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: April 9, 1998
THE ASHTON TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 333-1182
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(State of other jurisdiction of incorporation) (Commission File Number)
22-6650372
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(IRS Employer Identification Number)
1900 Market Street, Suite 701, Philadelphia, Pennsylvania 19103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 751-1900
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Item 5. Other Events
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On April 3, 1998 (the "Subscription Date"), the Company entered into a
Private Equity Line of Credit Agreement (the "Agreement") with a group of
accredited investors (the "Investors") which provides for an aggregate
commitment of $18,000,000 to the Company. On the Subscription Date the Investors
purchased three shares of Series D Convertible Preferred Stock (the "Series D
Preferred") with a liquidation preference of $1,000,000.00 per share for an
aggregate purchase price of $3,000,000.00 and the Company agreed to promptly
file a registration statement under the Securities Act of 1933, as amended,
registering shares of the Company's common stock (the "Common Stock") issuable
in connection with the transactions contemplated by the Agreement (the
"Registration Statement"). The Agreement provides that within five days after
the Registration Statement has been filed, and subject to the satisfaction of
certain other conditions, the Investors will purchase two shares of Series E
Convertible Preferred Stock (the "Series E Preferred") with a liquidation
preference of $1,000,000.00 per share for an aggregate purchase price of
$2,000,000.00. Following the purchase of the Series E Preferred and subject to
the satisfaction of certain other conditions, the Company may from time to time
put (each, a "Put") to the Investors shares of the Common Stock for an aggregate
Put price of $13,000,000.00. The Put price per share is an amount equal to 85%
of the average of the lowest bid prices of such Common Stock over the seven day
period beginning three days before and ending three days after the Company gives
notice of a Put.
Under the terms of the Agreement, the Company has agreed to hold
$1,000,000.00 of the proceeds received on the Subscription Date in cash or
government securities until the Company (i) receives shareholder approval for
the issuance of 20% or more of its Common Stock in connection with the
transactions contemplated by the Agreement (the "Required Approval") or (ii) is
able to increase its issued and outstanding Common Stock by at least 4,000,000
shares via the conversion of Convertible Preferred Stock (other than Common
Stock to be issued in connection with the Agreement). If neither of these events
has occurred within 90 days after the Subscription Date, the Company must return
the $1,000,000.00, plus a 10% premium, to the Investors.
The Investors are not obligated to purchase the Series E Preferred or any
Put shares unless, among other things, (i) the Company has received the Required
Approval, (ii) the Registration Statement is effective, (iii) the Company is
listed and trading on a national exchange or quotation system, (iv) the closing
bid price of the Common Stock on the day immediately preceding such purchase is
at least $1.50 per share, and (v) the Common Stock has traded at a volume of at
least 25,000 shares a day for the thirty trading days preceding such purchase.
The Series D Preferred may not be converted into Common Stock until the
earlier of (i) 60 days following the Subscription Date or (ii) the Registration
Statement has been filed. The conversion price of the Series D Preferred is an
amount equal to 75% of the average closing bid price per share over the five
days preceding the conversion date (the "Market Price"). The conversion price of
the Series E Preferred is 80% of the Market Price. Each of the Series D
Preferred and Series E Preferred (i) ranks pari passu with the other authorized
Preferred Stock of the Company and (ii) is entitled to a dividend of 8% per
annum on its respective liquidation preference.
On the Subscription Date the Investors received warrants (each, a
"Warrant") to purchase up to an aggregate of 250,000 shares of Common Stock and
will receive additional Warrants to purchase up to an aggregate of 100,000 of
such shares on the completion of the purchase of the Series E Preferred. The
Warrants are exercisable for five years at an exercise price of 120% of average
closing bid price of the Common Stock over the five trading days preceding the
Subscription Date.
On the Subscription Date, the Company paid the placement agent a fee of (i)
$150,000, (ii) 0.15 shares of Series D Preferred, (iii) a Warrant, on the same
terms as the Warrants issued to the Investors, to purchase up to 190,000 shares
of Common Stock and (iv) 20,000 shares of Common Stock. Upon the completion of
the purchase of the Series E Shares, the Company has agreed to pay the placement
agent (i) an amount equal to 5% of the proceeds of such purchase, (ii) 0.1
shares of Series E Preferred, and (iii) a Warrant to purchase up to 60,000
shares of the Common Stock. On the completion of each Put, the Company has
agreed to pay the placement agent an amount equal to 5% of the proceeds of such
Put.
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned herewith duly authorized.
Date: April 9, 1998 The Ashton Technology Group, Inc.
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(Registrant)
By: /s/ Fredric W. Rittereiser
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Fredric W. Rittereiser
Chief Executive Officer
