SECURITIES EXCHANGE AND 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): February 27, 1997
EDnet, Inc.
(Exact name of registrant as specified in its charter)
Colorado
(State or other jurisdiction of incorporation)
000-21659 84-1273795
(Commission File No.) (IRS Employer Identification No.)
One Union Street
San Francisco, California 94111
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (415) 274-8800
Total number of pages: 5
Index to Exhibits at page: 5
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Item 9. Sales of Equity Securities Pursuant to Regulation S.
On February 27, 1997, EDnet, Inc. (the "Company") sold one hundred
fifty (150) shares of the Company's Series A Convertible Preferred Stock (the
"Series A Preferred Shares") for $1,000 per share (the "Purchase Price") to an
accredited investor (the "Purchaser") in an offering exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to Regulation S ("Regulation S") of the Securities
Act. Up to one-third of the Series A Preferred Shares are convertible into the
Company's common stock ("Common Stock") 90 days after the purchase of the Series
A Preferred Shares. An additional one-third of the Series A Preferred Shares
become convertible 120 days after the purchase. The balance of the Series A
Preferred Shares become convertible 150 days after the purchase. Subject to the
preceding conversion restrictions, a Series A Preferred Share is convertible at
the holder's option at any time until the third anniversary of its issuance into
that number of shares of Common Stock equal to the Purchase Price divided by the
lesser of 70% of: (i) the Market Price (as defined below), or (ii) the Closing
Price (as defined below), although in no event shall the Market Price or the
Closing Price be deemed to be less than the Floor (as defined below) (the
"Conversion Formula"). On the third anniversary of its issuance a Series A
Preferred Share is subject to mandatory conversion utilizing the Conversion
Formula. For purposes of the Conversion Formula, the "Market Price" is equal to
the average of the closing bid price of the Common Stock on the five trading
days preceding conversion. The "Closing Price" is equal to the average of the
closing bid prices for the Common Stock on the five trading days preceding the
closing. If the Market Price or the Closing Price is less than $1.43 per share,
it shall be deemed to be $1.43 per share (the "Floor"). Upon conversion, the
holders of Series A Preferred Shares will receive a 6% cumulative dividend,
measured from the issuance date of the Series A Preferred Shares through the
conversion date, and payable in Common Stock valued at the Market Price.
On January 31, 1997, the Company entered into a Consulting Agreement
(the "Consulting Agreement") with NET Financial International, Ltd. ("NET
Financial"), pursuant to which NET Financial agreed to act as placement agent
for the sale of up to $5,000,000 of the Company's Series A Preferred Shares (the
"Financing"). The Company has agreed to pay NET Financial fees equal to 10% of
the total capital raised in the Financing and to issue NET Financial warrants
(with piggyback registration rights) exercisable for two years. The terms of the
warrants will allow the purchase of shares of Common Stock with a value on the
date of a closing of the Financing equal to 6% of the capital raised in the
closing, and at an exercise price equal to the closing bid price of the Common
Stock on the date of the closing. In connection with the sale reported herein
and the terms of the Consulting Agreement, the Company is obligated to pay Net
Financial $15,000 in cash and issue it a warrant to purchase 6,261 Shares of the
Company's Common Stock at an exercise price of $1.4375 per share. The Consulting
Agreement has a term of three months and thereafter is terminable by either
party upon ten days prior written notice. In addition, in the event that the
Company seeks additional financing during the twelve month period after the
execution of the Consulting Agreement, the Company must give Net Financing the
opportunity to obtain such additional financing on the terms approved by the
Company.
2.
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The offering and sale of the Series A Preferred Shares was made in
reliance on Regulation S. The Purchaser has represented that at the time the
offer to buy the Series A Preferred Shares was made and at the time the buy
order originated, the Purchaser was outside the United States and was not a
"U.S. person" (as such term is defined in Regulation S). The Company represents
that it did not engage in any advertising or other public promotional efforts in
connection with the sale. The Company is a reporting issuer under the Securities
Exchange Act of 1934, as amended. Distributors associated with the offering have
agreed in writing that offers and sales prior to the expiration of the
restricted period shall be made in accordance with Regulation S. Offering
materials utilized in connection with the offering contain statements indicating
that the securities offered have not been registered and cannot be offered or
sold in the U.S. or to U.S. persons unless the securities are registered under
the Securities Act or an exemption from the registration requirement is
available.
Item 7. Exhibits.
(c) The following exhibits are furnished in accordance with the
provisions of Item 601 of Regulation S-K:
Exhibit Number Exhibit
4.1 Form of Offshore Securities Subscription Agreement for
Convertible Preferred Shares, previously filed as
Exhibit No. 6(z) "Form of Subscription, Representation
and Securities Transfer Restriction Agreement," to
Post- Effective Amendment No. 1 to Form 10-SB,
incorporated herein by reference.
10.1 Consulting Agreement dated January 31, 1997 between
the Company and Net Financial International, Ltd.,
previously filed as Exhibit No. 6(w) to Post-Effective
Amendment No. 1 to Form 10-SB, incorporated herein by
reference.
3.
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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, thereunto duly authorized.
EDNET, INC.
Dated: March 13, 1997 By:/s/ Alan Geddes
------------------------
Alan Geddes
Vice President and Chief
Financial Officer
4.
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description Page number in
sequentially
numbered version
<S> <C> <C>
4.1 Form of Offshore Securities Subscription Not applicable
Agreement for Convertible Preferred Shares,
previously filed as Exhibit No. 6(z) "Form of
Subscription, Representation and Securities
Transfer Restriction Agreement," to Post-
Effective Amendment No. 1 to Form 10-SB,
incorporated herein by reference.
10.1 Consulting Agreement dated January 31, 1997 Not applicable
between the Company and Net Financial
International, Ltd., previously filed as Exhibit
No. 6(w) to Post-Effective Amendment No. 1
to Form 10-SB, incorporated herein by
reference.
</TABLE>
5.
