SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 6, 2000
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3DSHOPPING.COM
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(Exact Name of Registrant as Specified in Charter)
California 1-15161 95-4594029
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
308 Washington Boulevard, Marina del Rey, California 90292
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (310) 301-6733
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
Private Placement of Preferred Stock and Warrants
General
On December 6, 2000, 3Dshopping.com ("Company") sold 1,500 shares of
the Company's Series A Convertible Preferred Stock ("Series A Stock") and
five-year warrants to purchase 150,000 shares of common stock ("Warrants") for
an aggregate purchase price of $1,500,000 ($1,000 per share) to an institutional
investor ("Purchaser") pursuant to the terms of a securities purchase agreement
("Purchase Agreement"). The Purchase Agreement provides for the purchase of up
to an aggregate of 6,000 shares of the Series A Stock and the issuance of
Warrants to purchase up to an aggregate of 600,000 shares of common stock. The
Purchase Agreement provides that the Purchaser will purchase an additional 2,500
shares of Series A Stock and 250,000 Warrants after the Company obtains
shareholder approval for the issuance of common stock issuable upon conversion
of the Series A Stock in excess of 19.99% of the Company's outstanding shares of
common stock and the "capitalization rate" of the Company (market value of the
Company's common stock held by non-affiliates) for the five trading days prior
to the closing date equals or exceeds $25,000,000. The Purchaser will purchase
1,000 of the remaining 2,000 shares of common stock and 100,000 Warrants after
the effective date of the registration statement covering the shares issuable
upon conversion of the Series A Stock and exercise of the Warrants and the
satisfaction of certain additional conditions, and, if the capitalization rate
of the Company exceeds $35,000,000, the Purchaser may, at its option, purchase
an additional 1,000 shares of Series A Stock and 100,000 Warrants. All
remaining purchases are subject to the Company's compliance with certain general
terms and conditions under the Purchase Agreement.
The Company has agreed that if, at any time, the aggregate number of
shares then issuable upon conversion of the Series A Stock equals or exceeds
19.99% of the Company's outstanding common stock on the date of issuance of the
Series A Stock plus any additional shares of common stock issued thereafter in
respect of such shares pursuant to a stock dividend, stock split or similar
event ("Outstanding Common Amount"), the Series A Stock will be convertible into
only 19.99% of the Company's Outstanding Common Amount until the Company has (i)
obtained approval of the issuance of the additional shares of Common Stock by
the requisite vote, in person or by proxy, of the holders of the then
outstanding Common Stock or (ii) otherwise obtained permission to allow such
issuances from the principal market on which the shares are listed.
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Terms of the Series A Stock
Dividends
The holders of Series A Stock shall be entitled to receive dividends at
a rate equal to 8% of the stated value of the Series A Stock, which equals the
purchase price of $1,000 per share ("Stated Value") which may be paid in cash or
in kind.
Conversion
Each share of Series A Stock is convertible, at the option of the
holder, into shares of common stock in an amount equal to 125% of the Stated
Value on the date of conversion, plus any dividends accrued to such date,
divided by the conversion price of the Series A Stock. The conversion price is
determined by a formula that fluctuates based on the price of the Company's
common stock within certain parameters. The conversion price is equal to $1.50
through March 6, 2001 and thereafter the conversion price is equal to the lesser
of (i) the average daily price during the five market days ending on the market
day prior to the issue date (with a floor of $1.50 and a cap of $3.00) or (ii) a
percentage of the average daily price of a share of common stock of the Company
immediately prior to the date of conversion as follows (with a floor of $.20):
Percent of Average
If the conversion occurs Daily Price
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Between 91 and 119 days after the Issue Date 105%
Between 120 and 179 days after the Issue Date 100%
Between 180 and 209 days after the Issue Date 99%
Between 210 and 239 days after the Issue Date 98%
Between 240 and 269 days after the Issue Date 97%
Between 270 and 300 days after the Issue Date 96%
300 days after the Issue Date 95%
Based on the foregoing, the conversion price will never be greater than $3.00
nor less than $0.20, regardless of the market price. Each share of Series A
Preferred Stock outstanding on the third anniversary of the date of issuance
will automatically convert into shares of common stock.
Additionally, the Series A Stock will not, except in certain
situations, be convertible into, nor will the Company have the obligation to
issue, any shares of common stock upon conversion to the extent that such
conversion would result in beneficial ownership by the holder and its affiliates
of more than 4.99% of the Company's outstanding common stock.
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Liquidation, Dissolution or Winding up
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company, before any payment or distribution of the
Company's assets are made to the holders of Junior Securities (as defined
below), holders of Series A Stock will be entitled to receive an amount per
share equal to 125% of the Stated Value of a share of Series A Stock, plus any
dividends accrued through such date. Holders of Series A Stock will not be
entitled to any further payment.
Ranking
With respect to dividend rights and rights on liquidation, dissolution
and winding up, the Series A Stock will rank (i) senior to the Company's common
stock and each other class or series of capital stock established in the future
by the Company's Board of Directors, the terms of which do not expressly provide
that it ranks senior to, or on a parity with, the Series A Stock (collectively,
the "Junior Securities"), (ii) on a parity with each other class or series of
capital stock established in the future by the Company's Board of Directors, the
terms of which expressly provide that such class or series will rank on a parity
with the Series A Stock (collectively, the "Parity Securities") and (iii) junior
to any class or series of capital stock established in the future by the
Company's Board of Directors, the terms of which expressly provide that such
class or series will rank senior to the Series A Stock (collectively, the
"Senior Securities").
Redemption
If the Common Stock trades at or below $2.4126, which was the average
daily price during the five trading days ending on the trading day prior to the
date of issuance, for a period of 20 consecutive trading days, the Company may,
at its option, redeem all or part of the outstanding shares of Series A Stock in
cash at (i) 112.50% of the Stated Value if redeemed within 180 days of the date
of issuance, (ii) at 118.75% of the Stated Value if redeemed between 180 and 270
days after the date of issuance and (iii) at 125% of the Stated Value if
redeemed thereafter.
If the Company fails (i) to have a registration statement covering the
shares of common stock into which the Series A Stock may be converted, declared
effective within 240 days after the date of issuance of the Series A Stock, (ii)
to pay in full the amount of cash due pursuant to a Buy-In (as such term is
defined in the Series A Stock Certificate of Determination) within seven
business days after notice therefor is delivered or (iii) to have available a
sufficient number of authorized and unreserved shares of Common Stock to issue
to a holder of the Series A Stock upon conversion of such holder's shares of
Series A Stock ("Triggering Events"), the holder of the Series A Stock may cause
the Company to redeem all or a part of the outstanding shares of Series A Stock
at a specified redemption price.
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Voting Rights
The Series A Stock has no voting rights other than as provided under
California General Corporation Law, except that so long as any shares of the
Series A Stock is outstanding, the affirmative vote of the holders of a majority
of the outstanding shares of Series A Stock, voting together as a single class,
will be necessary to amend, alter or repeal any provision of the Company's
Amended Articles of Incorporation or By-laws that will adversely affect the
Series A Stock.
Restrictions on Certain Issuances; Right of First Refusal
The Company has agreed, subject to certain exceptions, not to offer or
sell any of its common stock or securities convertible into the Company's common
stock (collectively, "New Common Stock") if such New Common Stock is (i) freely
tradable or (ii) will be registered under the Securities Act, on or before two
hundred and seventy (270) days after the effective date of the registration
statement ("Effective Date") described below without the Purchaser's prior
written consent. The Company may, however, enter into such a transaction ("New
Transaction") during the period commencing on the Effective Date and continuing
through and including the date which is one hundred eighty (180) days after the
Effective Date if the average closing bid price for the common stock for the
twenty (20) trading days ending on the trading day immediately prior to the day
notice is sent to the Purchaser of such transaction is at least $5.50 per share.
The Purchaser also has the right, subject to certain exceptions, exercisable by
written notice given to the Company by the close of business on the fifth
business day after the Purchaser's receipt of notice of the New Transaction, to
participate in all or any part of the New Transaction on the terms so specified
in the notice.
Terms of the Warrants
Under the Purchase Agreement, the Purchaser is issued 100 Warrants for
every share of Series A stock sold to it. The initial exercise price of the
Warrants ("Exercise Price") is 110% of the closing price of the common stock
immediately prior to the date of issuance. The Purchaser was issued 150,000
Warrants exercisable at $1.925 per share in connection with the closing of the
first tranche of financing. The Warrants may be exercised by the payment of cash
or by using the appreciated value of the Warrant itself. The Warrants are
exercisable from the six-month anniversary of the initial closing
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through the fifth anniversary of the initial closing date. If, on any date after
the nine-month anniversary of the Effective Date, the closing bid price of the
Company's common stock is at least 275% of the Exercise Price for a period of
twenty consecutive trading days, the Company may redeem the Warrants for $0.10
per Warrant.
Registration Rights Agreement
The Company also entered into a Registration Rights Agreement with the
Purchaser, dated as of December 6, 2000. Pursuant to the terms of the
Registration Rights Agreement, the Company is required to file, on or before
January 5, 2001 ("Required Filing Date"), a registration statement
("Registration Statement") with the Securities and Exchange Commission
registering for resale of the shares of common stock issuable upon conversion of
the Series A Stock and upon exercise of the Warrants issued to the Purchaser. If
the Company's shareholders approve to increase the Company's authorized capital
stock and the transactions contemplated by the Purchase Agreement, the Company
will either file an amendment to the existing Registration Statement or file a
new registration statement that would cover in the aggregate with the
Registration Statement, no less than the number of shares equal to the sum of
(a) 200% of the number of shares of common stock into which the Series A Stock
and all dividends thereon through the third anniversary of their issuance would
be convertible into at the time of the filing of such Registration Statement and
(b) the number of shares of common stock that would be issued upon exercise of
all the Warrants. The Company must use its reasonable best efforts to cause the
Registration Statement to be declared effective on the earlier of (x) five days
after oral or written notice from the SEC that it may be declared effective or
(y) April 5, 2001 ("Required Effective Date").
Additionally, if at any time, the number of shares of common stock
issued or to be issued upon conversion of the Series A Stock and exercise of the
Warrants exceeds 80% of the aggregate number of shares of common stock then
registered, the Company shall either amend the Registration Statement to
increase the number of shares registered thereon by a set amount or file an
additional registration statement registering a set number of additional shares.
If the Registration Statement is not filed by the Required Filing Date (or
declared effective by the Required Effective Date), the Company will pay a fee
(as set forth in the Registration Rights Agreement) to the Purchaser. The
Company will pay all expenses, other than underwriting and brokerage discounts
and commissions and other selling expenses, of all such registrations.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
4.1 Certificate of Determination of Rights, Preferences,
Privileges and Restrictions of Series A Convertible
Preferred Stock, as corrected
4.2 Warrant to Purchase 150,000 shares of Common Stock dated
December 6, 2000 issued to the Purchaser
10.1 Securities Purchase Agreement, dated as of December 6,
2000, between the Company and the Purchaser (without
exhibits)
10.2 Registration Rights Agreement, dated December 6, 2000
between the Company and the Purchaser
99.1 Press Release, dated November 30, 2000
99.2 Press Release, dated December 6, 2000
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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.
Date: January 4, 2001
3DSHOPPING.COM
By: /s/ Terry Gourley
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Terry Gourley
CEO
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EXHIBIT INDEX
The following exhibits are filed as part of this report:
4.1 Certificate of Determination of Rights, Preferences,
Privileges and Restrictions of Series A Convertible
Preferred Stock, as corrected
4.2 Warrant to Purchase 150,000 shares of Common Stock dated
December 6, 2000 issued to the Purchaser
10.1 Securities Purchase Agreement, dated as of December 6,
2000, between the Company and the Purchaser (without
exhibits)
10.2 Registration Rights Agreement, dated December 6, 2000
between the Company and the Purchaser
99.1 Press Release, dated November 30, 2000
99.2 Press Release, dated December 6, 2000
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