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 12, 1997
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NEWRIDERS, INC.
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(Exact name of registrant as specified in its charter)
Nevada 000-22775 77-0390222
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(State of (Commission (I.R.S. Employer
Incorporation) File Number) Identification No.)
567 San Nicolas Drive, Suite 400, Newport Beach, California 92660
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(Address of principal executive offices)
Registrant's telephone number, including area code (714) 718-4630
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N/A
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(Former name or former address, if changed since last report)
Item 9. Sales of Equity Securities Pursuant to Regulation S.
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On December 12, 1997, Newriders, Inc. closed on the sale of $1,000,000
face value of its 8% Convertible Notes (the "Notes"), in minimum denominations
of at least $25,000, due December 12, 2000. Interest on the outstanding
principal amount is payable semi-annually in arrears on the first day of May
and November at the rate of 8% per annum accruing from the date of issuance.
The interest so payable will be paid in shares of common stock of Newriders,
Inc. ("Common Stock") at the then applicable Conversion Price (as defined
below) to the holder of each Note. The offering may continue until a maximum
of $2,000,000 of face value Notes have been sold, or until Newriders, Inc.
decides to terminate the offering.
Holders of the Notes are entitled, at their option, at any time
commencing 45 days after the closing date until maturity to convert one-third
or any lesser portion of the initial principal amount of each Note into shares
of Common Stock of Newriders, Inc. (the "Shares") at a conversion price for
each Share equal to the lesser of $3.3375 per share or eighty percent (80%) of
the average closing bid price of Shares of Common Stock for the five trading
days immediately prior to the Conversion Date with a conversion floor price
(the "Conversion Floor Price") of $2.00 per share (collectively, the
"Conversion Price"); beginning 75 days after the Closing Date, an additional
one-third of the initial principal amount of each Note may be converted into
Shares at the Conversion Price; and beginning 105 days after the Closing Date,
the remaining one-third of the initial principal amount of each Note may be
converted into Shares at the Conversion Price, provided that if the average of
the closing bid price of the Common Stock for the 20 consecutive trading days
immediately prior to a Conversion Date is less than $2.00 per share, the
Conversion Floor Price will be adjusted to equal eighty percent (80%) of such
20 consecutive trading day average of the closing bid price, provided,
however, that in no event shall the holder be entitled to convert any portion
of the Notes in excess of that portion of the Notes upon conversion of which
the sum of (1) 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 Notes, as defined in the Subscription Agreement) and (2) the number of
Shares issuable upon the conversion of the portion of the Notes with respect
to which the determination of this proviso is being made, would result in
beneficial ownership by the holder and its affiliates of more than 4.9% of all
outstanding shares of the common stock of Newriders, Inc.
First Bermuda Securities Limited of Hamilton, Bermuda, has acted, and is
acting, as principal underwriter or placement agent in selling the securities.
Commissions equal to ten percent (10%) of the face value of the Notes are paid
to the principal underwriter upon sale of the Notes. The Principal
underwriter also a non-accountable expense allowance of $15,000, and 5-year
broker warrants equal to ten percent (10%) of the aggregate amount raised with
an exercise price equal to one hundred twenty percent (120%) of the closing
bid price of the Shares on the closing date. The broker warrants have
certain piggy-back and demand registration rights.
The Notes sold pursuant to the offering and any Shares issued upon the
exercise of conversion rights have been and will be issued pursuant to
Regulation S promulgated under the Securities Act of 1933, as amended, and
have not been registered under the Securities Act of 1933. Since the offering
is being made pursuant to Regulation S, sales of the securities are limited to
Non-U.S. Persons, as defined under Regulation S, and offers and sales may only
be made outside the United States. The Notes may not be transferred, offered
or sold prior to the end of the 40 day restricted period commencing on the
date of closing, unless such transfer, offer or sale is made in an "offshore
transaction" and not to or for the account of or benefit of a U.S. Person (as
such terms are defined in Regulation S) and is otherwise in accordance with
the requirements of Regulation S. The Notes may not be converted into Shares
by or on behalf of any U.S. person.
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.
NEWRIDERS, INC.
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(Registrant)
Date: January 2, 1998 By:/s/ William R. Nordstrom
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William R. Nordstrom
Executive Vice President
