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): December 18, 2003
TAG-IT PACIFIC, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-13669 95-4654481
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
21900 BURBANK BLVD., SUITE 270
WOODLAND HILLS, CALIFORNIA 91367
(Address of Principal Executive Offices) (Zip Code)
(818) 444-4100
(Registrant's Telephone Number, Including Area Code)
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE.
PRIVATE PLACEMENT FINANCING TRANSACTION
On December 18, 2003, Tag-It Pacific, Inc. (the "REGISTRANT") closed
the sale of an aggregate of 572,818 shares of non-voting Series D Convertible
Preferred Stock (the "PREFERRED SHARES"), at a price of $44.00 per share, to
institutional investors and individual accredited investors. After payment of
placement agent fees and other offering expenses, the Registrant received
proceeds of approximately $23.2 million. The Registrant intends to use the
proceeds of the financing for repayment of debt, capital equipment purchases and
other general corporate purposes.
The Registrant entered into a registration rights agreement with the
purchasers of the Preferred Shares. Pursuant to this agreement, the Registrant
agreed to register the resale by the purchasers of the common stock underlying
the Preferred Shares. This registration rights agreement provides that if the
Registrant does not register for resale the common shares within 30 days of the
closing date (or 150 days in the event of a full review of the registration
statement by the Securities and Exchange Commission), then the Registrant must
pay each of the investors 1% of the per share purchase price paid by such
investor for each Preferred Share for each month thereafter that the investor
cannot publicly sell the shares of common stock underlying the Preferred Share.
Sanders Morris Harris Inc. acted as placement agent in connection with
the private placement financing transaction. For their services as placement
agent, the Registrant paid Sanders Morris Harris a fee equal to 7.5%, or
approximately $1,890,300, of the gross proceeds from the financing. The
Registrant also paid for the out-of-pocket expenses incurred by Sanders Morris
Harris and all purchasers in the amount of $45,000. In addition, the Registrant
issued to Sanders Morris Harris a warrant to purchase 572,818 shares of common
stock at an exercise price of $4.74 per share. The warrant vests and becomes
exercisable in full on June 18, 2004 and has a term of 5 years.
Copies of the form of Subscription Agreement, Registration Rights
Agreement, Placement Agent Agreement, and Common Stock Purchase Warrant are
attached to this report as Exhibits 99.1, 99.2, 99.3 and 99.4, respectively, and
are incorporated herein by this reference.
TERMS OF SERIES D CONVERTIBLE PREFERRED STOCK
Except as required by law, the Preferred Shares have no voting rights.
The Preferred Shares accrue dividends, commencing on June 1, 2004, at an annual
rate of 5% of the initial stated value of $44.00 per share, payable quarterly.
In the event of a liquidation, dissolution or winding-up of the Registrant, the
Preferred Shares will be entitled to receive, prior to any distribution on the
common stock and all other junior securities, a distribution equal to the
initial stated value of the Preferred Shares plus all accrued and unpaid
dividends.
Following approval by the Registrant's stockholders of the conversion
of the Preferred Shares, each Preferred Share will be automatically converted
into 10 shares of the Registrant's common stock (as adjusted for stock
dividends, combinations, splits or similar events), for an aggregate of
5,728,180 shares of common stock.
A copy of the Registrant's Certificate of Designation of Series D
Convertible Preferred Stock is attached to this report as Exhibit 4.1, and is
incorporated herein by this reference.
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PRESS RELEASES
On December 18, 2003, the Registrant issued a press release announcing
the closing of the private placement financing and providing guidance for the
2003 fourth quarter and 2004 fiscal year financial results. A copy of the press
release is attached to this report as Exhibit 99.5 and is incorporated herein by
this reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of business acquired.
None.
(b) Pro forma Financial Information.
None.
(c) Exhibits.
The following exhibits are filed herewith:
Exhibit
Number Description
------- -----------------------------------------------------
4.1 Certificate of Designation Series D Convertible
Preferred Stock.
99.1 Form of Subscription Agreement between the Registrant
and the Purchaser to be identified therein.
99.2 Form of Registration Rights Agreement dated December
18, 2003 among the Registrant and the Purchasers
identified therein.
99.3 Placement Agent Agreement dated December 18, 2003
between the Registrant and Sanders Morris Harris Inc.
99.4 Common Stock Purchase Warrant dated December 18, 2003
between the Registrant and Sanders Morris Harris Inc.
99.5 Press release dated December 18, 2003 issued by the
Registrant.
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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.
TAG-IT PACIFIC, INC.
Date: December 19, 2003 By: /s/ Ronda Ferguson
---------------------------------
Ronda Ferguson
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description
- ------- -------------------------------------------------------------------
4.1 Certificate of Designation Series D Convertible Preferred Stock.
99.1 Form of Subscription Agreement between the Registrant and the
Purchaser to be identified therein.
99.2 Form of Registration Rights Agreement dated December 18, 2003 among
the Registrant and the Purchasers identified therein.
99.3 Placement Agent Agreement dated December 18, 2003 between the
Registrant and Sanders Morris Harris Inc.
99.4 Common Stock Purchase Warrant dated December 18, 2003 between the
Registrant and Sanders Morris Harris Inc.
99.5 Press release dated December 18, 2003 issued by the Registrant.
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