4(2) of Act
and Regulation D under the Act and in reliance on similar exemptions under
applicable state laws.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBIT
None.
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.
PHARMAFRONTIERS CORP.
By: /s/ David McWilliams
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David McWilliams, Chief Executive Officer
DATE: October 11, 2004